How to convert Intraday to Delivery?

How to convert Intraday to Delivery?

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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. 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. 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. You have to use the mobile application or website of your stockbroker to 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 your intraday position to delivery.
  • When you select this option, your position will be changed.

It simply takes a few minutes to complete, and switching places is simple. But remember you can only convert intraday stocks within the same day of purchase after the end of the trading session, the following shares will be squared off or converted into delivery shares.

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Table of Content

  1. Conversion between Intraday and Delivery Positions
  2. Margin requirements for conversion 
  3. Exiting an Intraday Position
  4. What happens if you don't exit your position? 
  5. Benefits of converting intraday to delivery

Margin requirements for conversion 

You would need to provide more margin in order to convert your intraday trade to delivery. 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 convert your intraday trade to a delivery.

For example, you are trading ₹1,00,000 shares on an intraday basis with a ₹50,000 margin. You would be required to pay an extra margin of ₹50,000 to convert these positions to delivery.

Exiting an Intraday Position

During market hours, you are free to sell any stock you currently hold. 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 such extra fees. To save fees and maintain your investment, turn a stock position that you don't want to complete into a delivery transaction.

Benefits of converting intraday to delivery

Here are some benefits of converting intraday to delivery:

  • You can change your position to delivery if your intraday position is not in your favor in order to avoid losing money on bookings.
  • You can start your trade with an intraday position and change it to a delivery position during the day if it ends up losing money. This is because intraday positions demand less margin than delivery positions.
  • You can choose to average your purchase cost by holding onto the stock and adding more at a reduced price after the position is converted to delivery.

Overall, converting intraday to delivery trade offers flexibility and risk management in the stock market. The process allows traders to optimize positions, manage losses, and benefit from potential market upswings. Utilizing a reliable stock market app facilitates seamless transitions between these trading strategies, enhancing investor control and enabling informed decisions for maximizing gains and minimizing risks in the dynamic stock market environment. 

FAQs - How to Convert Intraday to Delivery

Yes, you must convert before the market's stipulated timing, usually about 15-30 minutes before the closing bell.

Yes, most online trading platforms provide an option to convert positions from intraday to delivery. Look for the relevant section or option in your trading interface.

Brokers might levy a nominal fee for converting intraday positions to delivery. Check your broker's fee structure for details.

Unconverted intraday positions are automatically squared off by the broker at the day's closing time, avoiding delivery obligations.

Yes, you can convert a part of your intraday holdings to delivery, specifying the quantity you wish to convert while adhering to the exchange's guidelines.