Skip to main content

What is MIS, NRML and CNC order types in stock market ?

By
Button-4
  • MIS (Margin Intraday Square Off)
MIS order types are for intraday traders and need to squared off during the same trading day. It will be activated till that particular trading day only.The biggest advantage of this order type is that while buying shares using it traders need not to pay the entire amount only a margin amount is required to be paid.Because of this feature traders can buy more number of shares with less capital. If in case position is not squared off or converted into other order types by the traders end then it will be automatically squared off by RMS few minutes before the market closes. If you want to strictly trade on intraday basis then you can rely on usage of such order type. As here you need to worry about squaring off your position, it will automatically get squared off before market closes.
  • NRML (Normal Order)
NRML order type is used while trading in future market. It is used to carry forward trade orders in derivatives segment. This order type works same like taking delivery of stock and holding maximum of it till the expiry date of contract. For example if you wish you to buy stocks of Tata Motors and sell them after few days you can do so by using normal order type. MIS order type can be converted in normal order if traders trading account has sufficient margin amount. All the shares will be added and removed from traders demat account. Using NRML order type no extra leverage is provided in derivatives.
  • CNC ( Cash and Carry)
This is order type is not meant for intraday traders and is used by equity traders. You should prefer to use this order type when you want to take delivery of particular stock or want to hold your position for more then one trading day.The stocks purchased using CNC will be added to your demat account after T+2 trading day. One disadvantage with CNC is that traders need to pay entire amount to buy stock using it. They can not use margin here.
tradedeal-image-01-700x340
Few difference between CNC and MIS orders are discussed below :
1) A fundamental difference is that CNC is delivery based order type whereas MIS is purely meant for intraday traders.MIS trade orders are automatically squared off by risk management system on the same trading day.
2) With MIS traders can use the facility of trading with margin but not with CNC. Entire sum of money has to be paid with CNC orders types and with MIS traders have to pay a part of stock price not the entire amount.
Open free Demat account with Pehla Trade-the lowest rate discount brokers to begin with trading using these order types. For beginning one month pay Rs1/executed order.We focus more on trade and less on brokerage.
Labels:

Comments

Post a Comment

Popular posts from this blog

What are the advantages and disadvantages of pair trading ?

By
Pair trading is a market neutral trading strategy which enables traders to make a profit under different market conditions.Without learning about the recent market trend a trader matches a long position with a short position in a pair of highly correlated shares, commodities, currencies or etfs. Usually, the pairing is done in shares of companies which belongs to the same industry. Demat account and trading account are required to trade using this strategy like in others. Advantages of pair trading are discussed below: No risk from market direction Direction risk means risk associated with movements in price because of change in market direction. For an example, a short position is exposed to the risk that stock prices may rise.In pair trading, no such risk exists. Because here profit depends on the difference in price changes of two stocks which are in the pair not in the direction in which they move. Limited risk and profit in different market conditions The co...
Post a Comment
Read more

Tips to become a successful day trader

By
Indian share market has attracted various investors towards itself by its good performance and has become an attractive source of investment now. Returns earned on investment in shares by long term traders is higher than investment in other markets and assets. However high capital is required to trade on a long-term basis. Another way by which traders can trade with less capital and earn good returns is intraday trading. Day trading means not holding your position in stocks beyond the current trading day. To trade on intraday basis traders need to have  Demat account  and trading account. The risk associated with this type of trading is high. Some useful tips to become a successful day trader are discussed below: Trade by using a practical approach Movements in intraday stocks are based on the market fluctuations.To earn good profit here traders have to trade on the basis on present market movements.When the market is bullish instead of waiting for large movements...
Post a Comment
Read more