Software Tools for Stock Trading

In our previous session we already saw about How to open a Demat account? What is a membership? What are brokers?.

Moving ahead,

If you have already opened your demat account at a broker, then next is How to buy shares. What are the different types of things that come in the software?

And lastly, Why are we supposed to do it? Why don't I have to go to a broker but do the trading by myself?

What are the facilities for that?

We are going to learn about all these things,

in today's session.

This technology is different from the earlier times,

Earlier What type of situation used to be there?

That you had to call the broker, and ask him to buy the shares of different companies every now and then, which can often be misheard, as sometimes you will ask for 70 shares and the broker buys the share only for 17, so such kinds of confusions also appear.

So, as the Demat Account came into the market, then slowly SEBI and NSE started shifting towards improvisation, and provided a platform at the broker's end.

And the broker also prepared a good software, at their end, and asked the client to put their user ID and password, and now you can trade as per your convenience.

How can it be done?

As I have explained to you in the previous lecture, there are many different types of brokers such as Sharekhan, Zerodha, Angel, ICICI Securities, etc, so there are many differences.

Now, here it will not be like this, suppose I am from Sharekhan then I have to buy only from the clients of Sharekhan, that is not necessary.

Here, it will happen that I am putting my buying order at the brokers account directly to the exchange, now I don't know who is the client that I am dealing with, he can be of Zerodha, Angel, or from  any other place, so this is the process of it

Now, How is that process?

I will try to display here, with a visual representation,

Suppose that I am sitting at the broker's premises, or at my home and have opened my software on my laptop or phone.

So, with my PC or laptop I placed an order for Wipro, TCS or Reliance, that I want to buy their shares, so What will happen here?

It will direct go through an internet to a satellite mainframe and from there it will go directly to an antenna, which will connect to the NSE mainframe exchange,

Now you might be thinking it is a very long process, in so much time many things can happen, but this happens in microseconds.

In each second a lot of order is placed, in each second the prices is very sensitive and  it can fluctuate in that same speed,

I placed my order, and instantly I will get a mail if my order gets matched.

So, same thing, that  it will go to the main frame, from there it goes to the premises of each and every broker. I might have placed it from Gujrat, someone else might be doing it from Maharashtra, Punjab, Jammu Kashmir, Delhi, so it can match with anybody.

So, this is the everyday process, and it is not like that it will happen only within the same clients of the same broker.

Ok! So, let's discuss What are the improvisations that we get, What types of order are there in the market, What are the things that we have to take care of in the market?

So, What is the advantage of trading in the software?

This System has completely become transparent?

What kind of transparency?

The price in which I have bought the shares I can see that myself and confirm it.

We are going to discuss all of these things right now itself.

It's not like the earlier times where we have to call the brokers and ask them to buy for us, it is not that type of a system.

So on whatever price you want to buy that is totally transparent whether it's high price or low price you have to choose according to your own convenience.

So there is no chance of any fraudulent activities or any error.

Next is what I was telling you earlier that all your we had to call the brokers by the shares but sometimes it can be possible that the phone is busy, he calls you back after 5 minutes or 10 minutes so the price on which you had seeing the shares that price has been fluctuated by now it might have increased or it might have decreased also, so the price in which you wanted to buy is left behind, so this distance that was there is completely gone now.

So a broker can directly provide a software from where he can buy the shares.

In this way we got the price efficiency as well as the price transparency. So there is no problem that arises.

Suppose I ask the broker to buy it for 315 rupees, but then the broker tells us that the price has become 320,if you want to buy,  so I will never know whether this information is true or false. Since I didn't go at the current time to check, and also I didn't even go to see when the order was placed.

So this was some of the things on which the previous system used to lack, when software use was not understood by the clients, therefore issues existed then, so the execution process has become fast after this.

Now seemingly if I have an account it's not important to give our account to the broker, so my login ID is not necessary for it to be given to the broker as its entire authority lies with me.

And if at all I want to share then it's my own choice.

Secondly, suppose I opened an account from a broker in Ahmedabad and now I have gone somewhere for a trip like Shimla, Manali or some other places. So now I want to book my profit or loss of the shares that I have bought, so for this it is not important for me to return back to Gujarat and then do this as now what happens is that, we have access to the software so we can buy sell or trade, as per our convenience from anywhere that we are.

