Trading Product Codes - MIS, NRML, CNC, BO

  • Posted By :
  • Friday Aug 09, 2019

Basic Trading Terminology

  • Market Order: A market order is an order to buy or sell a stock at the current market price. It signals your broker to execute the order at the best price currently available. However, as market prices keep changing, a market order cannot guarantee a specific price.

  • Limit Order: To avoid buying or selling a stock at a price higher or lower than you wanted, you need to place a limit order rather than a market order. A limit order is an order to buy or sell a security at a specific price. However, a limit order cannot guarantee execution of the trade. This is because the stock might not reach the desired rate on that particular trading day owing to market-related factors.

  • Stop Loss Order: A stop loss order is a standard order placed with a broker to sell a security when it reaches a certain predetermined price called the trigger price. The stop loss trigger price is your defence mechanism for unexpected loss-bearing transactions – an amount at which you will be able to sustain yourself against unanticipated market movements. For example, if you bought a stock at Rs. 10, you place a stop loss order with your broker to sell it, if it reaches Rs. 8. This helps you prevent further loss, in the eventuality that the price of the stock might dip even further. Thus, it helps limit your loss or protect unrealised profits, whichever the case.

  • Immediate or Cancel Order (IOC): An Immediate or Cancel (IOC) order allows a trading member to buy or sell a security as soon as the order is released into the market. In case the order failed to fulfil the total quantity, it will be cancelled from the market. Partial match is possible for the order, and the unmatched portion of the order is withdrawn immediately.

  • Intraday Trading: This involves buying/selling stocks within a day, to earn quick profits during the day. Books are closed on the same day.

  • Swing Trading: Trades executed for longer than a day, to make quick bucks on the swings/trends.

  • Positional Trading: Trade execution for a longer time horizon than swing (months), where traders hold the positions in expectation of favourable outcome.

Trading Products

Cash N Carry

How does a CNC order work?

If you intend to buy shares worth Rs.10,000, you should have the entire amount in your trading account. Similarly, if you wish to sell 100 shares, they should be available in your demat account. So if you have Rs.10000 and you want to buy stocks of Company A which cost Rs 10/ per share, you will be able to purchase ;
Amount (10000) / Per share price (10) = No. of shares (1000)
Thus, you can buy 1000 stock worth Rs.10/each with Rs.10000.

Normal Order (NRML)

How does NRML order work?

If you have an NLV (Net Ledger Value) of Rs. 100/-, you will be allowed to buy delivery of Rs. 400/- (assuming margin requirement of 25%). You will be debited Rs. 400 on T day with a debit effective date of T+2 days. Your ledger will have Rs. 300 debit. You'll pay 25% of what you're buying, i.e. 25% margin.

Margin Intraday Square-Off (MIS)

How does MIS order work?

You want to buy 1000 shares of company A, which are trading at Rs.50 per share. The total value of the transaction is Rs.50,000 if you use full cash position. However, you can buy the same stock through our intraday product MIS where the margin required is 10%. Thus, the total amount needed for the transaction would be 10% of Rs.50,000, i.e. Rs.5,000.

Bracket Order

How does Bracket Order work?

You wish to buy 100 quantity of stock A at Rs 200 and keep Rs 190 as stop loss and want to book your profits at Rs 215. Bracket order allows you to punch three orders at the same time – initiation buy order at Rs 200, stop-loss sell order at Rs 190 and square-off sell order at Rs 215.

Cover Order

What is a Cover Order?

How does Cover order work?

You place a buy order for 20 shares of company A at Rs 100 per share. The minimum margin on Company A is 3%, and you can bear a maximum loss of Rs. 2 per share Placing a stop loss cover order at trigger price is Rs. 98, margin blocked will be Rs.80 i.e. higher of maximum loss you can bear*multiple (E.g.: 2 times) decided by Reliance Securities  [(2*20)*2 = 80] and minimum margin% on the stock value [(20*100)*3% =60].

How to place Cover Order?

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