We have written a good article on intraday vs delivery trading. If you are not involved in long term investing or more precisely delivery trading, you can do intraday trading. This is where thousands of investors try to make a fortune every day. By following minute by minute variation in share prices.
There are two modus operandi you can trade in share markets. Either you can do delivery based trading (investment) or you can choose to intraday trading. Within a day, Intraday trading is generally finalized – it means that all the shares have bought by you have been sold on the same day before the closing of markets. Securities are automatically settled off earlier to market closing on same day. Whereas in delivery based investments, it is not obligatory to sell and purchase shares within a day and you can embrace them for as long as you need.
Pros & Cons
Intraday trading has few advantages too, the major one being that you can buy shares by paying only the margin money . The market makers permit you to pay only a chunk of the price to hold the shares. So, you can get benefit by investing less. It means that losses would be greater as well.
Intraday trading will let you short sell the shares – which means you can sell the shares before you even buy them (if you to buy those share before the market closes). It is one advantage that can generate you gain even when the value of the share is sure to fall.
The brokerage for intraday vs delivery trading comparatively lesser than that for .
One of the major shortcomings of intraday trading is the timing. So, if there is a loss on shares, you will lose money too. In long term investment you will have benefits like dividends, bonuses etc. As an investor has to monitor markets regularly it can turn out to be relatively traumatic. And with daily gains and losses, it can take a toll on a trader’s psychological wellbeing.
Selecting between Intraday Vs Delivery Trading
The trap of fast money sucks in the investors and they should stay away from Intraday trading. Intraday traders purchase shares based on intraday tips for just a few minutes or hours. However delivery traders might buy for months or years.
Now if you, as an intraday trader, you can judge the temper of share values at regular, small breaks, only then you should plan on intraday trading. You should be decent for the technical examination. There are numerous technical tools that help in forecasting short term share value movements.
If you think long term investing is better suited for you and you pick shares on the basis of assessing a company’s intrinsic value etc. Then you should choose delivery based trading.