I am recording some trades here based on the approach described below.
The capital that I allocate to this approach is Rs. 15000. I will isolate these trades from my other trading activities and record them here.
Over a period of time I found that it makes better sense to buy cash segment over FnO
Advantages of Cash segment over FnO:
If the trade goes against you it may not wipe out your capital.
You can buy as many shares unlike pre-determined lots in FnO
Zerodha charges zero brokerage if you are not trading intraday (But STT is higher)
If you are taking small trades and are in a loss, you can average if you still believe in your trade.
Bigger universe of stocks available for trade.
Advantages of FnO over cash segment:
Shorting option available.
Less transaction charges including STT
No DP Charges (Rs. 15.93 per scrip when you sell. As the number of shares increase, the impact of this comes down.)
Leverage (But this goes against you if you are stuck with overnight positions during geo-political news flare-up.)
Here I buy shares in cash segment. These are swing trades and not intra-day. I sell the shares when I make 2% profit. I sell them if they are on 2% loss and I exit that trade. Since I allocated small capital to this experiment, I will not add any other money management rules for these trades. Sometimes, I may reduce my target to 1% if I feel the market is not conducive. I plan to do these trades just based on daily candle stick patterns. I select shares based on favorable candlestick patterns. I will try to avoid penny stocks, bad repute managements, less liquid stocks and stocks hitting circuits often. Most likely I buy after 3 pm.
The transaction charges on Zerodha are Rs. 0.0021 for every Rs. 100 sale + Rs. 100 purchase. The transaction charges including DP charges (Additional Rs. 15.93 per scrip sold) may eat up this account. Just to keep oneself afloat, one has to identify stocks that give higher strike rate. Also, one cannot buy many different shares in this model as that increases DP charges. Further, one can only go long in this model. So, one may have no trading days as well. These are the challenges. I do not expect this to be easy.
The capital that I allocate to this approach is Rs. 15000. I will isolate these trades from my other trading activities and record them here.
Over a period of time I found that it makes better sense to buy cash segment over FnO
Advantages of Cash segment over FnO:
If the trade goes against you it may not wipe out your capital.
You can buy as many shares unlike pre-determined lots in FnO
Zerodha charges zero brokerage if you are not trading intraday (But STT is higher)
If you are taking small trades and are in a loss, you can average if you still believe in your trade.
Bigger universe of stocks available for trade.
Advantages of FnO over cash segment:
Shorting option available.
Less transaction charges including STT
No DP Charges (Rs. 15.93 per scrip when you sell. As the number of shares increase, the impact of this comes down.)
Leverage (But this goes against you if you are stuck with overnight positions during geo-political news flare-up.)
Here I buy shares in cash segment. These are swing trades and not intra-day. I sell the shares when I make 2% profit. I sell them if they are on 2% loss and I exit that trade. Since I allocated small capital to this experiment, I will not add any other money management rules for these trades. Sometimes, I may reduce my target to 1% if I feel the market is not conducive. I plan to do these trades just based on daily candle stick patterns. I select shares based on favorable candlestick patterns. I will try to avoid penny stocks, bad repute managements, less liquid stocks and stocks hitting circuits often. Most likely I buy after 3 pm.
The transaction charges on Zerodha are Rs. 0.0021 for every Rs. 100 sale + Rs. 100 purchase. The transaction charges including DP charges (Additional Rs. 15.93 per scrip sold) may eat up this account. Just to keep oneself afloat, one has to identify stocks that give higher strike rate. Also, one cannot buy many different shares in this model as that increases DP charges. Further, one can only go long in this model. So, one may have no trading days as well. These are the challenges. I do not expect this to be easy.
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