Upstox - RKSV - Trade in Rs 20 Max

[DSM]

Referring to your quote : 'We retail traders have an advantage that we can trade at the optimum points as per our charts and we can move/reverse quickly...and that is our biggest edge on the larger guys as they cannot move fast'

This is 100% contrary to what happens in the market! Large guys use algos to buy and sell at a speed that no human can match. This is clearly visble in the order book where buy and sell orders for 1,000's or multiple quantity that appear and disappear even before one can blink the eye.

 

[RKSV]

RKSV, Do clarify. You are qualifying your statement to mean that 'we can enable market orders on products like Nifty and Nifty options' What about the rest of the futures stocks? Can you give us a clear answer on this.?

What is your defination of illiquid stocks.?

Also, can you tell us how RKSV is at risk, when I have the margin to trade x no. of lots.? Unless, you think that too is not adequate.? Do give us a practical example as to how this margin can place RKSV at risk.? BTW, for extreme (rare) event, that RKSV may feel they are exposed to, there is a product called insurance.

The problem with brokers in India is that once they have sufficient no. of clients, they change their rules as per their whims. So even if a few disgruntled clients leave, they are fine with that.

Sorry to say RKSV, you disappoint.

If you reply, do give an answer that does not insult the intelligence of the TJ members.

Hey DSM,

Sure, so we explained it in a previous post and I'll give you an example: When you place a market order for a product, the RMS system blocks it based on the price of the best bid or ask. A trader places a buy market order for 1000 shares on a stock where best price is Rs. 100. However, quantity shown is only, say 25 since it is illiquid. What happens is that RMS will block an amount of 1000 * 100 = Rs. 1,00,000. In reality, 1000 shares are not available at Rs. 100. It could be that the other 9900 shares are spread out at an average price of Rs. 125. Or worse, maybe there is only a total of 200 shares available in the book in all.

Presently, the RMS is not doing these checks and lets the trader place the order as long as he has Rs. 1,00,000 available in his account. If after execution, the value is actually Rs. 1,50,00 then you will hit margin limits and maybe MtoM limits also. This can be a problem if broker/trader has to square off right away and someone is responsible for the losses. That is the present issue.

Now to mitigate this, you can place a limit order at a very high price to imitate a market order. This way, RMS blocks the right amount. Other way is to make RMS smarter and allow market orders but prevent the above scenarios which put both broker and trader at risk. The second scenario (a "protected" market order) is what we are working on rolling out soon.

Just a few days ago, we had someone punch in a market order for 5,500 lots of an illiquid option by accident. While the best buy price was within his RMS limits, it barely had any quantity and the 2nd - 5th level were extremely far off and thin in quantity.

Also, it's not possible to allow/disallow market orders on certain products (like allow on Nifty and other liquid products etc..) in the current RMS. Else, that would have been put in place since 80% of the trading happens on 20% of the products.

I hope that helps. If anything is confusing, do let us know. It is not something we are trying to hide, but something we are actively working on improving. We understand that during high volatile times you don't want to spend time punching in a limit order price.

 

[RKSV]

It is already settled they big players have access to order levels that we retail dont, down below the post.

What we should be wondering is about the orders lined up in RKSV systems, that they have access to before sending in the system! This could give the trading desk of RKSV an advantage.

We don't deal with retail orders at all except for customer care and support.

Also, we use NSE NOW, your connectivity/orders/trades all go directly to the exchange and don't pass through any broker system. This is not just for us but any broker using NSE NOW. NSE has done a good job in that sense to ensure that traders don't worry about broker infrastructure interfering with traders.

And even if brokers have their own infrastructure (NEST, Odin, SK), it is hosted on totally separate client-only lines and cannot pass through lines that the broker uses for his own trades.

So it is not just us, but any broker using NSE NOW or approved retail vendor won't be able to intercept your orders or such.

 

[RKSV]

This is something i did not know. In US market they have this level 2 order book, but i did not know that in India also it is available. I think we should ask RKSV/Zerodha to contact NSE and get this information for us....i.e whether there are players who have access to the 20 best bid/ask data.

@RKSV......could you please get in touch with NSE and confirm the above ?

Hey quinox,

Here's what we know:

- There is tick by tick on NSE. This shows you all the levels of data (more than 20, all levels of depth).

- Other exchanges only have 5 levels for everyone.

- No SL orders show up. It's just same thing as 5 levels but with more levels. Your disclosed/undisclosed orders also work the same. If you send an order with quantity of 100 but showing only 20, then only 20 will show up.

- Most pro trading software we have seen, all show 5 levels of data too. Don't believe we have seen one that shows more than 5.

- We don't believe any retail broking software offers more than 5 because the biggest challenge is processing the tick data and sending it out to 1000s of clients over the Internet without latency. It has not even really made it to GUIs for pro trading (in our experience).

One of our initiatives is to work on getting true tick data on a GUI for our clients It would be pretty cool considering even PRO guys don't have a good GUI to show more than 5 depths.

