The trading terminal is quite sensitive as it contains all your trading account information. To ensure adequate security, brokers usually follow a stringent login process. The process involves entering your password and answering a secret 6-digit PIN for 2-Factor Authentication. Alternatively, you can set a T-OTP for enhanced security. The snapshot below shows this process.
The Market watch
Once you log in to the platform, you will have to populate the ‘market watch’ with the stocks you are interested in. Think about the market watch as a blank slate. Once the stock is loaded on the market watch, you can easily transact and query information about it. A blank market watch looks like this (this is also the screen that you see once you log in)
Keeping the first task in mind, we will load ITC Ltd onto the market watch. To do this, we simply have to type in the stock symbol ITC in the search bar, and the drop-down will show the stock in different exchanges.
The Market watch will display last traded price, a percentage change of the stock
- The last traded price of the stock (LTP) – This gives us a sense of how much the stock is trading at the very moment
- Percentage change – This indicates the percentage points the LTP is varying concerning the previous day close
Some basic information that will be needed at this point would be:
- The previous day close – At what price did the stock closed the previous day
- OHL C – Open, High, Low and Close gives us a sense of the range within which the stock is trading during the day
- volumes – Gives a sense of how many shares are being traded at a particular point of time
You can find this information under Market Depth. If you hover over the stock name, you will find Buy, Sell, Market Depth and Stock Information. If you click on Market depth, you will find the above information and the best bid and ask price ladder. We will be covering Bid and Ask price in the latter part of the Chapter.
As you can see, the last traded price of ITC is Rs.262.25, and it is trading -0.40% lower than the previous day close, which is Rs.263.30. The open for the day was at Rs.265.90, the highest price and the lowest price at which the stock traded for the day were Rs.265.90 and Rs.262.15 respectively. The volume for the day is close to 27 lakh shares.
Buying stock through the trading terminal,
Our goal is to buy 1 share of ITC. We now have ITC in our trading terminal, and we are convinced that buying ITC at Rs.261, which is roughly Rs.1.25 lesser than the last traded price, is a great idea.
The first step for this process would be to invoke what is called a buy order form.
- Hover over the stock you want to buy and click on the Buy Icon(B)
- This will invoke the Buy. When the buy order form is invoked, the following order form will appear on your screen.
The order form is pre-populated with some information like the price and quantity. We need to modify this as per our requirement. Let us begin by the first drop-down option on the top. By default, the exchange specified would be the national stock exchange.
The next entry is the ‘order type’. By clicking on the drop-down menu, you will see the following four options:
- Limit
- Market
- SL
- SL-Market
Let us understand what these options actually mean.
You can opt for a ‘Limit’ order when you are very particular about the price you want to pay for a stock. In our case, the last traded price of ITC is Rs.262.25 but say we want to limit our buy price to Rs.261. In such a situation, where we are particular about the price we want to transact in, we can limit order price. If the price does not fall to Rs.261, then you will not get the shares. This is one of the drawbacks of a limit order.
You can also opt for a market order when you intend to buy at market available prices instead of a concrete price that you have in mind. So if you were to place a market order, as long as there are sellers available, your order would go through, and ITC will be bought in the vicinity of Rs.262.25. Suppose the price goes up to Rs.265 coinciding with your market order placement, then you will get ITC at Rs.265. When you place a market order, you will never be sure of the price at which you would transact, which could be quite a dangerous situation if you are an active trader.
A stop-loss order protects you from an adverse movement in the market after initiating a position. Suppose you buy ITC at Rs.262.25 with an expectation that ITC will hit Rs.275 shortly. But instead, what if the price of ITC starts going down? We can first protect ourselves by defining the worst possible loss you are willing to take. For instance, in the example let us assume you don’t want to take a loss beyond Rs.255
This means you have gone long on ITC at Rs.262.25 and the maximum loss you are willing to take on this trade is Rs.6 (255). If the stock price drops down to Rs.255, the stop loss order gets active and hits the exchange, and you will be out of the loss-making position. As long as the price is above 255, the stop-loss order will be dormant.
A stop-loss order is a passive order. To activate it, we need to enter a trigger price. A trigger price, usually above the stop-loss price, acts as a price threshold and only after crossing this price the stop-loss order transitions from a passive order to an active order.
