F n O Profit calculation.pls help

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???

a) Your calculation for profit is correct

b) If you take a position, your ledger must have enough extra money to take care of Mark To Market (MTM) Loss.... or else your broker can squareoff your position in the event you do not have enough money in the ledger to support the MTM loss.

c) As opposed to buying equity where settlement is T+2, in F&O settlement profit & loss is reflected in the ledger on the same day as the trade.

Happy & Safer Trading

SavantGarde

Thank you Savant.

So the biggest risk here is, if we are on the loss side we need to keep adding our money to our ledger in order to adjust the MTM loss, correct? if this case we keep losing our money if we are in loss side??

As opposed to buying shares....where once bought at an X price doesn't affect your ledger even if it goes down from your entry price....unless you decide to sell it at a loss.....

Same is not the case with F&O where you need that extra buffer for MTM loss and also for some high Volatile scrips Initial margin can change where there may not be enough in the ledger to support that extra requirement.

Total Margin consists of Initial Margin+Exposure Margin & Initial Margin % can change if undue amount of volatility is witnessed.

Happy & Safer Trading

SavantGarde

Always use stoploss to minimise loss. What generally happens is that we do not square-off position when in loss and the loss goes on increasing. On the other hand when we are in profit we square-off early. this tendency results in net loss. Another option is to hedge the positions in F&O traders.

My Trading Plan

I would like to start the NIFTY FUTURES trading from next month. Please find below my plan and let me know whether it will work out or not.

Am gonna open account with R.K.Global. its 9Rs. per lot.

I would like to start with low risk low return pattern.

So as my brokerage plan, my breakeven point is 2.15 points.

If i buy Nifty Futures @ say 6000 and sell it @ 6010.
so my profit is 6010-6000=10-2.15(brokergage,breakeven)=7.85*50(1 lot)=Rs.392.

day trading in nifty futures with just 10 points target calculation is really reasonable and i could acheive it.(if am good in following the market trend)

if i trade twice a day, my profit would be Rs.392*2=Rs.785 per day. If i trade for 10days in a month i can get a profit of Rs.7850 per month which is more than 20% of returns per month.(considering Rs.30,000 margin money for nifty futures)

I feel that with 10 points target in Nifty futures is a reasonable target.

could some one please guide me whether this plan will work out?

Note: I do not want to do delivery based trading in nifty futures,bcoz anything may happen over night which could result in gap up or gap down opening next morning which will badly affect my capital and put me in loss.

Dear,
Your planning is very good, no doubt; but markets do not move as per our plan. So please do not forget to put stoploss as suggested earlier, so as to minimise the loss in case the market moves in the reverse direction. Goodluck