Can anyone help with trading life cycle related question?

#1
Hi all,

You all experts here on this forum so thought to ask this question here. Today I was studying trade life cycle.
In trade life cycle, risk management function is there.

In books it is mentioned that once order gets executed by front office , risk management team will conduct a number of checks and calculations to see whether the levels of risk involved with the client's order before processing the order for next stage.

But in reality order gets executed within few seconds or minutes. So , when this risk management function as mentioned above takes place???? Because it would take couple of hours to perform it.
 

travi

Well-Known Member
#3
By taking excerpts from a book(s) and phrasing it differently doesn't make any sense.

A simple risk mgmt. function that kicks in when order is fired is the Margin check, if insufficient margin is there the order is rejected. That could be in a tenth of a second.

This is as simple as it can be or complex (that takes hours/days if u've put up your house as collateral) depending on the type of trade.
 

msdtime

Active Member
#5
Risk mgt doesn't mean they will take your interview.....;)
Consider broker as a local money lender/ don/ goon/ satta king etc. What kinda checks will he do? Paisa hai ke nai, udhar karja fitega ke nai! Buss.
Also here risk mgt is for broker and not for trader. Broker wants to keep himself out if risk if trader gets in debit and won't pay. But Broker has to pay to exchange.
There are various RMS factors, like volatility of stock, liquidity, etc.
 
#6
Thank you guys. So basically in equity trading, risk management team has no work. Everything is automatic and only margin will be checked.

Thanks again.
 
#9
Hi all,

You all experts here on this forum so thought to ask this question here. Today I was studying trade life cycle.
In trade life cycle, risk management function is there.

In books it is mentioned that once order gets executed by front office , risk management team will conduct a number of checks and calculations to see whether the levels of risk involved with the client's order before processing the order for next stage.

But in reality order gets executed within few seconds or minutes. So , when this risk management function as mentioned above takes place???? Because it would take couple of hours to perform it.
Every broker gives a limit to his client and that limit is set in the front end software. When we place an order that order value is checked with the limit set and if it is below the limit, the order is sent to the orderbook ,if it is above the limit, then it is rejected giving reason as " the order exceeds the limit or this order needs Rs XXX more in your margin to go through " This check is performed on every order and it takes fraction of a second.

Smart_trade
 

Broker Special Offers

Intraday Higher Leverage

Save up to 90% in brokerage and get higher leverage for intraday trades.

Name:Phone:
Email:City:
State:
Are you a day trader?