Intraday trading helps you make small chunks of money at regular intervals and if you want to do intraday trading in Zerodha, I’ll be showing you 5 easy steps to do intraday trading in Zerodha’s Kite platform.
We’ll also discuss some essential factors that traders must know before trading like market depth, volatility and order types.
Let’s start with market depth and volatility first.
Market depth guides us about the liquidity of a stock. Liquidity is how much buying and selling is happening in the market for that particular stock.
Volatility is how many ups and downs there are in the market. Experienced trades like trading in stocks with more than 2% volatility.
For example, if you pick HDFC stock for trading, you would see the volatility in the stock is around 0.50% which makes it a less favourite for traders. But on the other hand, the market depth of HDFC is really good.
When you buy a stock you have two options – CNC and MIS. You can select CNC in the order type which means Cash -n- Carry and the shares you buy are delivered to your demat account. You can check the list of free demat account with zero AMC fees.
But in trading, you have to select MIS i.e. Margin Intraday Square off, which means your position will be open for that trading day only and you have to close your position (either long or short) before the market closes otherwise it will be automatically squared off when the market closes.
An intraday order is called Position. A long position is a trading style in which you buy the shares first and then sell them later to book a profit.
Whereas to sell the stocks first and buy later is called shorting or short position. Short selling works on the same principle of buying at low and selling at high but the process is in reverse order. Short selling works when the stock price is falling and you can still book the profit from the falling price.
If you want to do intraday trading, I would suggest starting investing with Rs 5000 as an initial investment.
Without any further discussion, let’s start our step-by-step guide to intraday trading in Zerodha. We’ll also discuss different intraday order types available in Zerodha including Iceberg order which is a new concept in the later part of this article.
5 Steps to Do Intraday Trading in Zerodha
Step – 1. Login to Zerodha Kite
Open the Zerodha Kite portal in the web browser and log in with your user credentials. You’ll be asked to enter an “App code” from your smartphone’s Kite app for authentication.
You can find your app code option by clicking on your Zerodha account id at the right bottom of the Kite app.
You can also check the Zerodha charges for equity, intraday, and F&O trading.
Step – 2. Add Funds
You can add funds by going to the fund’s section (from the top menu) and clicking on “Add funds”, entering the amount and now selecting one option from UPI or Netbanking.
UPI funds transfer is totally free while transferring funds from net banking will cost you Rs. 9+GST. Let’s say you opt for UPI and enter your UPI id in the box and click on “Continue”.
Open the UPI app (like Gpay, or PhonePe) with the UPI ID you have provided and complete the transaction.
You can go through our comparison of the Zerodha vs Upstox to know about the fund adding charges of both stock brokers.
Step 3 – Shortlist the Stocks in Watchlist
Search for the stocks you want to trade in and you can add them to the watchlist to avoid searching every time you trade. You can make multiple watchlists for different stocks or other assets.
For example, I was searching for HDFC stock and I got a list of all HDFC stocks list on the exchange.
Step 4 – Observe Market Trend
Open the chart and try to observe the market trend. You can open the chart while hovering the mouse cursor over the stock name and see the option below.
You can also check the market depth and technicals as well from the options available.
Charts and market depth would help you decide whether you are going to take a long position or a short position. To keep things simple, we’ll execute a long position in the next step.
Step 5 – Place Order
Select the MIS (Intraday) and “Market” options to place the order that will open a buy position for you. (See the snapshot below). (Market order option I’ll explain in the next section).
Once your buy position is completed now you have to wait for the stock’s price to reach your desired price point so that you can exit the position and book the profit.
How to exit a position in Zerodha
Take the above example again, suppose your HDFC stock has crossed Rs. 2600 mark and now you are willing to book the profit. Follow the steps below.
- Go to the “Positions” section
- Hover the mouse over the stock name and you will see the “3-dot” menu. Click on that menu.
- Now click on “Exit”
- A “Sell” window will appear, now enter the number of stocks, select “Market” and click on “Sell”.
Now that you understand how to do intraday trade in Zerodha, it’s time to discuss more advanced options in intraday order types to enhance your trading experience.
You can also read our unbiased Zerodha Review article to get a complete understanding of the Zerodha Demat account.
Intraday Order Types in Zerodha
#1. Market Order
In the market order, your order is executed at the current market price at the time of order is placed. You cannot change the ordering price at your desired price as you only get the order at the market price.
For example, if you want to trade in HDFC stock which is trading at Rs. 2,584.95. Now if you go with the “Market” option in the order window, you’ll be able to buy shares at Rs. 2584.95 or whatever the market price would be when you complete your order.
Check out – comparison Dhan vs Zerodha
#2. Limit Order
A limit order allows you to decide the price on which you place your order. You can add your target price. The order will be executed when the stock price will meet your condition or price better than your limit price.
For example, if HDFC share is trading at Rs. 2584.95 but you think the share price will fall to Rs. 2500. If you set the limit price at Rs. 2500, the order will only be executed when the HDFC shares will reach the Rs. 2500 price point.
Limit order further has two options – Stop Loss Limit order (SL) and Stop Loss Market order (SL-M).
I. Stop Loss Limit Order
Stop Loss is an option that allows you to set a minimum price, your order will be executed at that price in any case, if your share price falls below the trigger price. Stop Loss works in both long and short positions.
