Accounts, Orders and Product Types

Understand trading and demat accounts, CNC, MIS, NRML, market and limit orders, stop-losses, order validity and market depth.

This chapter is about what actually happens after you press Buy or Sell. Most beginner mistakes are not bad ideas about markets. They are misunderstandings about operations: assuming an order executed when it was only submitted, assuming a stop-loss will fill at the stop price, or assuming an intraday position will be closed for you.

This is an educational overview, not financial or tax or legal advice. Broker features, order types, timings and policies change, and they differ between brokers and between segments. Check your own broker’s current documentation before trading. Costs are explained in what it costs.

The three accounts

Investors in India commonly use three connected accounts, or account relationships.

NSDL and CDSL are India’s two depositories. They hold the electronic records of who owns what. A Depository Participant (DP) is the middle layer that gives you access to that system, and a DP can be a bank, a broker or another institution.

A broker can also be a registered DP, but stockbroking and depository participant are legally distinct roles. Zerodha’s own footer, for example, lists its broking registration and its depository services as separate SEBI registrations under separate numbers. That is the norm rather than the exception, and it is why “my broker holds my shares” is a simplification.

Two further points beginners usually need told:

• A trading account is not a bank account. You cannot treat the balance shown in your trading app as savings. It is subject to margin blocks, pay-in requirements and broker risk controls.
• Securities are recorded in the demat system, not merely as entries in a broker’s app. Your consolidated account statement comes from the depository, which is the authoritative record.

You can usually open your trading and demat accounts through the same provider for convenience. That is convenience, not a requirement. They are separate accounts, and the Depository Participant is a separate function.

Not every derivatives trade needs a demat account. Cash-settled index futures and index options produce cash outcomes, with no securities delivered. Physically settled stock and commodity derivatives do introduce separate demat and delivery requirements.

What happens when you buy one share

The flow, in order:

1. You provide the necessary funds or eligible collateral.
2. You place a buy order through your trading account.
3. The broker validates the order and routes it to the exchange.
4. The exchange matching system pairs your order with an eligible sell order.
5. Clearing and settlement obligations are worked out and processed.
6. The securities are credited to your demat account following settlement.

Step 4 is not step 6. An order showing as executed does not mean the demat settlement has finished. Execution, clearing and settlement are separate events on separate timelines, and the securities land in your demat account only at the end of it.

Trade date and settlement date

T is the trade date, the day the trade executes. T+1 is the next working day, excluding weekends and holidays, and it is the standard rolling settlement cycle in the Indian equity cash market. NSE Clearing describes itself as following a T+1 rolling cycle, and BSE has required T+1 for its equity segment since 27 January 2023.

Not every security follows the same cycle. SEBI has given exchanges flexibility over settlement cycles, and an optional T+0 rolling cycle was introduced alongside T+1 for a limited set of eligible scrips and a limited number of brokers. Some securities are also placed in a trade-to-trade group that is settled gross rather than netted. The correct statement is therefore “T+1 is the standard cycle”, not “everything settles T+1”.

Product types: CNC, MIS and NRML

These are brokerage product labels, not exchange-defined product categories. Different brokers use different words for similar things, and terms like Delivery, Intraday and Overnight are common alternatives.

CNC

Used for delivery-based equity transactions. Bought securities can be held beyond the trading day, once settlement has completed.

Two things CNC does not mean. It does not mean an executed order is automatically a long-term investment, and it does not by itself imply broker-funded margin. If you buy and sell the same security on the same day under CNC, that is still an intraday transaction for accounting and for applicable charges, whatever the product label says.

MIS

Typically used for intraday positions. The broker expects positions to be closed during the session.

MIS means Margin Intraday Square Off. It is not swing trading, which is a strategy of holding for days and is handled under CNC or NRML. Conflating the two is a common and expensive misunderstanding.

The broker may initiate an automatic square-off near its cutoff. Three things follow from that “may”:

• Automatic square-off is not guaranteed to succeed.
• The trader remains responsible for the position and for whatever obligation results.
• A failed square-off can leave unintended open or delivery-related exposure, subject to broker and exchange procedures.

