Episode 2: How to Buy and Sell Stocks

Cont.

In the Previous Episode we had seen the First step(Opening a Demat Account) in How to buy and sell Stock.

Second Step

After Opening a Demat Account the investor or trader have to put the order in the trading terminal. Many brokerages providing different trading terminals like Kite, nest, upstox pro etc. In that we can make a order placement.

There are two types of order placement:

        1. Simple Order 

        2. After Market Order(AMO)

In Simple order we can place orders during Market Hours. Whereas in AMO the order can be placed only before or after market hours. The AMO is mainly used by the people who are going for jobs. There are different type order which can be placed in both Simple and After Market order.

Product Type: There are two product type 1. Delivery and 2. Intraday. In Delivery type the trader/investor can hold the share/equity as per their wish there is no time limit to sell the stock. But in Intraday the validity that the user have is just a day that to a marketing hour which starts from 9:15 A.M. to 3:30 P.M.

In Intraday the trader has huge risk but in Delivery there is only minimum amount of risk only.

Order Type: 1. Market Order, 2. Limit Order, 3. Stop Loss Market, 4. Stop Loss Limit

1. Market Order: In this order type the trader can buy a share at market price. For example, X company share is trading at Rs 100. Now the trader wants to buy X company share if he places market order then the share value, he bought would be 100.

2. Limit Order: In this order type the trader can buy a share at the price as per his wish. For example, X company share is trading at Rs 100. Now the trader wants to buy X company share at 95 if he places Limit order at 95 the order will be opened until the order get executed once X company share reaches 95 the order get closed or otherwise it will open until the market hours then it gets canceled.  

 

Stop Loss Limit and Stop Loss Market are similar because it both helps in setting stop loss for Market and Limit Order. Stop loss helps in reducing the loss of the trader. For example, A trader bought a shre of X company at Rs 100 now it felled to Rs. 90. If the trader put stop loss at 98 then his loss would be Rs. 2. Otherwise, his loss would be Rs. 10.

Now a days new popular order placement is there which called GTT order. In this we can set condition to buy and sell stock it similar to limit order but if the order is placed the validity of the order is 365 days. 

*Disclaimer: The above-mentioned details may vary from one terminal to another. I have said some basic details alone so please check with your trading terminal.