In this article, we will find out what is delivery in stock market? We will also see Delivery Trading, Intraday Trading, and some key features of both these trading methods.
In the stock market, ‘Delivery’ centers on purchasing stocks and then depositing them in investors’ Demat accounts. Thus, the investor who purchased those stocks becomes the stockholder unless he agrees to sell them.
To take ‘Delivery’ of shares, you’ll require adequate funds in your account. Two days later, after the purchase date. Your Demat Account will be credited with the shares you’ve purchased. Now in a small way, you’re a part-owner of the company (the company’s shareholder). You can keep these stakes in your Demat account unless you make up your mind to sell them.
How Delivery in Stock Market Works?
The day when you purchase a share is called the ‘Trading Day.’The next day is called Trading day 1; the delivery of shares you’ve purchased has been initiated but still left to reflect in your Demat account.
The day after, the next day is called T2; the shares will be visible in your Demat account.
In other words, if you buy shares on Monday, it will be reflected in your Demat account on Wednesday, provided there are no national holidays or bank holidays in between.
Read More: Stock Market Timings in India
Also, keep in mind that Saturdays and Sundays are holidays for the stock market. So initiate your purchases within weekdays and three days before weekends. So preferably purchase stocks or shares on Monday, Tuesday, or Wednesday’s respectively.
It is one of the most frequently used trading methods used by investors to carry long-term investments in the stock market. The main motive of this trading method is to focus on investment plans rather than just providing trading opportunities.
Delivery trading is a preferable method of trading because investors can easily pick shares based on a company’s intrinsic integrity and assess indicators like price to earnings ratios, book values, and so on.
Investors in delivery trading can easily access bonuses, dividends, rights issues, etc., that the company offers to their shareholders.
Read More: Stock Market Tips for Beginners
In this method of trading, the stocks are purchased and sold on the same day. Here stocks are bought with the motive of earning profits rather than just investing in them for a long tenure.
You must be careful in intraday trading and make sure that you sell the stocks you’ve purchased before the market closes, or else the shares bought by you would be squared off automatically at the end of the day.
Intraday trading is best for investors interested in low capital investment as fewer payments can be formulated within small margins. Intraday trading also reduces the risk arising due to the overnight holding of stocks. Thereby helping investors to leverage capital to earn high profits.
Advantages of Delivery Trading over Intraday Trading
1. Unlike intraday trading, delivery trading allows no time limit for selling stocks. This means investors can invest in the market with the intention of long-term investments.
2. Delivery market also diminishes the risk of short selling, which is a process of leasing shares to sell in the market and then purchasing them back before the trading day closes.
3. Delivery trading also provides investors high profits based on long-term investment in a particular company’s stock through various dividends and bonuses.
Well, I’ve just made you understand simple stock market terminology; many more terminologies must be familiar among investors.
If you are a neophyte investor or just have started investing in the market, then you must join a stock market course. The Thought Tree offers some of the best stock market courses.
Once you grasp the stock market basics, you can invest freely without facing any issues or difficulties.
In this article, we’ve discussed what is delivery in the stock market, how delivery in the stock market works, some trading methods, and some advantages of delivery trading over intraday trading.
I would strongly suggest you take a stock market course at The Thought Tree if you don’t want to suffer losses in the stock market and visit The Thought Tree to get equipped with the latest stock market updates.
I hope you found this article informative enough to clear all your doubts regarding the topic, What is delivery in the stock market.