Equity Trading

The selling and buying of stocks of the listed (public) companies are called equity trading. It is done by an investor through an authorized broker in an exchange like BSE and NSE. Equity trading is also known as share trading or stock trading.

Equity trading can be categorized into 3 types

1. Equity Delivery Trading
2. Equity Intraday Trading
3. Equity Derivatives Trading (Future & Options)

1. Equity Delivery Trading

   When an investor buys the shares of a company for long term holding or sells the stocks held in his demat account, it is called equity delivery trading. You pay the full price of the shares upfront and take the delivery of the shares. The money is paid from your trading account and the shares are deposited into your demat account.

   On the other end, the person selling the shares gets the money. The shares are debited from the seller's demat account.

   Equity delivery trades are settled on the T+2 basis. T represents the day of trading. It means the buyer gets the shares credited in the demat account on T+2 days.

2. Equity Intraday Trading

   In Intraday trading, the buying and selling of stocks happen on the same day. You buy X number of share of a company and sell them before the closure of the market on the same day. For example; you buy shares of SBI Bank at 10 AM and sell them at 3 PM.

   Key Points on Intraday Trading

   • As the trades are settled the same day, shares are not credited or debited in the demat account.
   • Most of the brokers provide exposure (margin or leverage) for intraday trades. Trading done using the margin facility is called margin trading. Some brokers offer up to 20x exposure. It means you could trade 20 times of the money available in your trading account. For example, if you have Rs 5000 in your trading account, you can trade up to Rs 1,00,000.
   • Brokerage fee and taxes are lower for intraday trades compare to delivery trades.
3. Equity Derivatives Trading (F&O Trading)

   Equity Derivatives are special contracts which are derived from underlying security like stock or index. There are 2 types of equity derivatives- Equity Futures and Equity Options. The buying and selling of equity derivatives are called equity derivatives trading or F&O trading.

   3 Easy steps to trade in F&O (Equity Future Derivatives) at BSE, NSE, MCX

Answered on 2019-02-24