{"id":1800,"date":"2026-07-20T10:13:29","date_gmt":"2026-07-20T10:13:29","guid":{"rendered":"https:\/\/www.incredmoney.com\/knowledge-center\/?p=1800"},"modified":"2026-07-20T10:13:29","modified_gmt":"2026-07-20T10:13:29","slug":"cnc-vs-mis-vs-nrml-margin-rules-explained-with-real-life-examples","status":"publish","type":"post","link":"https:\/\/www.incredmoney.com\/knowledge-center\/share-market\/cnc-vs-mis-vs-nrml-margin-rules-explained-with-real-life-examples\/","title":{"rendered":"CNC vs MIS vs NRML: Margin Rules Explained With Real Life Examples"},"content":{"rendered":"<div class=\"intraday-trading-guide\">\n<p>The product code you choose when you open a trading order window determines your leverage, risk exposure and time horizon. A bad choice can result in forced sales or lock up money unnecessarily.<\/p>\n<h2>CNC vs MIS vs NRML: The 60-Second Breakdown<\/h2>\n<p>CNC is for holding shares for the long term with full cash upfront. MIS provides high leverage for intraday trading with automatic selling of positions before market closes. NRML is used for F&#038;O overnight trading where margin maintenance is specific and no auto square off is required on the same day. Understanding these acronyms is the first step to a safe, calculated trade. Each kind of order has a strict set of operational rules for your capital.<\/p>\n<h3>Order Type Comparison Table<\/h3>\n<table>\n<thead>\n<tr>\n<th scope=\"col\">Order Type<\/th>\n<th scope=\"col\">Margin Required<\/th>\n<th scope=\"col\">Auto Square-Off<\/th>\n<\/tr>\n<\/thead>\n<tbody>\n<tr>\n<td data-label=\"Order Type\">CNC (Cash and Carry)<\/td>\n<td data-label=\"Margin Required\">100% Upfront Cash<\/td>\n<td data-label=\"Auto Square-Off\">None (Hold indefinitely)<\/td>\n<\/tr>\n<tr>\n<td data-label=\"Order Type\">MIS (Margin Intraday Square-off)<\/td>\n<td data-label=\"Margin Required\">Fractional (Up to 5x leverage)<\/td>\n<td data-label=\"Auto Square-Off\">Yes (Typically 3:15 PM)<\/td>\n<\/tr>\n<tr>\n<td data-label=\"Order Type\">NRML (Normal)<\/td>\n<td data-label=\"Margin Required\">Exchange-defined (SPAN + Exposure)<\/td>\n<td data-label=\"Auto Square-Off\">None (Held until expiry)<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<p>Your decision affects how much of your own money is at risk. It will also tell you when the broker will force you to sell. As mentioned in the support document of Zerodha, NRML is used only for Futures and Options (F&#038;O) trades which are overnight trades. Equity investors building a portfolio will almost entirely rely on CNC.<\/p>\n<h2>How Margin and Leverage Work on Different Order Types (With Examples)?<\/h2>\n<p>Leverage is the amount of purchasing power your broker extends to you, over and above the cash you actually have on hand. Capital efficiency. Knowing this math is essential. Let&#8217;s examine a real-world mathematical example of how purchasing power changes.<\/p>\n<p>Let\u2019s say you have Rs. 10,000 in your trading account. You want to buy some shares of a stock that is trading at 100.<\/p>\n<ul>\n<li><strong>CNC:<\/strong> You are using 1x leverage. You can buy exactly 100 shares (\u20b9 10,000\/\u20b9 100). AngelOne states that CNC orders are for delivery trades and 100% upfront margin is required.<\/li>\n<li><strong>MIS \u2013 Intraday Equity Trading:<\/strong> Brokers typically offer leverage up to 5x. So your cash balance of \u20b910,000 now has a buying power of \u20b950,000. Instead of buying 100 shares you can buy 500 shares.<\/li>\n<li><strong>NRML:<\/strong> Margin is calculated based on market volatility and is called SPAN and Exposure margin. Your \u20b910,000 may let you hold a particular options contract overnight, but it will not give you fixed 5x leverage like MIS.<\/li>\n<\/ul>\n<p>Leverage multiplies profits and losses. A 2% fall in MIS order on a \u20b950,000 position amounts to a \u20b91,000 loss. This means a small 2% move in the market will eat up 10% of your actual \u20b910,000 capital. This rapid capital erosion is why novice investors should avoid high-leverage order types. Stick with CNC and you only risk the capital you actually have.<\/p>\n<h2>Automatic Square-Off and Position Conversion Rules<\/h2>\n<p>The biggest operational concern for new traders is auto closing of positions. If you choose an intraday product code, your broker will automatically close your trade if you don&#8217;t close it manually.<\/p>\n<ul>\n<li><strong>MIS Auto Square-Off Time:<\/strong> Typically, brokers square off open MIS positions between 3:15 PM and 3:20 PM. To control your exit price, you have to close your trade before this window.<\/li>\n<li><strong>Auto-Liquidation Charges:<\/strong> If the broker takes the square-off, an additional penalty fee will be charged for each executed order. This eats away at your trading capital.