Show the disadvantage of distance and everything else of making a phone call for buying, is now completely erased.

Next we will talk about types of orders, what are the types of orders that are available in the market?

If I want to buy any stock at a  higher price or lower prices, or xyz, whatever it is, what are the types that are there?

First comes the stop loss order. What does this mean, directly the software, let's say the software of zerodha, I will take you to the zerodha and try to explain to you as to how it will be done.

So suppose this is my account of zerodha, assumingly I want to buy shares of Wipro company, okay!

So what is this over here? It is my complete watch list.

Watch list, meaning it is the list which shows what are the things that I regularly have a watch upon.

You All must be doing online shopping, certain type of things you might like, so we keep that product added in the card list or wish  list, so that the remains are added, and wait to see if the price of it decreases so that I can buy or order it.

So a watch list is also a very similar thing, where what you do is that, you keep your favourite shares added in it. So, that you can see it on a regular basis as to what are the activities that are happening in it.

So here what we are going to do is that we are going to add some shares of Wipro, and see what happens,

so here you will write Wipro and you can see exchanges, one will be  NSE and other would be BSE.

I had told you earlier, that NSE is such an exchange where liquidity is more and in BSE on the other hand in its comparison has less.

So, what are we going to do?

Is that we will add NSE Wipro,

Now, what will I do? I will click on the buy order, as I will click I will have Multiple types of things in front of me,

There are different things given here, Regular order, Cover order, AMO order, then here also intraday , and then long term, and here also there are many things, market order, limit orders, sell orders, SLM orders.

So, we will have to discuss all of these things only.

So, as you can see here you will get to see the price of Wipro mentioned over here. How much can you see here? 668.20, so it is around 668, Now suppose I want to buy this Wipro share at 680,  we will first talk about the stop loss order that we were studying earlier,

So, suppose a stock price is  of 400 rupees, and you are thinking that as it will cross the price of 420, we will get to see good actions in it,  buying strength will be generated, that means strong demand is about to come,

So, what we have to do is keep it above that price, suppose here for us the demand price of WIPRO is 675, Ok!

So, what did I do here then?

As soon as I click on SL orders, two things get open over here, here it is price , and the other one is trigger price,

Now, What are these?

So, suppose that after a certain price only, thereafter the actions will start, then we saw the price at 670, then What will we do?

So,  here in trigger price  we will write 670, trigger meaning understand it as a normal gun, where even if you put the bullets in the gun, to work it is important to give it a trigger.

So, in the same way, when we have to place an order, in that also  we have types of orders, where we have to tell the actions, that after this price only trigger will come, so You have to tell the actions

So, what did we put in trigger price, that is 670 rupees,

Now, what we will do is that we will put inside the price option, a price which is above 670 rupees, meaning 670 point 50, like this, now what we did here is that we placed the order to buy, here we will select the option long term,

Why long term? Because this is a share which I want to buy and  prefer to keep it as hold,

Now, what are intradays, that I have already explained, meaning broker will give you a limit on this, if you want to buy one share, so broker will take the margin of 675 rupees which is an exact amount, but if a select intra day over here, so What will I get?

They will provide a limit of 5x, you can see it is written here, that means instead of 670 rupees if you just have 134 rupees then you buy, there is no problem with it.

But, How is this? As the day will end, whether it's profit or loss, everything will be done, my order will be finished and it will be booked.

So here we will select 6 long term order, and here What I did is, I place the order to buy, and as you can see, the order went into book, and trigger has become pending,

That is trigger price 670, and buying point 670 point 50, meaning until the price of WIPRO shares reach 670 point 50, till then my Wipro share will not be bought.

So, this is normally the stop loss orders.

Where you feel above this only a good action in the prices will be generated, so then only we use such type of order.

Ok!

So, How do we do that?Here first we will cancel this order, because we want to discuss more orders.

We will go over here, and from here either I can.cancel or modify it. So we will go in modification so that we can discuss the other orders.

Which is the other one, now here you can see there is a limit order, one is market order that is whatever will be the ongoing current price, and it be purchased there only,

Here, it will see 666 point 6, then and there it will be activated.

As I modified here and clicked it,

What happens?

You can see the order is completed instantly.

Ok!

Why?

Because I had selected the "market price" in the order type.

