Difference Between Intraday and Delivery Trading

The difference between intraday and delivery is preferred to how long you've owned the shares. While delivery trading lets you hold onto your stocks for a longer amount of time, intraday trading entails the purchase and sale of stocks within the same trading day. You can go through the intraday vs delivery trading debate in the following article.

Intraday vs Delivery

While intraday traders rely on technical analysis and short-term trends, delivery traders use fundamental analysis and longer-term patterns to invest in companies with high development potential. There are many various ways to trade on the stock market; some include making short-term purchases and sales of shares, while others involve making long-term investments. Depending on whatever extreme you're looking at, there are two distinct modes of operation, or tactics, for making trades in the stock markets: intraday vs delivery trading explain the fundamental and major difference between these types of trading.

Most investors who are eager to trade must learn the process. And with the help of a stock trading platform, it's easy for traders to trade in the stock market without much hassle. Intraday trading is the idea of purchasing and selling stocks on the same day.

Your transaction becomes a delivery trade if the position hasn't squared off that day and you anticipate holding the shares for a much longer period of time. Trading tactics change between delivery trading vs intraday. 

Check out the Intraday stocks for today here.

What is Intraday Trading

Transactions that begin and end on the same trading day are referred to as intraday trading. For instance, you would have earned an intraday trading profit of Rs. 2000 (Rs. 22,000 - Rs. 20,000) if you had purchased 100 shares of a company at Rs. 200 a share and the stock price had increased to Rs. 220 per share. In the event that the stock price dropped, you would have lost Rs. 2,000 (Rs. 18,000 - Rs. 20,000). 

Advantages of Intraday Trading

1. Leverage for Enhanced Gains: Intraday trading allows traders to invest only a fraction of the full stock price, leveraging their capital. This means the potential for higher gains with a smaller investment.

2. Shorting Opportunities: Intraday traders can profit from falling stock prices by selling shares they don't own. If they anticipate a stock's decline, they can sell it early in the day without purchasing it first and then buy it back at a lower price, locking in a profit.

3. Early Trend Capture: Through intraday trading, traders can identify emerging market trends early on. For instance, stock prices in the agriculture sector can rise if the government announces a favourable policy during market hours, such as raising the Minimum Support Price (MSP), lowering import duties on necessary raw materials, or providing subsidies to the sector. By selling before the market settles, intraday traders can profit quickly from these rapid price swings.

Disadvantages of Intraday Trading

1. Time Constraint: Market timing remains inherently uncertain, regardless of the tools employed. If a stock moves in the opposite direction of your prediction, you're unable to retain the position for the next day, resulting in obligatory losses.

2. No Additional Benefits: Intraday trading means you won't hold the stock on crucial dates like record days for dividends, bonuses, rights issues, or stock splits, which means you miss out on these additional benefits.

3. Constant Monitoring Required: Engaging in intraday trading demands vigilant and continuous monitoring of the market's minute-by-minute fluctuations, leaving little room for relaxation. This can be time-consuming and mentally demanding for traders.

What is Delivery Trading

Buying assets and keeping them for a longer amount of time—typically more than one trading day—is known as delivery trading, also referred to as positional trading. After receiving the shares, the investor retains them in their Demat account. For instance, you would sell all 100 shares of ABC Company for Rs. 350 each, or Rs. 35,000, if you invested Rs. 300 in 100 shares, which appreciated in value to Rs. 350 each. In the event that the stock price dropped, you would have lost Rs. 5,000 (Rs. 25,000–Rs. 30,000), whereas your delivery trading profit would have been Rs. 5,000 (Rs. 35,000 - Rs. 30,000).

What Distinguishes Intraday vs Delivery Trading the most?

The duration of the holding of the securities is the primary distinction between intraday trading as well as delivery trading. While delivery trading entails purchasing and keeping shares for an extended amount of time, intraday trading includes purchasing and selling securities during the same trading day. As you know the key point for the difference between intraday and delivery trading, it's easy to make your investment in either one of them. Further on delivery trading vs intraday trading in the stock market. Let's check some basic differences between intraday and delivery.

Some basic differences between intraday and delivery trading in the Indian stock market

Here are some of the basic differences in delivery trading vs intraday trading in the stock market. 

Conclusion 

The article explains the distinction between intraday trading vs delivery trading in the Indian stock market in simple terms. While delivery trading entails purchasing and keeping shares for an extended period of time, intraday trade includes purchasing and selling securities during the same trading day. 

The article “Intraday vs Delivery Trading”  also discusses the differences between the two methods of trading in terms of timescale, transaction resolution, risk and return, brokerage fees, margin requirements, trading technique, and tax ramifications. Overall, this in-depth detail is useful as a primer for those who want to learn the fundamentals of stock trading in India.