20 May 2024
4 min read
Every trader or investor dream of making big money in the stock market, similar to personalities like Rakesh Jhunjhunwala or Warren Buffet. But only a few actually managed to achieve it.
There is no rocket science behind understanding the fundamentals of a company; what matters is persistence. Well-known investors like Warren Buffet or Mark Mobius stay invested in their portfolios for a long period, decades even.
While this type of long-term investment isn’t everyone’s cup of tea, it still gives you the expected returns. But this doesn’t mean that you won’t be able to make money in the short run.
Individuals who are not interested in long-term investing can consider intra-day trading. This is the place where millions of investors try to make a fortune every day by tracking the market very closely, minute by minute.
However, before you, as an individual, venture into the stock market, let’s understand the background of trading.
Types of Trading
An individual can trade in two different ways in the share market – delivery or intra-day.
Intraday Trading
In intraday trading, an individual buys and sells shares on the same day during market hours.
Delivery Trading
In delivery transactions, an investor is not required to buy and sell shares within the same day. In such transactions, the individual can hold the shares for a longer-term depending on his/her willingness. The duration can range from two days to even two decades or more.
📣 IPOs to look out for
Companies | Type | Bidding Dates | |
| SME | Closes Today | |
| SME | Closes Today | |
| SME | Closes 17 Sep | |
| SME | Closes 18 Sep | |
| Regular | Closes 18 Sep |
Advantages and Disadvantages
Intraday and delivery have both pros and cons of their own. Let us see the advantages of intraday first –
Advantages of Intraday
- Allowed To Buy Shares On Margin
The market makes allows an individual to pay only a part of the full price; thus, a trader can technically gain more by investing less.
- Allowed to Short Sell
If an individual believes that the price of a stock is likely to fall during the day, he may sell the shares without even buying in the first place or holding from previous transactions.
Later, during the day, depending on the profit, the individual can buy the stock at a lower price to book profit. Note that it forms a part of derivatives trading. To know more about this, click here.
- Catch The Price Trends Early
One of the key advantages of intra-day trading is that when there is a price correction or upward trend in prices, you can catch the wave early.
For instance, you purchased a share of company XX in the agri-sector today. And during market hours, Government makes a favourable announcement for the agricultural sector. This could be an increase in MSP, reduction in import duty of raw materials (required for fertilizers or some subsidies for the companies in the industry. Then the stock reacts positively, and the prices surge. Intra-day traders can make quick money by selling the stocks before the prices come back to range-bound.
Disadvantages of Intraday
- Time Frame
Remember, the market can’t be timed, and you can’t predict things irrespective of the tools you use. Thus, if the stock moves in the direction opposite to what you anticipated, you can’t hold the stock for the next day as the position is cut off automatically. Thus, you will have to book losses come what may.
- No Dividend Or Other Benefits Such As Bonus, Rights
In intraday trading, you do not hold the stock as on the record date of the dividend, bonus, rights issue and stock split.
- Required To Be Monitored Closely
An individual is required to track the minute-by-minute market.
Advantages Of Delivery Trading
- Holding Stocks For Long-term
If you believe in the business and fundamentals of a company and believe the company performs well, you can benefit from remaining invested in the stock. Also, if your stock didn’t perform well in the short term for any reason, you don’t need to book a loss if you believe the stock can do well in the long run.
- Safer Than Intraday
The risk in delivery is comparatively lower than intraday, where the profit and loss are booked on the same day.
Disadvantages of Delivery
- Blocking Funds
You need to buy stocks by paying the full amount of each share. Thus, your funds are until you decide to sell your holding.
Which One Should You Go For?
So, this was the key difference between delivery and intraday. According to many market experts, long-term investment gives better rewards than intra-day trading.
Long-term investment or delivery could be a useful investment strategy for those who have less time to review their portfolio on a daily basis.
However, those who are strong in technical analysis and are quick to read chart patterns and have a lot of time to spare can consider intra-day trading.
Whichever choice you make when it comes to the stock market, know your ground, be it fundamentals or technicals. It helps to avoid losses if not make a profit.
Disclaimer: This blog is solely for educational purposes. The securities/investments quoted here are not recommendatory.
Check More Stocks
Share Name | Annual Revenue (in Cr) | ||||
2019 | 2020 | 2021 | 2022 | 2023 | |
Uttam Sugar Shares | 474 | 530 | 462 | 606 | 520 |
PFS Shares | 194 | 200 | 193 | 202 | 204 |
Cupid Shares | 43.49 | 35.2 | 36.45 | 40.78 | 65.88 |
Airan Shares | 27.34 | 26.06 | 24.78 | 27.25 | 26.22 |
Kothari Sugar Shares | 130 | 213 | 165 | 117 | 136 |
Alembic Ltd Shares | 33.05 | 39.16 | 39.47 | 80.15 | 41.55 |
Advik Capital Shares | 229 | 153 | 163 | 210 | 323 |
Manali Petro Shares | 244 | 339 | 308 | 279 | 212 |
BGR Energy Shares | 258 | 132 | 146 | 236 | 473 |
Man Industries Shares | 672 | 609 | 494 | 1039 | 847 |
Disclaimer
The stocks mentioned in this article are not recommendations. Please conduct your own research and due diligence before investing.Investment in securities market are subject to market risks, read all the related documents carefully before investing.Please read the Risk Disclosure documents carefully before investing in Equity Shares, Derivatives, Mutual fund, and/or otherinstruments traded on the Stock Exchanges. As investments are subject to market risks and price fluctuation risk, there is noassurance or guarantee that the investment objectives shall be achieved. Groww Invest Tech Pvt. Ltd. (Formerly known as Nextbillion Technology Pvt. Ltd)Ltd. do not guarantee any assured returns on any investments. Past performance of securities/instruments isnot indicative of their future performance.