Square-off times are a broker’s own policy and are not a market rule. They differ between brokers and, within one broker, between segments. Zerodha’s published intraday square-off times are 3:12 PM for CAS stocks, 3:25 PM for non-CAS stocks, 3:26 PM for F&O, and ten minutes before the close for MCX, and its documentation states that its risk management team may adjust these. Dhan, for its part, states that its admin square-off begins at 3:18 PM, with separate timings for commodities. Zerodha’s own wording on the obligation is worth reading directly:

The client shall be responsible for squaring off all open positions. While Zerodha may square off positions, it is under no obligation to do so. The selection and sequence of such square-offs are at Zerodha’s sole discretion.

It also charges an auto square-off fee of ₹50 plus GST per order squared off, which is a reminder that the broker performing the exit does not make it free.

NRML

Used for eligible overnight derivatives positions. Margin depends on the contract and the applicable risk rules, and positions can stay open across sessions until closed, expired or settled.

NRML is not an exemption from exchange or broker expiry restrictions, and physically settled derivatives can generate real delivery obligations. See futures and options.

Margin Trading Facility is not intraday MIS

MTF lets an eligible equity purchase be part-financed by a broker under applicable SEBI rules. The broker provides the financing, you pay margin and financing charges, and the broker may require pledged securities or other eligible collateral.

It is a different mechanism from MIS. An MTF position is a financed delivery position that can be carried; a MIS position is expected to be closed intraday. Brokers accept securities as margin only by way of pledge in the depository system, which is a framework-level requirement rather than a broker preference.

Avoid assuming current MTF leverage, interest rates or eligible-security lists from any page, including this one. Those change and are broker-specific.

The three dimensions of an order

Three separate choices describe one order, and they are often confused because they appear on the same screen.

A trader might place a CNC product, a limit buy order, with DAY validity. Three different properties of the same order. Another trader might place an MIS order with stop-loss functionality, where the broker supports it.

Keeping them separate is what makes “why did this order behave like that” answerable.

Market orders

A market order instructs the exchange to buy or sell at the best available prices, subject to available liquidity and applicable trading controls. It prioritises immediate execution, not a price.

That distinction is the whole of it, and it is frequently stated backwards. A market order does not guarantee execution, and it does not get you the price you were looking at a moment ago.

• The final price can differ from the last traded price displayed on screen.
• A larger quantity can execute across several price levels, which is called walking the order book.
• Slippage is the difference between the price you expected and the price you got.
• A market order can be partially filled or rejected under exchange or broker controls.
• Market orders are not universally permitted for every instrument or session.

Limit orders

A limit order specifies the least favourable price you will accept.

• For a buy limit, execution cannot occur above the limit price.
• For a sell limit, execution cannot occur below the limit price.

Execution at a better price is fine. What a limit order does is draw a boundary.

It may fill completely, fill partially, stay open, expire, or be cancelled. One thing beginners get wrong: a last traded price equal to your limit does not guarantee a fill. Queue position, available quantity and order priority all matter. The exchange matches on price-time priority, so the order that reached that price first is served first.

Market orders prioritise immediate execution. Limit orders protect the execution price. Neither guarantees a completed trade.

A worked order book

Suppose the visible asks are:

A market buy for 200 shares, assuming those quantities stay available, would fill:

The average execution price is ₹20,025 ÷ 200 = ₹100.125 exactly. Note that this average is an arithmetic result, not a price you could have traded at: for a security priced around ₹100 the exchange tick size is ₹0.01, and ₹100.125 is not a multiple of it. The nearest tradable prices are ₹100.12 and ₹100.13.

Now the same book with a buy limit of ₹100.10 for 200 shares. Nothing above ₹100.10 is acceptable, so under the same static assumptions it could fill 150 shares (50 at ₹100.00 and 100 at ₹100.10) and leave 50 shares pending or later cancelled depending on the validity.

Real order books change continuously. These outcomes are illustrative, not guaranteed.

Stop-loss orders

Two different instruments, often confused because both start with “stop”.

Stop-Loss Market (SL-M). Once the trigger is met, the order behaves like a market order for execution. Execution can occur at an unfavourable price during a gap or a fast market. The trigger does not guarantee the stop price. SL-M is also subject to product and exchange restrictions and is not available for every instrument or segment.

