What is Delivery Trading?

There are two major types of trading in the stock market – Delivery and Intraday. Do you know what is delivery trading? If not then let’s discuss this type of trading and will also go through the comparison of Intraday and delivery as well.

What is Delivery trading?

One of the types of trading in the stock market is equity delivery trading, also known as delivery based trading. In delivery trading, you can purchase certain stocks and keep them in your demat account for a period of time.

Once you buy the stocks and they have been transferred to your demat account, you can keep them for as long as you want in delivery trading. You own the shares you purchase outright and can sell them at a profit or loss at any time.

Fund Required for Delivery trading

After you understood what is delivery trading, You must need to know that to buy shares in delivery, you’ll need enough money in your account since no margins are provided by brokerage firms.

This is in sharp contrast to the other most popular type of stock trading, intraday trading, in which you buy and sell stocks within a single trading day and 2 times to 20 times margins are available.

Delivery trading Charges

You may be curious as to what equity delivery charges are. When you trade shares, you’ll be charged a range of fees, including service tax, stamp duty, and depository participant fees, among others. Every brokerage firm has its own charges mostly different from each other in case of delivery trading.

How to Place a Delivery Order?

Things to keep in mind for delivery trading

There are the most important things you follow in Delivery Trading:

Research

The phrase “don’t depend for your success on a single plan” applies to stocks as well. Never put all of your money into a single stock. When purchasing stocks, always try to create a diverse portfolio.

You should conduct research before selecting firms from a wide range of industries. Make a list of a few markets that you think are attractive, and then look for firms that trade in those industries.

Buying shares across different selection of businesses will favour you and you will gain if any good news comes for any of the businesses.

Patience

Since the stock market is so unpredictable, it can put your patience to the test on a daily basis.  There ‘s always the risk that the stocks you purchase will lose price. All stock values fluctuate on a regular basis.

If you see that the rates are falling don’t panic and sell your stock. There is no set time in which you would sell your stocks, which is a significant benefit of delivery-based trading over intraday trading.

If you stay calm, you’ll have a better chance of making money. The majority of traders wait until the shares have reached their cost price before selling.

Advantages of Delivery Trading

• Since there is no time commitment, you can keep the stocks when the market is down and sell them only when the markets are favourable.
• Some banks and finance companies will lend you money based on your stock. So, if you’re going through a tough patch, your stocks will actually be useful.
• If you notice that a business is profitable, they declare a dividend per share. Then, if you own stocks in these firms, you will receive dividends on each one.
• If you keep your funds in a deposit you can earn a maximum of 9% or 10% interest each year.If you invest the fund in stocks of the firms, nevertheless, you can expect returns of at least 15% or even can go up to 100 or 200%.
• If a firm makes a big profit, bonus stocks can be announced. If they announce a 1:1 ratio, you will be eligible for a free share of the stocks you already own.
• Long-term trading yields the highest returns in the stock market.

Disadvantages of Delivery Trading

• The most significant drawback of delivery-based trading is the increased commission charge. The brokerage fee for delivery-based trading is considerably higher than the fee for margin trading.
• Deliver-based trading requires you to pay the complete amount of the shares while margin trading allows you to acquire shares by paying only a portion of the share price. As a result, in the scenario of margin trading, you can purchase more shares while investing less.
• Short selling is never profitable in delivery-based trading, because you must hold the stocks before Short selling them.

Difference between Delivery trading and Intraday trading

Intraday Trading	Delivery Trading
1. Intraday trading is usually completed within a day.	1. There is no fix period for delivery trading
2. You just need to pay the margin instead of full money for trading.	2. You need to pay complete money for delivery based trading.
3.  It basically depends on technical indicators and news.	3. It basically depends on financial track record earnings ratio and book value.
4. You need to become an expert to do intraday trading.	4.  In delivery trading technical knowledge required.
5.  In Intraday trading No dividend or other advantage such as bonus, rights issue etc.	5. In Delivery trading, investors will get the benefit of everything dividend ,bonus, rights issue etc.
6. You can short sell intraday.	6. Short sell is not allowed in delivery trading in India.

Conclusion

Delivery trading mostly gives positive returns over a long period. However, most people do not like to hold stocks for long term as they sell them after a decent profit.

This is all from our side regarding what is delivery trading? Let us know your views in the comment section.