SEBI's new move to cut retailers participation in F&O!

headstrong007

----- Full-Time ----- Day-Trader
hi
I even through some light on this extended timing also..its totalyl related to stop retails to trade & force all of them to put their surplus money into mutual fund..in covering of protacting retails, SEBI is helping mutual funds..mutual funds has a big lobby & they have lot of money..they have already lobbied to make those rules.
1) cash market will close at 3:30 pm & futures will be traded...think about it..take an example, As a retail trader, I buy reliance in cash market..I cant closed my position after 3:30 pm..& I am not able to buy /sell enough lots of futures( due to net worth exposure rule) ..so if any bad news happens after 3:30, HNI & DII & FIII all big boys can use that news, they can buy/sell futures/options & control their losses..but as a retail trader, I have to bear losses..I can not react on that news & cant do anything about that..but big boys can do..Itslike not providing same field to players..
2) two players are playing but retails traders are not allowed to use futures/options for their protection ..
after 2008 loss, people know now about power of shorting & importance of future /options ..so educated traders also can take short/long positions in future/options to use short opportunities.as we are not allowed to do short in cash markets..its simple As a retail trader, I am not allowed to do shorting ( as shorting only allowed in options /futures) ..so how retail trader can use shorting opportunities?
3) people who buy as a deliviery trade, can just see helplessly , that market is falling..& losses is mounting ..just see that FII,DII & HNI is selling & we retails traders are just seein helplessly market is falling..cant hedge our positions & use the opportunity of shorting..thats is totally unfortunate & unfair..
fellow traders ,think about this points ..If those all points implement..then its not worth risking to trade in market & worth spending time & money to do that business which we have learnt after years of struggle & hardwork..RIP TRADING PROFFESION ..its really unfortunate..
Thanks
Nice Points! :up:
 
1) cash market will close at 3:30 pm & futures will be traded...think about it..take an example, As a retail trader, I buy reliance in cash market..I cant closed my position after 3:30 pm..& I am not able to buy /sell enough lots of futures( due to net worth exposure rule) ..so if any bad news happens after 3:30, HNI & DII & FIII all big boys can use that news, they can buy/sell futures/options & control their losses..but as a retail trader, I have to bear losses..I can not react on that news & cant do anything about that..but big boys can do..Itslike not providing same field to players..
As far as my memory serves me right, the timings are ought to be implemented for Indices only in order to facilitate FII trades - kind of similar to SGX Nifty. And @headstrong007 previously explained me about the Supply-Demand as I was confused how can Derivative be traded when its corresponding Spot market is closed.

Now for stocks derivatives to be traded I think we need its underlying stock to be traded at the same time, otherwise, it will churn into pure speculation and as rightly mentioned by you would create a massive paradox.
 

headstrong007

----- Full-Time ----- Day-Trader
@Smart_trade
IMO, it is always better to edit/delete the objectionable part of the post, rather than delete a full-length post which may contain some valid and unobjectionable points.
Just hiding the whole post is easy, but moderating the post is actually a good moderator's job. Most of the time moderators just simply hide the whole post.

But, anyway it is just a suggestion, the moderators can just press the hide button as it's less time-consuming. :)
 

headstrong007

----- Full-Time ----- Day-Trader
As far as my memory serves me right, the timings are ought to be implemented for Indices only in order to facilitate FII trades - kind of similar to SGX Nifty. And @headstrong007 previously explained me about the Supply-Demand as I was confused how can Derivative be traded when its corresponding Spot market is closed.

Now for stocks derivatives to be traded I think we need its underlying stock to be traded at the same time, otherwise, it will churn into pure speculation and as rightly mentioned by you would create a massive paradox.
Here is the more detailed view from my side,

Now the biggest question is who will take the opposite position of the Smart Money[FII are usually smart money] at Night Trading in absence of small retail traders [95% loosers]?
Demand-Supply theory will not work in the absence of the most of the losers.
This will create an imbalance bcoz there is no cash market to follow.

When there is enough liquidity and demand-supply market goes naturally like SGX Nifty traded without the Nifty Spot(cash market) at night. But that will not be the case when smart money will try to cut the smart money. :DD The market at Night will be non-tradable soon if such restrictions are applied.
 

hitesh05

Well-Known Member
I wanted know can someone trade equaty with his available cash without margin or for that also he has to have supporting itr and networth certificate?
 

headstrong007

----- Full-Time ----- Day-Trader
I wanted know can someone trade equaty with his available cash without margin or for that also he has to have supporting itr and networth certificate?
In CNBC channel, earlier there was a discussion that one of the main goals of SEBI is to bring the F&O volume to the cash market. You can see the heading of this thread. I made this thread after the report and discussion on CNBC.

So, let's hope that at least intraday cash trading (which is actually still under the speculation, not business) will be free.
If SEBI wants to stop legal F&O business, let's spare the speculation at least for small retail traders.

