Both advantages and disadvantages are involved trading in the Indian stock market.
Online share trading is a well-accepted avenue of trading for many investors.
For short-term trading, two types of trading are involved.
1. Intraday Trading:
Buying and selling a stock within the same day. It entails that no positions are held overnight and all positions are exited within the market hours. You can receive margin benefits on intraday trading.
2. Delivery trading:
When you purchase the shares on one day, and hold the position overnight so you take delivery of them on the next day. In the Indian financial market, this is a widely preferred type of trading. The full price of the stock must be given, with no margin and the shares are deposited into the investors Demat account the next day.
What are the advantages of delivery trading:
You can hold positions in case you are undergoing a loss in the day that you purchased the securities, and exit the positions when the market opens the next day after performing your own market watch. On the other hand, delivery trading comes with a larger brokerage fee linked with it by most brokerage companies.
The securities transaction tax is larger on a delivery trade than on an intraday trade.
Shares bought with a delivery option can also be sold as an intraday trade, while the reverse is not factual.
Unlike margin trading, you pay the full price of the stock when taking part in delivery trading, which also means that the cost of investment increases in this form of trading.
You cannot short sell in delivery trading, which implies that you must actually hold the shares before you sell them. Your investment is also vulnerable to market crashes, business cycles and other factors that influence the stock markets.
Another benefit of delivery trading is that there is no time limit for selling the stocks that you hold.
It is necessary to make an informed decision and make sure you are aware of the type of trading you carry out in order to avoid losses.