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Intraday trading and delivery trading are two different types of trading approaches and require different skills and mindsets. So, it becomes critical for a trader to understand himself and the stock market and then choose the right trading style that suits his skills and needs. To understand the concept of intraday vs delivery, read our article.
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Intraday Vs. Delivery Trading Intraday Trading During intraday trading, stocks are bought and sold within the same day, i.e., before the market closes. It is important for Intraday traders to acknowledge that no matter how their stock performs, they must square off their positions before the market closes. We need to understand the pros and cons of both intraday trading and delivery trading in detail to make an informed decision. If you want to know how to make money in intraday trading, read our article.
Delivery Trading How does delivery differ from intraday if it's about squaring off positions on the same day? Deliveries in the stock market are different from intraday trading in that you can hold your stocks for a longer period of time. Unlike intraday trading, delivery trading gives you the flexibility of squaring off your position at any time of day. As opposed to intraday trading, in delivery, ownership is transferred from the seller to the buyer, making the buyer the owner of the shares purchased. Depository participants charge brokerage, which includes depositories' costs, for transferring shares to a buyer's Demat account.
Intraday vs. Delivery Trading: Key Differences Trading intraday and delivery have their own pros and cons, and an individual chooses an approach that works best for them based on their style and requirements. Intraday trading and delivery are distinguished by the following differences: 1. Share Delivery Stock market delivery occurs when you hold shares for more than a day. The delivery takes place from the seller's Demat account to the buyers, whereas intraday trading does not occur since you must square off your position by the end of the day. 2. Time Duration Delivery trading rules allow individuals to hold the shares as long as they wish, whereas in intraday trading, it is mandatory for a trader to sell the shares by the time market closes, regardless of whether he is profitable.
3. Transfer of ownership Due to the fact that the Indian stock market follows the T+1 cycle for settlement of shares, intraday traders do not own the shares they buy since the delivery of shares does not take place. Intraday traders must square off their positions by the end of the day, which does not transfer ownership. The buyer becomes the owner of the shares he has purchased after the shares are delivered to their Demat accounts. 4. Risk Factor Trading Intraday versus Delivery is regarded as riskier than Delivery trading because the market can be volatile and difficult to predict in the short-term, which is hours in the case of Intraday trading, whereas it is comparatively easier to predict the market in the long-term. While delivery trading can yield handsome rewards in the short run, it's a long-fought struggle that takes a long time. On the other hand, intraday trading can yield handsome profits in a short amount of time if done accurately. So, Intraday is riskier but also more rewarding too.
5. Intraday vs. Delivery charges In Intraday vs Delivery, Intraday traders pay fewer commissions than delivery traders, and they also have access to margin facilities.
