What is Delivery and Intraday Trades? (Intraday Vs. Delivery) :

Do you know the difference between Delivery and Intraday Trading?

Don’t worry every details for delivery and intraday trading will be provided right here in this article.

So, that there should be no doubt left in your mind after reading and understanding this.

Our article is on “What is Delivery and Intraday Trades?”

The main difference between both of the trading is ultimate the timings or periods.

This will help you to decide which one type of trading will be suitable for you.

Let’s us understand about the actual definition of these trading.

What is Delivery Trading?

Delivery Trading means the trading that happens for the perspective to hold it for longer period mostly more than one day.

The investors holds the securities with the perspective that it will benefit them for achieving their long term goals.

These shares which have been bought by this investors are transferred to their demat account.

In this, the shares are not directly sold but they are sold whenever the investors or the traders wants them to sell in the stock market.

These shares are kept in possession that can be in days, weeks, months or in years.

The settlement of this type of trading executes on T+2 date and full amount is payable on T+1.

The main focus for the delivery trading is about the growth or on the value.

What is Intraday Trading?

Intraday Trading means the trading that took place within the same day as the positions are taken in place when the market opens and the positions are squared off on the same day before the market closes down.

These type of trading done by the traders in the sense to make more money in trading and booking a short term profits.

These shares are not transferred to the demat account of the trader as the shares or the position get squared off before the market closes down each day.

These shares or position taken by the traders are visible to their trading account and not on demat account.

These shares need to be squared off before the market closes down by the trader but if in case they forget to square off then the system automatically squared off these position on the behalf of them.

These shares are only available to the trader for just one day and that’s why it is also known as day trading.

These trading offered the traders lower margins and brokerage on their transaction.

The main focus for the intraday trading is about the churning of the capital.

Okay, this was about the definition of the both the trading types, now let us see how you can execute this trades.

How to execute these trades?

When you want to trade in the intraday trading then you need to select the “MIS” option that is especially for the intraday orders.

Where, if you want to trade in the delivery trading then you need to select the “NRML” option that is for the delivery orders.

Both of these trades can be executed from any online or offline trading platform.

In both of the trading type, the shares are visible in the trading account after the execution.

So, this was about the trade execution part now will see the margins you need to pay for these trading.

Which type of margins paid for the trading?

In intraday trading, the trader need to enter the stop loss and the profit targets when they are punching their trades. They are also provided with huge leverage in the trading that is structured as the Cover Order.

While in delivery trading, you need to insert the stop loss and the profit targets later based on the price movements. The buyer for the delivery trading needs to settle the full amount by T+1 and the seller for the delivery trading needs to be ensure that the DIS for the sale reaches to the broker by T+1.

Now let us see the advantages and the disadvantages for both the trading types:

Advantages for Intraday Trading & Delivery Trading

Intraday TradingDelivery Trading
This trading allows to buy the shares with margins and high leveragesThis gives the benefit for holding the stocks for long term period.
The brokerage fees is lowIt is believed that for beginners, they should choose delivery trading.
This also allows for short selling the sharesDelivery trading is safer for the beginners to start their trading practice.
Created By, Trading Fuel

Disadvantages for Intraday Trading & Delivery Trading

Intraday TradingDelivery Trading
In intraday trading, you need to monitor the market closely and the time frame is shorter.The main and biggest disadvantage for delivery trading is that you blocked the funds as you opt for longer term period.
In intraday trading, there is no benefit for dividend and also they are not represented as the owners of the company but in delivery trading the buyer has all these rights.The brokerage charges are high than intraday and no margin benefits to the buyer of the delivery trading.
Created By, Trading Fuel

Conclusion

Through this article on “What is Delivery and Intraday Trades?” we had only one perspective to give you immense knowledge about both the trading types. The decision rest with you as this also needs to be do according to your risk and capital allocation. For this you can also consult some expert guidance for knowing which type you can opt for trading. Hope that you liked our article and find this to be useful for you.

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Author

Prashant Raut is a successful professional stock market trader. He is an expert in understanding and analyzing technical charts. With his 8 years of experience and expertise, he delivers webinars on stock market concepts. He also bags the ‘Golden Book of World Record’ for having the highest number of people attending his webinar on share trading.