Different types of Share trading

Day trading and Delivery trading (it is also called as investing) are the two main types of share trading.

Day trading :

Buying and selling of shares on daily basis is called day trading; this is also called as Intraday trading. Whatever you buy today you have to sell it today OR whatever you sell today you have to buy it today and very importantly during market hours that is between 9.15 am to 3.30 pm (Indian time).

In day trading, brokers provide margin to do trading. Means you get extra amount for day trading. Suppose if you have 10,000 rupees in your account then you can buy and sell shares worth rupees 40,000(four times more – basically margin amount depends on your broker).

So if you use margin amount for day trading then you have square off your shares before market closes irrespective of share price or whether you are making loss or profit.

Please note - If you don’t use margin amount and trade only with your available amount then no need to square off your positions.

For example if the you buy some shares and the share prices falls then you can hold them and take delivery and sell them whenever the share prices increases.

Important note - New comers should not start by day trading as it is very risky.

Delivery Trading :

In Delivery Trading, as the name say, you have to take the delivery of shares and after getting these shares in your demat account you can sell them at anytime (or you can hold them till you want, there is no restriction).

In delivery trading you need to have the amount required to buy share in other words you don’t get margin amount as you get in day trading

For example - If you want to buy 10 shares of Reliance at price 1200 than you must have (100x1200) Rs 12,000 in your account; once you purchased these shares will get deposited in your demat account (after trading day and 2 additional days). Then you can sell these shares when the price of these shares goes up or else you can hold them as long as you want.

Please Note - First you have to buy and sell. You can’t sell before buying in delivery trading while it’s possible in day trading which is called as short selling.