Beginners in stock market very often have this question, How to buy and sell shares online? Moreover due to lack of knowledge about the different types of orders available they misplace and bear losses.
In this post we will understand how to buy and sell shares online using online trading platform with examples and also going to learn different technical jargons which you may come across.
Let us first start understanding the different types of orders used in share market and how exactly they work, later we will use best online trading platform of 2 top stock broker in India, Zerodha and Upstox and see how to place them step by step.
What Is Order In Stock Market?
In layman terms order in stock market simply means giving a command on how much quantity, at what price to buy, at which price to sell, which stock you are buying, it is like filling a form.
You need to give details before your trades executed on the exchange, it let exchange know what exactly you were looking for.
You place order either on the online platform provided to you by broker or through calling your broker.
Placing orders by yourself help in saving much of time, instead of calling your broker to get connected and than letting them know. However, always check twice what you have filled as once you place the order and it gets executed there no going back.
This is very important to know as you will use it every time you want to trade in share market. Depending upon your broker the name might change for different orders but the purpose remains same.
How Many Types Of Order Are There In Stock Market?
Below are the different Order Types You Should Know:
- Market Order
- Limit Order
- Stop-Loss Order
- Stop-Loss Limit Order
- Stop-Loss Market Order
- Cover Order
- Bracket Order
- After Market Order(AMO)
- Basket Order
- Good Till Triggered Order(GTT)
Using these orders you can place buy and sell of stocks online through trading platforms, Let us now understand them one by one with examples and trust me they are very easy to apply in live market.
In order to buy and sell shares online, we will use different order types such as market order, limit order, cover order, bracket order, stop-loss limit order, after market order etc., and product codes such as MIS which is margin intraday square off used for intraday trading and CNC refers to cash and carry for delivery based trades.
MIS as a product code is used for trading Intraday Equity, Intraday F&O, and Intraday Commodity Trading. You enjoy additional margin using the MIS product code.
All the positions under the MIS product code will get automatically squared off, if you do not do it from your end before the market gets closed.
Depending upon your broker the timing for auto square-off may vary 3:15 to 3:25 usually. Some brokers do charge for auto square-off trades so check with them while opening your account.
Whereas Cash and Carry (CNC) simply means you buy shares and take it to your demat account for holding it for any time frame you want to keep it.
If you have placed order as CNC, cash and carry order type or delivery order type, than you first require full margin to place the order . So if you are buying let say HDFC bank shares, trading at 800 per share.
You have to have the full Rs.800 (per share) to place the order. Having said that there are few stock brokers who do provide the margin facility in delivery trades as well one of them is 5Paisa.
Other than this one should also know the time condition of order types, basically there are 2 time conditions:
IOC – An Immediate or Cancel (IOC) order allows to buy or sell a security as soon as the order is released into the market. In case if orders is failed then it will be removed from the market. There are chances of Partial match for the order, and the remaining unmatched portion of the order is cancelled immediately.
DAY – As the name suggests, a day order is valid for the day on which it is entered. If the order is not matched during the day in market, the order gets cancelled automatically at the end of the trading day.
If you do not know, Intraday trading often called as day trading trading in stock market refers to buying and selling of shares of any stock within market hours. Intraday trading is not limited to equity (cash), you can buy and sell same day in other market segments like derivative (futures and options), commodities (gold, silver, crude-oil) or in currency segment as well.
In case if you forgets to sell the position or buy (in case of short sell), the trades are executed(squared-off) automatically by your stock broker before the market closing.
Delivery trading is just opposite of intraday trading, In delivery trades as an investor, you take shares that you buy to your demat account, instead of selling it same day.
Moreover in such transactions, you can hold the shares for a short, medium or longer-term depending up on you. The duration can range from two days, months, years or even two decades or more.
I hope you know have a better understanding as the basics have been cleared, Moreover the concepts and functions remains the same whether you use any stock broker. Having said that let us take example from top 2 brokers in India, i.e. Zerodha and Upstox to check how to buy and sell shares online using their trading platform.
To buy and sell shares online in zerodha you can use 3 trading platform available with them, Zerodha Pi a desktop version, Zerodha Kite web version and Zerodha Kite mobile APP or even you can call and place orders, however there is charge associated for call n trade.
Let us take example of Zerodha trading platforms and understand market order.
A market order is an order to buy or sell a stock at the current price the stock is trading in market. So when you place such order whatever price the stock is trading at, your order will get executed at that rate.
In the image below AXIS BANK is currently trading at ₹394.55 So, suppose you placed market order, It may happen your market order gets executed at (394, 394.20, 394.80).
Because it takes few seconds for your order to sent to exchange and it might happen that the stock price have fallen or rose to few points.
This happens because prices fluctuate ever microsecond. The latest-traded price also know as LTP in the market may have changed by the time you place (bid) your order.
Generally, this type of order will be executed immediately. However, the price at which a market order will be executed is not guaranteed.
Let us take other order type examples in zerodha
On contrary, a limit order is an order that places a limit on the price you are willing to pay to buy or sell a stock. Thus, a limit order guarantees a price, but whether the trade will get executed remains uncertain.
As you can see in the image below you now have the option to put the price in a box, you can set at what price you want to buy the stock.
This is because the stock may not reach the price at which the order is placed during the trading day. So suppose you placed a limit order to buy a stock when its trading at 100, you put a price to buy it at 105.
However the stock did not reach to that price, so exchange did accepted your trade but the order remain un-executed as the price of the stock did not came up.
From the name itself, it tells you to stop your losses. So when you place order you cannot be 100% sure the price of the stock will move in your favor, it may move in opposite direction significantly. So to avoid your losses you can place a stop-loss at a particular price.
