Introduction to Delivery Trading and Its Benefits
Introduction to Delivery Trading and Its Benefits
Blog Article
Delivery trading is one of the most common types of stock trading where investors buy securities and hold them for an extended period. Unlike intraday trading, where stocks are bought and sold on the same day, delivery trading allows investors to own the shares outright. In this article, we will discuss the basics of delivery trading, how it works, and the benefits it offers to investors.
What is Delivery Trading?
In delivery trading, an investor buys stocks from the market with the intention to hold them for a longer time, typically ranging from a few days to several years. When you buy shares through delivery trading, you receive physical ownership of the stocks. The shares are credited to your demat account and remain there until you choose to sell them. This is different from intraday trading, where traders buy and sell stocks on the same day to capitalize on short-term market movements.
Key Benefits of Delivery Trading
- Long-Term Investment: One of the main advantages of delivery trading is that it allows you to invest for the long term. By holding onto stocks, you have the potential to benefit from long-term capital appreciation and dividend income.
- Dividends: Investors holding shares through delivery trading are eligible to receive dividends. These dividends are a form of profit distributed by companies to shareholders, providing a steady income stream for long-term investors.
- Lower Risk: Unlike intraday trading, delivery trading usually involves lower risk because it doesn’t rely on short-term market fluctuations. Instead, investors hold onto stocks and ride out the ups and downs of the market.
- Ownership of Stocks: With delivery trading, you actually own the shares, which gives you voting rights in company decisions, something intraday traders do not experience.
- Tax Benefits: Holding stocks for over a year through delivery trading qualifies for long-term capital gains tax, which is typically lower than short-term capital gains tax. This offers significant tax advantages to investors.
Conclusion
Delivery trading is an excellent choice for investors looking for long-term growth, regular income through dividends, and the safety of owning stocks. While it may require patience, the potential for higher returns makes it a favored strategy for those committed to a longer investment horizon. Report this page