In an intraday trade, both the legs of a transaction (buy and sell) are executed on the same day leaving the net holding position at zero. In a delivery trade, only one side of the transaction (buy or sell) is executed in one day. Let us look at the difference between intraday and delivery trading in more detail.
How are these trades executed?
When an intraday trade is executed, you have to specifically select the “MIS” option, whereas in the case of delivery trades, you need to select the “NRML” option. Both these trades can be executed through an online or offline trading platform. In both the cases, the trades will be visible in the trade account once executed with the appropriate tag.
Which margins should be paid for trading?
In case of intraday trading, the stop loss and profit targets are normally inserted at the time of trade itself. This enables the intraday trader to get higher leverage as the trade gets structured as a Cover Order. Delivery traders normally put the stop loss and set profit targets later based on price movements. The delivery buyer has to pay the full amount by T+1 morning, while the delivery seller has to ensure that the DIS for the sale reaches the broker by T+1 morning.
How are the trades settled?
The real difference between intraday trading and delivery trading is in the way trades are cleared and settled. In case of intraday trading, the trades are closed out on the same day so the profits or losses, if any, are either credited or debited to the trading account. In case of delivery, the buyer will have to pay the funds by T+1 and get the delivery in the demat account by the end of T+2. In case of delivery selling, the DIS has to be deposited with the broker on T+1 morning and the bank credit comes in by the end of T+2 day.
What is more profitable; intraday trading or delivery trading?
This largely depends on how you plan and execute the trades. Intraday trades are all about technicals, charts, and news flows. Delivery trades are based on fundamentals such as macros, industry attractiveness, company performance, etc. Intraday trades attract lower brokerage compared to delivery trades. Hence, the focus of intraday trading is more on churning capital, while the delivery trader looks for opportunities for growth or for long-term value.