How to convert Intraday to Delivery?

Beginner traders in the share market can easily get confused by questions such as ‘how to convert intraday to delivery’. Let us answer this query in detail and understand how to convert intraday to delivery positions effectively. When trading stocks, you may employ a variety of tactics. Nonetheless, delivery trading and intraday trading are two of the most popular trades in the stock market.

Intraday trading involves buying and selling stocks within the same day, aiming for short-term capital gains. On the other hand, delivery trading requires a longer holding period, which is why many traders choose to convert intraday to delivery positions when market conditions change. In delivery trading, you purchase and sell shares across multiple trading sessions. This method allows you to hold onto stocks for days, weeks, months, or even years before selling them.

Conversion between Intraday and Delivery Positions

For converting shares, you can switch from intraday to delivery positions and vice versa through an intraday to delivery conversion process. You have to use the mobile application or website of your stockbroker to convert intraday to delivery in India and change positions. The steps involved are as follows:

• Open the website or mobile app for your broker and log into your trading account.
• Select the stocks you wish to convert to your position by going to your portfolio.
• Input the quantity of stocks you wish to convert as well.
• Following your decision, you will have the chance to convert your delivery position to intraday or convert intraday to delivery based on your trading preference.
• When you select this option, your intraday to delivery conversion request will be processed and your position will be changed.

It simply takes a few minutes to complete, and convert intraday to delivery in India can be done easily through most brokerage platforms. But remember you can only convert intraday to delivery within the same day of purchase; after the end of the trading session, the shares will be squared off or converted into delivery shares automatically.

Margin requirements for conversion

You would need to provide more margin in order to convert intraday to delivery, as delivery positions require full funding. This is due to the fact that intraday positions allow you to trade with a small margin that does not fully reflect the cost of the equities you are buying or selling. For intraday trading, the Securities and Exchange Board of India, or SEBI, requires an initial margin requirement of 50% of the entire transacted value.

Delivery trade, on the other hand, presents a distinct situation. You must pay the full purchase price of the stocks in these circumstances. One hundred percent of the investment amount is the margin.

You are responsible for paying the difference, often 50%, between the intraday and delivery margins when you complete an intraday to delivery conversion.

For example, you are trading ₹1,00,000 shares on an intraday basis with a ₹50,000 margin and wish to convert intraday to delivery. You would be required to pay an extra margin of ₹50,000 to convert these positions to delivery. Before initiating an intraday to delivery conversion, traders may also review their intraday turnover calculation to better understand their trading activity and associated obligations.

Exiting an Intraday Position

During market hours, you are free to sell any stock you currently hold or convert intraday to delivery if you prefer to carry the position forward. Select the equities you wish to sell your stakes in. You'll have the choice to leave. Choose the option and enter the quantity and price of the stocks you wish to redeem. Then, based on your open trading position, choose "Buy" or "Sell" to close the intraday deal.

What happens if you don't exit your position?

It is important to settle any intraday positions by the time the market closes. Your broker's automatic system will close your trade for you if you fail to do it yourself. There is an extra fee associated with this type of departure, which is known as a system square-off. The fee is contingent upon your broker's pricing policy; therefore, it is an extra cost associated with your portfolio.

Therefore, you should be careful to close all active intraday positions before the market closes in order to avoid incurring intraday to delivery charges or other brokerage-related fees. To save fees and maintain your investment, you may convert intraday to delivery and continue holding the stock as a delivery position.

Benefits of converting intraday to delivery

Here are some benefits of converting intraday to delivery:

• You can convert intraday to delivery if your intraday position is not in your favor in order to avoid booking immediate losses.
• You can start your trade with an intraday position and later opt for an intraday to delivery conversion if the trade moves against your expectations.
• You can choose to average your purchase cost by holding onto the stock and adding more at a reduced price after you convert intraday to delivery in India.

Conclusion

Overall, the decision to convert intraday to delivery offers flexibility and risk management in the stock market. The process allows traders to optimize positions, manage losses, understand potential intraday to delivery charges, and benefit from potential market upswings. Utilizing a reliable stock market app facilitates seamless intraday to delivery conversion, helping investors convert intraday to delivery in India efficiently while enabling informed decisions for maximizing gains and minimizing risks in the dynamic stock market environment.