Key Takeaways
- Intraday trading, or day trading, involves buying and selling securities within the same day to profit from short-term price fluctuations. It requires active monitoring and quick decision-making and relies heavily on technical analysis.
- Delivery trading, also known as positional trading or investing, involves buying stocks and holding them for an extended period to benefit from long-term growth potential. It focuses on fundamental analysis, requires less frequent trading, and aims for long-term wealth creation.
- Intraday trading offers the potential for quick profits but carries higher risk and involves margin trading. Delivery trading focuses on long-term investment, requires patience, and incurs lower transaction costs due to fewer trades. The choice between the two depends on individual investment goals, risk tolerance, and available resources.
What is Intraday Trading?
The other name for intraday trading is known as ‘day trading.’ This is a trading strategy in which the investors buy or sell their financial assets, such as – commodities, stocks, currencies, etc., within 24 hours or the same day. Intraday traders aim to profit by acknowledging the advantage of short-term market fluctuations.
Intraday trading is preferably based on technical analysis, in which traders use charts and other tools to find trends and patterns in the price movements of the assets. The investment amount required or needed for intraday trading is a small amount of capital.
Also, the brokerage fees required for this are low because of the quick turnaround time. And it has a high risk compared to that delivery trading.
What is Delivery Trading?
The other name for delivery trading is ‘positional trading’ or ‘investment trading’. This a trading strategy in which the investors buy or hold their financial assets, such as commodities, stocks, currencies, etc., for an extended period, for more than 24 hours or a day.
Delivery trading aims to make profits from the long-term assets they hold. Delivery trading is preferably based on fundamental analysis, in which traders use economic and financial data, such as – financial statements, economic indicators, industry trends, etc., to know undervalued assets.
The investment amount required is significant capital. And has a low risk compared to delivery trading with a high brokerage fee.
Difference Between Intraday Trading and Delivery Trading
- The holding period in intraday trading is for the same day itself, while compared to delivery trading, the holding period can be for more than one day.
- The purpose of intraday training is that it tries to book profit from short-term market fluctuations. At the same time, delivery trading aims to invest in long-term price appreciation.
- The investment amount required for intraday trading can be small, while, on the other hand, the investment amount required for delivery trading is higher.
- The risk involved in intraday trading is higher than the risk involved in delivery trading, which is low.
- The brokerage fees are low because of the quick turnaround time. Comparatively, on the other hand, the brokerage fees for delivery trading are high because of the holding period.
- In intraday training, market analysis requires technical analysis, whereas, comparatively, on the other hand, delivery trading requires fundamental trading.
- The margin required in intraday training is minimum, whereas comparatively, the margin needed in delivery trading is the full payment of the upfront investment amount.
- The exit strategies that can be used in intraday trading are – limit orders, stop loss, and profit booking based on targets. In contrast, the exit strategies that can be used in delivery trading are – profit booking or holding for long-term price appreciation.
Comparison Between Intraday Trading and Delivery Trading
| Parameter of Comparison | Intraday Trading | Delivery Trading |
|---|---|---|
| Holding Period | Same day | More than one day |
| Purpose | Acquiring profit from the short-term price fluctuation | Investment for the long-term price appreciation |
| Investment Amount | It can be small | It is a large sum of money |
| Risk | High | Low |
| Brokerage Fees | Low because the quick turnaround time | High because of the holding period |
| Market Analysis | It mainly requires technical analysis | It mainly requires fundamental analysis |
| Margin Required | It is possible to have high leverage and requires ow margin amount | It is the full payment of the investment amount required upfront |
| Exit Strategies | Limit orders, stop loss, and profit booking based on targets | Profit booking or holding for long-term price appreciation |
- https://www.sciencedirect.com/science/article/abs/pii/S1364032119304836
- https://royalsocietypublishing.org/doi/abs/10.1098/rsta.2019.0624
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Piyush Yadav