Going with the above example:
We are long at Rs.261. In case the trade goes bad, we would want to get rid of the position at Rs.255. Therefore, 255 is the stop-loss price. The trigger price is specified so that the stop-loss order would transition from passive to an active order. The trigger price has to be higher/equal than the stop-loss price. We can set this to Rs.255 or higher. If the price drops below 255, the stop loss order gets active.
Going back to the main buy order entry form, we now move directly to the quantity once the order type is selected. Remember, the task is to buy 1 share of ITC; hence we enter 1 in the quantity box. We ignore the trigger price and disclosed quantity for now. The next thing to select would be the product type.
Select CNC for delivery trades. If you intend to buy and hold the shares for multiple days/months/years, you need to ensure the shares reside in your DEM AT account. Selecting CNC is your way of communicating this to your broker.
Select NRML or MIS if you want to trade intraday. MIS is a margin product; we will understand more about this when we take up the derivatives' module.
Once these details are filled in your order form, the order is good to hit the markets. The order gets transmitted to the exchange as soon as you press the submit button on the order form. A unique order ticket number is generated against your order.
Once the order is sent to the exchange, it will not get executed unless the price hits Rs.261. As soon as the price drops to Rs.261 (and assuming sellers are willing to sell 1 share) your order gets through and is eventually executed. As soon as your order is executed, you will own 1 share of ITC.
The order book and trade book
The order book and trade book are two online registers within the trading terminal. The order book keeps track of all the orders you have sent to the exchange, and the trade book tracks all the trades that you have transacted during the day.
The order book has all the details regarding your order. You can navigate to the order book by clicking the Orders tab.
The order book provides the details of the orders you have placed. You should access the order book to:
- Double-check the order details – quantity, price, order type, product type
- Modify the orders – For example, if you want to modify the buy order from 332 to 333, you can do so from the order book.
- Check Status – After you have placed the order, you can check the status of the same. The status would state open if the order is completed partially, it would state completed if the order has been completed, and it would state rejected if your order has been rejected. You can also see the details of the rejection in the order book.
If you notice, there is an open order to buy 1 share of ITC at Rs.261.
If you hover over the pending orders, you can find the option to modify or cancel the order.
By clicking ‘modify’ the order form will be invoked, and you can make the desired changes to the order.
Once the order has been processed, and the trade has been executed, the trade details will be available in the trade book. You can find the trade book just below the order book.
Here is a snapshot of the trade book:
The trade book confirms that the user executed an order to buy 1 share of ITC at Rs 262.2. Also, notice a unique exchange order number is generated for the trade.
So with this, our first task is complete!
You now officially own 1 share of ITC. This share will reside in our DEM AT account until you decide to sell it.
The next task is to track the price of Infosys. The first step would be to add Infosys to the market watch. We can do this by searching for Infosys in the search box.
Once we select the trading symbol for Infosys, we press Add to add it to the market watch.
We can now track some live information about Infosys. The last trade price is Rs.1014.75; the stock is down -0.11% from its previous days' close of Rs.1015.85. Infosys opened the day at Rs.1014.80 made a low of Rs.998.40 and a high of Rs.1028.95. The volumes were 3.6 million shares.
Please note, while the open price will be fixed at Rs. 1014.80 the high and low prices change as and when the price of Infosys changes. For example, if Infosys moves from Rs.1014.2 to Rs.1050, the high price will reflect Rs. 1050 as the new high.
Notice that the LTP of Infosys is highlighted in green and ITC in red. If the current LTP is more than the previous LTP, the cell is highlighted in green, else in red.
Have a look at the snapshot below:
The price of Infosys moved from 1014.20 to 1020.80, and the color changed to red from blue.
Besides the basic information about the LTP, OHL C, and volume, we can also dig deeper to understand the real-time market participation. To see this, we need to invoke what is called a ‘Market Depth’ window also referred to as the snap quote window. As you can see, there is a lot of information in the snap quote window. I specifically want to draw your attention to the blue, and red numbers called the Bid and Ask prices.
Conclusion
The trading terminal is your gateway to markets. The trading terminal has many features that are useful to traders. We will explore these features as we progress through the various learning modules. For now, you should be in a position to understand how to set up a market watch, transact (buy and sell) in stocks, view the order and trade book, and understand the market depth window.
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