Stop-Loss Limit (SL-L). Once the trigger is met, the order becomes eligible for execution as a limit order. You specify both a trigger price and a limit price. Execution is constrained by that limit, so the order can remain unfilled if the market moves beyond it.

You may see a broker label the second one with a nonstandard abbreviation. SL-L, or “stop-loss limit”, is the safer term to use when checking a contract note.

Example

A trader holds a share bought at ₹100 and sets a sell stop trigger at ₹95.

• SL-M, where permitted, seeks execution at whatever price is available after the trigger, which may be below ₹95.
• SL-L with trigger ₹95 and a sell limit of ₹94.50 permits execution at ₹94.50 or better, but may remain unfilled if the price gaps below that limit.

The distinction to hold onto is that reaching a trigger is not the same as trading. The first is your instruction becoming active. The second needs someone on the other side of the trade.

Bracket orders

A bracket order is generally a broker-supported arrangement containing an entry order, a profit-taking exit and a protective stop-loss exit. Where the platform implements an OCO (One Cancels the Other) relationship, execution of one eligible exit causes the other to be cancelled or adjusted under the platform’s rules.

Qualifications that matter:

• Bracket orders are not necessarily native exchange order types. They are broker arrangements built on top of exchange orders.
• Availability varies by broker and by segment.
• Protective exits are not guaranteed to execute at an exact price.
• Partial fills, rejected legs and broker outages can leave unexpected exposure.
• The trader should verify that the protective legs are actually active, rather than assuming.

Do not assume every broker’s bracket facility behaves identically.

Cover orders

A cover order combines an entry order with a compulsory protective stop-loss order attached to the resulting position.

It is not an exit-only order, which is a common misdescription. The entry may be market or limit, subject to broker support, and the protective stop travels with the open position. Cover orders may be restricted to intraday products or particular segments, and the stop ranges a broker allows vary.

A stop-loss does not guarantee a fixed maximum realised loss, and cover orders are not universally available.

After Market Orders (AMO)

AMO allows eligible order instructions to be entered while the relevant market is closed. The broker stores or schedules the instruction for submission in a later eligible session.

• An AMO does not execute simply because it was placed outside regular trading hours. Submission timing depends on the broker’s own rules, on the instrument, and on which session is eligible.
• The eventual order may be market or limit, subject to supported configuration.
• Exchange acceptance and actual execution are not guaranteed once the broker submits it.
• Overnight price gaps can significantly change the result, which is the main risk.

Some brokers offer additional scheduled-submission choices. Do not rely on a published AMO window without checking it and dating it for your own broker.

Good Till Triggered (GTT)

GTT is typically a broker-managed conditional instruction that stays stored until a specified condition is met, or until it expires under the broker’s rules.

• It is not necessarily a continuously resting exchange order.
• The trigger can cause the broker to place an exchange order.
• Triggering does not guarantee execution.
• Adequate funds, collateral and eligible holdings may be required when the triggered order is placed, which is not the same moment as when the GTT was created.
• Maximum validity periods are broker-defined.
• Some facilities support one trigger, others two, or an OCO-style relationship.

Do not assume a GTT instruction remains active indefinitely.

Other order facilities

These are broker and platform features, and not every broker offers every one.

• Basket orders let you prepare and submit multiple orders together. A basket is not atomic. Individual legs can execute, reject, partially fill or stay pending independently, and a margin estimate shown before submission is not a guarantee of margin at the moment each leg is processed.
• Iceberg or sliced orders break a larger intended quantity into smaller orders. How execution and visibility behave depends on the broker’s implementation.
• Trailing stop-loss has a reference trigger that can move in a favourable direction under a specified rule. The precise mechanism and supported products vary.
• OCO (One Cancels the Other) is a conditional relationship between two orders. Cancellation timing, partial fills and platform handling all matter.
• Conditional or multi-leg orders may contain dependencies between legs, but a visual grouping in a broker interface does not guarantee simultaneous exchange execution.