 

[Smart_trade]

Referring to your quote : 'We retail traders have an advantage that we can trade at the optimum points as per our charts and we can move/reverse quickly...and that is our biggest edge on the larger guys as they cannot move fast'

This is 100% contrary to what happens in the market! Large guys use algos to buy and sell at a speed that no human can match. This is clearly visble in the order book where buy and sell orders for 1,000's or multiple quantity that appear and disappear even before one can blink the eye.

If that is true all big guys with algos would be highly profitable.Are they all profitable ? On the contrary evidence shows that most algo traders and hedge funds using mathematical models loose.

Just see how many algo traders are intervied in Market Wizards ? There are few but majority are not algo traders.

But as traders we all trade our beliefs, so if it is your belief that algo traders have edge then algo is the way for you.

Smart_trade

 

[DSM]

Thanks, appreciate you writing on Sunday, and that too promptly. However, as expected, you have ignored the hard question. So will number them, in order to have a point to point response.

1. What do you consider ill-liquid stocks?

2. Stocks such as : Tata Motors / ACC / Infosys / Suzlon / Dena Bank etc. are (future stocks), which are highly liquid. Will you introduce market order for them as well along with Nifty?

3. Regarding the real life example given, it is really not apt to compare orders for stocks to options because even Nifty far OTM options will be illiquid.

Hey DSM,

Sure, so we explained it in a previous post and I'll give you an example: When you place a market order for a product, the RMS system blocks it based on the price of the best bid or ask. A trader places a buy market order for 1000 shares on a stock where best price is Rs. 100. However, quantity shown is only, say 25 since it is illiquid. What happens is that RMS will block an amount of 1000 * 100 = Rs. 1,00,000. In reality, 1000 shares are not available at Rs. 100. It could be that the other 9900 shares are spread out at an average price of Rs. 125. Or worse, maybe there is only a total of 200 shares available in the book in all.

Presently, the RMS is not doing these checks and lets the trader place the order as long as he has Rs. 1,00,000 available in his account. If after execution, the value is actually Rs. 1,50,00 then you will hit margin limits and maybe MtoM limits also. This can be a problem if broker/trader has to square off right away and someone is responsible for the losses. That is the present issue.

Now to mitigate this, you can place a limit order at a very high price to imitate a market order. This way, RMS blocks the right amount. Other way is to make RMS smarter and allow market orders but prevent the above scenarios which put both broker and trader at risk. The second scenario (a "protected" market order) is what we are working on rolling out soon.

Just a few days ago, we had someone punch in a market order for 5,500 lots of an illiquid option by accident. While the best buy price was within his RMS limits, it barely had any quantity and the 2nd - 5th level were extremely far off and thin in quantity.

Also, it's not possible to allow/disallow market orders on certain products (like allow on Nifty and other liquid products etc..) in the current RMS. Else, that would have been put in place since 80% of the trading happens on 20% of the products.

I hope that helps. If anything is confusing, do let us know. It is not something we are trying to hide, but something we are actively working on improving. We understand that during high volatile times you don't want to spend time punching in a limit order price.

 

[DSM]

The discussion was not if algo's are profitable or not but about how fast we could trade, and if algos had advantage in that respect, which they do.

Not sure about 'most algo traders and hedge funds using mathematical models loose' This assumption may or may not be right.

BTW, the most profitable hedge fund over the LONGEST PERIOD OF TIME taking the value of funds handled (over 20 Billion) is Jame Simon's Renaissance Technologies/Medallion Fund, which traded entirely with algo programs created by a team consisting largely of PHD's with non-financial backgrounds. Barring a few years of negative returns, it is considered the best hedge fund - and run using only algos.

James Simons left the fund in 2009 with a net worth of US$ 10 Bil.

If that is true all big guys with algos would be highly profitable.Are they all profitable ? On the contrary evidence shows that most algo traders and hedge funds using mathematical models loose.

Just see how many algo traders are intervied in Market Wizards ? There are few but majority are not algo traders.

But as traders we all trade our beliefs, so if it is your belief that algo traders have edge then algo is the way for you.

Smart_trade

 

[DSM]

RKSV, You are usually prompt in replying, but not heard from you regarding the below points. i.e what is your defination of ill-liquid stocks?, and if you will consider blue chips such as Tata Motors / ACC / Infosys etc. as illiquid and thus not provide 'market order' trades?

Thanks, appreciate you writing on Sunday, and that too promptly. However, as expected, you have ignored the hard question. So will number them, in order to have a point to point response.

1. What do you consider ill-liquid stocks?

2. Stocks such as : Tata Motors / ACC / Infosys / Suzlon / Dena Bank etc. are (future stocks), which are highly liquid. Will you introduce market order for them as well along with Nifty?

3. Regarding the real life example given, it is really not apt to compare orders for stocks to options because even Nifty far OTM options will be illiquid.

 

[soft_trader]

@ RKSV:

Please update your calculator with new STT rates.

 

[saakk]

do you guys allow "bracket orders"??