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There are different ways in which you can do stock market
trading. The cash trading is one such method. Cash trading or equity segment
trading is the most common form of share trading that is done at the stock
market and major portion of the stock investors prefer to do stock trading
simply because of the simple ways in which the trading can be done. The cash
trading is also referred as the delivery based trading as the stocks in this
type of trading are deposited to the DP account of the investor.
Advantage of cash trading – The biggest advantage of cash
trading is that there is no set time limit for buying and selling the stocks
unlike the margin trading and derivative trading. So when you are trading in
cash segment you can hold the stocks for as much time as you want until you get
the desired profit. So in cash trading your chance of getting profit from
trading is more than other ways of trading in the stock market. In cash trading
you have to pay the full price of the stocks that you are buying, though it may
seem impractical at times, but it surely restrains one investor from going
beyond the limit. As you can not invest more than what your fund permits you
can control the loss effectively even if the prices get down.
Disadvantage
of cash trading –
The biggest disadvantage of cash trading is of course the exuberant brokerage
charge and taxes that you have to pay for delivery trading. Mostly the
brokerage for the cash trading is 10 times higher than margin trading. But of
course you can reduce this brokerage rate by opting for the online stock
trading portals where the brokerage rate is significantly lower than the
traditional broking houses but then they are still higher than the margin
trading brokerage.
But still cash
trading is the most hassle free way of trading in stock market that requires
hardly any skill for trading and have no complications at all. Therefore, for
those who are new to the stock market investment and have little knowledge of
the trading procedures at the market cash trading is the most suitable way of
trading for them.