Understanding Intraday and Delivery Trading in Share Market

When it comes to the share market, understanding the difference between intraday and delivery trading is crucial. Whether you buy shares in a cash and carry delivery format and sell them on the same day, it will be classified as an intraday trade, not a delivery trade. This article will explore the nuances of both trading methods and help you navigate the complexities of the share market.

What is Intraday Trading?

Intraday trading is a type of trading where the shares are bought and sold within the same trading day. Unlike delivery trading, where the shares are held for a long-term period and transferred to your demat account, intraday trading focuses on short-term profits. When you buy and sell shares on the same day without holding them overnight, you are engaging in intraday trading.

What is Delivery Trading?

Delivery trading, also known as cash and carry, involves buying shares with the intention of holding them for a longer period. These shares are then transferred to your demat account. The primary goal in delivery trading is to take advantage of the long-term market trends and make consistent profits over a longer period.

Key Differences Between Intraday and Delivery Trading

The main difference between intraday and delivery trading lies in the holding period and the trading strategies involved. Here are the key distinctions:

Intraday Trading: Shares are bought and sold on the same day. Traders take advantage of short-term price movements for quick profits. Delivery Trading: Shares are bought with the intention of holding them for a longer period. The shares are then transferred to a demat account for long-term investment.

Buying Shares in Cash and Carry Format and Selling the Same Day

When you buy shares in a cash and carry delivery format and sell them on the same day, the transaction is classified as an intraday trade. This classification is based on the fact that the shares are not held overnight. Regardless of the initial purchase method, the trading in the same day determines the trade type.

Important Considerations for Trading

When engaging in trading, it's essential to consider the following:

Service Provider: Different brokerage firms have different terms and conditions. Always check the terms of your service provider to ensure you are trading according to their rules. Margin Benefits: If you buy shares in the intraday market (MIS), you may benefit from margin trading. In contrast, if you buy shares in the delivery market (CNC), you need to pay the full amount upfront. Safe Trading: For beginners, it's recommended to start with small quantities of shares (10-20) to understand the market dynamics and get a better calculation for larger quantities when you decide to trade in higher volumes.

Conclusion

Understanding the difference between intraday and delivery trading is fundamental in the share market. If you aim to engage in short-term trading and make quick profits, intraday trading is the way to go. Conversely, if you are looking for long-term investment opportunities, delivery trading is the best choice.

For expert advice, you can subscribe to services like CapitalVia Global Research Co., a well-renowned investment advisory firm in India. Whether you are a beginner or an experienced trader, staying informed about these trading methods will help you make more informed decisions in the share market.