What does CNC, MIS and NRML mean?

CNC, MIS, and NRML are the three product types available. Here's a quick breakdown of each:

1. CNC (Cash & Carry): This is for delivery-based trades in equities. You buy shares and hold them in your demat account for as long as you want. No leverage here, and no automatic square-offs. You can't take short positions with CNC. But you can use it to sell stock from your holdings.

Ex.: If you want to buy Bajaj Auto ltd shares with the expectations that the share price may rise within a month then you have to use the product CNC. And to buy and hold those shares you have to pay a full amount.

Amount required = CMP x No. of shares

Note: Even though CNC is a delivery-based product type, it's not the same as a delivery trade. A delivery trade means you hold the stock for at least two days, whereas with CNC, you can buy and sell on the same day and still be charged intraday brokerage. So, while CNC is useful for longer-term holdings, it's not necessarily a delivery trade. It's more like a versatile product type that can be used for short-term or long-term trades.

2. MIS (Margin Intraday Square Off): MIS products are basically those equity, equity F&O, commodity futures, and currency futures that you can trade using MIS product type on a trading platform. It's important to note that MIS products are meant for short-term, intraday trades only. They provide leverage, meaning you can trade with more money than you have in your account, but they also come with the risk of automatic square-offs. In simple terms, MIS products allow you to trade with more leverage, but they're not suitable for long-term investing.

3. Normal (NRML): product type is like the "overnight guest" of derivatives trading. It lets you keep your position open until the expiry date of the contract, without requiring you to square off your position on the same day. Unlike MIS, NRML doesn't provide any intraday leverage, but it does let you hold your position overnight. It's perfect for traders who want to take a position and hold it for a while, instead of making quick, intraday trades.