CNC Vs. MIS Order: Which One To Pick? – (Explained)
If you buy any stock on Zerodha or any other broker platform, you’ll see CNC and MIS options in the order type.
A wrong type of order selection can cause you considerable loss. So, knowing the meaning of CNC and MIS orders is vital in trading or investing in the stock market.
CNC is an abbreviation for Cash N Carry, while MIS stands for Margin Intraday Squre-off. I’m sure this definition is a bit difficult for a beginner to understand.
In this article, I’ll explain the meaning of both order types and tell you which type suits different scenarios.
If you’re a beginner in the stock market, this guide will be beneficial. So, don’t skip any paragraphs.
What are CNC and MIS in Zerodha?
While buying any stock or its derivatives in Zerodha Kite, Angel One, Alice Blue, or any other broker’s platform, you’ll be asked to choose between CNC and MIS.
It becomes confusing for beginners to choose the correct order type, and they end up paying high brokerage and ultimately making losses due to lack of knowledge.
CNC Order Type
Let’s discuss the CNC order type first…
As I told you in the introduction, CNC is an abbreviation for Cash and Carry. You should select the CNC order type when buying stocks to carry for more than a day.
When you select the CNC order type, the bought stock will be credited to your Demat account, and you can hold that share in the long term.
MIS Order Type
MIS stands for Margin Intraday Square-off, meaning your broker will sell the stock the same day before closing hours.
In other words, this MIS order type is preferable for intraday trading. It doesn’t matter if your position is in profit or loss; the broker will square off your position before the closing hours.
Which Order Type is Best for Equity Trading?
If you are an investor, selecting the CNC order type is necessary because you’ll hold the position for years. Even swing traders also needed to choose CNC order types to carry forward their positions.
| Purpose | CNC | MIS |
|---|---|---|
| Investing | Yes | No |
| Swing Trading | Yes | No |
| Intraday Trading | Yes | Yes |
| FNO Intraday | Yes | Yes |
- Investing: If you aim to invest in a stock for years, then you must select CNC order type.
- Swing Trading: CNC is the right order type for you if your analysis says a stock price will go up in a couple of weeks, and you want to capture that trend.
- Intraday: The only advantage of MIS order type is you get high leverage (10 to 20 times), but your order will be auto-squared off before closing hours.
Note– An intraday trader can also select a CNC order type and exit their position on the same day. If you don’t want to use leverage, CNC is also best for intraday traders because if a trade goes in your direction, you can carry forward some quantity for the next day.
Read Next: Scalping Vs. Swing Trading
Which is Better CNC or MIS?
The advantage of MIS order is higher leverage, but your positions will be auto-squared off at 3:20 PM (for equity/cash) and 3:25 PM (for derivatives).
But, if you place a CNC order, your position will be carried forward for the next day. You can change your decision if the stock price moves in your direction.
Can I Use CNC for Intraday?
Yes, you can use CNC for intraday trades, but you won’t get the advantage of leverage. CNC orders can be squared off intraday, but MIS can not be carried forward for the next day.
Conclusion
I hope you understand the difference between CNC and MIS order types. If you’re a beginner to the stock market, I advise you to choose CNC order types in intraday trades because higher leverage can increase the quantity and make it difficult for you to manage the risk.
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