loader2
Partner With Us NRI
Download iLearn App

Download the ICICIdirect iLearn app

Helping you invest with confidence

Open Free Demat Account Online with ICICIDIRECT

Difference between Intraday Trading and Delivery Trading

12 Nov 2021 0 COMMENT

Stock markets are not everyone’s cup of tea. You can get thrown off by the jargon and market uncertainties. However, if you have a strong appetite for risk, you can upscale yourself toward technical analysis and begin reading market data. This will stand in good stead with you in intraday trading and delivery trading which can help you hit a fortune. Intraday trading and delivery trading are both different avenues of the stock market and they vary in their inherent features.

Get the Basics Right

Before trying to understand the difference between intraday trading and delivery trading, it is important to apprise yourself of what these different modes of trading are.

Intraday Trading:

This involves buying and selling of stocks within the same day. It is necessary to tag your intraday trades explicitly, but if you forget to place the trade in the bracket of intraday trading, or do not square off your position before the end of the day, your stocks will be automatically squared off at the closing market price, under some brokerage plans. Some of the features of intraday trading are as follows:

  • Intention:

    The primary intention of engaging in intraday trading is to take advantage of fluctuating prices of stocks and make instant trading profits
  • Timeline:

    All intraday trades are executed and squared off within the same trading day
  • Focus:

    To excel in intraday trading and earn profit, the focus should be on the microeconomic factors such as technical reading of price charts, monitoring the market by the hour etc.
  • Participants:

    Intraday trading is typically undertaken by speculators and short-term investors who are looking to make quick profits. These participants are primarily risk lovers as they are looking to trade within a day, and a shorter timeline can be risky as you may not be able to recover from trade losses within a day.

Delivery Trading:

Under delivery trading, you enjoy ownership of your purchased stocks until you decide to sell them off to another party. This could be within days, weeks, months or years – but purely based on your own discretion. Say, a stock didn’t fare well in the long-term, you are not required to sell it off at a lower value and book losses right away. Rather, you can hold on to the stock, if you believe basis your fundamental analysis, that this stock could perform well in the future and would render you profits in the long-run.

  • Intention:

    The intention of delivery trading is to make fruitful investments. The ultimate intent is to earn profits but not by continuous trading, rather than through sound investment strategies.
  • Timeline:

    There is no specific timeline to delivery trading; you can sell off your held securities as per your discretion. The term delivery trading is only coined to imply the delivery of your purchased stocks into your demat account.
  • Focus:

    Delivery trading requires focus on macroeconomic factors guiding the market such as company research, industry reading, political and economic reforms etc.
  • Participants:

    The prime participants in delivery trades are investors with a long-term perspective who aren’t just obsessed with making quick money.

Margin Trading

One of the key and primary differentiators in intraday vs delivery trading is margin trading. What it means is that in intraday trading, you can make use of margins which is borrowing from your broker. Different broking companies offer varying margin rates. Say, you are investing Rs 5,000 in your intraday trade, and your broker has a margin of 10X. This means that you can actually make an investment of Rs 50,000 by paying only INR 5,000 upfront and borrowing the remainder of INR 45,000 from your broker. By way of margin trading, your ability to enhance your return on investment is amplified. However, this is not possible in delivery trading. Delivery trades require you to pay 100% of the stock value upfront, in cash, before the delivery of those stocks is provided into your Demat account.

Conclusion

The intent to pitch intraday vs delivery trading is not to grant one of them a superior status than the other. Rather, it is to make you understand that no one size fits all. Based on your own skillset, investment amount and risk-taking abilities, you should be able to take your pick and discover which trading type would be more helpful for you to achieve your financial goals.

Disclaimer

ICICI Securities Ltd. ( I-Sec). Registered office of I-Sec is at ICICI Securities Ltd. - ICICI Centre, H. T. Parekh Marg, Churchgate, Mumbai - 400020, India, Tel No : 022 - 2288 2460, 022 - 2288 2470. The contents herein above shall not be considered as an invitation or persuasion to trade or invest.  I-Sec and affiliates accept no liabilities for any loss or damage of any kind arising out of any actions taken in reliance thereon. The contents herein above are solely for informational purpose and may not be used or considered as an offer document or solicitation of offer to buy or sell or subscribe for securities or other financial instruments or any other product. Investments in securities market are subject to market risks, read all the related documents carefully before investing. The contents herein mentioned are solely for informational and educational purpose.