With a proper plan in place and active risk-management, Delivery trading can be one of the effective ways to make long-term gains in the stock market.
There are several benefits of delivery trading; however, there are also certain charges you will need to consider before you begin.
Delivery trading is a term used to describe stock market investments wherein you hold shares for a limited period and sell them later with an aim to generate profit. With Delivery Trading, you get to invest in stocks for a term more than 1 day or you can choose to stay invested for a long term.
For example, let’s say you buy shares worth Rs.1000 of an XYZ company. Once the transaction is complete, XYZ shares worth Rs.1000 are credited to your Demat account after settlement. In delivery trading, you will have to hold these shares for at least a day or longer and sell them at a suitable opportunity. Unlike Intraday Trading, Delivery Trading doesn’t allow you to buy and sell shares on the same day.
This article will cover all about delivery trading and carve a path for you to get started. The advantages of delivery trading, the associated charges, and understanding the difference between intraday and delivery trading are also highlighted. Read on to learn more!
To start delivery trading, you must open a Demat & trading account with a stockbroker like Bajaj Broking.
Here are the steps you need to follow while opening your Demat and trading account with Bajaj Broking:
Once you have opened your Demat and trading account, you can start scanning for stocks you wish to invest in. Also, before investing you must look at the company’s past performance as well as its growth potential.
The charges associated with delivery trading vary from broker to broker. These charges include the following:
Your stockbroker will charge you a brokerage fee on all your transactions. This fee can be a fixed amount per order or variable brokerage based on transaction value of the order.
STT is a tax levied by the government on all trades through the stock market exchange.
These are additional charges imposed by NSE/BSE to perform the trade.
The Securities and Exchange Board of India (SEBI) levies a turnover fee of 0.00010% on all delivery trades.
Margin trading enables investors to purchase more shares at a lower price. Here, the broker pays the balance amount and charges an interest. The amount paid by the investor is called the margin.
Although intraday and delivery trading are different forms of market entry, they have similarities involving buying and selling stocks. But the primary difference between the two is that intraday traders buy and sell their stock within the same day and seek to profit from short-term price movements of stocks. On the other hand, delivery traders aim for long-term gains.
Intraday trading allows traders to take advantage of small fluctuations in stock prices without taking ownership of the underlying asset. Whereas delivery trading requires a longer-term view as it involves taking delivery of the shares and wait for its value to appreciate over time.
Delivery trading gives a lucrative opportunity for those looking to make long-term gains in the stock market. It involves a comparatively lower risk, and holds the possibilities of a higher returns. However, delivery traders must consider the various charges before they enter a trade.
You will need a Demat and trading account before you start delivery trading. Open your Demat and trading account with Bajaj Broking for free and save up to 99% of brokerage charges.
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