How-to Negative balance Market order

How to fix negative balance after a market order

From WebNotes, a public knowledge base. Last updated . Reading time ~2 min.

A negative balance after a market order is rare but can happen when:

  • The market order executes at significantly worse price than LTP.
  • Illiquid scrip with thin order book.
  • High volatility making bid-ask gap widen.

Conflict-of-interest disclosure. This guide is published by WebNotes Editorial Team for informational purposes. WebNotes has no commercial relationship with Zerodha.

Step-by-step procedure

Five steps per the procedure infobox.

Common cause: market order on illiquid F&O option

For an illiquid OTM option with wide spread:

  • LTP: Rs 5.
  • Order book: Bid Rs 3, Ask Rs 8.
  • Market buy order: executes at Rs 8 (the ask, or higher on next levels).

If you intended to spend Rs 5 x 50 lot = Rs 250, you ended up spending Rs 8 x 50 = Rs 400. The Rs 150 difference is slippage.

For larger quantities, slippage compounds.

How to prevent

  1. Use limit orders for illiquid contracts.
  2. Check market depth before market-ordering.
  3. Avoid market orders on:
    • Deep ITM options.
    • Long-dated options.
    • Mid / small-cap stocks during illiquid moments.

Resolving the negative balance

  1. Add funds immediately via UPI to restore positive balance.
  2. Check for margin shortfall that may have arisen as a result.
  3. Pay any penalty if applicable.

See also

External references

References

  1. Zerodha Support, Negative balance resolution, support.zerodha.com.
  2. SEBI, Risk management framework, sebi.gov.in.

Related articles

Reviewed and published by

WebNotes Editorial Team

The WebNotes Editorial Team covers Indian capital markets, payments infrastructure and retail investor procedures. Every article is fact-checked against primary sources, principally SEBI circulars and master directions, NPCI specifications and the official support documentation published by the intermediary in question. Drafts go through a second-pair-of-eyes review and a separate compliance read before publication, and revisions are tracked against the SEBI and NPCI rule changes referenced in the methodology section.

Last reviewed
Conflicts of interest
WebNotes is independent. No relationship with any broker, registrar or bank named in this article.