Intraday Trading and Delivery Trading are two distinct trading
strategies for stock market participants. Here’s a detailed explanation of
each:
Intraday
Trading
Definition: Intraday trading involves buying and selling stocks on the
same day. The positions are closed before the end of the trading session, so no
stocks are held overnight.
Key Points:
- Same-Day
Transactions: You need to square off (sell) your positions by the end of the
trading day, usually before 3:20 PM. If you don't, 5Paisa will
automatically initiate a square-off process from 3:20 PM onwards at the
current market price.
- High Frequency: Typically involves multiple
daily trades, aiming to profit from short-term price movements.
- Leverage: Often uses higher leverage,
allowing control over larger positions with a smaller amount of capital.
- Monitoring: Requires active monitoring of
the market throughout the trading day.
Example: If you buy 100 shares of a company at ₹100 in the morning
and sell them at ₹105 in the afternoon, you make a profit of ₹500 (minus
transaction costs) if you close the position within the same day.
Delivery
Trading
Definition: Delivery trading involves buying stocks and holding them
for a period longer than a single trading day. You can keep these shares for as
long as you wish, even for years.
Key Points:
- Holding Period: You can buy shares today and
choose to sell them anytime in the future, whether that’s a day, a month,
a year, or even longer.
- Lower Frequency: Fewer transactions compared to
intraday trading, focusing on long-term price appreciation.
- Ownership: Shares bought are held in your
demat account until you decide to sell them.
- Less Monitoring: Requires less frequent
monitoring as positions are held for a longer period.
Example: If you buy 200 shares of a company at ₹100 and sell them
after a year when the price has risen to ₹150, you make a profit of ₹10,000
(minus transaction costs) when you decide to sell.