- If you have a buying position, then you will hold a sell Stop Loss
- If you have a selling position, then you will hold a buy Stop Loss
For instance, again taking the same HDFC stock. If you have already bought HDFC shares at Rs. 2580 in the morning and now you have placed a selling order and put the limit price at Rs. 2600 and put a stop loss at Rs. 2590 (see snapshot).
That means your order will be triggered when the share price reaches Rs. 2590 but it will only be executed when it reaches the limit price that is Rs. 2600 or better, otherwise, it will remain active in the system if the limit price condition is not met.
You would like to read – how to earn money regular by investing 10 lakhs in different segments.
II. Stop Loss Market Order
Stop Loss-Market order allows you to set a trigger price, when the stock price will reach near the market’s current best available price, your shares will be sold off at that price.
For example, if you have set the Stop Loss Market Order Trigger’s price at Rs. 2490, now your order will be placed when the market price reaches Rs. 2493 or 2492 or any price near your trigger price.
#3. IceBurg Order
Iceberg is an order type that divides larger orders (or values) into smaller orders, and each small order is sent for execution to the exchange once the previous order has been executed.
An Iceberg order not only lowers the impact cost but also hides large orders in market-depth bids and offers. An iceberg order is valid for both market and limit orders. Each small order is called a leg in Iceberg. You can decide no. of legs you want to divide a big order into.
Now the question is what is the impact cost? So, the impact cost is the difference between the actual traded price and the visible stock price (or asset price) at the time the order was placed. For example, if you placed a market order to buy 2000 shares, at a trading price of Rs. 100, but the actual execution price was Rs. 100.30, the impact cost for the order would be Rs. 0.30 x 2000 = Rs. 600.
The impact cost rises in proportion to the size of the order. Traders with large quantities lose far more money to impact costs than to all other charges in total. Other charges could be a brokerage, STT, and exchange transaction charges. You can go through list of zero brokerage trading account in India that offer cheap brokerage charges on intraday trading.
The iceberg option reduces the impact cost by placing multiple small consecutive orders of a big quantity order.
#4. Cover Order (CO) in Zerodha
Cover order comes with an in-built risk mitigation feature because Cover order allows you to place two orders for the same stock at a time. These two orders are –
- Market order
- Stop loss-limit order
Cover order with a default risk mitigation feature (a compulsory stop loss) that comes in handy for those traders who use leverage in their trading. Because stop loss reduces your risk of losing all the money.
- Buy Cover Order – Remember that when you place a ‘buy cover order’, your limit price must be greater than your stop-loss trigger price.
- Sell Cover Order – When you place a ‘sell cover order’, your limit price must be less than your stop-loss trigger price.
While placing a CO, the stop loss trigger price is allowed to be within a 10% range. You can check out a quick video below to understand how to place a Cover Order in Zerodha.
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#5. After Market Order (AMO)
You can go for After Market Order (AMO) if you have missed trading within market hours. When you place an AMO, your order will be placed the next day as soon as the market opens.
You can place AMOs between the timings mentioned below –
- NSE – 3:45 PM to 8:57 AM
- BSE – 3:45 PM to 8:59 AM
I have also made a quick guide on how to use Zerodha reward points to get additional benefits from other partnership brands.
The Bottom Line
Now you know how to do intraday trading in Zerodha but you must enhance your technical skills like using indicators, building trading strategies and similar skills to be better at intraday trading.
Please go through our guide on how to transfer shares from Upstox to Zerodha if you are confused about the share transfer process.
The auto square-off time for intraday in Zerodha is 3:20 PM
The full form of NRML is Normal. You can use NRML product type for overnight trading of futures and options. This allows you to carry your position until expiry.
Unlike intraday trading, NRML does not provide intraday leverages. Additionally, NRML product type is also used for delivery-based trading of Currency.
Margin Intraday Square Off (MIS) is a product type offered by Zerodha for intraday trading. MIS provides intraday leverage for trading in Equity, Equity F&O, Commodity futures, and Currency futures.
If all the open positions under MIS are not closed before the auto-square off time, Zerodha automatically squares off the positions on their behalf to avoid any potential risk of carrying forward the position to the next trading day.
Zerodha provides you with up to 5x or 20% margin intraday margin leverage in MIS (Margin Intraday Square off) orders and CO (Cover Orders) in the equity segment. For example, if you have Rs. 1 lakh funds in a Zerodha trading account, you can buy or sell stocks for up to Rs. 5 lakhs intraday.
When you place an intraday order you get three options at the end under the validity section –
Day – If you choose Day validity, then your order will remain open throughout the day until the mentioned price is not triggered.
IOC – IOC means Immediate or Canceled. In IOC, if the limited price you set is immediately met only then the order is executed otherwise, it gets cancelled. In case, the partial quantity of your order matches, then the order of that quantity is executed and the rest of the order is cancelled.
For example, if you have ordered 100 buy shares of HDFC at Rs. 2500, with IOC option, then if suppose only 40 shares are being sold at Rs. 2500, then your order with 40 shares quantity will be executed and the rest of the order having 60 shares will be out of the system.
Minutes – In the ‘minutes’ validity option, you can select the period of an order to remain alive, which ranges from 1 minute to 120 minutes. Once the time-period is over, your order (if pending) will be cancelled automatically.