For ages, trading in the share market has been associated with a lot of terminologies. Two such terminologies are intraday and delivery trades; now, you might have wondered what these terms are and the difference between them. Both of them are types of trading methods carried out by traders in a centralized market.
In Intraday trade, a trader sells the shares he/she bought on the same day, while in delivery, the trader will hold the shares for a few days before selling them. This blog further explains how both these trades vary across various functions.
Execution of Trades
When executing an intraday trade, you must specifically select the “MIS” option, whereas when executing a delivery trade, you must specifically select the “NRML” option. Both of these trades can be carried out using an online or offline trading platform. Once executed with the appropriate tag, the trades will be visible in the trading account in both cases.
Settlement of Trades
The distinguishing factor between intraday and delivery trading is how trades are cleared and settled. In the case of intraday trading, trades are closed on the same day, so any profits or losses are credited or debited to the trading account. In the case of delivery, the buyer must pay the funds by T+1 and receive the delivery in his or her Demat account by the end of T+2. When selling by delivery, the DIS must be deposited with the broker on T+1 morning, and the bank credit must be received by the end of T+2 day.
Margin to be paid for Trading
In the case of intraday trading, the stop loss and profit targets are typically entered at the time of the trade. As the trade is structured as a Cover Order, the intraday trader gains more leverage. Delivery traders typically place a stop loss and then set profit targets based on price movements. The delivery buyer must pay the total amount by T+1 morning, while the delivery seller must pay the entire amount by T+1 morning. The delivery buyer must pay the full amount by T+1 morning, and the delivery seller must ensure that the broker receives the DIS for sale by T+1 morning.
This is primarily determined by how you plan and execute your trades. Technical, charts, and news flows are all critical in intraday trades. Fundamentals such as macroeconomics, industry attractiveness, company performance, and so on are used to determine delivery trades. When compared to delivery trades, intraday traders have lower brokerage. As a result, intraday trading emphasizes churning capital, whereas the delivery trader seeks opportunities for growth or long-term value.
Best Suited for
Intraday trading is best suited for traders who have limited capital and would like to earn quick money. Delivery trades are best suited for investors looking to play the long game by holding the shares until it grows to a particular threshold.
With that being said, both these forms of trades have their advantages and disadvantages. It’s best to choose either of them based on multiple factors such as your capital, financial goals, and risk factor.
No matter what type of trading you are planning to do, we at Tradeplus can help you facilitate it by providing free Demat and trading accounts, full-fledged analytical tools, and top of it, the best brokerage fee plan in the form of a Flexi plan as well as flat brokerage fee plan. To know more about our services, check here.