Trade Smart Online

[market oracle]

TradeSmartOnline,

Still waiting for ur reply

 

[TradeSmartOnline]

Thanks TradeSmartOnline. I always had this question, what if there is a flash crash like the one that happened in 2011 when Nifty went down 1000 points in 5 minutes. Don't you stand the chance of losing money and your hat!? The traders' margin blocked for the futures positions is predetermined and during a flash crash the exaggerated movements can cause the broker to lose money ey and recovery from clients may not be possible due to the high possibility of bad debts.how do u intend to deal with a six sigma event such as this?

Hello market oracle,
Flash crashes have been a more recent phenomena and has happened usually because of some temporary error (software or human). You'll observe the market rebounds very quickly after that to the normal level.

In case of a bad news market may still react fast but the speed has not been like that of a flash crash situation. The big players who move the markets also need time to react to the situation and adjust their position accordingly. Bigger positions usually take time to readjust too. If you look at events like 9/11 which shook the entire world, the markets did not start falling immediately.

Moreover, the function of an Exchange is to ensure the clearing. In case they do not collect proper margins they have much more at stake. That's why the prescribed margins are decided by the exchanges itself. They may even change the margins on account of a higher volatility.

Moreover, in case a significant news is expected during the market we reduce our intraday exposure limits.

Hope this helps.

 

[shaman]

yeah. we can make money with it. but we need smart. i think we need learn and practice with it.

 

[market oracle]

Hello market oracle,
Flash crashes have been a more recent phenomena and has happened usually because of some temporary error (software or human). You'll observe the market rebounds very quickly after that to the normal level.

In case of a bad news market may still react fast but the speed has not been like that of a flash crash situation. The big players who move the markets also need time to react to the situation and adjust their position accordingly. Bigger positions usually take time to readjust too. If you look at events like 9/11 which shook the entire world, the markets did not start falling immediately.

Moreover, the function of an Exchange is to ensure the clearing. In case they do not collect proper margins they have much more at stake. That's why the prescribed margins are decided by the exchanges itself. They may even change the margins on account of a higher volatility.

Moreover, in case a significant news is expected during the market we reduce our intraday exposure limits.

Hope this helps.

TradeSmartOnline,

Thanks for the reply. Yes I am aware of those points u mentioned. I guess you misinterpreted my question. What I meant to ask was: when flash crashes happen, they are usually unexpected so for that short time period margin exposure limits cannot be updated imposed by exchanges. Next, what happens if let's say your clients have 5000 Nifty futures contracts long positions and stop loss market order for the same. What if a massive sell order hits the market and triggers major stop losses causing the nifty to go into a tail spin? What will happen if it crashes 1000 points giving ur clients the worst prices for the SL-M orders? In such cases losses incurred are far in excess of the SPAN+EXPOSURE. in such a case the broker has to pay up if he cannot recover from clients. What happens then?

 

[dipendu]

How much margin require for selling option on the last day of expire?

 

[TradeSmartOnline]

How much margin require for selling option on the last day of expire?

Hello dipendu
The margin would depend on a number of factors like the strike price, current market price, underlying etc.

However, keeping everything else constant the margin shouldn't be very different from that for a position taken a few days before the expiry.

 

[market oracle]

No reply to my post?

 

[ram2010]

TradeSmartOnline,

Thanks for the reply. Yes I am aware of those points u mentioned. I guess you misinterpreted my question. What I meant to ask was: when flash crashes happen, they are usually unexpected so for that short time period margin exposure limits cannot be updated imposed by exchanges. Next, what happens if let's say your clients have 5000 Nifty futures contracts long positions and stop loss market order for the same. What if a massive sell order hits the market and triggers major stop losses causing the nifty to go into a tail spin? What will happen if it crashes 1000 points giving ur clients the worst prices for the SL-M orders? In such cases losses incurred are far in excess of the SPAN+EXPOSURE. in such a case the broker has to pay up if he cannot recover from clients. What happens then?

Broker will go bankrupt.:lol:

Defaulted clients will abscond.:lol:

This will happen. ok.

Any other doubt?

 

[shatson]

One Disadvantage i see about TradeSmartOnline

Stamp Duty Charges for maharashtra state very high=> 0.01% (Rs.1000/Crore) in compatison to brokers based in karnataka state where charges are 0.01% subject to a maximum of Rs.50/-

 

[TradeSmartOnline]

No reply to my post?

Sorry about the delay. Will reply on Monday.