The Trading Terminal

The Trading Terminal

9.1 – Overview

When a market participant wants to transact in the market, he can do so by opting one of the options:

1. Call the stock broker, and trade usually called “Call & Trade”

2. Use a web browser to access the markets

3. Use the trading software called the Trading Terminal

It allows you to do multiple things such as transacting in shares, tracking your Profit & Loss, tracking market movements, following news, managing your funds, viewing stock charts, accessing trading tools etc. 

To keep this chapter as practical as possible let us set two basic tasks to using the TT.

1. Buy 1 share of ITC, and

2. Track the price of Infosys

we will be using Zerodha’s web platform ‘Kite’

9.2 – The login process

 The process involves entering your password and answering two secret questions, the answers to which only you know.

9.3 – The Market watch

Keeping the first task in mind we will load ITC Ltd onto the market watch. To do this we simply have to type in the stock symbol ITC in the search bar and the drop down will show the stock in different exchanges(NSE/BSE)

 

Click on the Add symbol to add the stock to the marketwatch.

 

The marketwatch will display last traded price, percentage change of the stock

The last traded price of the stock (LTP) – This gives us a sense of how much the stock is trading at the very moment

Percentage change – This indicates the percentage points the LTP is varying with respect to the previous day close Some basic information that will be needed at this point would be:

Previous day close – At what price did the stock close the previous day

OHLC – Open, High, Low and Close gives us a sense of the range within which the stock is trading during the day

Volumes – Gives a sense on how many shares are being traded at a particular point 

of time

You can find this information under Market Depth.

 

As you can see, the last traded price of ITC is Rs.262.25,

it is trading -0.40% lower than 

previous day close Rs.263.30.

open Rs.265.90

highest price Rs.265.90  

lowest price Rs.262.15

volume 27 lakh shares.

9.4 – Buying a stock through the trading terminal

The first step for this process would be to invoke what is called a buy order form.

-Hover over the stock you want to Buy and click on the Buy Icon(B)

-This will invoke the Buy. When the buy order form is invoked, the following order form will appear on your screen.

 

The next entry is the ‘order type’

Limit

Market

SL

SL-Market

You can opt for a ‘Limit’ order when you are very particular about the price you want pay for a stock. In our case, the last traded price of ITC is Rs.262.25 but say we want to limit our buy price to Rs.261. In such a situation where we are particular about the price we want to transact in, we can opt for a limit order price. If the price does not fall to Rs.261, then you will not get the shares.

market order

when you intend to buy at market available prices instead of a very specific price that you have in mind.

when you place a market order, you will never be sure of the price at which you would transact, and this could be quite a dangerous situation if you are an active trader.

stop loss order 

IT protects you from an adverse movement in the market after initiating a position.

This means you have gone long on ITC at Rs.262.25 and the maximum loss you are willing to take on this trade is Rs.6 (255). If the stock price drops down to Rs.255, the stop loss order gets active and hits the exchange and you will be out of the loss making position. As long as the price is above 255 the stop loss order will be dormant.

A stop loss order is a passive order. In order to activate it, we need to enter a trigger price. A trigger price, usually above the stop loss price acts as a price threshold and only after crossing this price the stop loss order transitions from a passive order to an active order.

Going back to the main buy order entry form, once the order type is selected we now move directly to the quantity. Remember the task is to buy 1 share of ITC; hence we enter 1 in the quantity box. We ignore the trigger price and disclosed quantity for now. The next thing to select would be the product type.

Select CNC for delivery trades. Meaning if your intention is to buy and hold the shares for multiple days/months/years

Select NRML or MIS if you want to trade intraday.

The order gets transmitted to the exchange as soon as you press the submit button on the order form. A unique order ticket number is generated against your order.

 As soon as your order is executed, you will own 1 shares of ITC.

9.5 – The order book and Trade book

The order book keeps track of all the orders that you have sent to the exchange and the trade book tracks all the trades that you have transacted during the day.

 

The order book provides the details of the orders you have placed. You should access 

the order book to:

Double check the order details – quantity, price, order type, product type

Modify the orders – For example if you want to modify the buy order from 332 to 333 

you can do so from the order book

Check Status – After you have placed the order you can check the status of the same. 

The status would state open if the order is completed partially, it would state 

completed if the order has been completed, and it would state rejected if your order 

has been rejected. You can also see the details of the rejection in the order book.

If you notice, there is an open order to buy 1 share of ITC at Rs.261.

If you hover over the pending orders, you can find the option to modify or cancel the 

order.

 

The trade book confirms that the user executed an order to buy 1 share of ITC at Rs 262.2. Also notice a unique exchange order number is generated for the trade.So with this our first task is complete!

