As I understand we cannot trade more then 10000 in one order for Nifty. If the price is rs 50 then it comes to 5,00,000 per order.
what if someone wants to buy more then 5,00,000 worth of Nifty Options? Putting multiple orders is not ideal. In that time the market may move.
So what is Zerodha trying to do about it. And also importantly by when?
thanks.
The limit of 200 lots or 10000 nifty per order is put by the exchange and unfortunately nothing that we as Zerodha can do about it.
That said, some of our high volume trading clients use our product which is called as " i3" , there around 11 order execution algos.
When I say order execution algos, it will give you the best way to execute an order(once you have decided what to buy/sell) with the least impact cost.
We have something called as a iceberg order, in the iceberg a big order is firstly hidden from marketwatch(similar to how in an iceberg, only a small bit of the iceberg you can see on top of the sea, and the 90% of iceberg is hidden in the water,
remember titanic) and also the order is broken into small parts and sent to execute. This not only gets over the limitation of the 200 lots, but more importantly will save you a lot of money in impact cost. Today if you put a market order of 10000 nifty, you could loose between 50 paise to 2 Rs in impact cost itself. This could mean 5000 to 20000 in impact cost saved. Brokerage actually is immaterial. We have a bunch of our high volume clients using this product.
The catch here though is that since these are algos, you will need a dealer terminal to execute and not possible on retail terminal. To get a dealer terminal, you need to become an Authorized person with us(cost around Rs 5000/exchange) , give us NISM certification and then also subscribe to i3( Rs 5000/month). But if you are a person who executes big orders, this would be peanuts compared to what you can save.
Will get Nithin to write a blog on this tomorrow..But here is the list of 11 algos available..
Aggressive execution strategies: Discretionary, Market/Limit if touched, Pegged to market, Sweep to fill
Reduce your risk: Bracket
Better average price: Mid point, active relative, passive relative, Scale
Automated slicing: Iceberg, time slicing, volume participation.
