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Level 5 of 13 · Trading types

Types of Stock Market Trading and Investing

By the end you will: understand delivery, intraday and swing trading.

There are many ways to take part in the market, from holding shares for 20 years to buying and selling within minutes. They differ hugely in risk, effort and cost. This level explains each one, with numbers, so you can pick what fits your life. Most beginners are best served by delivery and long-term investing.

Start with 5.1: What is delivery trading?
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A. Delivery trading

  1. 5.1What is delivery trading?Delivery trading means buying shares and taking them into your demat account, so you own them for as long as you like.
  2. 5.2How does delivery trading work?You place a delivery buy, money is debited, the clearing corporation settles on T+1, and the depository credits the shares to your demat.
  3. 5.3How long can I hold shares?As long as you want: days, years, or even a lifetime. There is no expiry for shares in demat.
  4. 5.4How does ownership transfer?Ownership transfers electronically when the depository moves shares from the seller’s demat to the buyer’s demat at settlement.
  5. 5.5Delivery trading: advantages and disadvantagesA summary of when delivery suits you and when it doesn’t.

B. Intraday trading

  1. 5.6What is intraday trading?Intraday trading means buying and selling the same stock within the same trading day. You never take delivery.
  2. 5.7How does intraday trading work?You choose product MIS/Intraday, and the broker blocks a margin (a part of the trade value). You must close before the cut-off, or the…
  3. 5.8Why must intraday positions be closed the same day?Because you only paid a margin, not the full price, and you chose not to take delivery.
  4. 5.9What is intraday square-off?Square-off means closing your intraday position, by selling what you bought or buying back what you sold. If you don’t, the broker does an…
  5. 5.10What are the risks of intraday trading?Intraday combines leverage, speed and emotion, a dangerous mix for beginners.
  6. 5.11Example of intraday profit and lossLet’s work through a winning trade and a losing trade, including charges.

C. Margin trading

  1. 5.12What is margin?Margin is the amount of your own money you must put up to take a bigger position, with the rest provided by the broker or allowed by the…
  2. 5.13What is leverage?Leverage is using borrowed money or margin to increase your position size. 4× leverage means ₹1 of yours controls ₹4 of shares.
  3. 5.14What is Margin Trading Facility (MTF)?MTF lets you buy shares for delivery by paying only part of the value; the broker funds the rest as a loan and charges interest daily.
  4. 5.15How does borrowed money work?The broker pays the part of the purchase you didn’t pay. You owe that amount until you repay or sell.
  5. 5.16What are interest charges on margin?Interest is the cost of the broker’s loan, usually charged per day on the funded amount.
  6. 5.17What is a margin call?A margin call is the broker’s demand for more money (or collateral) when your losses reduce your margin below the required level.
  7. 5.18What happens when margin requirements are not met?If you don’t meet a margin call in time, the broker sells your shares (liquidates) to recover the loan, at whatever the market price is.

D–F. Swing, positional and long-term

  1. 5.19What is swing trading?Swing trading means holding stocks for a few days to a few weeks to capture a "swing", one leg of a price move.
  2. 5.20How long are swing trades generally held?Usually 2 days to 6 weeks.
  3. 5.21How to identify swing trading opportunitiesSwing traders look for stocks in a clear trend, then enter on a pullback to support or on a breakout above resistance, with a stop-loss…
  4. 5.22What is positional trading?Positional trading means holding a position for weeks to several months to ride a bigger trend.
  5. 5.23What is long-term investing?Long-term investing means buying good businesses (or index funds) and holding them for years, usually 5 or more, to benefit from business…
  6. 5.24How does compounding work?Compounding means earning returns on your returns. Your money grows on itself, like a snowball rolling downhill.
  7. 5.25Why do people invest for 5, 10 or 20 years?Long horizons let compounding work, smooth out short-term volatility and match real goals like a child’s education or retirement.
  8. 5.26Comparison: all trading and investing typesAll six styles side by side.