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Market participants have the option to choose from
Each of these options can be used to gain access to the exchanges.
To access the trading terminal (TT), you will need to enter the URL into your browser.
A trading terminal that has many useful features is a smart investment.
We will complete the above tasks and learn all relevant concepts. We'll use Zerodha’s web portal Kite to help us with this chapter.
Your trading account information is stored on the trading terminal, which can be very sensitive. Brokers follow a strict login process to ensure security. This involves you entering your password and providing a 6-digit secret PIN to 2 Factor authentication. You can also set a TOTP to increase security. The snapshot below illustrates this.
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After you log in to the platform, you will need to fill the "market watch" with the stocks that interest you. Market watch is like a blank canvas. After the stock has been loaded to the market watch you can transact or query information about the stock. This is how a blank market watch looks (it's also what you see when you log in).
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We will load ITC Ltd onto the market watch, keeping the first task in our minds. Simply type the stock symbol ITC into the search bar. The drop-down list will display the stock on different exchanges (NSE/BSE).
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To add the stock to Market Watch, click on the Add symbol
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Marketwatch will show the last traded price and the percentage change in the stock.
Here are some basic details that you will need to know:
This information is available under Market Depth. Click on the stock name to view Buy, Sell, Market Depth, and Stock Information. Clicking on Marketdepth will bring up the information as well as the best bid/ask price ladder. In the last part of this Chapter, we will cover Ask price and Bid.
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The ITC's most recent traded price was Rs.262.25, a difference of -0.40% from the previous day's Rs.263.30. The stock opened at Rs.265.90. These were the highest and lowest prices it traded on that day. The volume of the day was almost 27 million shares.
We want to purchase 1 share of ITC. We have ITC in our trading terminal and are convinced that buying ITC for Rs.261, or Rs.1.25, is a great deal.
This process begins with a purchase order form.
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The order form has some pre-populated information such as the quantity and price. This information can be modified to suit our needs. Let's start with the first drop-down option at the top. NSE would be the default exchange.
Next is the order type'. You can click on the drop-down to see the following options:
Let's find out what these options really mean.
You have the option of a 'LimitWhen you have a very specific price in mind for a stock, you can use 'order. Let's say that the ITC last traded price was Rs.262.25, but we want to restrict our purchase price to Rs.261. Limiting the order price is possible in such situations where you are very specific about the price that we wish to transact in. You will not receive the shares if the price is below Rs.261. This is one of many drawbacks to a limit order.
A can be also chosen market order When you are looking to buy at the market prices and not a price you had in mind. If you place a market order, so long as sellers are available, your order will go through and ITC would be purchased in the region of Rs.262.25. If the price rises to Rs.265 in conjunction with your market order placing, you will receive ITC at Rs.265. You can't be certain of the price you will transact when you place a Market Order. This could prove dangerous for active traders.
Stop-loss orders after you have initiated a position, it protects you against adverse market movements. Let's say you decide to buy ITC at Rs.262.25 and expect that ITC will reach Rs.275 soon. What if ITC's price starts to fall? First, we can protect ourselves by determining the maximum loss that we are willing to accept. Let's say, for example, that you don’t want to lose more than Rs.255.
This means that you are long ITC at Rs.262.25. The maximum loss you can take on this trade would be Rs.6 (255). The stop-loss order becomes active if the stock price falls below Rs.255. You will then be out of the loss-making situation. The stop-loss order is inactive as long as the stock price remains above 255.
A stop-loss or passive order is called a stop-loss. We need to enter a trigger value in order to activate it. The trigger price is usually higher than the stop-loss price. Only after this price has been crossed does the stop-loss or active order become a passive one.
As an example, here are some more:
We are long at Rs.261. We would like to sell the position at Rs.255 if the trade does not go well. Therefore, 255 is the stop-loss price. The trigger price is set so that the stop-loss order can be made active. The trigger price must be equal or higher than the stop-loss price. This can be set to Rs.255 and higher. The stop-loss order becomes active if the price falls below 255
We return to the main order entry form and now we move to the quantity after selecting the order type. We need to buy 1 share ITC shares so we must enter 1 in the quantity field. For now, we will ignore the trigger price or disclosed quantity. Next, choose the product type.
Choose CNC to execute delivery trades. You must ensure that the shares are in your Demat account if you plan to purchase and hold them for a long period of time. This can be done by selecting CNC.
