Stay Ahead in Trading: Understand How the Trading Cycle Works
If you are new to trading, it’s important to understand how the trading cycle works. Understanding the sequence of steps from placing an order to the settlement of that trade can help you meet all necessary obligations and deadlines. Stock exchanges operate every day except weekends and exchange-declared holidays. When you are buying shares, make sure to transfer the payment to your broker's bank account before the settlement's pay-in day. This should be preferably right after your purchase order is confirmed. Similarly, when selling shares, ensure you deliver them to your broker's demat account before the settlement's pay-in day. This ensures a smooth and timely settlement process for your trades.
What are Pay-in and Pay-out Days?
In simple words, the pay-in day is the day when brokers need to make payments or deliver securities to the clearing corporation of the stock exchange. On the other hand, the pay-out day is when the clearing corporation makes payments or delivers securities to the broker.
Now, let's talk about the settlement cycle. The settlement cycle operates on a T+1 basis. This means that trades executed on a Monday, for instance, are usually settled the next day, which is Tuesday. So, if you trade on Monday, your payment or delivery obligations typically need to be fulfilled by Tuesday.
Contract Notes: Your Proof of Stock Market Transactions
Think of a contract note as your receipt from your stockbroker. It is evidence of the trade done by the stockbroker. It is a legal document that proves you have made a trade. It contains details of the transaction such as securities bought/ sold, traded price, etc. Contract notes can be issued online as well as in physical form. In case you opt for an electronic contract note, you will need to authorise your broker to send it to your email along with the details of your email ID. Such electronic contract notes are digitally signed, encrypted and can’t be tampered. Such contract notes should be stored so that you can refer to them in future, if need be.
Note of Caution: When you receive a contract note, make sure there are no inaccuracies or discrepancies. If there are, you should take them up promptly with your stock broker to avoid any potential issues or misunderstandings later on.
Stay Connected: Get Updates on your Investments via SMS and Emails
Opting for SMS and email alerts is a convenient way for investors to stay informed about any trading or transaction activities in their accounts. The SMS and email alerts facility allows you to receive free-of-cost SMS and email alerts for your trading and demat account.
To receive timely notifications, make sure your mobile numbers and email IDs are updated with their stock brokers and depository participants.
Verify Your Trades Easily with the Trade Verification Module
The Trade Verification module is a feature available on stock exchanges’ websites that allows users to confirm the trades executed in their accounts. It provides access to transaction data typically starting from the day after the trade (known as T+1) and remains available for the subsequent five days. This tool helps investors ensure the accuracy of their trading activity and monitor their transactions effectively.