F n O Profit calculation.pls help

S

sanjayspeilberg

Member
#1
#1
Hello All,

I have been trading since 2007 in equities,i was only onto short term trading(stocks). i was not into FnO.

Now I wanna start trading in F n O, but i have some very basic doubts. Someone pls clarify. Mentioned below data is nothing but the stocks and their margin money to trade in F n O as per R.K Global.


Stock Margin Lots
IVRCL 24602.5 1000
MINIFTY 12212.09 20
RNRL 25180 4000

I wanted to start with a investment of Rs.25,000. Pls consider the following example.
If i wanna buy RNRL 1 lot, ==>I bought it for 40Rs. and sold it for Rs.41.
so is my profit==>Rs.41-40=Re.1 * 4000(lot size)=Rs.4000 is my profit. excluding the brokerage.

I checked all charges with R.K global i.e Brokerage
Service Tax,STT,NSE Charges,ST on NSE and Other Charges. which is equal to Rs.70.
so as per the above calculation my profit should be Rs.3930, right? if it is right, then my doubt is with just a increase of Re.1 in the share price, we could get Rs.4000 profit i.e more than 15% R.O.I.

which sounds really great!! but y do people say it is more risky? is there any other risk factor involved here? except share price of rnrl going down?
i mean instead of Rs.41 if it goes down to Rs.39 then the loss is same Rs.4000, right?

could some one tell me which is bit safe to start with in F n O segment? is it Nifty Futures ot Mini Nifty or stock futures???
Am sorry,if i posted it in the wrong place..
 
veluri1967

veluri1967

Well-Known Member
#2
#2
sanjayspeilberg said:
Hello All,

I have been trading since 2007 in equities,i was only onto short term trading(stocks). i was not into FnO.

Now I wanna start trading in F n O, but i have some very basic doubts. Someone pls clarify. Mentioned below data is nothing but the stocks and their margin money to trade in F n O as per R.K Global.


Stock Margin Lots
IVRCL 24602.5 1000
MINIFTY 12212.09 20
RNRL 25180 4000

I wanted to start with a investment of Rs.25,000. Pls consider the following example.
If i wanna buy RNRL 1 lot, ==>I bought it for 40Rs. and sold it for Rs.41.
so is my profit==>Rs.41-40=Re.1 * 4000(lot size)=Rs.4000 is my profit. excluding the brokerage.

I checked all charges with R.K global i.e Brokerage
Service Tax,STT,NSE Charges,ST on NSE and Other Charges. which is equal to Rs.70.
so as per the above calculation my profit should be Rs.3930, right? if it is right, then my doubt is with just a increase of Re.1 in the share price, we could get Rs.4000 profit i.e more than 15% R.O.I.

which sounds really great!! but y do people say it is more risky? is there any other risk factor involved here? except share price of rnrl going down?
i mean instead of Rs.41 if it goes down to Rs.39 then the loss is same Rs.4000, right?

could some one tell me which is bit safe to start with in F n O segment? is it Nifty Futures ot Mini Nifty or stock futures???
Am sorry,if i posted it in the wrong place..
Click to expand...


Risk lies in the leverage as you understood correctly. In order to play F n O, you should have a very high accuracy and success ratio.

Let us take same example of RNRL.

If you want to play in cash you need 40 x 4000 = 1,60,000/-. But for futures, you just need Rs.25,180/-. Here capital advantage.

In cash as well as Futures Rs.1 profit gives you Rs.4,000/-. In cash segment it is 3%+ and Futures segment it is 15%+. Here profit advantage.

If the trade goes wrong, you loose 3% in cash and 15% in futures.

A single loss in futures can through u out of business because you are not meeting margin requirements to enter your next trade. Secondly, if you are holding to loosing trade in futures, broker forces you cough up more funds to meet the margin requirements even if you have not squared off your position. If you fail to meet margin requirements, your broker will square off your positions.

Advantage is that - you can control 4000 shares with just 15% of capital. If your trade proves profitable, you can add to your positions by using remaining capital. Thus you can control over 24,000 shares with the same cash of Cash segment where you can control only 4,000.

The trick is - cut your losses early. Run your profits by adding to your profitable positions. How do you achieve this, all that counts in FnO.

Cheers.
 
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