An abode for the resourceful firms

trading strategies and money management discussion, code, results

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An abode for the resourceful firms

Postby dbra » Thu Mar 11, 2010 9:53 am

Since the advent of the liberalization of the Indian economy in the early 1990s, major changes have been witnessed in the stock market. Gone are the days when the time frame for a transaction was extended to help traders to complete a transaction. Auction is conducted for those securities which brokers fail to deliver/short deliver during the pay-in.

In case the securities are not received in an auction, the positions are closed out as per the close out rate fixed by the exchange in accordance with the prescribed rules. The close out rate is calculated as the highest rate of the scrip recorded in the settlement in which the trade was executed or in the subsequent settlement up to the day prior to the day of the auction, whichever is higher.

Consider the steps involved in the trading and settlement cycle for A + B1, B2 and C group of securities. If a transaction is entered on the first day of the settlement, i.e. on Monday, the same will be settled on the eighth working day, excluding the day of transaction. However, if the same is done on the last day, of the settlement, i.e., Friday, it will be settled on the fourth working day excluding the day of transaction.

The trading and settlement cycle for ?F? group, i.e., debt market is rather flexible. Even then fewer transactions take place in this group. However, with more and more people finding the stock market to be lucrative, trade in stocks belonging to this group is also now witnessing major changes. If the rigid rules implemented when trading in scrips belonging to other groups are implemented in the ?F? group, things may not be the same.

In commodities trades, a broker or a trader will be able to play it safe only by gaining immense experience after years of slogging out in this highly volatile market. Also, commodities trade involves the operation and maintenance of additional infrastructures to effectively influence the market. Traders with limited resources may not be able to make it big here.

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