What happens if I don’t sell intraday stock on the same day Zerodha
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What Happens If you Forgot to Sell Intraday Stocks in Zerodha
Stock brokers or banks that hold demat accounts of the trader play a responsible role in Intraday trading.
Brokers like Zerodha, Upstox, ICICI Bank, Axis Bank, etc take the responsibility of their clients by automatically square off the open positions (MIS Orders) at the closure of the stock markets.
It can happen when a trader for some reason is unable to buy/sell stocks before the stock market closes down.
Conversion: Intraday Trade into Delivery
The stock markets do suspend the trading of a particular stock on reaching the upper circuit limit, or lower circuit limit.
The stock market does convert the intraday trade into a delivery trade.
Depending upon the availability, the shares shall be transferred to the traders’ demat accounts or credited into stock brokers accounts.
Short Delivery:
It is a condition that arises from the fact that the trader executes open sale and the trading demat account runs short of stocks.
A buyer will have bought and paid for the stocks, and is unable to receive the stocks in his demat account. Such a situation can be encountered by the non-availability of the stocks in the demat account.
A situation of this sort can happen due to non liquidity of funds, or upper circuit.
The exchange will perform trading of stocks on behalf of the seller and pass over the stocks to the committed buyer.
During this period, the stock exchange will auction stocks with other sellers and deduct the money from the trading account to compensate for the loss incurred by the buyer.
Intraday Sell Order:
You must buy back the shares to square off the holding in sell order. Either, you must square off manually or automatically the sell order else your order shall be put to auction and your account will be debited with a price the stock is sold.
To avoid the applicable penalty, you can convert the shares from intraday to delivery stocks and wait for the next trading session.
In the next trading session, you can square off the original intraday sell position and safeguard from the trading penalties.
Stock Hitting the Upper Circuit:
The MIS/CO position held by the trader does carry additional risks. And, in the most possible scenario, one is unable to square off positions. Such a situation arises for stocks hitting the upper or lower circuit limit.
During such circumstances, a trader will have to confront overnight and auction risks with an inclusion of the leverage positions.
Open Sell Intraday Position:
A stock hitting the upper circuit price means a trader will find buyers and it is hard to see any sellers.
The stocks from the trader’s demat account shall be delivered to the stock exchange. And, subsequently the seller will get the negotiated price credited into the trading account.
In case, the trader does not hold the stocks for the option sell in the demat account. Then, the trader will have to confront the ‘short delivery,’ the stock exchange will perform an auction to purchase the shares on behalf of the seller and deliver it to the buyer of the sell trade on T+2.
The stock market shall apply an auction penalty to an amount equivalent to 120 % of the closing price on the date of sell trade.
Stock hits the lower circuit limit:
A stock hitting the lower circuit limit indicates that a trader will find only sellers and no buyers shall be available for trading.
Open Buy Intraday Position:
A trader will hold the open buy intraday position and incidentally, the stock hits the lower circuit limit.
By the end of Intraday trading you will have to square off the sell position because the trader entered and bought stock through the intraday.
As a result, the stock exchange immediately converts the intraday trade into delivery trade.