- Every trader or investor will dream big to make money in the stock market, just like other personalities such as Warren Buffet.
- There is no rocket science to making money in the stock market, as all we will need is persistence.
- Long-term investing is the best way to make money from the stock market, but it is not everyone’s cup of tea.
- If an individual is not interested in long-term trading, then you can consider intraday trading.
- This is the place where millions are making fortunes.
Types of trading
There are two ways to trade in the stock market.
They are as follows:
Intraday trading
In this type of trading, an individual will buy and sell the shares on the same day during market hours.
Delivery trading
- In delivery trading, an individual is not required to buy and sell the shares within the very same day.
- In these transactions, individuals will hold the shares for a longer period of time that will depend on their willingness.
- This duration will also range from two days to even two decades or even more.
Advantages of intraday trading
Intraday trading is both easy and risky.
Some of the advantages of intraday trading are as follows:
Allowed to buy the shares on margin
- The market makers will allow the trader to pay only a part or a full price.
- This will allow the trader to technically gain more by investing less.
Allowed to short sell
- If the individual believes that the price of the stock might fall during the day, he may first sell the shares, even without buying them in the first place.
- Later, during the day, depending on the profit, the trader can buy the stock at a lower price so as to book the profit.
- This type of trading, at times, becomes part of derivatives trading.
Catch the price trends early
- One of the key advantages of intraday trading is that when there is a price correction or an upward trend in prices, you might be able to catch the wave early.
Disadvantages of intraday trading
After looking at the advantages, let us discuss some of the disadvantages.
The disadvantages of intraday trading are as follows:
Time frame
- You should remember that the market cannot be timed, and you cannot predict things irrespective of the tools you use.
- Thus, if the stock ends up moving in the opposite direction to what you anticipated, then you cannot hold the stock for the next day as the position is to be cut off automatically.
- Hence, you will have to book the losses, come what may.
No dividends and other benefits
- In intraday trading, you will not hold the stocks, and so you are not entitled to a dividend.
- You will not receive other benefits such as bonuses, rights issues, or stock splits.
Required to be monitored closely
- A trader will have to monitor the market minute-by-minute.
- Intraday trading, at times, becomes a full-time job.
Advantages of delivery trading
Delivery trading comes with several benefits.
They are as follows:
Holding stocks for the long term
- If you believe in the business as well as the fundamentals of the company and also believe that the company performs well, then you will be able to receive the benefit of staying invested in the company.
- Also, if the stock could not perform well in the short term for any reason, then you might not need to book a loss if you believe that the stock will perform well in the future.
Safer than intraday
- The risk in delivery trading is comparatively lower than that in intraday trading.
- The reason here is because in intraday trading, profits and losses are booked on the very same day.
Disadvantages of intraday trading
With advantages will come some disadvantages.
The main disadvantages are as follows:
Blocking of funds
- You will need to buy the stocks by paying the full amount of each share.
- Due to this, your funds will be there until you decide to sell your holding.
Which one is right for you?
- The above text gave you the differences between delivery trading and intraday trading.
- As per the experts, long-term investments will bring you better rewards than intraday trading.
- Long-term investment or delivery trading is best for those who don’t take time to review their portfolio on a daily basis.
- However, those who are strong in technical analysis, are quick to read chart patterns, and have a lot of spare time can consider intraday trading.
- No matter what you choose, you need to have a strong foundation, be it fundamentals or technical.
- This will help you avoid losses if you do not make a profit.
Conclusion
Trading is the easiest job, but for that, you will require good technical skills and knowledge.
Frequently Asked Questions (FAQs)
Q1) Is it okay to convert intraday to delivery?
Yes, it is ok, and you will need to pay the difference in margin, which is typically 50% of the invested amount.
Q2) Which is better, intraday or options?
Intraday trading will involve high volatility and risk, while options will offer potential rewards through capital leverage and exposure to underlying assets while also involving risks.
Q3) Why is intraday not profitable?
At times, due to a lack of trading discipline, intraday trading is not possible.
Q4) How risky is intraday?
Intraday trading is a high-risk activity as it will involve buying and selling securities within the same trading day.
Q5) Is intraday trading luck?
Intraday trading is not simply luck but will also require analysis.
About Us
Nifty Trading Academy is our academy, where we teach you about the stock market as well as technical analysis. We also provide live market trading and upload blogs for it.