Delivery, Intraday and Margin
1. Delivery
A delivery purchase is intended to result in shares being credited to your Demat account after settlement.
You normally pay the full purchase value from your available funds, subject to broker and market processes.
2. Holding period
Delivery does not mean you must hold forever. You may sell after settlement or later, subject to market rules and your plan.
Swing trading commonly uses delivery positions held for days or weeks.
3. Intraday
An intraday product is designed for positions opened and closed within the same trading day.
Brokers may apply product-specific margin, square-off and risk rules. If the position is not closed in time, the broker may act according to its policy and market conditions.
4. Why intraday is operationally different
Intraday trading compresses decision-making into minutes or hours and exposes the trader to noise, rapid movement and execution pressure.
Lower capital requirements can create the illusion of lower risk even when percentage loss on the trader's capital is much higher.
5. Margin
Margin is the amount of capital or collateral required to support a position under the applicable rules.
Using margin means controlling a position larger than the cash immediately paid or using collateral under defined conditions.
6. Leverage magnifies outcomes
If Rs 1 lakh controls a Rs 5 lakh position, a 2% movement in the stock creates a Rs 10,000 change - equal to 10% of the trader's Rs 1 lakh capital before costs.
Leverage magnifies losses as efficiently as gains.
7. Margin is not free money
Margin creates obligations, risk limits and possible forced liquidation.
Interest, charges, haircut on collateral and mark-to-market requirements may apply depending on the facility.
8. Product conversion
Some brokers allow permitted conversion between intraday and delivery products if funds, time and rules allow.
Never assume conversion will always be possible. A sharp move or insufficient funds can leave the position exposed to forced action.
9. Short selling
Selling shares you do not own is generally a short position and follows specific market and settlement rules.
Beginners should not treat the sell button as interchangeable with selling owned delivery shares.
10. Delivery risk still exists
Paying full value removes leverage risk but not business, market, liquidity or gap risk.
A delivery stock can still decline sharply. Risk control remains necessary.
11. Common beginner mistakes
- Selecting intraday by accident
- Product type changes settlement and square-off handling.
- Using maximum leverage because it is offered
- Broker permission is not a risk recommendation.
- Assuming delivery cannot lose heavily
- Unleveraged positions can still suffer major declines.
- Depending on automatic square-off
- Execution may occur at an unfavourable price or fail under extreme conditions.
12. Delivery vs intraday vs leveraged position
13. DStreet principle
Use the simplest product that fits the strategy. Never use leverage merely to make a small account feel large.
14. Beginner checklist
- I confirm the product before submitting.
- I understand whether shares will be delivered.
- I understand broker square-off rules.
- I know whether leverage is involved.
- I can withstand the loss without relying on forced exits.
15. Quick knowledge check
Question: What is delivery trading?
Answer: Buying shares intended for settlement into the Demat account.
Question: Does margin reduce market risk?
Answer: No. It magnifies exposure relative to capital.
Question: Can a delivery position still gap down?
Answer: Yes.
Question: Why is automatic square-off risky?
Answer: Price and execution are not guaranteed.
16. Next lesson
Market, Limit and Stop Orders.