Intraday vs Delivery Trading
- 20 Sept 2024
- By: BlinkX Research Team
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Intraday trading involves buying and selling stocks within the same trading day, while delivery trading allows you to hold onto your stocks for a longer period. The two choices depend on how long you plan to own the shares. Learn everything about intraday vs delivery trading, and what is difference between intraday and delivery trading in this detailed article.
The Difference Between Intraday and Delivery Trading
Intraday traders focus on technical analysis and short-term trends, while delivery traders use fundamental analysis and longer-term patterns. There are different strategies for trading on the stock market, including short-term transactions and long-term investments. Intraday trading involves making quick buys and sells, while delivery trading involves holding onto investments for a longer period. Understanding the difference between intraday and delivery trading is crucial for successful stock market trading.
Most investors who are eager to trade must learn the process. With the help of a stock trading platform, it's easy for traders to trade in the stock market without much hassle. Intraday trading refers to the purchasing and selling of stocks on the same day.
Your transaction becomes a delivery trade if the position hasn't squared off that day. Trading strategies change between delivery trading vs intraday.
Check out the Intraday stocks for today here.
Table of Content
- The Difference Between Intraday and Delivery Trading
- What is Intraday Trading?
- Advantages of Intraday Trading & Disadvantages of Intraday Trading
- What is Delivery Trading
- What is the Importance of Trading Margins?
- What Distinguishes Intraday from Delivery Trading the most?
- Basic Differences between Intraday and Delivery Trading
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 ₹2000 (₹22,000 - ₹20,000) if you had purchased 100 shares of a company at ₹200 a share and the stock price had increased to ₹220 per share. If the stock price dropped, you would have lost ₹2,000 (₹18,000 - ₹20,000).
Advantages of Intraday Trading & Disadvantages of Intraday Trading
The advantages and disadvantages of Intraday trading are outlined in the table below.
Advantages | Disadvantages |
| Intraday trading allows investors to use their capital to make small investments in stocks, potentially leading to higher profits with a smaller investment. | You could lose your position the next day if the stock moves against your prediction, leading to unavoidable losses. |
| Intraday traders can gain from falling stock prices by selling shares they do not possess. They can sell stock early in the day without purchasing it beforehand, then buy it back at a lower price to make a profit. | Intraday trading involves not holding onto stocks during important dates such as dividend record days, bonuses, rights issues, or stock splits. Hence, traders don’t get these benefits. |
| By engaging in intraday trading, traders can detect developing market trends in their initial stages. | Continuous monitoring is crucial in intraday trading. Traders must closely observe minute-by-minute market fluctuations, allowing minimal downtime. This process demands considerable time and attention. |
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 ₹350 each, or ₹35,000, if you invested ₹300 in 100 shares, which appreciated to ₹350 each. If the stock price dropped, you would have lost ₹5,000 (₹25,000– ₹30,000), whereas your delivery trading profit would have been ₹5,000 (₹35,000 - ₹30,000).
What is the Importance of Trading Margins?
Understanding the significance of trading margins is essential for traders as it provides them more control over their funds. With trading margins, traders have the potential to enhance their earnings through larger trades. However, this approach carries a higher risk, with the potential for more significant losses.. Consequently, traders need to understand how margins work and effectively manage them to mitigate the possibility of significant financial setbacks.
What Distinguishes Intraday from Delivery Trading the most?
The duration of the holding of the securities is the primary difference between intraday trading as well as delivery trading. While delivery trading entails purchasing and keeping shares for an extended period of time, intraday trading includes purchasing and selling securities during the same trading day. Understanding the key point for the difference between intraday and delivery trading makes it easy to choose the suitable trading strategy. Let's check some basic differences between intraday and delivery.
Basic Differences between Intraday and Delivery Trading
Here are some of the basic differences in delivery trading vs intraday trading in the stock market.
Aspect | Intraday Trading | Delivery Trading |
| Timeframe | Same trading day | More than one trading day |
| Settlement of Transactions | Executed on the same day | Settled later |
| Risk and Return | High risk | Less risky |
| Brokerage Fees | Typically cheaper due to higher volume | May be higher due to fewer transactions |
| Margin | Can opt for margin to increase capital | Doesn't involve the use of a margin |
| Trading Approach | Technical evaluation and short-term trends | Fundamental research and long-term trends |
| Tax Implications | Taxed as per the tax slab a trader belongs to | Capital gain, potentially lower tax rates |
Conclusion
Intraday trading involves buying and selling securities within the same trading day, while delivery trading involves holding shares for a longer duration. The comparison between these two trading methods highlights differences in timescale, transaction resolution, risk and return, brokerage fees, margin requirements, trading technique, and tax implications. Downloading a stock trading app can further enhance your understanding of these concepts.
