Reviewed by Aug 27, 2020| Updated on
Delivery transactions do not allow an investor to buy and sell shares within the same day. The person can keep the shares in these transactions for a longer duration, depending on his / her willingness. The length will range from two days to even two or more decades. This process is called delivery trading.
You can hold your stock for a long period, if you believe in a company's business and economics and think the company is doing well. You can get the advantage of staying in the stock. Even if your stock has not done well for any cause in the short term, you don't need to book loss if you think the stock will do better in the long run. Also, the delivery risk is comparatively lower than intraday, where profit and loss are booked the same day.
The only concern is that you have to pay out the full amount of each share you need to buy stocks. Therefore, your funds must remain until you want to sell your stake.
Intraday Trading vs Delivery Trading
Through capital markets, you can trade in two different ways. You can transact intraday, or you can opt for delivery-based (investment) trading. Intraday trading is usually done within one day – which means you'll have to sell the stock you've bought the day before market closing. Even if the shares are not sold by yourself, they are automatically squared off before closing. On the other hand, you are not forced to buy and sell shares within a day in delivery-based investments, and you can keep them for as long as you wish.
Intraday Trading lures a person, but it isn't the cup of tea for everybody. An individual is required to track his / her position minute by minute. But, preferably, an investor who is not very happy with such an approach will stay away from the intraday approach. On the other hand, a trader who has a habit of making money quickly should ideally not get into delivery mode very often because the style needs patience that may not be present in traders.