Understanding the Recommendations from Your Investment Advisor

1. Listed Companies and Their Symbols

Before starting with the recommendations, it is very important to have a basic idea of the stock markets. National Stock Exchange or NSE consists of around 1400 listed companies, whose stocks are traded on a daily basis by the investors. All these companies are represented by a symbol on the exchange which is usually an abbreviation of the name of the company. Before placing an order with your broker, it is important to know the symbol of the company.

It is easy to predict the name of the companies using the symbol, but it is not recommended to take risks. The recommendation from your advisor will always have the investment symbol and may skip out on the name of the company. Well, you need not to worry because you can find out all the listed companies with their respective symbols here.

2. Different Trading Instruments

After understanding the symbol and name of the company it is important to understand about the trading instrument.

There can be various different trading instruments available for the same stock. For example, you can trade in stock, futures and options of TCS. If you are trading only in cash or stocks, there is no chance of confusion because you will only get recommendations for cash market. In case of multiple segments, the recommendation for cash market or equity market will have the following abbreviation:Cash / NSE Cash – Stocks, Cash Segment

However, if you are trading in derivatives market which consists of futures and options it is important to understand, how the decode the recommendation from your advisor.

The trading recommendations for derivatives will have the following abbreviations or symbols:

FUT – Futures
CE – Call Option
PE – Put Option

3. Different Levels Required for Placing Order

The third thing to keep in mind while decoding the recommendation are levels. A single recommendation can have multiple levels, like target, stop less, entry levels etc. This is probably the most important aspect to consider because the stock market is all about levels. If you miss a level, you lose an opportunity. On the other hand, if there is any disparity in placing the trade with the accurate levels, the trade can lead to huge losses.

Some of the abbreviations and symbols which will be used for denoting various level in the recommendations include:

TGT – Target
SL – Stop Loss
SL (SAR) – Stop Loss (Stop and Reverse)
CMP – Current Market Price
MTM – Market to Market Price

4. Standard Format for Recommendations

Let us now take a look at the format of recommendation which will be used for providing you trade recommendations. It is very important to note that these are sample recommendations to provide you an idea about the format and are not intended for any kind of trial or trading.

Sample Recommendation

1: BUY 1 LOT OF BERGEPAINT 600 CE NSE 29 OCT IN THE RANGE OF 18.10-18.30 WIH SL (SAR) AT 13.4 AND TARGET IN THE RANGE OF 23.40-25.40

Now in this recommendation, we are recommending you to buy 1 lot of Berger Paints Call Option on NSE in the range of 18.10 to 18.30 with a Stop Loss (Stop and Reverse) at 13.4 and target in the range of 23.40 to 25.40

Sample Recommendation

2: HOLD LONG POSITION IN NIFTY JUN FUTURES ENTERED ON 2020-09-10 AT 11808.40 WITH SL(SAR) AT 11704.9, MTM BEING -32 pts & CMP- XYZ

Here, you have been recommended to hold a long position in Nifty June Futures at 11808.40 with Stop Loss (Stop and Reverse) at 11704.9, Market to Market being -32 points and Current Market Price XXX

Sample Recommendation 3: BUY 20 SHARES OF HINDUNILVR NSE CASH IN THE RANGE OF 2172.40 - 2172.50 WITH SL AT 2139.90 AND TARGET IN THE RANGE OF 2203.70-2205.70

Once you keep the above pointers in mind, it will be very easy for you to decode the recommendation from your investment advisor and place timely orders using the same. Placing timely orders with correct levels may help you in maintaining a healthy risk reward ratio in the market. You can also use CapitalVia’s customer portal for a seamless experience in all areas including recommendations, latest offers, payments, customer support, referrals and payments.

Happy Trading!