Intraday and delivery trading are two popular approaches in the stock market, each with distinct timeframes, objectives, risk profiles, and associated costs. Understanding the differences can help you choose the strategy that best suits your investment goals and risk tolerance.
Intraday trading
1. Definition: Intraday trading involves buying and selling stocks within the same trading day. Also known as day trading, the goal is to profit from short-term price movements. Intraday traders do not hold positions overnight.
2. Objective: Short-term gains by exploiting small price fluctuations within the trading day.
3. Time horizon: Trades are completed within the same trading day.
4. Risk level: Higher risk due to market volatility and the use of leverage.
5. Capital requirement: Lower, as brokers often provide margin trading facilities, allowing traders to control larger positions with less capital.
6. Returns: Potential for rapid returns within a single day, but with a higher risk of losses.
7. Transaction costs: Higher due to frequent trades.
8. Monitoring needs: Requires continuous real-time monitoring and quick decision-making based on technical analysis and market indicators.
9. Ownership: No ownership of shares is transferred since the trades are squared off by the end of the day.
10. Overnight risk: Eliminated as positions are closed before the market closes.
Delivery trading
1. Definition: Delivery trading involves buying stocks with the intention of holding them for longer
2. than a day. Shares are transferred to your demat account, making you the owner of the shares.
3. Objective: Long-term wealth creation, benefiting from a stock’s overall growth and potential dividends.
4. Time horizon: Shares can be held for days, weeks, months, or even years.
5. Risk level: Lower short-term risk compared to intraday trading, but subject to long-term market risks and potential depreciation of stock value.
6. Capital requirement: Higher, as full payment for shares is required.
7. Returns: Realized over time, potentially benefiting from capital appreciation and dividends.
8. Transaction costs: Lower per trade due to less frequent trading, but also involves demat charges and Securities Transaction Tax (STT).
9. Monitoring needs: Less intensive monitoring, typically relying more on fundamental analysis.
10. Ownership: Shares are transferred to the investor’s demat account, granting them ownership rights.
11. Overnight risk: Exposed to overnight risks from events that may impact stock prices after market hours.
If you’re using Alice Blue’s trading platform (like ANT Web or ANT Mobi) and you’ve initiated an intraday buy trade (using MIS product code), you can convert it to delivery (CNC) before the market closes. Here’s how you can generally do it:
1. Access your trading platform
Log in to your Alice Blue trading platform (ANT Web, ANT Mobi, etc.).
2. Locate your open positions
Navigate to the section where your current open trades are listed, usually labelled as “Positions” or “Portfolio”.
Look specifically for your intraday (MIS) trades.
3. Find the conversion option
Once you’ve identified the specific stock position you wish to convert, look for an option to “Convert”.
On the platform, this might be accessed by clicking on the position itself, or via an “Actions” menu (often represented by three dots) associated with the position.
4. Specify the quantity
Enter the number of shares you want to convert from intraday to delivery.
5. Ensure sufficient funds
Before proceeding, ensure your trading account has enough funds to cover the full market value of the shares you’re converting, as leverage used for intraday trading will no longer apply.
According to Torus Digital, SEBI requires a 50% initial margin for intraday trading, and you will need to pay the difference, or typically the remaining 50% of the transaction value, to convert to delivery.
6. Confirm the conversion
Review the details and confirm the conversion request.
You may see a pop-up or alert to confirm your decision.
7. Conversion cut-off time
Complete the conversion before Alice Blue’s specific cut-off time for intraday trades, which is usually a few minutes before market close.
Any unconverted or unclosed intraday positions will be automatically squared off by the system
If you don’t square off an intraday trade with Alice Blue by the end of the trading day, the system will automatically square off your positions, typically around 3:15 PM for equity and 3:25 PM for F&O, before the market closes. This automatic square-off can lead to potential losses, especially if the market moves unfavourably before the system executes the trade. Additionally, there may be auto square-off charges applied.
