what is MIS multiplier???
MIS are intraday orders which are squared off at 3:20 pm of the trading day.
Means you can’t hold the MIS orders for the next trading day.
So you get very good leverage or can say you can trade in much lower margin.
Coming to your question, MIS Multiplier is x amount of percentage which will be leveraged to your actual trading value.
That means for 1 lot of some script if your total turnover value is Rs. 1,00,000 and MIS multiplier is x85 so you can buy that lot for Rs. 15,000 for an intraday trade.
HOPE IT HELPED…
You have 1000 rupees
So you can buy shares or lots worth 1000 rupees, is the scenario, which is normal.
But if the broker allows you to buy shares or lots worth 9000, then it means he is allowing you to buy 9 times more than the worth of money you actually have.
This 9x (multiple times) is called the MIS multiplier.
is it kind of loan borrowed from the broker and at the end of the day have to return to the broker with an interest?
There is no interest.
MIS is Margin Intraday Squareoff. What this means is for an MIS position, you will receive a margin, its validity is for one day(intraday) and any open intraday MIS positions will be squared off at 3.20pm by the admin terminal.
Lets take an example:
The current market price of BPCL is 710.
The MIS margin for BPCL is 14x. What this means is if you have Rs.710 in your trading account, you can trade 14 shares of BPCL for Intrday instead of just 1. This is what 14 times leverage means.
What this also means is as opposed to delivery trades which require full cash, your risk in this MIS trade also increases by 14 times.
One must be prudent while trading using margin. Its a double-edged sword. The word in the market is one must never lose more than 2% of their trading capital in a single trade. The MIS quantity for risk-friendly traders should keep in mind the maximum loss it can take in that trade.
When MIS order can be placed? I tried to place MIS limit order at Pre Open Session(9:02) but it didn’t get executed.
Is there any rule like that only Market MIS orders are allowed or I can do intraday in Normal Market hours(9:15 to 3:30).
You can place MIS orders during pre-market session, but execution during this period won’t be guaranteed.
During pre-market session from 9 AM till 9:08 AM you can only place, modify or cancel orders.
After price discovery is complete, there is order matching period from 9:08 AM till 9:12 AM. Orders are matched at the equilibrium price, where Limit Orders are matched with Limit Orders and Market Orders are matched with Market Orders. You can check how pre-market session works here.
Orders which aren’t matched are carried forward to normal trading hours.