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How Can I Convert My Intraday Position To Delivery

There are different strategies that you can use when trading in stocks. However, two of the most common strategies are intraday and delivery trading.

Intraday trading involves buying and selling stocks within the same day to gain a quick profit. Delivery trading, on the other hand, involves a holding period. Under delivery trading, you buy and sell stock over different trading sessions. After purchasing the stock, you can hold it for a few days, months or even years and then sell them later.

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Conversion between intraday and delivery positions

It is possible to convert your intraday positions to delivery and vice-versa. You must switch positions through your stockbroker's website or mobile application. The process is as follows:

Log into your trading account on your broker's website or mobile application.
Go to your portfolio and choose the stocks you want to convert to your position.
Also, enter the number of stocks that you want to convert
After you make a choice, you will get the option to convert your intraday position to delivery or your delivery position to intraday
Click on the option, and your position will be converted

The whole process takes only a few minutes, and you can easily change your positions.

Margin requirements for conversion

An additional margin would be required when converting your intraday trade to delivery. This is because, in intraday positions, you can trade with a narrow margin which does not represent the full value of the stocks bought or sold. Per SEBI (Securities and Exchange Board of India), you need an initial margin of 50% of the total traded amount for intraday trading.

However, in the case of delivery trading, the story is different. In these cases, you must pay the entire value of the purchased stocks. The margin is equal to 100% of the invested amount.

When you convert your intraday position to delivery, you must pay the difference between the intraday margin and delivery margin, usually 50%.

For instance, say you are trading shares worth ₹50,000 on an intraday basis with a margin of ₹25,000. If you convert these positions to delivery, you would have to pay an additional margin of ₹25,000 for the conversion.

Exiting an intraday position

You can exit your intraday position on any stock anytime during the market hours. To do so, log into your Demat and trading account on your broker's website or mobile application. Choose the stocks whose positions you want to exit. You will get the exit option. Select the option and specify the number of stocks you want to redeem and the price for each. Then choose 'Buy' or 'Sell' depending on your open trading position and exit the intraday trade.

What happens if you don't exit your position?

Every intraday position should be squared off by the time the market closes. If you don't exit your position by closing, your broker's automated system will do that for you. Such an exit is called a system square-off and involves an additional charge. The charge depends on your broker and its pricing policy, but it becomes an additional expense for your portfolio.

So, to avoid such additional charges, you should be mindful of closing every open intraday position before the market closing time. If you don't want to close your position on a stock, convert it into a delivery trade to avoid charges and stay invested.

Depending on your trading strategy and investment horizon, you can trade on an intraday or delivery basis and switch between the two. Understand the conversion process and the margin requirements so that the conversion happens smoothly.

Conclusion

Converting intraday positions to delivery or vice versa is straightforward and facilitated by your stockbroker's platform. With a few clicks on your broker's website or mobile application, you can seamlessly switch between these trading strategies to align with your investment goals.

However, it's essential to consider the margin requirements associated with such conversions. While intraday trading allows for narrow margins, delivery trading requires full payment for the purchased stocks. Therefore, when converting from intraday to delivery, you'll need to pay the difference in margins, typically 50% of the invested amount.

Exiting intraday positions before market closing is crucial to avoid system square-offs, which can result in additional charges imposed by your broker. By proactively closing your intraday positions or converting them to delivery trades, you can prevent unexpected expenses and maintain control over your portfolio.

Understanding the conversion process and margin implications empowers you to make informed decisions and execute trades efficiently. Whether you prefer the quick gains of intraday trading or the longer-term holdings of delivery trading, knowing these dynamics ensures a smoother trading experience.

Ultimately, your trading strategy and investment horizon dictate whether you opt for intraday or delivery trading. By leveraging the flexibility to switch between these approaches, you can adapt to changing market conditions and optimise your portfolio for long-term success.