Difference Between Intraday & Delivery

When it comes to trading in the stock market, two of the most common terms you’ll hear are intraday trading and delivery trading. If you’re just getting started, it might sound a bit confusing, but don’t worry, we’re going to break it down for you in the simplest way possible.

Think of it like this: intraday trading is like buying something in the morning and selling it before bedtime, while delivery trading is more like buying something and keeping it for days, weeks, months, or even years.

In this article, we’ll explore the key differences between intraday and delivery trading, how each one works, and which might be right for you.

What Is Intraday Trading?

Intraday trading, also called day trading, means buying and selling shares on the same day. The goal is to make a profit from small price changes that happen during the day.

Let’s say you buy 100 shares of a company at 10:00 am and sell them at 1:00 pm the same day. That’s intraday trading. You don’t keep the shares overnight, they’re bought and sold within market hours.

Key Features of Intraday Trading:

• Same-day trade: You must close your position before the market closes.
• No ownership: Since you sell the shares the same day, you don’t actually “own” them.
• High risk, high reward: Small price movements can lead to profits, but also losses.
• Used by active traders: Usually done by people who keep an eye on the market throughout the day.

What Is Delivery Trading?

Delivery trading means buying shares and holding on to them for a longer period. You can keep the shares for days, months, or even years. You become the actual owner of the shares.

For example, if you buy 100 shares today and keep them in your Demat account for six months, that’s delivery trading. You’re not looking for quick profits, you’re investing for the future.

Key Features of Delivery Trading:

• No time limit: You can sell the shares whenever you want, there’s no pressure to do it on the same day.
• You become a shareholder: The shares are delivered to your Demat account.
• Lower risk: Since you’re holding long-term, you can wait for the market to recover from short-term dips.
• Good for building wealth: Ideal for long-term investors looking to benefit from company growth.

Major Differences Between Intraday and Delivery

Let’s look at the major differences between intraday and delivery trading in a simple comparison:

Pros and Cons of Intraday Trading

Pros:

• Quick profits possible
• Uses less capital because of margin facility
• No need to wait for days or months

Cons:

• Very risky due to market volatility
• Requires constant monitoring
• Losses can happen quickly

Intraday trading is like a race, you need to act fast and make quick decisions. If you win, the rewards can be great. But if you make a mistake, the losses can pile up fast too.

Pros and Cons of Delivery Trading

Pros:

• You own the shares
• Suitable for building wealth over time
• Less stressful compared to intraday

Cons:

• Requires more capital
• Higher charges like STT (Securities Transaction Tax), DP charges, etc.
• Profits may take time to realise

Delivery trading is like planting a tree, you need to wait and be patient, but the fruits can be worth it.

Which One Should You Choose?

The big question is, should you do intraday or delivery trading? Well, it depends on your goals, risk appetite, and time.

Choose Intraday Trading if:

• You can track the market during the day
• You’re okay with high risk
• You’re looking for short-term profits
• You have good knowledge of charts and price movements

Choose Delivery Trading if:

• You want to build long-term wealth
• You don’t have time to monitor markets all day
• You’re okay with holding shares for months or years
• You prefer a safer approach

Important Things to Keep in Mind

1. Brokerage Charges

Intraday trading usually has lower brokerage fees compared to delivery. But because you’re trading more often, the costs can add up. Delivery trading, on the other hand, has higher charges but fewer trades.

2. Taxes

Both types of trading attract taxes. Intraday profits are taxed as business income, while delivery profits may be subject to capital gains tax (either short-term or long-term, depending on how long you hold the shares).

3. Discipline and Strategy

Intraday requires fast decision-making, good timing, and a clear strategy. Delivery trading needs patience, proper research, and a long-term mindset.

4. Market Volatility Impact

Intraday trading is highly sensitive to market volatility, as prices can swing quickly within minutes. Delivery trading is less affected by daily fluctuations, focusing more on long-term trends.

Examples

Let’s say you bought shares of a company called XYZ:

• Intraday: You buy 100 shares at ₹200 in the morning and sell them at ₹205 in the afternoon. Your profit is ₹500 (minus charges).
• Delivery: You buy 100 shares at ₹200 and hold them for one year. The price rises to ₹300. Now, your profit is ₹10,000 (minus charges).

Both methods can make you money, but the time frame and risk involved are very different.

Can You Do Both?

Yes! Many traders use a mix of both intraday and delivery trading. You can start with intraday to learn the ropes, then move to delivery once you’re more confident, or vice versa.

Some people trade intraday to make quick gains and use that money to invest in delivery stocks for long-term growth. It’s all about balance and knowing what suits your style.

Conclusion

So, there you have it, the key differences between intraday and delivery trading.

• Intraday is fast-paced, risky, and requires quick thinking.
• Delivery is slow and steady, but it helps build wealth over time.

There’s no one-size-fits-all answer. It all comes down to your goals, risk-taking ability, and how involved you want to be in the stock market.

Whether you choose intraday, delivery, or a mix of both, always remember, do your research, start small, and never invest money you can’t afford to lose.

FAQs