Intraday vs delivery: A quick comparison
Intraday trades and delivery trades are two common approaches to trading in the stock market. Here is a quick comparison of these trading styles:
Aspect
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Intraday Trading
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Delivery Trading
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Time horizon
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Trades are completed within the same trading day.
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Stocks are held for a longer period, ranging from days to years.
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Objective
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Focuses on quick profits by exploiting short-term market movements.
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Aims for long-term growth by investing in fundamentally strong stocks.
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Risk level
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High risk due to market volatility and leverage usage.
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Lower risk compared to intraday, but subject to overnight and long-term market risks.
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Capital requirement
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Requires less capital due to leverage provided by brokers.
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Requires higher capital as full payment for shares is needed.
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Returns
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Potential for rapid returns within a single day but with higher risk of losses.
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Returns are realised over time, often benefiting from dividends and corporate actions.
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Transaction costs
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Higher due to frequent trades, including brokerage and taxes.
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Lower as trades are less frequent, but delivery involves additional costs like demat charges.
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Monitoring needs
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Demands constant attention during trading hours for quick decision-making.
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Less active monitoring needed; suitable for investors with limited time.
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Skill requirement
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Requires advanced technical analysis skills and real-time decision-making ability.
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Relies on fundamental analysis and long-term market understanding.
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Overnight risk
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No overnight risk as positions are squared off before market close.
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Exposed to overnight risks like global events or company-specific news affecting stock prices.
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Stress level
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High stress due to fast-paced trading and constant monitoring of market movements.
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Relatively lower stress since it involves a more relaxed, long-term approach.
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Liquidity
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High liquidity as intraday trading focuses on highly liquid stocks for easy entry/exit.
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Liquidity depends on the stock held; less relevant as stocks are held long-term.
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How should your approach differ for intraday and delivery trades?
When it comes to trading in the stock market, adapting your approach based on the duration of your trades is crucial. Here is a breakdown of how your strategy should differ for intraday and delivery trades:
Trading volumes:
Trading volume indicates how often a company’s shares are bought and sold in a day. Stocks of popular, large-cap companies tend to have higher volumes, making them ideal for intraday trades due to easier entry and exit. Low-volume stocks may be harder to sell quickly or at desired prices. For delivery trading, lower liquidity can be tolerated, as long-term investors can wait for favourable price points.
Price levels:
Setting price targets and stop-loss levels is crucial—especially for intraday traders—to manage risks and maximise gains in a short window. Missed opportunities may not return in the same day. Delivery traders, however, can extend their investment timeline, revise targets upward, or wait out losses, offering greater flexibility in price movement management.
Investment analysis:
Intraday trades rely heavily on technical indicators or short-term events to predict price movements. These methods focus on trends and patterns, not the company’s fundamentals. Delivery trading, on the other hand, depends on deep fundamental analysis of a company's financial health, industry position, and long-term growth potential, making it suitable for patient, informed investors.
Common mistakes in trading and tips to avoid them:
Options traders often err by skipping foundational knowledge—like “Greeks” or volatility effects—and overleveraging. Such habits raise risk significantly. Always study the mechanics of options trading and use simulations first. Avoid buying during high IV, as post-event crashes can offset gains. Avoid holding options too close to expiry due to time decay. Lastly, don’t sell uncovered options without understanding unlimited risk—defined-risk strategies are safer.
Utilising fundamental and technical analysis for trading:
Fundamental analysis helps identify long-term potential by reviewing financials and market conditions. In contrast, technical analysis uses price patterns and trading indicators to pinpoint short-term trends and entry/exit opportunities. Combining both allows traders to spot quality stocks with timing precision—like buying a fundamentally strong stock during a temporary technical dip.
Conclusion
Choosing between intraday and delivery trading depends on individual preferences, risk tolerance, and investment goals. Intraday trading suits those seeking quick profits through short-term market movements, while delivery trading is for investors looking for long-term growth and a more relaxed investment approach.
