What are various Delivery Trading Strategies?

Delivery Trading, quite simply, is the process of taking or delivering shares in a Demat Account. In other words, as a trader, you can buy or sell shares and do not have to square off your position on the same day but hold on to them for as long as you want. These transactions are settled according to the T+2 settlement cycles of the exchanges.

Conclusively, if you want to be successful in your delivery trading endeavor using an online trading app, it’s best to be aware of and formulate a suitable delivery trading strategy. Trading in the stock market and life is nothing but learning. Here are some delivery trading tips and strategies to aid you on your trading journey.

Delivery Trading Strategies

Let’s take a look at the different delivery-based trading strategies.

  • Start Investing Early

    This is an elementary aspect of investing and saving. All the investment gurus, and possibly concerning family members, were right about this. Investors who start early, inadvertently cultivate patience. They can strategize and plan their investments for the long term. As a bonus of being an early investor, you have ample time to learn from your mistakes and refine your trading process. Essentially, you should be investing a considerable chunk of your earnings every month.

  • Understand before you Invest

    Understanding the financial product or preferred investment avenue is essential, not only with your delivery trading strategy but also as a consistent financial practice. If your objective is to earn a profit through the shares of a business, it seems only reasonable to first understand what you’re getting into. Trading doesn’t work plainly as a stroke of luck.

  • Feelings and Finance don’t belong together

    The fact of the matter is that trading can arouse a lot of volatile emotions. But, you cannot let your emotions get ahead of your rational mind. Decisions in trading need a sound mind and careful analysis, not impulsive or emotionally charged calls.

  • Maintaining Positive Cash-flow

    Positive cash flow implies that you have more incoming cash than you have outgoing. The vice versa is negative cash flow. A large part of good financial health is a blanket goal of maintaining a positive cash flow.

  • Diversify trading investments

    Diversification is nothing but investing in a host of different groups, industries, and products. Diverse trading investments will respond differently to the market thus reducing risk concentration. While risk is inevitable in the stock market, diversifying can help you control or reduce that risk. As the saying goes– don’t put all your eggs in one basket.

  • Trade Confidently

    Tweaking your delivery trading strategy little by little is a more sensitive measure than upturning your portfolio entirely. If you are patient, consistent, and confident, you should be able to reach your financial goals.

Types of Delivery Trading Strategies

The different types of delivery trading strategies include:

  • Growth Investing

    A growth investment trading strategy indulges in the stock of businesses that look to grow at a rapid pace, either through specific plans, economical growth, or both. The crux here is to study the companies and identify one whose financial and operational metrics point towards potential expansion in a relatively short time.

    Such investors would go for young start-ups or small to mid-sized companies that are all set to escalate performance. While valuing stock, growth investors should keep in mind:

    1. Historical performance analysis
    2. Scope of growth
    3. Return on assets
    4. Profit margins
    5. Share price efficiency
  • Value Investing

    Value investing is a strategic delivery trading approach where investors select stocks that trade at lower prices than their underlying book value. Simply put, value investors pick the stock that the market underestimates. With intensive financial analysis, such investors make informed choices. Some of the most well-known names in the stock trade– Warren Buffet and Rakesh Jhunjhunwala, are value investors.

  • Buy and Hold

    If you are looking to hold a portfolio for the long-term with stability as a prerequisite, this particular delivery trading strategy is for you. Short-term fluctuations in the market are irrelevant to the Buy-and-Hold investor as long-term gains are inevitable.

Being aware of various delivery trading strategies is just the beginning, it’s time to put it into action. However, a prerequisite to delivery trading is to maintain vigilance and consistency throughout the trading period. Happy investing!