There are growing numbers of stock market courses in Delhi. Students/Traders are confused to choose any course because of dirty marketing. Few Institutes are left, which provides you course from scratch with valid information. Everyone is running behind strategy and short term gain which causes to loss of students in the market. Very few stock […]
There are growing numbers of stock market courses in Delhi. Students/Traders are confused to choose any course because of dirty marketing. Few Institutes are left, which provides you course from scratch with valid information. Everyone is running behind strategy and short term gain which causes to loss of students in the market. Very few stock market courses in Delhi teach you this basic information of order matching system.
Why you should know this theory? Where this information is practically used? How this system has come in the market?
I remember an instant which I feel the right case study to explain this system. It was few years ago, when one of the stock crashed. It was a misunderstanding of dealer and client. One of client sent mail to his dedicated dealer to sell basket of 10 lakh ( 1 million).Here the client meant to sell basket of worth 10 lakh Indian rupees. What the dealer thought? He thought sell basket of securities of 10 lakh quantity of stocks. Early morning around 10 o clocks, Dealer put a market order of 10 lakh quantity to short and the stock which was going us started going down and crashed. You can think of many retail trades who lost their money that day.
You might think why any new rules make? A simple answer is when it can cause hazardous to public. Who is like public in the stock market? It’s us, retail traders. This instant created lot of controversy around the market, client thought it was dealer’s mistake. Dealer thought it was client’s mistake. Broker had meeting with NSE executives and the new changes are made to stop this discrepancy.
SEBI acts like a supreme court in stock market. Which makes the new rules and exchange follows these rules. It should be mandatory to teach SEBI rules and regulations in stock market course in Delhi.
What is order matching system??
Framework matches orders as indicated by the make time and cost (price). First long and then short belong to the purchasing side. While first shorting then closing it with long belong to the selling side.
On the purchasing side, the request which was set the soonest and has the most astounding cost will be the first to be coordinated. On the offering side, the request which was set the most punctual and has the least cost will be the first to be coordinated.
At the point when the cost of first purchasing request is bigger than or equivalent to the main offering (selling) request, the two or more requests will be coordinated.
When somebody is trying to take a limit order with large quantity, it is next to impossible for the shares to get that specific price.
So, it is possible to get the order matched through market orders. But, there is uncertainty of price for shares. You order will get through different prices for different no of shares.
See the below screenshot of market depth from my broker and understand how matching system works. You must request faculty to follow the example of trades though this market depth if you are willing to join any Stock market courses in Delhi.
Let’s discuss an example of buying. You want to buy 100 quantities at 1765.70. Your price is specific so, you will take a limit order. Do you think you order will hit at 1765.70 instantly, answer is no. Because you are taking a limit order (you want exact price per share).At price of 1765.70, only 82 quantities are available.
The solution of getting 100 quantities instantly is taking market order. At market order whatever the best price going is per share price. So, your 82 quantities will get 1765.70 rupees per share and remaining 18 quantities will be getting the next best price which is 1765.75.
Note: I have seen Students in our stock market courses Delhi misunderstands this fact of buying order. Please keep in mind when you are buying your order will hit according to offer quantity, offer price and vice-versa.