Task 2

The next task is to track the price of Infosys. The first step would be to add Infosys to the market watch. We can do this by searching for Infosys in the search box.

The trading symbol for Infosys is Infy. Once we select Infy, we press Add to add it to the market watch.

 

We can now track some live information about Infosys. 

The last trade price Rs.1014.75

the stock is down -0.11% from its previous days close of Rs.1015.85

opened Rs.1014.80

low Rs.998.40

high Rs.1028.95.

volumes 3.6 million shares.

Notice that the LTP of Infosys is highlighted in green and ITC in red. If the current LTP is more than the previous LTP, the cell is highlighted in green else in red.Have a look at the snapshot below:

 

9.6 – The Bid and Ask Price

If you want to buy a share, you obviously need to buy it from a seller. The seller will sell 

the shares at a price that he thinks is fair enough. The price that the sellers ask you is 

called the ‘Ask Price’. The ask price is highlighted in red. 

In the table above we have the top 5 ask prices.

The first ask price is Rs.3294.80. At this particular moment, this is the best price to buy 

Infosys and there are only 2 shares available at this price being offered by 2 different 

sellers (both of them are selling 1 share each). The next best price is Rs.3294.85. At this 

price there are 4 shares available being offered by 2 different sellers. The third best 

price is Rs.3295 at which 8 shares are available, and this price is offered by two sellers. 

So on and so forth.

As you notice, the higher the ask price the lower is the priority. For example, at 

5th position is an ask price of Rs.3296.25 for 5 shares. This is because the stock 

exchanges give priority to sellers willing to sell their shares at the least possible price.

Notice even if you want to buy 10 shares at Rs.3294.8 you can only buy 2 shares because 

there are only 2 sellers at Rs.3294.8. However, if you are not particular about the price 

(aka limit price) you can place a market order. When you place a market order at this 

stage, this is what happens:

2 shares are bought @ Rs.3294.8

4 shares are bought @ Rs.3294.85

4 shares are bought @ Rs.3295.00

The 10 shares will be bought at three different prices. Also in the process the LTP of 

Infosys will jump to Rs.3295 from Rs.3294.8

If you want to sell a share, you obviously need to sell it to a buyer willing to buy it from 

you. The buyer will buy the shares at a price that he thinks is fair enough. The price that 

the buyer demands is called the ‘bid price’. The bid price is highlighted in blue. Let us 

analyse this part in a bit more detail:

Again by default the snap quote window displays the top five bid prices. Notice the best 

price at which you can sell shares is at Rs.3294.75, and at this price you can only sell 10 

shares as there are only 5 buyers willing to buy from you.

If you were to sell 20 Infosys shares at market price the following would be the 

execution pattern:

10 shares sold @ Rs.3294.75

6 shares sold @ Rs.3294.20

1 share sold @ Rs.3294.15

3 shares sold @ Rs.3293.85

So in essence, the bid and ask prices gives you information about the top 5 prices at 

which the buyers and sellers are stacked up. It is extremely important for you to 

understand how the buyers and sellers are placing their trades especially if you are an 

intraday trader.

9.7 – Conclusion

The trading terminal is your gateway to markets. Trading terminal has many features 

that are useful to traders. We will explore these features as we progress through the 

various learning modules. For now, you should be in a position to understand how to 

set up a market watch, transact (buy and sell) in stocks, view the order and trade book, 

and understand the market depth window.

Key takeaways from this chapter

1. A trading terminal is your gateway to markets. You must know the operations of a 

trading terminal if you aspire to become an active trader

2. You can load the stock you are interested in on the market watch to track all the 

relevant information

3. Some of the basic information on market watch is – LTP, % change, OHLC and 

volumes

4. To buy a stock you need to invoke a buy order form by pressing ‘B’ key. Likewise, to 

sell a stock you need to invoke a sell order form by pressing ‘S’ key

5. You choose a limit order type when you are keen on transacting at a particular price, 

else you can opt for a market order

6. You choose CNC as product type if you want to buy and hold the stock across 

multiple days. If you want to trade intraday, you choose NRML or MIS

7. An order book lets you track orders that are both open and completed. You can 

modify the open orders by clicking on the modify button at the bottom of the order 

book

8. Once the order is completed you can view the trade details in the trade book. In 

case of a market order then you can view the exact trade price by accessing the 

trade book

9. You can press the F6 key to invoke the market depth or snap quote window. The 

market watch enables you to see bid and ask prices

10. The bid & ask prices refers to the price at which you can transact. By default, the top 

5 bid and ask prices are displayed in the market depth window at all times.