<\/li>\n<li><strong>M2M Margin Shortfalls:<\/strong> If your intraday losses cross a particular threshold of your capital, brokers will square off your position even before 3:15 PM. This risk management protocol protects the broker from your losing trades.<\/li>\n<\/ul>\n<p>Convert a MIS position to CNC to prevent auto-square-off. But this transformation is governed by strict mathematical rules. You need to have the full 100% cash balance in your account to convert from MIS to CNC. If you bought shares worth 50000 using your margin of 10000, you cannot convert to CNC unless you put in another 40000 before the market closes.<\/p>\n<h2>Cash and Carry (CNC): The Benchmark for Long-Term Delivery<\/h2>\n<p>CNC is the default order type for investors who prefer to create wealth rather than daily speculation. There is no risk of margin calls or auto-liquidations at all. You pay the full underlying value up front so the broker cannot force you to sell.<\/p>\n<p>So, when you place a CNC buy order it will settle in the normal T+1 time frame. Your shares are credited to your demat account on the very next trading day. You keep the rights forever, you get dividends and benefits of corporate actions.<\/p>\n<p>By choosing CNC, you make your investment safe from the intraday market fluctuations. If the stock goes down 5% the day you buy it, you just hold the asset and you don&#8217;t get called on margin for it.<\/p>\n<h2>What is NRML? Overnight Futures &#038; Options Positions Explained<\/h2>\n<p>NRML stands for Normal and is intended for the derivatives market. It enables traders to rollover their Futures &#038; Options position to the next trading session. NRML, unlike MIS, does not require you to auto square-off your position on the same day.<\/p>\n<p>Overnight positions are susceptible to gap ups and gap downs. If the market opens big down the next day, your portfolio gets hit immediately. To counter this, exchanges impose strict maintenance of margin for NRML orders. You must always maintain the required SPAN and Exposure margins in your account. If your account balance falls below this requirement due to overnight losses, you will receive a margin call and potential liquidation.<\/p>\n<h2>Can You Buy in CNC and Sell in MIS on the Same Day?<\/h2>\n<p>Yes, but the operational reality depends on how brokers deal with intraday trades. If you purchase shares using the CNC option and sell them before the market closes, that transaction is treated as an intraday trade by the broker automatically. The brokerage rates are intraday, not delivery. However, you cannot sell a holding directly from your demat account with MIS product code. Then you have to place a normal CNC sell order to get rid of your current portfolio positions.<\/p>\n<h2>Conclusion<\/h2>\n<p>Choosing between CNC, MIS, and NRML is not about which is \u201cbetter\u201d \u2014 it\u2019s about matching the product code to your trading goal. CNC is safest for long-term investors, MIS offers leverage for disciplined intraday traders, and NRML is built for overnight F&#038;O exposure with proper margin management. Understand margin rules, auto square-off timings, and leverage math before placing your order to avoid forced exits and unnecessary losses.<\/p>\n<h2>Disclaimer<\/h2>\n<p><em>This article is for educational purposes only and is not investment or trading advice. Leverage and margin trading involve high risk of loss. Product codes and margin requirements are subject to broker and exchange rules. Please consult a SEBI-registered advisor before selecting an order type.<\/em><\/p>\n<\/div>\n","protected":false},"excerpt":{"rendered":"<p>The product code you choose when you open a trading order window determines your leverage, risk exposure and time horizon. A bad choice can result in forced sales or lock up money unnecessarily. CNC vs MIS vs NRML: The 60-Second Breakdown CNC is for holding shares for the long term with full cash upfront. MIS [&hellip;]<\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"inline_featured_image":false,"footnotes":""},"categories":[27],"tags":[],"class_list":["post-1800","post","type-post","status-publish","format-standard","hentry","category-share-market"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v28.0 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>CNC vs MIS vs NRML: Difference, Margin, Leverage &amp; Auto Square-Off Rules | InCred Money<\/title>\n<meta name=\"description\" content=\"Understand the difference between CNC, MIS and NRML order types in trading. Learn how margin, leverage, auto square-off timing, and conversion rules work with examples. 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