Hey, Have you seen movies like Scam
1992 or Hollywood movies like The Big Shot, Wall Street or so. If you have
watched these movies, you must have come across the "open outcry"
system of trading, where people meet on a trading floor and trade the stocks of
various companies. This system had many disadvantages. The major disadvantage
of this system is price transparency. As an investor, you actually do not know
at what price your shares are bought. To avoid such a situation, exchanges
started with online trading, where you could see the rates of the scripts you
wanted to buy and instruct your dealer to execute the trade on your behalf.
Now, with the emergence of cheap
internet data and mobile phones, such trading terminals are in your hands in
the form of mobile applications.
But let us take you to the entire
journey of online trading & why you should opt for it.
Account Opening
For online trading, you must open 3 accounts,
which consist of a bank account, a brokerage account, and DP account. The
existing bank account may be used, or you can open a new bank account
exclusively for the purpose of online trading.
You must submit a copy of PAN card and
Aadhar card (along with Aadhar consent), a photograph, and a cancelled cheque
to complete the account opening process. If Aadhar is not available, or you do
not want to share Aadhar, alternate documents may be made available.
The entire process for account opening
is completed online within a few minutes. The documents are verified using the
e KYC process introduced by the exchanges and regulator SEBI.
You will be allotted a Unique Client
Code (UCC) and provided copies of all account opening documents.
Order Placing
You may place orders through the
broker's website, via a mobile app, by calling a dedicated call center (call
and trade) or visit the broker's office. In rare cases, you can place orders
through email.
All email and phone communication
shall be only using the email ID and phone number provided at the time of
account opening. This is referred to as ``registered email" and
"registered mobile number" (RMN).
A complete order must specify the
following: stock, price, quantity, and
Buy or sell.
All orders must be accompanied by
appropriate margin.
Types of Orders
- Limit Order - A limit order allows you to set a maximum and minimum price for a buy and sell
order respectively. The trade will get executed only at the given price.
- Market Order - A market order buys or sells at
the current market price of the share.
- AMO (After Market Order) - AMO’s are the trades
which are placed after the market is closed. AMO can also be placed at Market
Price. This type of order is useful for highly busy professionals and investors
in different time zones.
- IOC (Immediate or Cancel Order) - As the name suggests,
when you place an IOC trade, if the trade isn’t executed immediately as soon as
it is placed on the exchange, it gets cancelled.
- Stop Loss Order - A stop loss is where a
trader can limit his losses by exiting the trade if the share reaches the
trigger price. By placing a stop loss, you can save yourself from heavy losses
if the price of a share rises or falls suddenly.
- Cover Order (CO) - Cover order is one of the
types of orders where you can enter into a position along with stop loss in the
same trade.
- Bracket Order (BO) - Bracket order is a
combination of 3 orders. First is a buy / sell order, followed by a stop loss and a target order. The order
plays between the SL and target (bracket) hence the term bracket order.
Order Confirmation
Once an order is traded, you will
receive confirmation for the same via SMS and in the evening you shall receive
a contract note for all the trades done during the day. The contract note is
required to be issued within 24 hours, but is normally issued by late evening
on the same day.
A contract note contains details of
transactions such as Date, Time, Price, Quantity, Trade ID, various charges/
levies, etc.
Settlement of Trades
The Indian capital market follows a
T+1 settlement. This means that the exchange settlement will happen on the next
working day for all trades. Accordingly, you have to make the funds available
to your brokers account before trade or on the same day. Post trade you will get shares in your demat
account the next day. Similarly, if you
have sold stock, you will be required to
ensure that shares are available for delivery before the pay in on T+1 and you
will get the funds in your bank account at the end of day on T+1 day. A broker
is required to pay out the funds to your bank account within 24 hours of pay
out.
That was all about the trading
process.
If you are an investor with Jhaveri
Securities, we have a very robust mobile trading application called JeTrade+.
This application not only helps you to trade but also provides you with
actionable research calls, screeners, and an IPO application feature.
To Open an account with Jhaveri Securities,
please give a missed call on 9555066040