Basic Queries in Eq Intraday Trading

General
1

  1. What is a Squareoff ? Is it same as selling an already bought stock and vice versa ?

  2. Will squareoff (automated squareoff by broker in margin orders) be done @ closing price or at the lowest traded price that day?

  3. When will the profit/loss get reflected in trading a/c in day transactions? Immediately or in any particular days time?

2

1. Yes it is same as basically exiting a position that you have already bought/sold. 

2. Square off in case of margin orders can happen for two reasons

  • Your accumulated losses increased and the money in your trading account was not enough to support the position you had entered, so the broker's risk management team decides to square off. This can happen anytime during the day. 
  • Brokers when they provide margins for intraday, will have a particular time during the day when all the ones for intraday are squared off. For example at Zerodha it is 3.20 pm, so at this time all intraday positions are squared off. 

3. All intraday trades are settled on a T+1 day basis, if you make profits it gets credited to you the next day, but if you make a loss it is debited from your account instantly. 

3

1. Assume you have bought 50 shares and kept in your pocket. When you sell all those 50 shares and clear your pocket, it is called square off. It means you are completing the cycle. Nothing remains with you.

The reverse is also true. Assume you have sold 50 shares (without actually having it, this is called shorting), you are obligated to buy 50 shares before evening, so that you will complete the cycle. This buying back is also called square-off.

2. Automatic square-off will always happen at the market price, not the closing price or lowest traded price.

It is important to know when automatic square-off will be initiated. Nithin’s answer explains it very well.

  1. If you forget to square-off your MIS intraday shares or positions, it will be squared off by zerodha at 3:20 pm on the same day
  2. If your margin already blocked by zerodha from your trading account increases due to correction in the market, zerodha will check for additional margin. In that situation, if you don’t have money in your trading account, then zerodha risk management team will decide when to square-off your shares. This is will only happen when you are running into too much of loss.

3. Whenever you get some profit/loss it is immediately reflected in your trading account as available margin. But you can use that money only to do further trading from your account on that same day. If you want to withdraw your profits, you have to wait until by evening or next day morning, when the profits get added to your account balance as withdraw-able amount. You need to raise a withdrawl request from your backoffice after that.