If you wish to trade intraday, choose NRML or MIS. MIS is a margin product. We will learn more about it when we enroll in the derivatives module.
After you have filled out the order form, your order will be ready to go. Once you click the submit button, your order is sent to the exchange. Your order is assigned a unique order ticket number.
The order will not be executed until the price reaches Rs.261, even though it has been sent to the exchange. Your order is executed once the price drops below Rs.261 (assuming that sellers are willing to sell 1 share), Once your order has been executed, you'll own 1 share ITC.
Two online registers in the trading terminal are the order book and trade books. The order book keeps track all orders that have been sent to the exchange and the trade books track all trades you make during the day.
All details about your order are available in the order book. Click the Orders tab to navigate to the orderbook.
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The order book contains details about all orders that you have placed. The order book can be accessed at:
You will notice that there is an open offer to purchase 1 share of ITC for Rs.261.
You can modify or cancel an order by hovering over the pending orders.
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Clicking "Modify" will invoke the order form, and you can make any changes to it.
The trade details will be made available in the trade book once the order has been processed and executed. The trade book is located just below the order books.
Here's a quick snapshot of the trade books:
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The trade book confirms that an order was placed to purchase 1 share of ITC at Rs 26,2.2. A unique order number for the trade is also generated.
This is our first task!
Now you officially own 1 share in ITC. This share will remain in our DEMAT account until it is sold.
Next, we need to monitor the Infosys price. First, add Infosys to the market watch. You can search for Infosys using the search box.
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Infosys' trading symbol is Infy. Once you have selected Infy, click Add to add it to the market watch.
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You can now view live Infosys information. The stock closed at Rs.1014.75, a decrease of 0.11% over its previous close of Rs.1015.85. Infosys opened at Rs.1014.80 and closed at Rs.1028.95. There were 3.6 million shares.
The open price will remain fixed at Rs. 1014.80 The high and low prices will change depending on the Infosys price. If Infosys's price rises from Rs.1014.2 - Rs.1050, then the high price will reflect Rs. The new high is 1050.
The Infosys LTP is highlighted in green, while the ITC is highlighted in red. The cell will be highlighted in green if the current LTP exceeds the previous LTP.
Take a look at this snapshot:
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Infosys's price increased from 1014.20 to 1020.80, and its color changed from blue to red.
We can dig deeper to get more information about LTP, OHLC, and volume. This is what we call the 'Market Depth window', also known as the snap quote window. The snap quote window contains a lot of information, as you can see. I want to specifically draw your attention to the blue and red numbers, the Ask and Bid prices.
The Zerodha Kite User Manual will help you to use it more efficiently.
You must buy shares from a seller if you wish to purchase them. The seller will offer the shares for a fair price. The seller will sell the shares at a price he believes is fair. Ask youThe 'Ask for a price. In red, the asking price is highlighted. Let's examine this in more detail.
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The snap quote window will display the top 5 bids and asks prices by default. The table below shows the top 5 asking prices.
The initial ask price is Rs.3294.80. This is the lowest price Infosys has at the moment. There are 2 shares being offered at this price by 2 sellers (each selling 1 share). Next is Rs.3294.85. There are 4 shares being offered by 2 sellers at this price. The third-best price is Rs.3295. 8 shares are available and this price is offered by 2 sellers. And so on.
You will notice that the priority is lower the higher the asking prices. A 5 th position would have an asking price of Rs.3296.25 per 5 shares. Stock exchanges prioritize sellers who are willing to sell their shares for the lowest possible price.
You can't buy 10 shares for Rs.3294.8. This is because only 2 shares are available at Rs.3294.8. You can however place a market order if you don't care about the price (aka limit) This is what happens when you place a Market Order at this stage:
The 10 shares can be purchased at three prices. The LTP of Infosys will also increase to Rs.3295, from Rs.3294.8
You must sell your share to someone who is willing to purchase it. The buyer will purchase the shares at a fair price. The buyer will demand a price. This is known as the "bid price". The blue color is used to indicate the bid price. Let's look at this section in more detail.
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The snap quote window will display the top five bids prices by default. You will notice that the highest price you can sell shares at is Rs.3294.75. This price allows you to sell only 10 shares, as only 5 buyers are interested in buying from you.
The following execution pattern would apply if you wanted to sell 20 Infosys stock shares at the market price:
In essence, the ask and bid prices provide information about the top five prices at which buyers and sellers are stacked. It is important to understand how buyers and sellers trade, especially intraday traders.