You might have come across these product codes: MIS and CNC. Ever wondered, what they mean? Here you'll learn what is MIS and CNC in context to stock trading in context to Zerodha and other stock brokers in general.
While a lot of information is available about trading strategies, for novice traders, it is equally paramount to learn about the little nitty gritties of investing. While it might seem basic, lack of knowledge might result in huge opportunity costs. Sometimes, it can be as basic as knowing about things within an application, where things like CNC and MIS matter.
Now, let's understand these product codes one by one.
The full-form of MIS is Margin Intraday Square-off (MIS).
Margin Intraday Square-off (MIS) is used mainly in intraday trading, which can be used for assets like stocks, futures and commodities. Basically, in such type of transaction, you get a margin, which is nothing but credit extended by the broker. Another important aspect to note that such positions, being primarily intraday, are squared off by the end of the day, i.e the position will be exited voluntarily or otherwise.
The full-form of CNC is Cash and Carry (CNC).
Cash and Carry (CNC) is basically a service code, a product code that is used for delivery-based equity. Using CNC while trading simply means your transaction is entirely cash basis, i.e. the payment is done while purchasing the stock. There is no need or utilisation of margins, but instead, you pay ‘cash’ and ‘carry’ the underlying asset i.e. the shares in your demat account. Needless to say, there can be no short selling transactions through this method.
This code is suitable for infrequent traders and investors, by extension for all the long positions. You can use this for all the assets. Also, note that ‘cash’ here does not refer to physical cash, but used as an antonym of credit.
Whenever you place an order through Zerodha Kite or Pi, you may require to use products codes like MIS and CNC.
In Zerodha (a leading stock broker in India), when trading through the product code MIS, the broker provides a margin of 3 to 10 times of your balance, depending on the risk parameters associated with the stock. While using MIS with Futures, the margins provided would be 35-45% of the total margin required, which again depends on risk parameters like \span of the future contract\ and \potential exposure\ (Span+Exposure) created due to said contract. Note, that Zerodha does not provide a margin for trading \Options.
Also, all the positions created using such margins would be treated as intra-day only, and will be squared off by 3:20 PM – 3:25 PM. While using MIS for commodities, there is extra leverage provided, and for overnight exchange stipulated margin, you only need 50% of that amount. MIS is the product code to be used while using Zerodha for short selling.
While using CNC in Zerodha, no extra margin would be provided, which is to say you can only place a BUY order for the amount you are willing to pay upfront. However, in CNC type of transaction, the position would not be auto-squared, instead you will ‘carry’ the asset till you decide to place the SELL order. Till then, the asset would remain in your demat account.
While these are both product codes with purpose, note that this does not mean that you cannot do a intraday transaction using CNC. Simply put, using CNC, you trade with the money you have, and you get actual possession of the asset. You can choose to sell this asset within the same day and it would be considered an intra-day transaction.
MIS and CNC are different terminologies that are used to execute trades. MIS provides margin to your trading ventures in futures or other segments of the stock market. Whereas CNC is the method in which the stocks are purchased, that is, through cash.
MIS and CNC are different terminologies that are used to execute trades. MIS provides margin to your trading ventures in futures or other segments of the stock market. Whereas CNC is the method in which the stocks are purchased, that is, through cash.
MIS and CNC are different terminologies that are used to execute trades. MIS provides margin to your trading ventures in futures or other segments of the stock market. Whereas CNC is the method in which the stocks are purchased, that is, through cash.
MIS and CNC are different terminologies that are used to execute trades. MIS provides margin to your trading ventures in futures or other segments of the stock market. Whereas CNC is the method in which the stocks are purchased, that is, through cash.
MIS and CNC are different terminologies that are used to execute trades. MIS provides margin to your trading ventures in futures or other segments of the stock market. Whereas CNC is the method in which the stocks are purchased, that is, through cash.
MIS and CNC are different terminologies that are used to execute trades. MIS provides margin to your trading ventures in futures or other segments of the stock market. Whereas CNC is the method in which the stocks are purchased, that is, through cash.
Most of the online brokers allow you to take only one position in a particular security, (Either in MIS or CNC), but Zerodha lets you take 2 positions separately in one security in the form of MIS as well as CNC. This feature is very useful for traders as well as investors for hedging their open position for a single day.
IOC simply stand for Immediate Or Cancel (IOC) orders. As you get more and more familiar with trading terms and slang, you might realize that each term is supposed to be linked with others, which form this sort of conjoined strategies. These strategies are usually what result in successful trading, rather than speculation.
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Intraday trading on Zerodha can be executed with ease by choosing the type of trades you want to engage in. These could be NIFTY, BANK NIFTY, or future options of companies. Once you choose the respective lot, then choose the type of orders and then buy the shares. Trade them when you see a profit or wait till a specific point till you recover your investment.
For placing a BTST order via Zerodha Kite, the process is quite simple. You can follow the same steps as to how you might place an order on Zerodha Kite. However, when you buy or purchase a stock, you will have to select the “CNC product type” option in the buy order popup.
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So, you wish to know how to do short selling in Zerodha or with any stock broker for that matter. In simple words, Short selling is When you go short, you sell the stock first and buy it later. The same has been explained in detail here.
Putting Stop losses for any position is an essential step to ensure that no major losses occur if the view on the underlying goes wrong. You should always place a Stop Loss when trading Intraday or positional. You can use a stop loss in Zerodha by following some easy steps.
Zerodha is India’s largest and most trusted Stock broker with more than 1+ crore active users. Selling shares in CNC is very simple in Zerodha. To sell any share in CNC you must possess that stock in your Demat order to sell it in CNC. Learn how to sell your shares in detail.
Trigger price is the price entered by a trader during stop-loss limit and stop-loss market orders. Let's understand this in detail. In Zerodha following this mechanism is really simple.
GTT in Zerodha is an acronym for the Good Till Trigger feature offered by Zerodha that lets the investor select a trigger price and a set of predetermined conditions that as and when are met, an order is placed automatically.
Rishika Agarwal
This is one of the great features of Zerodha and is loved by the trades. I am impressed by the way it is written as it very explanatory and well defined. It also mentions all the details in a segregated manner making it easier for the readers to understand. One of the best articles so far.