The intraday and delivery trading are two different types of stock trading options. Intraday trading is the process of buying and selling shares in a single day. In contrast, delivery trading means buying and selling shares for a long period, basically more than one day. In this blog, we will guide you through the process of converting intraday to delivery trading and provide a differentiation between these two.
Definition at a Glance: Intraday to Delivery Conversion
| Term | Meaning |
| Intraday to Delivery Conversion | Changing an open intraday trade (intended for same day square-off) into a delivery trade that you can hold beyond the trading day |
| Why it matters | Allows you to hold stocks long term, receive dividends and bonuses, and avoid compulsory square-off |
| Key consideration | Full margin/payment is needed as delivery requires higher funds compared to intraday leverage |
Intraday Trading vs. Delivery Trading: The Difference
Before converting intraday to delivery, you need to know the basic difference between these two types of trading. The below table provides a comparison between intraday trading and delivery trading:
| Aspects | Intraday Trading | Delivery Trading |
| Approach | You must perform technical analysis for decision-making. | You do not have to monitor the market frequently. |
| Time-frame | You have to buy and sell the stocks in a single day. | You can buy and hold stocks for more than one day. |
| Capital Required | Traders need low capital to perform intraday trade because they can benefit from a margin that boosts the position size. | You should have sufficient capital to cover the purchase of shares. |
| Estimated Returns | You can get more returns even since you invest with low capital because of the leverage involved. The profit depends on daily price fluctuations. | Holding shares for a longer period will allow you to avail more dividends along with market returns. This increases your probability of getting high returns from your investments. However, the impact of long-term price movements affects profitability. |
| Risk | You might face high risk due to market volatility. | You can face less risk impacting market volatility due to the long-term. |
| Dividends | You cannot avail dividends or bonuses. | You will get dividends, bonuses, and even voting rights. |
Intraday vs Converted Delivery vs Fresh Delivery
| Aspect | Intraday (MIS/Intraday) | Converted to Delivery | Fresh Delivery (CNC/NRML) |
| Holding Period | Same day only | Can hold for days, months or years | Can hold for days, months or years |
| Funds Required | Very low margin (high leverage) | Requires paying remaining margin to convert | Full amount upfront |
| Eligibility for Dividends/Bonus | No | Yes | Yes |
| Square-off | Auto square-off by broker if not closed | No auto square-off | No auto square-off |
| Risk Level | High due to leverage | Medium | Depends on market movement |
| Purpose | Short term price movement | Extending an existing position | Long term investing |
How Can I Convert Intraday Positions to Delivery?
Here is a step-by-step guide on how to convert from intraday to delivery positions:
Step 1: Open your stockbroker’s website or mobile application and log in to your account.
Step 2: Navigate to your portfolio section and choose the stocks you want to convert to your position.
Step 3: Enter the number of shares you intend to convert.
Step 4: Now you have to convert your intraday position to delivery.
Step 5: Your position will be changed once you have selected this option.
What are the Charges Included in the Conversion of Intraday Positions to Delivery?
You do not have to pay any intraday to delivery conversion charges. However, the Securities and Exchange Board of India (SEBI) requires a 50% initial margin of the transaction value for this conversion. For instance, you are trading shares worth ₹50,000 in intraday with a margin of ₹25,000. In this case, you have to pay an additional margin of ₹25,000 to convert your intraday positions to delivery.
Key Takeaways
- You can convert an intraday (MIS) position to delivery (CNC/NRML) through your broker’s trading app or web platform
- Delivery requires full funds, so ensure your account balance covers the required margin
- After conversion, you can hold shares long term, get dividends and bonuses
- Always convert before your broker’s cut-off time to avoid auto square-off
Final Thought
Converting intraday to delivery position can be essential depending on your trading requirements. Holding stocks for a long period allows you to earn dividends from particular stocks along with market returns. It also gives you ample time to conduct technical analysis and buy and sell shares accordingly.
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