1. Demat Account vs Trading Account vs Bank Account
To trade in the Indian stock market, you need a 3-in-1 linkage between your accounts:
- Savings Bank Account: Holds your real liquid fiat currency (INR).
- Trading Account: The bridge interface provided by your broker where you execute BUY and SELL orders on the exchange.
- Demat Account (Dematerialized): The electronic bank locker managed by CDSL/NSDL where your delivery shares, ETFs, and bonds are deposited.
2. Mastering Exchange Order Types
A. Market Order
Executes immediately at the best available current market price. While execution is 100% guaranteed, price is not. In fast-moving or illiquid contracts, market orders can suffer severe slippage.
B. Limit Order
Specifies the exact maximum price you are willing to pay (BUY Limit) or the minimum price you will accept (SELL Limit). You guarantee your entry/exit price, but if the market never reaches your limit price, your order remains unfilled.
C. Stop-Loss Limit Order (SL)
Consists of two prices: Trigger Price and Limit Price. When the market price hits the Trigger Price, your Limit order is released to the exchange. This protects capital while avoiding extreme slippage.
D. Stop-Loss Market Order (SL-M)
When the Trigger Price is breached, the order instantly converts into a Market Order and exits at whatever price is available. Ideal for emergency stop-outs in high-liquidity indices like Nifty 50.
E. GTT (Good-Till-Triggered) Order
An automated conditional order valid for up to 1 year. Once your predefined price trigger is met, the broker automatically fires your entry or exit order. Perfect for working professionals who cannot monitor live screens all day.
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