Trading Terminal: Meaning and How To Invest

Prior to 1994, the era of electronic trading, you could only place an order via phone with the stockbroker. You must have watched this in movies and documentaries related to the stock market. 

But now, there are three new ways to execute a stock market transaction:

• Contact your stock broker through a central support number and request to buy or sell a stock, known as "Call & Trade."
• Utilise a web application for trading.
• Use a mobile application for trading.

No matter which method you go for, it's like opening a door to the stock market. Imagine this door as your entry point, allowing you to do all sorts of things like buying and selling shares, keeping an eye on your profits and losses, tracking market trends, handling your funds, checking out stock charts, and using various trading tools.

This entry point is commonly referred to as a 'Trading Terminal’, like the Angel One platform. In this chapter, we'll know what exactly a trading terminal is. Let's find out!

What Is a Trading Terminal?

A trading terminal is just as essential for a trader as a command line terminal is for a software developer—it's their main portal to the markets. Traders use this software to execute orders on the stock exchange. You can usually download it from your broker's website and install it on your computer.

For a trading terminal to be effective, it must have excellent charting capabilities. This feature allows traders to visualise various stock charts and market indicators, which are critical tools for technical analysis before entering a trade. For example, Angel One offers a proprietary trading terminal that's packed with advanced features for this purpose.

How To Invest With Your Trading Terminal?

When you're investing with Angel One, you'll come across two handy lists on your trading terminal: the order book and the trade book. The order book shows all the orders you've sent to the stock exchange, while the trade book records all the transactions you've completed during the day. 

When buying and selling stocks, buyers and sellers meet at a price they both agree on. The price a seller is willing to accept is known as the 'ask price,' and the price a buyer is willing to pay is called the 'bid price.'

Before you place an order, there are a few key details to check:

• Previous Day's Close: This tells you the price at which the stock closed the day before. It's a good starting point to understand today's trading potential.
• OHLC Data: This stands for Open, High, Low, and Close. It helps you see the price range in which the stock has been trading throughout the day.
• Volumes: This figure shows how many shares are being traded at a given time, giving you a feel for the stock's activity level.
• Market Depth: This provides a look at the best available bid and ask prices and shows the stock's liquidity, letting you know how easy it might be to execute your orders.

What Happens When You Buy a Stock?

Let's say it's a Monday and you decide to buy 50 shares of Tata Motors at ₹2,000 per share, totalling ₹1,00,000 (50 * 2000). This is your trade date—often called 'T Day'—when you officially make your trade. You plan to keep these shares in your Demat account, perhaps for several days or even yea₹This is not a day trade.

When you initiate this purchase, your broker first checks to make sure you have enough money in your account. In this case, the transaction will proceed only if there's ₹1,00,000 in your trading account. Let's assume your broker is Angel One for this transaction. Here's how the costs break down if the trade goes through:

• Brokerage: This is free for Equity Delivery at Angel One. So, no charges here.
• Securities Transaction Tax (STT): This is 0.1% of your total amount, which comes to ₹100.
• Exchange Transaction Charges: These are 0.00345% of your total trade amount, adding up to ₹3.45.
• GST: This is charged at 18% of the sum of brokerage and transaction charges, plus the SEBI charges, totalling ₹0.62.
• SEBI Charges: These are ₹10 per crore of your transaction amount, which here is ₹0.12.

So, all the additional charges total up to ₹104.19. Moreover, you'll also pay ₹15 as stamp duty, which is 0.015% on the buy side. This brings your total transaction cost to ₹119.19. Thus, you need ₹1,00,119.19 to complete this buy.

Remember, this money is reserved in your account when you place your order, but the actual stocks haven’t been transferred to your Demat account yet.

On T Day, Angel One will send you a 'contract note'—basically a detailed bill of your day's trades—via email. This note includes the trade reference number and a detailed list of all charges incurred.

Day 2 – T+1 Day (Tuesday)

As of January 2023, India introduced a T+1 settlement system for all stocks listed on its exchanges. This means that if you buy stocks on a Monday, they will be credited to your Demat account by Tuesday, instead of Wednesday which would have been the case with the earlier T+2 settlement. On T+1 day, the funds are moved from the buyer’s broker to the seller’s broker through the clearing corporation, and your Demat account will reflect that you now own 50 shares of Tata Motors.

Recently, in 2024, SEBI rolled out a T+0 settlement for Indian stocks. BSE, taking the lead, will launch the beta version on March 28, 2024, aiming to enhance trading efficiency, reduce risks, and improve liquidity.

What Happens When You Sell a Stock?

When you decide to sell stocks, that particular day is often called "T Day." This is when the stocks you're selling are blocked in your Demat account and set aside to be processed by the end of the day. For more details on this setup process, take a look at the following section on earmarking.

By the next day, which we call T+1, these earmarked stocks are sent off to the depository. On this settlement day, the stocks are officially taken out of your Demat account and handed over to the clearing corporation. 

In return, you get the money from the sale, minus any fees. Here's something interesting: you usually get about 70% of your money on T Day itself and the remaining 30% the next day, T+1. That means everything wraps up and you're fully paid by T+1, and the same goes for the buyer receiving their shares.

The whole process from T Day to T+1 involves a lot of steps and coordination among various financial players like your stockbroker (for instance, Angel One), the clearing corporation, the depository, and the stock exchange. They all exchange numerous documents to make sure everything goes as planned. 

As far as you're concerned, remember this: equity transactions (buying or selling stocks) are settled on a T+1 basis. That means if you buy shares, they're yours on T+1. And if you're selling, you'll see the money in your account by then, too.

Bottom Line

To wrap up, investing through a trading terminal like Angel One is like having a direct line to the stock market's pulse. Whether you're dialing in an order, clicking through a web app, or tapping on your mobile, you're equipped to buy and sell shares, track your portfolio, and analyse market trends right from your fingertips.

 The T+1 settlement system ensures that your transactions, whether buying or selling, are squared away by the next day—making the entire process smooth and efficient. 

With features like real-time charts and market depth at your disposal, you're well-prepared to make informed trading decisions. So, whether you're a newbie or a seasoned trader, understanding and utilising your trading terminal effectively can significantly enhance your trading experience. Happy trading!