As you can see in the image below, it now have another box to put the stop-loss. So, if in case the price does not move in your favor and fall below than what you have expected, you stop-loss order will get executed.
Let say you bought the stock at Rs.50, it fall to Rs.40, if you have placed a stop loss at 45 than the maximum losses would have been restricted to Rs.5.
That is why it is always advisable to put the stop-losses, whenever you are trading, as in any given situation you cannot be 100% right.
In stop-loss limit order you an put the price of the stock as well as the stop-loss value. There is nothing fancy here, just like normal limit order we discussed above.
In Stop-Loss Market Order you do not have the option to select at what price(Buy, sell) you want your order to get executed. It is similar to market order with just a stop-loss to prevent your losses.
I hope you now have enough understanding of orders and how to place them with Zerodha or for that matter any other broker. It is because the basic concept is the same for every broker, yes the name may be little changed sometime.
Let us see the remaining types of orders and their uses using Upstox trading platform.
You can place all the regular types of orders using the Upstox trading platform. You just have to click the scrip that you are interested in and click Buy or Sell and choose the type of order you want to place.
There are 3 types of trading platform available with them, Desktop, Web, Mobile you can use any of them.
One Cancels Other (OCO) The one cancels the other order or sometimes known as bracket order is three legged intraday order.
In Bracket order you can place buy/sell price, at limit or market rate, with a a stop-loss and a target fixed. The benefits of multiple orders placed through bracket order is, it allows you to fully automate your trade.
As you have already given all the information to exchange about your order, you risk get reduced and the margin offered to you by broker gets exponentially high. It is only useful if you are placing intraday trades.
In cover order (CO) you can buy (or sell) shares with keeping it as market price or limit price and can also put a stop-loss.
Let us take an example to understand it better:
Suppose you want to buy a share however you want to buy it a limit price of your choice. Currently stock is trading at Rs.80 you can place a cover order by keeping the buying price at Rs.75 and stop loss as Rs.70 .
The moment stock comes to Rs.75 or lower than that your limit order will get executed & stop-loss order will be placed. In case if stock fall to Rs.70 this stop-loss order will also get executed. You can see your profit/loss in admin position.
One of the major benefit of cover order or bracket order is, it reduces your risk or exposure in market. By using cover order, you are lowering your risk and ensuring that your losses are limited.
Moreover you will get additional leverage or margin if you use CO order. You can place cover order only for intraday trades not for delivery based.
In normal order window the margins are lower in comparison to BO,CO. You can put price at which you want the order to get executed, also you can change your intraday position to delivery using this order in case you want to hold the stock.
However there is no place to put stop-loss or target, you have to square off your position by your own. Just to let you know the white mark you see is my client id which I have removed.
After Market Order (AMO) AMO or After Market Order is for those people who are busy during market hours but wish to participate. You can plan your orders at leisure after researching about the markets before the market opens and place an order after the market closes.
AMO is allowed only between 3:45 PM and 8:59 AM for equity and up to 9:10 AM for F&O.
For currency derivatives, AMO is allowed from 3.45 PM the previous day to 8:59 AM only.
As you can see in the above image you can choose AMO order type and select the type of order you want to place(normal, market, limit, stop-loss).
After-market orders are also allowed for commodity trading. After-market orders for commodity can be placed anytime during the day, orders will be sent to the exchange at 9:00 AM (MCX opening). So if you place an after market order at 8:59 it will get sent today and if you place it at 9:01 AM it’ll get sent tomorrow.
Now, the last 2 remaining types of order you can use is Basket order and Good Till Triggered Order(GTT), let us understand how they work.
You may create a basket order with Buy / Sell order of multiple stock
Once the basket are created, one can just choose the relevant basket to place the order in single go. The moment the triggers get hit that you placed (particular price to buy sell), your orders will gets placed.
The Good till triggered (GTT) orders are quite helpful when you stay busy and does not have time to login to the trading terminal. By using GTT orders you can place trades at a particular price with a stop-loss and a target.
This orders that are valid until cancelled and you do not need to login every to check the price or placing trades.
Once done it remains in your account till 1 year(depend on broker), whenever the stock price comes to what you have mentioned in your order at the time placing the GTT , it will get executed at that price.
Likewise all other triggers like stop-loss or targets also get active and if the stock reaches to any of them your positional will squared-off.
You don’t need to have any cash or margins available in your account to create a GTT, however you have to make sure there are enough funds in the trading account after order gets created. Also, all orders will be triggered and placed only during market hours.
In a nutshell to buy and shares online in stock market one should first know the different order types and its usage moreover one should also be knowing the product code as discussed above.
Above were the major types of orders in stock market in India, and one should definitely be aware to maximize the trade profitability. It may happen few of them may be called with some other depending on your broker but by and large the rules remains same.
Below image represent what you need to do step by step:
Once you have placed order
– broker will send it to exchange
– Exchange will find counter party
– Exchange than confirm to broker
– Broker debit/credit your account depending on your order type.
Apart from above points as a beginner in share market you should also know stock market timings in India:
- 9 am to 9.15 am – Pre-market
- 9.15 am to 3.30 pm – Normal trading
- 3.40 pm to 4.00 pm – Post-market
- Internationally Reference-able Non-Agri Commodities – 9 am to 11.30 pm – during daylight savings time – March to November (9 am to 11.55 pm – November to March)
- Internationally Reference able Agri Commodities (Cotton, CPO & RBDPMOLEIN) – 09.00 AM to 09.00 PM (9.00 AM to 9.30 PM – November to March)
- All Other Agri Commodities – 09.00 AM to 05.00 PM
Currency: Indian Currency market trading hours are from Monday to Friday From 9:00 a.m. to 5:00 p.m.
I hope you have now for sure have completely understood How To Buy And Sell Shares Online in Stock market.
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