Any client who has a savings bank account linked with the trading account along with a demat account, supported by a stock broker, can trade in the listed securities on any of the stock exchanges either through an online or offline facility. It is advisable to select a stock broker who is a member of widely used stock exchanges, so as to provide the investor with the flexibility to trade in various stock exchanges. Also, a working mobile number and email ID has to be provided to the stock broker at the time of setting up the accounts, so as to inform the investor of the necessary transactional details and any other account related information from time to time.
Clients can trade in any of the 7000+ stocks listed on the BSE and 2000+ stocks listed on the NSE during the trading hours of 9:15 a.m. to 3:30 p.m. The process of online trading involves, placing an instruction for a buy order or a sell order, indicating the desired quantity and price. Upon matching the instruction with a counter party, the stock broker executes the trade and the information will be relayed to the investor immediately by the stock broker through the SMS facility. Hence, the process of trading involves placing the order, executing the said order and settlement of the order (either payment of money at ‘T+2’ or debit of investor held shares at ‘T’).
Online trading implies that the client uses a self-service based online trading platform offered by the selected broker for order execution, whereas offline trading implies that the investor relays the instructions through phone or email to the broker for order execution.
After the end of the trading day, the stock broker will email the client, a set of documents separately, consisting of a digitally signed contract note, the transaction statement for the DP account and a margin statement. The terms involved in this process will be explained in detail along with the understanding of the documents sent by the stock broker.
The terms commonly used in the trading process, as well as online platforms, are defined as follows:
For all the listed companies on the stock exchanges, a unique number or a unique symbol is provided for specific identification of each company. This nomenclature is termed as Security Symbol or Ticker Symbol. BSE uses a 6-digit number for each company while NSE uses alphabets that are a short form or the best representation of the company name. Eg: Infosys Technologies Ltd is denoted as follows: BSE: 500209 | NSE: INFY
As highlighted earlier, BSE has more than 5000+ stocks listed on its exchange, whereas NSE has close to 1600+ stocks only. Some of the stocks are listed on both the exchanges. Hence, clients should identify the exchange on which they would want to trade in the securities. Also, during the time of opening the trading account, investors need to check with their stock broker if he/she is registered to trade on both the exchanges or only on one exchange.
The buy price placed for any stock during trading is termed as the Bid Price. Only when there is seller for that particular price, will the order be executed. Upon execution of the highest buy price order, the next bid price will take the place as the highest bid price. This process continues as long as there are sellers available in the market. Simply put, the price offered by any buyer is the bid price.
The total quantity of shares being bid for, at a particular price is termed as the Total Bid Quantity or simply, Bid Quantity. For any particular price, there are many buyers placing orders continuously and all orders with the same price are grouped together, to reflect the collective quantity at any point during the trade.
The sell price placed for any stock during trading is termed as the Ask Price. Only when there is a buyer for that particular price, will the order be executed. Upon execution of the lowest sell price order, the next sell price will take the place as the lowest ask price. This process continues as long as there are buyers available in the market. Simply put, the price offered by any seller is the ask price.
The total quantity of shares being offered, at a particular price is termed as the Total Ask Quantity or simply, Ask Quantity. For any particular price, there are many sellers placing orders continuously and all orders with the same price are grouped together, to reflect the collective quantity at any point during the trade.
The price recording by any stock at the time of opening of trade is termed as the Open Price. This price is not the bid price quoted during the pre-open but the price at which the first trade takes place, when the market opens for trading at 9:15 a.m.
The price recorded by any stock at the time of closing of trade is termed as the Close Price. After a complete session of trading, the stock markets close at 3:30 p.m. (current timing) and the final price traded by the stock is published as the closing price of the stock.
The highest/lowest price reached by any stock during the course of an intraday session is termed as the High Price/Low Price for that stock. Depending on the momentum of the stock and the stock market, the high price/low price can sometimes be the opening price or the closing price or any other price higher/lower than the opening price.
The total number of shares of a particular scrip, bought or sold by all the investors in a particular trading session is termed as Total Buy or Total Sell for that particular stock.
The sum total of all the shares of a particular company, bought and sold in a particular trading session is termed as the Total Traded Quantity of that company. It is also referred to as ‘Volume of Trade’ of that stock or simply, Traded Volumes of that stock.
The value arrived at by multiplying the total traded volumes and the price of that particular stock is termed as the Total Traded Value of that stock. It is also referred to as ‘Value of Trade’ of that stock or simply, Traded Value of that stock.
The highest/lowest price reached by any stock during the course of an entire year or 52 weeks of trading is termed as the 52 Week High Price/ 52 Week Low Price for that stock. These prices are essential to track the trends followed by that stock during the course of 4 financial quarters of trading activity.
Order Types13 Lessons
Get an understanding of the various order types. Traders/Investors can use order types as per their requirements.
Understanding Your Company
Learn how to monitor/study the performance of companies using financial statements and understand relevant time frames.
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