But, currently, most of the retail traders are trading with Index Options (only buy side) as there is a lesser risk. At least there is no risk of a margin call, and small retailers can do positional trade with even a few thousands.
Some traders are making money mainly positional basis using Bank Nifty options, beating the smart money using higher Time Frame(less noise). It's bad to shift them to unknown territory like intraday stock cash trading.
Many of small retailers are losing the money in options too but they are providing the essential liquidity to the system and the options writers.
 

hitesh05

Well-Known Member
In CNBC channel, earlier there was a discussion that one of the main goals of SEBI is to bring the F&O volume to the cash market. You can see the heading of this thread. I made this thread after the report and discussion on CNBC.

So, let's hope that at least intraday cash trading (which is actually still under the speculation, not business) will be free.
If SEBI wants to stop legal F&O business, let's spare the speculation at least for small retail traders.

But, currently, most of the retail traders are trading with Index Options (only buy side) as there is a lesser risk. At least there is no risk of a margin call, and small retailers can do positional trade with even a few thousands.
Some traders are making money mainly positional basis using Bank Nifty options, beating the smart money using higher Time Frame(less noise). It's bad to shift them to unknown territory like intraday stock cash trading.
Many of small retailers are losing the money in options too but they are providing the essential liquidity to the system and the options writers.
Thanks for the info, in that case margin will also available with BO orders or trading with own cash only?
 

headstrong007

----- Full-Time ----- Day-Trader
Thanks for the info, in that case margin will also available with BO orders or trading with own cash only?
Let's wait and see. SEBI wants to increase every type of margin for every instrument, always blaming that excess leverage.
 
Some traders are making money mainly positional basis using Bank Nifty options, beating the smart money using higher Time Frame(less noise). It's bad to shift them to unknown territory like intraday stock cash trading
That's exactly how I leverage my swing trades by judging IV. At times I go for correlated liquid stock options as well; exit using strict stop-loss if wrong, and if right simply trail the stop-loss until kicked out. For several days now, unable to pull the trigger because SEBI has added an extra veil over my rationale mind.

I use Amibroker. Without any programming background reading the manual line by line, coding my strategy in AFL took me 3 years (still in progress) - over 7000 lines. I am very compassionate about trading, because despite of initial losses, trading has made me become aware of my true potentials. I have become a different person in these years - I can mentally calculate better, has turned more vigilant on several aspects, my perception of reality has tremendously improved, I have become more goal-oriented, organized. These are all gifts of trading.

Moreover, anybody serious about trading, goes through the same phase. It's common to feel the pain while acquiring new skill sets. SEBI as a regulator must motivate, instead of bullying.
 

sridhga

Well-Known Member
Now the biggest question is who will take the opposite position of the Smart Money[FII are usually smart money] at Night Trading in absence of small retail traders [95% loosers]?

You are assuming that small retail traders are losers! I know that you intended it to be sarcastic. This is a stereotype promoted by American financial literature. SEBI has not done much ground work and just gave a questionnaire to less than 100 people/institutions and is making laws based on that. Look at the SEBI document and it shows that people in SEBI sit in their ivory towers and are bureaucrats with no trading experience. Reading financial literature and going through surveys and research papers does not provide much insight into the real life of a trader.

I will give you a small example. I keep less than 2 lakhs in my trading account. Very often, I commit about 60K for the margins and on most days I make about 5K to 9K on the trades. I am documenting my trades on this forum. Now, SEBI thinks that Big investors/Smart Money/Mutual Funds are better, show me which mutual fund can deliver me my daily returns? Simply, it is not possible to replicate this on a larger scale. I am aware of this and I prefer to be a small trader. When it comes to large investments, I can choose long term growth stocks which gave me 6 times return in 3 years in the past. I can share that data from my broker statements. India has many such small investors and traders all across this country. Though, I have not done formal research on this subject, I lived and interacted with small town traders in AP, Telangana and in the cities of Hyderabad, Chennai and Ahmedabad. An investor/trader who has taken keen interest in the financial markets would never go with mutual funds. SEBI cannot kill the entrepreneurial spirit of investors/traders in this country. As it is, we deal with extraordinary burden like STT and still survive.

I do not believe that small traders are dumb money and large funds are smart money. That is a fallacy promoted in financial literature.
I can show many counter-examples, LTCM, Bernard Madoff, Lehman Brothers, AIG, Citigroup just to name a few.
But, in a given time frame a large fund, has a better holding power than a small player. Any trader would acknowledge this.

If SEBI wants to protect small investors/traders, it should spend its time and the fees that it collects from us, on investor education programs. Actually, certifying traders is not a bad idea. But looking at the quality of education in our country in different fields, I can only tell that a certificate is only as good as the quality with which it's underlying education is imparted.
 
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