Nowadays, stock trading has become much easier than ever before, thanks to electronic and digital mediums that help new to existing investors invest their money from comfort. Investors can easily access many trading and investing methods to make money from the stock market. However, to make money from the stock market, it’s essential to stay aware of common trading methods, like Delivery Trading.
Read this article if you are new to stock trading or a student learning about it. We have come up with a comprehensive article to explain delivery trading, its advantages, and the difference between delivery and intraday trading.
What is Delivery Trading?
Delivery trading is one of the common trading methods in the Indian stock market. Unlike intraday trading, delivery trading has many intentions of investment rather than just availing trading opportunities. It happens because investors aim to hold on to their stock holdings for a long time, i.e. two days to two decades.
This trading does not have any time constraints to sell their stocks at profit or loss. Unless stocks get delivered to the relevant Demat accounts. So, this is what delivery trading means in the stock market. Moreover, you can execute delivery trades, even though you don’t have a Demat account, as the Demat account only stores the stocks you have purchased.
What is Equity Delivery?
Let’s also understand equity delivery through equity buying and selling. In this delivery trading, you first buy the stock, pay its market rate by T+1 and then get delivery of equity by the end of T+2 days. In the cases of delivery selling, the stock seller debits the stock with TPIN online on T+1 day, and the stocks are automatically debited from his Demat account. The share stays reduced by the extent of Demat holding.
Benefits of Delivery Trading
Here are some major benefits of delivery trading; let’s look.
- This stock trading does not limit the number of stocks to sell.
- With this trading, the trader can keep earning bonuses like dividends, bonus issues, and right issues. In short, the stock owner keeps earning all the benefits and bonuses that the company provides.
- This trading helps in increasing the profiles of the investors by providing high returns from the company’s dividends and profits.
- The trader does not need to bear short selling risk. If you are a stock trader or learning about it, you might already know what short selling is. It’s a trading method where investors borrow the shares to sell in the market and buy them again before closing the stock trading day.
Difference between Intraday and Delivery Trading
Intraday trading is generally complete within a day. Here trade purchases the shares and sells them by the end of the day, before the closing of the market. And if the trader does not sell the shares, they automatically squared off at the closing time. In contrast, the delivery trading method does not put a time limit on selling the shares. The purchased shares can be maintained for a long period of time to earn more profit than present deals.
In Intraday, traders benefit from low capital accounts and margin payments, whereas they require complete payments for delivery trading transactions. Intraday trading is suitable for traders, who can determine the future value of select shares in the short and long run. Also, there are many tools to do technical analysis to make profitable intraday trading. However, if you think long-term trading suits you, it’s good to pick delivery trading. It allows you to keep earning many benefits the company profiles to its shareholders.
This article discussed the meaning of delivery trading and how it differs from intraday trading. We hope you have understood the same and are ready to use this knowledge. Moreover, if you keep willing to stay tuned with the latest finance articles on core concepts of the stock market, make sure you stay tuned with us.