Diiference Between Intraday Trading vs Delivery Trading | Espresso

What is the Difference Between Intraday Trading and Delivery Trading

Stock market trading can involve both short-term buying and selling of shares as well as long-term investments. Depending on which extreme you're looking at, there are two ways of trading in the share markets: intraday trading and delivery-based trading.



What is Intraday Trading?

Intraday trading online entails selling the shares you have bought or buying back the shares you have sold within a single trading session, i.e., on the same day. The equity market timing is from 9:15 AM – 3:30 PM. Not squaring off your position by the end of the day can automatically cause your stock to be sold at the day's closing price.

The profit you gain or the loss you incur will be credited/debited to your Demat account within 24 hours. This settlement of money is known as (T+1) settlement.

Intraday trading provides you with the following features:

  • Low Capital: Intraday traders can use margin funds while taking positions to place a more substantial trade while paying only a small amount upfront. The broker provides the additional funds, which allows you to take a more prominent position than your capital would allow, thereby pushing up the profit potential.
  • Low Brokerage: Brokers charge lower commission rates on intraday trades as compared to delivery trading.
  • No Overnight Risk: Intraday traders are protected in case the markets shift after hours, as all trades are squared off at market closing.
    Also Read: Intraday Trading Tips & Tricks

What is Delivery Trading?

Unlike intraday trading, delivery trading online involves investing over an extended period. There are zero time constraints as to when you have to sell your stocks. In delivery trades, the stocks you buy get added to your Demat account and remain in your possession till you decide to sell them. You enjoy full ownership of your stocks.

Delivery trading provides you with the following features:

  • No Time Limit: Delivery traders can hold on to stocks for as long as they please. There is no need to book losses right away if a stock did not perform well in the short term.
  • Corporate Benefits: By taking delivery of shares, traders become part-owners of the company. Hence, they are eligible to receive regular dividends and interest payments. They may also be entitled to other benefits such as bonuses and rights issues.
  • Losses are Limited: Delivery traders pay the total value of the shares upfront. There is no option of leverage, and they are limited in their trades by the amount of capital they possess. Conversely, if the transaction does not go as planned, their loss is limited only to the purchase price. In comparison, margin traders could face massive losses if their trade moves negatively.

Intraday Trading vs Delivery Trading

Your approach to intraday trading online should be very different from delivery trades. With the latter, you have the possibility of extending your investment period if you miss your target price, something that isn't possible with intraday trades. It's a healthy practice to set price targets and stop-losses for both types of trades. However, they are more critical for intraday trades since they are more time-sensitive.

Intraday trades are usually based on technical indicators and charts, which offer information about a stock's expected short-term price movements based on its historical price chart. These trades can also be event-driven.

With delivery-based trading and investing, experts suggest performing fundamental analysis and investing in companies with strong long-term prospects. This requires an in-depth study of the particular company's business environment, performance, internal operations, and industry attractiveness.

Which approach is better largely depends on how you plan and execute your trades. Intraday trading is focused more on churning capital, while delivery traders look for growth opportunities in the long term.


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Frequently Asked Questions

Intraday trading online is all about technical indicators and charts, while delivery trading relies more on fundamental analysis.

Both come with their own set of pros and cons. Intraday traders are protected in case the markets shift after hours as all trades are squared-off at market close, whereas with delivery trades, you can extend your investment period if you miss your target price. Intraday trading can provide very high returns due to the option of using leverage.

Intraday trading is the buying and selling of financial instruments such as stocks, shares, currency, commodities, etc., daily without taking ownership of the securities overnight. On the other hand, delivery-based trading involves stocks or financial securities such as futures, options, or currency, which don't need to be bought and sold on the same day. The securities you purchase are delivered to your Demat account and can be held for as long as you wish