Before starting with the trading, it is essential to get accustomed to the methods and the basics of delivery trading. Though a widespread way, it can also get a little overwhelming for traders at times.
What Is Delivery Trading?
Delivery trading does not give an option to buy or sell the shares on the same day. Delivery trading meaning is that the investors can hold the stocks and then transfer them into the demat account.
Delivery trading works without any time limit, which means you can sell the stocks anytime you desire. The trader has the full right to hold the shares according to his will.
To understand this better, let’s assume that you want to buy a stock worth ₹ 20,000, then you should have a cash limit of at least ₹ 20,000. In case you want to sell the share, you should have it saved in your demat account.
Delivery trading, although a famous option, can also get a little tricky at times. So, keeping a couple of delivery trading rules in mind can certainly help simplify the process.
Even if you are well versed with the concept of delivery trading, there still are some rules that you should learn and stick to. Make a checklist beforehand so that at every point and condition of trading, you remain prepared.
Always research properly before setting your foot in delivery trading only after making sure the process moves ahead.
In delivery trading, you need to have sufficient funds in your account. You cannot buy or sell your stocks until you have all the amounts in your account.
Always wait for the right time to sell your share to ensure that you don’t suffer any losses.
It is always advisable to set stop losses and targeted prices beforehand.
It is always beneficial to invest in various companies. Multiple companies will ensure your higher chances of benefit.
These are some delivery trading tips that you can follow if you want better results and profits. It does not matter whether you are a newbie or a known trader; more benefits will pour in with consistency and proper rules.
How To Do Delivery Trading?
Delivery trading is usually done when you want to go into long-term investments. In delivery trading, you buy a stock and hold it in your demat account.
You can buy or sell the shares after two days or even years. The decision is up to you. Unlike intraday trading, there is no compulsion to sell the stock on the same day.
You can wait for the right time to gain the maximum profit and then sell the stock. There is a requirement of funds in your account before you start trading your shares.
In delivery trading, you cannot buy shares without having sufficient funds.
There is also a higher chance of benefit if you figure out the right delivery trading strategy and then stick to it. Even if you are not finding a higher price to sell, you can wait for a more extended period to reach your target.
Delivery trading comes with a wide range of delivery trading charges as well. Let us have a look at all the charges.
Some of the charges associated with delivery trading remain fixed, whereas the others can vary from broker to broker.
One common task is the SEBI charge levied by the Security and Exchange Board of India. This charge helps in keeping an eye on the market and regulating it.
Delivery trading charges also include brokerage charges. These brokerage charges can vary from broker to broker. GST is another charge that is levied by the government on all the services that they provide.
The GST includes transaction charges along with the brokerage.
In 1899, the India Stamp Act let the government put stamp charges on the delivery trading. If the stock exchanges are transacting in instruments, the government must necessarily put some charges on it.
Along with this, STT/CTT and transaction charges are added to the delivery trading charges. Here are five top brokers and their delivery charges to make your work and understanding a little better.
Top Brokers And Their Delivery Charges
Rs. 20/ order
Delivery Trading Profit
The one question that arises before investing in any trade is the profit that it will generate. So, what about delivery trading profit?
Delivery trading is a long-term process when you compare it to intraday trading. You can buy shares and then sell them any time you want to. The delivery trading profit depends on the time and consistency you put into your claim.
Suppose you buy shares worth ₹10,000, then what probably is best for you if you want to gain subsequent profit is to wait for the right time to sell it.
You can also benefit from the bonuses or extras rolled out by the companies you have invested in. you are the sole owner of the shares and thus entitled to all the extra profit.
In all, delivery trading is profitable if proceeded with caution and a keen eye.
Margin or margin trading allows an investor to buy and hold more shares than is affordable. Brokers can provide you with some margin that will enable you to buy shares even when you are running short of the price.
When it comes to delivery trading, the margin provided is often low or negligible. The reason is that in delivery trading, the shares are with the investors for a longer duration.
The long-term factor can often cause loss to the brokers that hold them back from giving margins for delivery trading.
Margin For Delivery Trading
1X (no margin)
3X (24% interest/year)
Upto 3X (18% interest/year)
5X (Interest added)
Delivery Trading Advantages
With the growing popularity of delivery trading, there are a lot of advantages associated with delivery trading.
Apart from being an easy way to trade and comfortable to understand, other factors add to the immense popularity of delivery trading.
Now that you are familiar with the concept of delivery trading, let us discuss some of the advantages below.
The most significant benefit that comes along with delivery trading is the option to make long term investments.
Suppose you invest in a stock and hold it, and later that company or business gives you a positive result, you can continue to stay. But in case you don’t see any profit, you can easily step out.
The long-term quality of delivery trading is also helpful when you haven’t seen any benefits in short-term investments. You can always wait and look for the right time to sell your stock.
You cannot buy and sell the stock the same day when doing delivery trading. This property reduces the chances of risk in trading. Therefore, when we compare delivery trading to other forms, usually intraday trading, it is safer.
In delivery trading, you will be able to earn all the bonuses since you won the stock. Even when the company rolls out some bonus shares, you can claim them.
The profits in delivery trading are higher because you hold the stock until the right time and get bonuses rolled out by the company. Since you are the owner, you will have full profits, which can significantly increase the income.
Delivery Trading Disadvantages
Before starting any trading, it is essential to weigh all the sides and then pick one according to your own needs. With the whopping amount of advantages that come along with delivery trading, there are also some disadvantages.
As a trader, it becomes your responsibility to analyze the growth and potential benefit from every angle. Here are some disadvantages of delivery trading.
In delivery trading, you can only trade the stock when you have sufficient funds. The upfront payments can make it quite tricky sometimes.
In case you want to trade stock, but you don’t have the funds for it, there is a possibility that you might suffer a significant loss.
More Brokerage Charges
Another disadvantage of delivery trading is high brokerage charges. When you visit a stockbroker, it is possible that intraday trading will be much cheaper than delivery trading.
Delivery trading is a long-term and profitable option in the trading market. It makes the trader the sole owner of the shares and adds benefits rolled out by the company to the bag.
With the trader being the shares’ owner, when to sell the shares depends on your will. You can hold the share for two days or even two decades.
If you are a beginner or even someone acquainted with delivery trading, it becomes crucial that you stay persistent. Delivery trading is long-term, and patience plays an important role.
Your account should have sufficient funds to continue with delivery trading. Various charges levied on delivery trading include brokerage charges, SEBI charges, transaction charges, GST charges, along with STT and CTT.
In delivery trading, it is always beneficial if you invest in multiple companies. It is a safe option as even when your short-term investments fail, and you can hold the shares and then sell it at the right time.
Although the beforehand payments and high brokerage charges can be a hurdle in the process, there are still many advantages overshadowing this.
It works in a way that if you buy a share worth ₹ 30,000today, you should only benefit from it at the time that you sell it.
The best part is that you can hold your shares only when you have comfort and trust in the company. If you think that progress is not steady, then you can always discontinue.
Delivery trading is perfect if you are looking for investing and working long-term.
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