What’s this article about?
TLDR – this article discusses the key differences between MIS and NRML order types. Brush up on the basic definitions and concepts surrounding this topic.
Three key things to take away from this article :
- MIS is Intraday Trading. NRML is overnight also.
- Leverage in equity trading.
- Auto-Square off option when doing MIS trades.
MIS refers to intraday trading and NRML refers to normal trading.
Intraday leverage is fixed to a maximum of 5x for intraday equity trading. It can be lower based on factors such as the volatility of the stock in question. There is no additional leverage for F&O trading.
Also you can find our table of intraday square off times for all the brokers on the AlgoTest platform. Now let’s dive into the contents!
Contents
- MIS and NRML – What you need to know.
- Broker Cut-Off times and Types of Orders
- Experienced Trader’s take on MIS and NRML
Before we dive into the world of MIS and NRML, let’s try to understand what leverage is.
What is Leverage?
Leverage is like having a superpower in the world of trading. It allows you to control a larger position with only a fraction of the money. Imagine having the ability to move a giant boulder with just a small lever!
Back in the day, marking an order as MIS allowed you to take more leverage in your trading (whether cash segment or FnO segment), as long as the trading was intra-day. Now, you only get 5x leverage with MIS orders for cash (cash segment = equity segment), no extra leverage for FnO. However, trading in FnO is implicitly leveraged – see blogs.
Here’s a bunch of articles we wrote to explain Leverage further.
- Leverage in Trading : 2.25 Crores in 8 minutes?
- Leverage in Trading : Futures Contracts
- Leverage in Trading : Long Options
- Leverage in Trading : Short Options
Now let’s tackle MIS and NRML!
MIS and NRML
MIS (Margin Intraday Square off) and NRML (Normal) are two types of orders that traders can use in the stock market.
MIS: With MIS, you can take advantage of intraday trading opportunities by placing trades with leverage (for equity). For F&O trading there is no leverage on offer, but you get the auto square off option where the broker automatically squares off your positions at the end of day.
So it’s an intraday square off order, which means you need to close your position before the market closes for the day, because if you don’t, the broker will do it for you.
NRML: NRML as the name suggests is the “normal, boring” type of order. NRML orders are meant for traders who prefer to hold their positions for more than a day or who generally prefer more control on when they want to square off a trade. It allows you to take a position in the market with the intention of holding it for multiple days or even weeks, months or years. NRML orders don’t come with intraday leverage, though you could still use them for intra-day trading.
Example: Let’s say you want to invest in a fundamentally strong stock for the long term. You can use an NRML order to buy the stock and hold it in your portfolio for as long as you want. There is no need to square off the position at the end of the day. All you need is the money in your broking account to fund the purchase.
Auto-Square Off
As an FnO trader, you can think of an MIS order as a broker-level auto-square off.
Auto-Square off is a useful function when you wish to make intraday trades and aren’t sure if you’ll be available to square off trades at the end of the day. The Auto-Square off functionality provided by brokers then is a nice way for you to protect yourself from unnecessary losses.
But algos can sometimes (rarely, but it’s possible) mess up. In 2022 Kotak Securities experienced a glitch on their app that left traders unable to trade, leaving them exposed to losses. As a result of the glitch, some orders marked as MIS were not auto squared off by the broker, which means traders were left with overnight positions that they did not intend to hold! You can read more about it here.
Different Brokers handle MIS differently
While we were doing research for this article, we asked two of our traders to find out what kinds of orders their brokers used for squaring off their MIS orders.
We thought this was just a routine research but we found that both the brokers (Angel One and IIFL) squared off their orders differently!
IIFL auto-squared off using Market Orders while Angel One squared off using Limit Order!
We are soon going to release an article on market and limit orders. Both these types of orders carry their own risks and tradeoffs. More on this coming soon!
In the meantime, do you know what kind of order your broker uses for Auto-Squaring off your MIS options?
How does it make a difference to our lives? Why do you need to think about MIS and NRML orders?
As F&O traders, for any intraday strategies it makes sense to use an MIS order. This gives me the reassurance that I will have the auto-square off button to bail me out in case I don’t have an opportunity to square off the trade myself.
MIS orders are especially useful for selling options intra-day as it is possible to lose big if the markets make a big overnight move. The auto square off button then allows me the comfort of knowing that my short options will be squared off by the end of the day by the broker.
