Who pays the LOSS !!!

market_looser · #1 11th February 2008, 03:31 PM

Who pays the losses !!!

Dear friends, I have a very big doubt in my mind.

When we buy some shares at 100 rupees and sell that at 120 rupees, the person who is buying pays 120 and we get 20 rupees profit. So the buyer pays our profit.

When we sell the same share at 80 rupees, we loose 20 rupees. when the buyer pays 80 for the selling that we made, he gets same share at lower price. first question where did this 20 rupees loss goes ???

In the futurs market, When i buy SAIL share at 100 rupees, lot size 10, which is 1000 rupees. I pay a margin of 200 rupees. Lets us assume the SAIL share closed at 90 rupees, I will pay 10 * 10 = 100 rupees at EOD settlment.

question 1. who will get 100 rupees loss that i paid to exchange.

assume SAIL closes at 110 and i get 10 as profit........ question 2. who will pay that 10 rupees to me.

Thanks

Market_looser

VasanSuccess · #2 11th February 2008, 04:51 PM

its same as buying and selling. When u buy at higher price, u take profit, when you sell at lower price, You pay for loss.

I find no discrepancy in this question, Probably you have to coin your question in more understandable way

ajaysena1 · #3 11th February 2008, 06:08 PM

Its almost the same way as u trade in shares.
In your example, another person will take the position which you squared off.
I think I'm right but lets check out from any of the seniors.

fast_rizwaan · #4 11th February 2008, 06:09 PM

either you are trading with other traders like yourself or the market maker.. who will buy or sell when no buyer or seller is available. and your profit will not be 20 but 20 minus brokerage, security transaction tax, turnover tax, which comes to 17rs. 3rs to govt.

raghav1366 · #5 11th February 2008, 06:36 PM

very good observation rizwan. whether we gain or lose the people around us are getting assured money that is why they alwysgive hope on revivial.

money lost is lost. this can be regained only by future profits ( else from earned money from other sources).

let almighty save every one of us .

uasish · #6 11th February 2008, 07:01 PM

Quote:

Originally Posted by market_looser

Who pays the losses !!!

Dear friends, I have a very big doubt in my mind.

When we buy some shares at 100 rupees and sell that at 120 rupees, the person who is buying pays 120 and we get 20 rupees profit. So the buyer pays our profit.

When we sell the same share at 80 rupees, we loose 20 rupees. when the buyer pays 80 for the selling that we made, he gets same share at lower price. first question where did this 20 rupees loss goes ???

In the futurs market, When i buy SAIL share at 100 rupees, lot size 10, which is 1000 rupees. I pay a margin of 200 rupees. Lets us assume the SAIL share closed at 90 rupees, I will pay 10 * 10 = 100 rupees at EOD settlment.

question 1. who will get 100 rupees loss that i paid to exchange.

assume SAIL closes at 110 and i get 10 as profit........ question 2. who will pay that 10 rupees to me.

Thanks

Market_looser

These are Contracts between 2 parties where exchange is the mediator.

nayagam · #7 14th February 2008, 11:15 AM

Mr, Market Looser,

Iam Also Having Same Doubt ,that You Have. Let Us Wait, Some Senior Members Explain It Clearly.

Raviraj1 · #8 14th February 2008, 01:37 PM

Consider an example if you buy gold @11000 per/gm and keep it in your safe deposit locker or with yourself, now if the price increases to 11500, value to the extent of 500 is being created; if price decreases to 10500, value to the extent of 500 is being eroded, in short the underlying value of the assest pays or takes away the money.
Similarly in delivery trading a basic fact which needs to be understood is that the amount you get depends upon the value\price of the underlying assest. When the price increases value is created and vice versa
In futures the role of market maker is not clear to me so maybe the seniors could comment.

zeekid · #9 14th February 2008, 03:18 PM

Quote:

Originally Posted by market_looser

Who pays the losses !!!

first question where did this 20 rupees loss goes ???

... to the person from whom YOU first bot the shares @ 100/-