If you are new to Zerodha and looking to buy your first few shares, you will find the option ‘MIS’ and ‘CNC’.
This is how it will look on your Zerodha Kite Mobile App:
Below the quantity and price, you will find ‘MIS’.
- MIS Full Form: Margin Intraday Square-off
- MIS Meaning: MIS is an intraday order, which means you will have to close the order on the same day.
- MIS Example: You buy shares of Reliance Industries in the morning by selecting the ‘MIS’ option. You will have to sell the shares before 3:20PM in the evening. If you don’t sell, Zerodha will automatically close your order at 3:20PM – i.e. 10 minutes before the market closes.
The reason why a lot of people prefer ‘Intraday’ trading is because of leverage.
In very simple words, Leverage means using more money than you have.
For example, the current share price of Reliance Industries – at the time of writing this article – is ₹ 1976.
If you deposit ₹ 10,000 in your Zerodha account, you can only buy 5 shares.
However, with the ‘MIS’ option, the broker (Zerodha) gives you more money to play with. You can buy 46 shares of Reliance, as long as you sell it before the end of the same day.
That’s right. You can buy shares worth ₹ 91,000 by just depositing ₹ 10,000 in your account!
Check the screenshot below:
This ability to take leverage using the ‘MIS’ option has both advantages and disadvantages.
If the share price of Reliance goes up by 5%, you will gain ₹ 4500 in a single day. That’s 45% returns on a capital of ₹ 10,000.
However, if Reliance falls by 5%, you will lose ₹ 4500 in a single day. That’s 45% of your ₹ 10,000 capital lost in a single day.
This is what makes leverage extremely exciting as well as extremely risky.
Experienced traders, who know how to manage their risk, use leverage to their advantage. On the other hand, those who are new to the market, but think they can earn quick money – end up losing everything.
Advice: Unless you know exactly what you are doing, avoid intraday trading. Avoid using leverage. Avoid the derivative market (Futures and Options).
In the first few years, always buy shares of good companies for longer periods of time. Also, use the ‘Coin’ platform to invest money in mutual funds or index funds.
Only after you learn technical analysis, gain experience in the market for a few years, get comfortable with its volatility (ups and downs) – should you even think of using leverage or trading intraday.
If you have any questions, please ask in the comments section below.
I couldn’t close my order in MIS trade as per the time given..I have invested 145.rupees on ONGC in the morning, but evening the amount is lost..how can I get back.