NIFTY Futures Mechanical Trading

[pravinaca]

Hi Sanjay,

I am confused what you want to say.
Please can you explain it better.

Thanks in advance
Pravin

 

[GRORICH]

Hello Mr Sanjay,
I could not understand your post and charts . Could you please take pains to explain them to novices like me . Thanks.

Grorich

 

[SGM]

Hi Sanjay,

I am confused what you want to say.
Please can you explain it better.

Thanks in advance
Pravin

Hello Mr Sanjay,
I could not understand your post and charts . Could you please take pains to explain them to novices like me . Thanks.

Grorich

Am sorry, really don't know how to make it understandable ...

There was a specific query from a friend regarding leverage and margin limits allowed by brokers, that discussion triggered this post.

The margin limits fixed by SEBI (SPAN Margins) take into account Value at Risk (VaR) for 1 day only (i.e the risk to the broker to carry your position from close to open next day) .

This creates a misconception that all you need to trade is amounts equal to that margin, which in effect exposes the trader to a highly leveraged position.

The equity curve plotted above is just a graphical plot form the excel sheet posted by vinod. It shows 3 case studies for a person having Rs 5 to trade with.

Looking at the topmost line what everyone will happly notice is that it climbs above Rs 15, but hardly anyone understands the implications of losing Rs 2 (40%) in few trades in a row.

Regards
Sanjay

 

[nadodav]

Thanks sanjay.

This is true that, the systam has drawdown upto 40%. what i understand is - if you have Rs. 50,000 to trade futures, than do not trade entire 50000 as a margin. Instead, trade with roughly 20-30 % of your capital as a margin. so for this case, it is better to trade with MINIFTY one lot if you have 50000 capital. once your caital grown to e.g. say, 100000, than one can add one more lot of MINIFTY or swith to regular one lot of NIFTY.

correct me, if i am wrong sanjay

thanks

Vinod

 

[nadodav]

NIFTY FUTURE For July 21,

Current position : LONG (at 3918 on 11/07/2008)

Nifty Fut Closed at : 4077.65

Profit/Loss in current trade : +159.65 (as per last closing price)
Net Profit/Loss since thread started : +1862.65 (1703.00+159.65)

Support : 3932
Resistance : 4088

Hold LONG position with SL 3932. If trades below 3932, exit LONG & go SHORT with SL 4088.

Happy Trading.

Vinod

 

[deb99891]

NIFTY FUTURE For July 21,

Current position : LONG (at 3918 on 11/07/2008)

Nifty Fut Closed at : 4077.65

Profit/Loss in current trade : +159.65 (as per last closing price)
Net Profit/Loss since thread started : +1862.65 (1703.00+159.65)

Support : 3932
Resistance : 4088

Hold LONG position with SL 3932. If trades below 3932, exit LONG & go SHORT with SL 4088.

Happy Trading.

Vinod

nice vinod
keep it up
regards

 

[sandeep721]

NIFTY FUTURE For July 21,

Current position : LONG (at 3918 on 11/07/2008)

Nifty Fut Closed at : 4077.65

Profit/Loss in current trade : +159.65 (as per last closing price)
Net Profit/Loss since thread started : +1862.65 (1703.00+159.65)

Support : 3932
Resistance : 4088

Hold LONG position with SL 3932. If trades below 3932, exit LONG & go SHORT with SL 4088.

Happy Trading.

Vinod

Thanks vinod for posting regularly

Sandeep

 

[nareshch]

Thanks sanjay.

This is true that, the systam has drawdown upto 40%. what i understand is - if you have Rs. 50,000 to trade futures, than do not trade entire 50000 as a margin. Instead, trade with roughly 20-30 % of your capital as a margin. so for this case, it is better to trade with MINIFTY one lot if you have 50000 capital. once your caital grown to e.g. say, 100000, than one can add one more lot of MINIFTY or swith to regular one lot of NIFTY.

correct me, if i am wrong sanjay

thanks

Vinod

Both of you are absolutely correct .
The big mistake many new comers in to trading will do is excess leverage . Infutures , I saw many people taking postions with all the money they have with out giving any room for Stop losses , Draw downs etc. One big move against their trade will wipe out their entire money and may even borrow some to clear the dues . Who ever trade in Futures / Cash with brokers margin , has to be very careful and understand the risk of not maintaining stop losses and not maintaing enough margin in account for Drawdowns.

Vinod,
I am not a positional trader in Futures but watching this thread from many days .You are doing a great job .

Naresh

 

[praveen taneja]

but isnot it better u pls tell newcomers to trade in options n tell the call put which u think is good of nifty instead of asking to buy nifty or mininifty thats too risky for newcomers.Iam a regular readerof this thread so leaving my view thinking that it wont hurt ur sentiments

 

[skarpio]

but isnot it better u pls tell newcomers to trade in options n tell the call put which u think is good of nifty instead of asking to buy nifty or mininifty thats too risky for newcomers.Iam a regular readerof this thread so leaving my view thinking that it wont hurt ur sentiments

Derivatives, whether options or futures have their own risks and so does equity especially if you dont know what you are doing. IIRC, options positions translate to futures under the hood. Any particular reason you fancy options to futures (I do as my broker doesn't give me any exposure)?