2. 2
• Stock Brokers
• How to Start Stock trading account
• Type of orders: SL, MKT, SLM etc.
Contents
3. 3
• Stockbroker is a member of a recognized stock exchange who buys sells or deals in
securities.
• To work as a stockbroker registration with SEBI is mandatory.
• SEBI is empowered to impose conditions while granting the certificate of registration.
• Stock brokers work on behalf of their clients. Examples of stock brokers include:
• Geojit Financial services Ltd.
• Zerodha Broking Ltd.
• HDFC Securities Ltd.
• Motilal Oswal Ltd.
• ICICI Securities Ltd. Etc.
3.4 Stock Brokers
4. 4
3.4 Stock Brokers
Stock Brokers
Full Service
Stock brokers
Discount
Brokers
•Provide research materials,
•Call & Trade
•Suggestions etc.
•E.g. Sharekhan, Motilal
Oswal, Geojit
•Only Trading Platform
•Less brokerage
•E.g. Zerodha, UpStox,
5Paisa.com etc
5. 5
Functions of Stock Brokers:
• Buying and selling of shares
• Selling third party products like mutual funds and insurance
• Managing clients’ portfolio
• Engaging in marketing their products
• Investor education
Duties of Stock Broker to the investors:
• He should be faithful to the clients in his dealings with them and execute orders as per the
instructions.
• He should issue to his clients a contract note without any delay for all transactions in the form
specified by the SE.
• To avoid breach of trust, he should not disclose or discuss with any other person details of
investment and transaction of clients.
• He should not mislead clients merely to generate business.
• He should avoid dealing with a client who is a defaulter in his dealings with other brokers.
• He should not give investment advice to any client unless sought by him.
• A stockbroker should have adequately trained staff and arrangements to render fair, prompt and
competent services to his clients.
3.4 Stock Brokers
6. 6
• A trading account is an investment account that holds securities, cash and other
holdings like any brokerage account.
• With a trading account, an investor can buy and sell assets as frequently as they want
that too within the same trading session.
• The demat account is used as a bank where shares bought are deposited in, and where
shares sold are taken from. E.g. NSDL & CDSL
3.5 How to Start a trading account?
7. 7
• First, select the stock broker or firm. Ensure that the broker is good and will take your
orders in a timely manner. Remember, time is of utmost importance in the stock
market. Even a few minutes can change the market price of the stock. For this reason,
ensure that you select a good broker.
• Compare brokerage rates. Every broker charges you a certain fee for processing your
orders. Some may charge more, some less.
• Next, get in touch with the brokerage firm or broker and enquire about the account
opening procedure. Often, the firm would send a representative to your house with the
account opening form and the Know Your Client (KYC) form
• Fill these two forms up. Submit along with two documents that serve as proof of your
identity and address.
• Your application will be verified either through an in-person check or on the phone,
where you will be asked to verify your personal details.
• Once processed, you will be given your trading accounts details. Congrats, you will
now be able to conduct trades in the stock market
3.5 How to Start a trading account?
8. 8
Documents Required:
• PAN card – Compulsory
• ID- Proof – Aadhar/ Voters ID/ Passport (Any one of them)
• Proof of Address – Ration card/ Driving License
• Bank Statements/ Cancelled Cheque – Compulsory
3.5 How to Start a trading account?
9. 9
3.6 Types of Orders
Types of
Order
Intraday Delivery
Types of
Order
Buy
Order
Sell Order
•Intraday trades involve
buying
and selling a stock within
a trading session, i.e. on
the same day
•The stocks you buy are
added to your demat
account. They remain in
your possession until you
decide to sell them
•SL & SL-M Orders
10. 10
Long Position V/S Short Position
• Long means: Buy
• Short means: Sell
• You can short sell stocks in intraday trades. You cannot short sell stocks using
‘’Delivery’’ method.
• E.g. for Shorting: Sell 100 shares of ITC Ltd. @ 172. Cover it @ Rs. 170. So profit =
200 Rupees
• E.g. for Long: Buy 100 shares of ITC Ltd. @ 145. Sell it @ Rs. 150. So profit = 500
Rupees
3.6 Types of Orders
11. 11
Buy Order process
1. Open a trading & demat account
2. Download the App from the Playstore/ app store
3. Log – in
4. Add items to watch list
5. Add money to the trading account using your bank
6. Select a share. For e.g. Reliance 10 shares @ Rs. 1000 each
7. Place a BUY order
8. After order matching, you will get your shares
9. After T+2 days, the shares will be credited to your demat account
3.6 Types of Orders
12. 12
Why Stop Loss ?
A stop-loss is designed to limit an investor's loss on a security position that makes an
unfavorable move.
One key advantage of using a stop-loss order is you don't need to monitor your
holdings daily.
A disadvantage is that a short-term price fluctuation could activate the stop and
trigger an unnecessary sale.
An example:
• You have an intraday position. You purchased, 100 shares of SBI @ Rs. 100. You
want to stop the loss if market moves opposite. You are able to bear Rs. 2 per
share, i.e. 100*2 = Rs. 200. So you have to set SL order
3.6 Types of Orders – Stop Loss Order
13. 13
• In this case, since you have a buy/long position in the market, your stop loss order would
be a sell order.
• So suppose you have bought a stock for Rs 500 and you don’t want to lose more than 2%
of your capital in the trade, you would like to set a stop loss at Rs 490.
• Now you have two choices, you can either place a SL order or a SLM order.
• SL - M Order – Stop Loss Market Order
You will put a sell SLM order with the trigger price specified as Rs 490. As soon as the stock
price hits Rs 490, your sell order will be sent to the respective exchange, as a market order
and the stocks will be sold at the market price.
3.6 Types of Orders – Buy SL - M
14. 14
SL - Order – Stop Loss Limit Order
You will put a sell SL order with the price and the trigger price specified. Now it is
obvious that your order needs to be sent to the respective exchange before it is
executed, hence the trigger price needs to be greater than or equal to the price for the
sell order.
Now you can set the trigger price as Rs 490.5 and sell price as Rs 490. This gives you a
range of Rs 0.5 or 50 paise. Immediately after the price level of Rs 490.5 is breached,
your sell order is sent to the exchange as a limit order.
3.6 Types of Orders – Buy SL
15. 15
So suppose you have shorted a stock at Rs 500 and you don’t want to lose more than 2%
of your capital in the trade, you would like to set a stop loss at Rs 510.
SL – M Order – Stop Loss Market Order
You will put a buy SLM order with the trigger price specified as Rs 510. As soon as the
stock price hits Rs 510, your sell order will be sent to the respective exchange, as a
market order and the stocks will be bought at the market price.
3.6 Types of Orders – Sell SL - M
16. 16
SL Order – Stop Loss Limit Order
You will put a sell SL order with the price and the trigger price specified. You can set the
trigger price as Rs 509.5 and buy price as Rs 510. This gives you a range of Rs 0.5 or 50
paise. Immediately after the price level of Rs 509.5 is breached, your buy order is sent
to the exchange as a limit order at Rs 510.
3.6 Types of Orders – Sell SL