Order validity: DAY and IOC

Do not treat 3:30 PM as a universal DAY expiry time. Segment-specific trading schedules and order cutoffs differ, exchanges run to different closes, and brokers set their own cutoffs. A DAY order expires at the applicable session end, whatever that is.

IOC permits partial fills. That is the detail beginners miss.

Example

A trader submits an IOC buy for 1,000 shares, and only 600 shares are available at eligible prices immediately.

The system executes 600 shares and cancels the remaining 400. The trader ends the day with a 600-share position, not the 1,000 requested.

IOC does not guarantee the full requested quantity, and it is not automatically the best choice for large orders or fast markets. Where relevant, some venues offer stricter all-or-nothing requirements such as fill-or-kill, but those are not available on every exchange, so do not assume them.

The order lifecycle

Status names vary by broker, but the underlying chain does not, and four distinctions explain most of the confusion:

• Broker submission is not exchange acceptance.
• Exchange acceptance is not execution.
• Execution is not settlement.
• A cancellation requested is not a cancellation confirmed.

One more that catches people: a partially filled order creates a real position for the executed quantity, even if the remainder is later cancelled or the order is then rejected. The leftover is not a phantom.

Market depth and the order book

• Bid: a price a prospective buyer will pay.
• Ask: a price a prospective seller will accept.
• Bid-ask spread: the difference between the best bid and the best ask.
• Market depth: the visible buy and sell orders, or aggregated quantities, at available price levels, as shown by the data feed and display.

The order book is matched on price-time priority, so it is useful for reasoning about queue position, partial fills and slippage, and for estimating whether an exit can be filled in size.

Qualifications that keep it honest:

• Displayed liquidity can disappear, through cancellation or through someone else trading it first.
• Depth is not a guaranteed indication of future support or resistance.
• Some liquidity is hidden or undisplayed, or simply not visible in the levels shown.
• The last traded price and the best available bid and ask are different concepts.
• An order book is dynamic, not a fixed inventory.

Visible depth does not guarantee an exit at a particular price.

Why orders get rejected or fail

• Insufficient funds or eligible margin.
• Price bands or exchange price-limit restrictions.
• Incorrect trigger and limit relationships, for example a sell stop trigger set above the sell limit price.
• Incorrect quantity or lot-size multiples.
• Instrument restrictions.
• Broker RMS restrictions.
• Trading-session or order-type restrictions.
• Failure of broker or exchange validation.
• Low liquidity, leaving the order simply unfilled.
• Partial fills, where some quantity trades and the rest does not.
• Market interruptions, including halts and auction sessions.
• Connectivity or platform issues.

A rejected order may create no trade at all. A partially executed order creates exposure for the executed quantity. And a pending order, a filled order and an open position are three different states.

Execution risk when placing multiple orders

This matters especially if you place orders programmatically or in several legs.

Multi-leg placement is not always atomic. In a two-leg options strategy:

• The first leg may execute.
• The second leg may be delayed, rejected or partially filled.
• Margin availability can change between the legs.
• Broker RMS may evaluate each leg separately.
• Releasing margin from a closing trade may take processing time before the next leg is accepted.
• You may therefore hold unwanted directional exposure temporarily.

Broker-side batching, leg sequencing and small delays can influence outcomes, and some traders add a delay deliberately. No fixed delay universally solves margin or order-rejection problems.

One caution for automated traders: order placement latency is not confirmed exchange execution. An acknowledgement that an order was submitted is not evidence that a preceding position has actually closed.

Before placing an order

1. Correct account.
2. Correct instrument and exchange.
3. Correct buy or sell direction.
4. Correct quantity and lot size.
5. Correct product type for how you intend to hold the position.
6. Correct market, limit or stop-loss selection.
7. Correct trigger and limit prices, and their relationship.
8. Correct order validity.
9. Sufficient funds or margin available.
10. Applicable expiry and delivery obligations understood.
11. Expected transaction costs calculated.
12. Final order status and actual resulting position checked after submission.

A stop-loss, a market order, or a broker-managed protective feature does not guarantee a particular execution price. None of the twelve checks makes a trade safe. They make an unintended trade less likely, which is a different and smaller claim.

Next: what it costs.