Delivery Margin in Stock Market | Difference Between Margin and Delivery

What is the Delivery Margin in the Stock Market?

Delivery Margin in Stock Market

Investors aim for achieving high returns from their invested money in the stock market. However, they need to know the techniques of investing correctly, to gain enough profits from their purchased shares. Delivery and margin are two different modes of share trading, about which traders need to have a clear idea.

Basic Information about Delivery Trading

Delivery trading is conducted by receiving the purchased shares in the Demat account of a trader in the Indian stock market. The ownership of these shares are automatically passed to the trader, to whose Demat account shares are transferred. Hence, the shares can be held back according to the convenience of the previous owner in the delivery trading. The profits of traders depend on the long-time movements of the prices of their purchased shares in this type of trading.

Important Details of Margin Trading

Margin trading is also known as intraday trading in India, where traders can buy more shares than their affordable range. This type of share trading is popularized by many share brokers, who like to refer this trading style to their clients. It is more preferable to traders, as they can earn a large amount of money in a short time. Its processing time is now made shorter, due to the huge popularity of this trading. Traders borrow money from their share brokers to buy many stocks, which can be used as collateral for the borrowed amount. Traders should ask their brokers to open margin accounts for them. A certain sum of money should be paid to brokers to open margin accounts, which compensates the loss of a broker if his client faces a huge loss in trading and cannot repay the borrowed amount.

Difference Between Margin and Delivery trading

Share Prices

Traders must mention the targeted prices of their shares, to prevent losses in margin trading. There is very little scope of quitting the market when the share price rises to a higher point in margin trading. On the contrary, traders do not need to mention their desired prices in the case of delivery trading. They get enough scopes of quitting the trade or revaluate their share prices.  

Volume of Shares

In margin trading, traders need to pay attention to the volume of shares to be purchased or sold. When the volume of the shares of a company is high, it means there are high demand and a steady supply of those shares, ensuring better profit for shareholders. Thus, margin traders need to square off these shares that are in high volume, to prevent loss if the price drops in the future. However, delivery traders do not need to bother about squaring off their shares and they can purchase even shares of low volume. Since it is a long-term trade, investors can sell their shares whenever they find the targeted price.

There are some technical pointers in margin trading that determine the prices of shares, with the help of graphs and statistical calculations. On the other hand, the basics of delivery trading are decided according to the detailed analysis conducted by company experts, as per the financial condition of that company.

By, Nifty Trading Academy