Now for positional trades/strategies, I will use NRML trades as I would like to hold my positions for a longer period of time. (That’ why NRML is ‘overnight also’).
Broker Cut-Off Times and Types of Orders
Now that you know more about MIS and NRML, let’s look at the cutoff times for all the different brokers on the AlgoTest platform!
While we tried to make our research fool proof, we couldn’t quite get all the information that we needed. If you know what kind of MIS order type each broker offers, then please let us know in the comments! We will update this article as soon as we get the relevant information.
| Broker | Square off Timing Intraday Cash | Square off Timing Intraday Equity Derivates | Square off Timing Intraday Currency Derivates | Order Type | NSE | BSE |
| 5Paisa NSE | 3.20pm | 3.20pm | Yes | No | ||
| A.C. Agrawal Shares NSE | 3:20pm | 3:25pm | Yes | No | ||
| Alice Blue NSE BSE | 03:15pm | 3:15pm | Yes | Yes | ||
| AngelOne NSE | 3:15pm | 3:15pm | Limit | Yes | No | |
| Choice NSE | 3:15pm | 3:15pm | Yes | No | ||
| Dhan NSE | 3:20pm | 3:20pm | 4:45pm | Yes | No | |
| Finvasia NSE | 3:15pm | 3:15pm | Yes | No | ||
| Firstock NSE BSE | 3:25pm | 3:25pm | Yes | Yes | ||
| Fyers NSE | 3:15pm | 3:15pm | 4:45pm | Yes | No | |
| FlatTrade NSE BSE | 3:20pm | 3:20pm | Yes | Yes | ||
| ICICI Direct NSE | 3:20pm | 3:20pm | 4:30pm | Yes | ||
| IIFL NSE BSE | 3:15pm | 3:15pm | 4:30pm | Market | Yes | Yes |
| Jainam (Duck) NSE | Yes | |||||
| Jainam (XTS Dealer) NSE | Yes | |||||
| JM Financial NSE | Yes | |||||
| Kotak Neo NSE | 3:20pm | 3:20pm | Yes | |||
| Mastertrust NSE | 3:15pm | 3:15pm | 4:45pm | Yes | ||
| Motilal Oswal NSE | 3:15pm | 3:15pm | Yes | |||
| Nuvama Wealth NSE | 3:00pm | 3:00 pm | Yes | |||
| Paytm Money NSE | 3:15pm | 3:15pm | Yes | |||
| Upstox NSE | 3:15pm | 3:15pm | 4:45pm | Yes | ||
| Wisdom Capital NSE BSE | 3:15pm | 3:15pm | Yes | Yes | ||
| Zebu NSE BSE | 3:20pm | 3:20pm | 4:45pm | Yes | Yes | |
| Zerodha | 3:20pm | 3:25pm | 4:45pm | Yes | Yes |
Experienced Trader’s Take on MIS and NRML
At AlgoTest, we are helmed by an expert panel of Traders. Amongst themselves they have decades of experience and have some great insights on how to go about when it comes to thinking about MIS and NRML.
Chintan Jaggi
For the layman – the definition is enough.
For the nuanced and more technical players – it depends on what kind of product they are trading. Is it F&O? Or cash? If they are doing cash then in those trades are they doing intraday or long term? For intraday, having leverage is extremely important as this leverage is interest free. But it also comes with a risk – if it’s 5x the profits then it is also potentially 5x the loss.
Raghav Malik
Back in the day there used to be a lot more leverage offered for intraday trades by brokers. But after regulation changes a couple of years ago, there’s not that much leverage on offer anymore. 5x is the maximum any broker can offer.
So how you can now use intraday or MIS trading as an F&O trader in today’s day and age is through the auto-square off option. If you’re trading intra-day only, or for your intra-day strategies, it’s a good idea to use MIS orders to take advantage of the auto-squareoff that the brokers provide. .
As a stock trader you can use MIS to get leverage. And when we say that, we mean get leverage from your broker.
Shaurya Srivastav
So MIS and NRML are very entry level parameters to think about. So as an expert trader, I don’t think about MIS and NRML anymore. Or rather, I don’t put too much thought into it. Plus, as an F&O trader when I don’t get leverage I don’t really get an edge or advantage when thinking about this. The only place where I would give it a thought is when I am doing expiry day trading.
That’s it from us regarding MIS and NRML! We hope you find this information useful and actionable.
Log onto Algotest.in to begin your trading journey today!
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