Ok!

So, we were feeling above 670, so we should have selected SL orders,

Ok! Let me show you some more buying orders of different types.

Now, the order that is given here is limit order,

Now, limit order normally when it is used in the market, suppose a certain stock price is 666 rupees, then what  we want, is to buy it at a cheaper price, when we want to buy anything at a lower price then only we use its order, it's not like that I want to buy and wrote 670 rupees like this over here, it will not happen, and won't buy it.

As I will do it, it will be completed immediately.

Why?

Because the seller's intention here is to sell only at higher prices.

So, here you can see, as you will go there, it is given Market depth over here.

So, here you can see these are the top prices, and the broker is providing, and coming down there are these prices also sellers are activated and buyers are activated.

So, what we want to select, you saw here, is not the limit price, but one thing which is known as SL price, so I will give you an example of that also.

Again I clicked on buy, and bought one stock, here in the limits now I will put the price at 650 rupees, and then placed in the market, now what happened here, my order went in pending, when will my stock be purchased?

When the stock price will come at 650 rupees, so it will come at that price or not, we don't know, when it will come, it will be executed then only, so this order is applicable only for one day, and as the time comes at 3:30, it will cancel all the orders.

Ok!

So, here we will go and learn about the other orders,

For instance as I go here in modification, here you can see one more order, called SLM. What is the difference between SL and SLM?

When you choose SL orders, it displays here a price, a trigger price which will be between high or low, and in that I will get my price.

But in SLM, I will just get the trigger price i will select the price above which I know the actions will take place, so I selected 670 as the price over here, and picked here modifier, so after 670 whatever the first price that will come, my stocks will be purchased immediately then,

So, what was the difference between SLM, there the price that I have put in trigger, as well as the price that I have given at limit, when it will come there, then only it will be purchased, otherwise it will remain as it is.

Ok!

So, these were certain orders that we selected.

So, let's move ahead and discuss about  cover orders, so for that first I will have to cancel this current order, so here we will cancel from here this order,

Then will go on cover orders, So, What is cover order?

That you kept a certain price over here, here I will select long term cover price, Normally you will have to select the price of the stock, here only two types of orders is only possible one is market, the other is limit, here SL and SLM is not possible, you can set a price to buy, and bought at that price, and along with that you can keep stop loss trigger price, here you think that you should buy at 670 meaning such a point, if my price comes below that it will automatically book my loss,

Meaning from there, there is a chance of aggressive selling, when I feel that way, I use the feature of cover orders while buying or selling.

How to use that?

Here I will go at limit,

While buying,I will put my buy price 650, meaning my stock will be purchased at the price of 650 rupees, and trigger price I will keep it as 630, and here like this I placed my position,

So, what will happen here?

So, here you can see that the buying price has gone to 650, and the stop loss price, here you see it's written sell, so when it will reach 630, the order that I have purchased will automatically be booked.

There is no doubt in that.

So, this is what the cover order is.

Now, we will talk about our third order , AMO. It is normally called an aftermarket hour order, meaning when the market closes,  10 minutes after that you can place your order, that is it should be purchased or sold at this particular price on the next day.

So, for that first we will cancel this, and then will see here ahead

So, what did we do here?

Again we went to buy, and selected an AMO order, so it will give us all the four types, so here what we will do is? We will do the same things, whenever you want to perform any actions it's better to use SL, either you go through the market or through SL that is always better, it's not that you used limit price everywhere, you should use limit price only when you want to purchase at a cheaper rate.

Here I kept the trigger price as 680 rupees, and here I kept the price as 681 rupees, so this can be places only at the next day, you can see here, it is applicable only after the trading hours,

Because the market is open in the current situation, it will not let us place the order itself.

So, these are some of the different types of order,

Hopefully, you must have understood a lot of things.

As to What are the types of orders?

How to use it?

As we had used it, it is written on each and every slide over here.

So, we learnt about types of orders, stop loss orders, market price, limit price, sell orders, buy orders.

Stop loss price, why it should be used or how to use?

We have discussed all of these things.

Ok!

If you have any doubts or queries,then you can post that in the comment section, and in this way your questions will reach us, and your comment will reach the other learners, the result of which, it will help in creating discussion of queries and solutions.

So, don't forget to post your comment in the discussion box.