Uploaded on Dec 1, 2020
PPT on Intraday vs delivery Trade in terms of Taxes.
Intraday vs delivery Trade in terms of Taxes.
Intraday vs delivery Trade in terms of Taxes INTRODUCTION • The distinction between intraday and delivery trading is that intraday trading is buying and selling shares during a single trading day and your exchange becomes a delivery trade because you do not square off your position. • For intraday and delivery-based dealing, techniques vary. Source: www.fincash.com INTRADAY TRADES • Within a trading day, i.e. on the same day, intraday trades require buying and selling a stock. • Under such brokerage schemes, if you do not square your position by the end of the day, your shares will be sold automatically at the day's closing price. • So confirm Automatic Squaring Off with your broker. Source: www.kotaksecurities.com HOW IT WORKS? • By setting a price target for a stock and purchasing it if it is trading below your target, several traders start an intraday trade; they then sell the stock until it hits the target. • Or if they fear that before the market closes for the day the stock will not meet the target, the intraday traders sell it at the best price possible. Source: www.kotaksecurities.com ADVANTAGES OF INTRADAY TRADES • Low Capital: When taking positions, intraday traders also use margin funds. This way, though paying just a small sum upfront, they get to put a greater trade. • Strong liquidity: Dependent on price volatility, the small timeline often helps traders to book gains easily. Source: www.financialexpress.com ADVANTAGES OF INTRADAY TRADES CONT. • Low brokerage: Traders typically bill intraday trades for smaller fees relative to distribution trading. • No overnight risk: trades are squared off here before the close of the market. Source: www.kotaksecurities.com DISADVANTAGES OF INTRADAY TRADES • Loss risk: The trader could suffer losses if the stock shifts adversely during the trading day. • Constant monitoring: One must closely watch market fluctuations to gain as an intraday trader. • No corporate benefits: No stocks are delivered by intraday dealers. Source: www.businessinsider.com DELIVERY TRADES • The stocks you buy are added to your account in distribution transactions. • When you wish to sell them, they will remain in your hands, which could be in days, weeks, months or years. • You enjoy absolute control of the stocks. Source: www.kotaksecurities.com ADVANTAGES OF DELIVERY TRADES • No time limit: For as long as they want, distribution traders are able to hang on to stocks. • Losses are limited: Traders pay the entire value of the stock up front when acquiring shares for distribution. • Corporate Benefits: Traders become part-owners of the company after taking delivery of shares. Source: www.livemint.com DISADVANTAGES OF DELIVERY TRADES • Low liquidity: Distribution traders are losing out on margin financing benefits. • No leverage: In their deals, distribution traders are constrained by the amount of money they currently have. Source: www.economictimes.com HOW APPROACH DIFFER FOR INTRADAY AND DELIVERY TRADES • Trading Volumes: • For intraday trades, experts advocate sticking to larger stocks. • As a key intraday trade measure, analysts still use trading volumes. • Price levels: • Setting pricing targets and avoiding losses allows to make the best of these possibilities. Source: www.kotaksecurities.com
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