Introduction
Trading has become a major means of earning a living worldwide. This is mainly because there are plenty of options when it comes to trading facilities or varieties. This includes trading practices like intraday trading and delivery trading. Delivery trading can be classified as a long-term investment strategy, while traders who do not want to indulge in long-term investing can try their hands on intraday trading.
Intraday trading boasts of the involvement of numerous investors who buy and sell securities on the same day within a specific time bracket. Delivery trading, on the other hand, is all about investing in the long-term potential of an asset, without having to constantly monitor or track the everyday movement of the market.
Here, we will be looking at the major differences between intraday trading and delivery trading.
Difference Between Intraday and Delivery Trading
Here’s a look at the major differences between intraday and delivery trading
Aspects
Intraday Trading
Delivery Trading
Meaning
Intraday trading involves the buying and selling of shares on the same day during specific market hours.
Delivery trading involves the buying and selling of securities without the time restrictions that exist in intraday trading and where traders can hold shares for a longer term whether for two days or more than two decades.
Safety
Intraday trading is riskier without a doubt as trades need to be carried and closed out in a single day and the profit potential is subject to the market volatility on that particular day.
Delivery trading is a less risky method to trade as the investment is long-term and does not get as affected by the daily fluctuations of the market.
Holding Period
In intraday trading, the holding period is solely dependent on an investor’s ability to buy/sell stocks to make quick profits while keeping in mind the market volatility of a particular day. Stocks cannot be held till the next day as the position gets cut off automatically.
Remaining invested in a particular company’s stocks for the long term can end up producing higher returns. The holding period of delivery trading can range from 2 days to more than 2 decades.
Advantages and Disadvantages of Intraday and Delivery Trading
To know which between intraday trading and delivery trading might be the best fit for you as an investor, here’s a look at the pros and cons of both these trading methods.
Advantages of Intraday
Traders can participate in intraday trading by using leverage to attain a higher position and increase their profit potential
For experienced traders, intraday allows short-selling which is the practice of selling stocks when traders anticipate that their price will fall during the day, and then buying it back when the actual fall happens.
Intraday trading enables traders to get insights into any potential price corrections or upward price trends in prices earlier than other trading methods.
Disadvantages of Intraday
Intraday trading does not provide any extra benefits like dividends or bonuses, apart from the profit a trader makes during a trade
Intraday trades need constant monitoring and quick decision-making abilities to capitalize on minute-by-minute market movements.
Advantages Of Delivery Trading
For investors who truly believe in a company’s business and fundamentals staying invested in it could lead to the generation of high profits in the long run.
Delivery trading is less riskier than intraday since it does not depend much on the everyday fluctuations of the market
Apart from the profit that a trader might acquire upon selling the stocks of a company, they also have the opportunity to earn extra through the dividends or bonuses that companies hand out to their shareholders regularly.
Disadvantages of Delivery Trading
One of the main disadvantages of delivery trading is that till the time the trader decides to sell the stocks they have invested in, their funds are locked in for the entirety of the holding period.
Conclusion
Intraday trading and delivery trading both have their fair share of advantages and disadvantages. This is why it is important for traders to consider everything before they decide to indulge in a specific trading method.
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