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Lot sizes revised upwards on both index and stock derivatives. Nifty lot size goes up from 25 to 75 from Nov contracts https: Those taking trades currently more than 3 lots or 75 Nifty at a time, life doesn't really change for them at all.
Those taking 1 lot or 25 of Nifty per trade putting up a margin of around Rs 20k, will be forced to minimum take a position of 75 Nifty by putting up Rs 60k as margin. The issue with increase in margin is that some people would not have enough money to trade nifty futures anymore, and those who have may not be comfortable taking much bigger risk on every trade.
Those traders who don't have money, might move to trading options. Trading options is much more riskier, and most retail don't really understand this product very well in terms of risk. Also many retail traders participate in stock futures with 1 lot per trade currently. Traditional brokers charge per lot fees for trading options. When the lot size goes upto 75, they will now be forced to charge only Rs So the revenue yield for them for a 75 or 3 lot Nifty trade will drop from the current Rs to Rs Discount broking firms run on per trade fees, and the business composition is mainly retail traders.
If because of the margin increase, number of trades drop, it will hit the revenue. Only the ones with scale, will probably continue to operate this model in the long run. But yeah, like everything change is tough to deal with. Thank god, they hv atleast spared the banknifty to some extent.
They are just there to help the big brokers. If they were so concerned about the risk of retail traders they would have sticked on with 25 lot which i feel was really good for retail traders.
People like Nithin has to take up the matter with SEBI so that we retail people can get some good news. We are all in the learning process of trading so this decision is going to affect badly and at the ead of the day we will have to be very very careful in our trading decisions. So in total its bad for retail traders and for brokers. Alternatively, people who trade nifty and bank nifty can trade the index through niftybees and bank bees.
These securities tend to replicate the indices. So people with lower risk apetite do not need to risk more by entering into buying futures on the indices and risking their money at once. Hope this helps for traders who seek to trade the derivatives market. Trader's investment increases and broker's brokerage also increases with it.
However traders trading with a solid intraday strategy need not bother. But then, brokers like ICICI will earn from futures transactions right, as their brokerage is percentage of traded value?
I think this will benefit them in a huge way! Also the futures business will mostly reduce because of the increased margins. It could also consolidate the broking industry which is currently in decline due to "easy " entrants, remisiers, and sub agents.
The industry consolidation ensures professionalism, quality augmentation and bargaining power. How will lot size increase affect trader and brokers? Read this on Zerodha FB post: Can someone tell me how it will affect brokers and traders. Trader Those taking trades currently more than 3 lots or 75 Nifty at a time, life doesn't really change for them at all. Broker Traditional brokers charge per lot fees for trading options.