Discount Broker Comparison

TracerBullet

Well-Known Member
I still think that there will either be a dilution of the circular, or a workaround will be found. The markets will literally be devoid of liquidity if this circular is enforced as it is, in its current form
Yeah i hope so too, last time i remember example given by zerodha was suggesting margins around 8x for some stock, but now its even lower at around 4x for Reliance, maybe due to covid or recent margin changes for options.

But zerodha guys so far are suggesting that its very unlikely that SEBI will roll back.
https://tradingqna.com/t/no-additio...-aug-2021-in-indian-capital-markets/84561/219
 
Guys,
If my understanding is correct, then this circular comes to effective only on 1st Dec'20..

Even after 1st Dec 2020, 4 phassed manner increase in margin requirements till Dec'2021.

But we are reacting too much and too early i think so...

During phase 1, we will get 4X of actual VAR + ELM, ...that will be trail for both exchanges and SEBI..most likely they will drop or modify rules...

So lets enjoy till Feb 2021
 

Schatz

Well-Known Member
A well known gents said that there r 3 ways to go broke... ladies, liquor, and leverage.... If somebody thinks that without leverage they cant trade anymore that basically means he is getting saved from going broke in future .. leverage is good/okay to some degree .. Beginners always look for leverage and professionals shy away from leverage..
 

TracerBullet

Well-Known Member
Guys,
If my understanding is correct, then this circular comes to effective only on 1st Dec'20..

Even after 1st Dec 2020, 4 phassed manner increase in margin requirements till Dec'2021.

But we are reacting too much and too early i think so...

During phase 1, we will get 4X of actual VAR + ELM, ...that will be trail for both exchanges and SEBI..most likely they will drop or modify rules...

So lets enjoy till Feb 2021
Right now for Reliance Var+ELM gives about 4x leverage. So till Feb we should have 16x+

Dec 2020- Feb 2021: Penalty if margin used <25% of VAR+ELM
Mar 2021- May 2021: Penalty if margin used <50% of VAR+ELM
June 2021- Aug 2021: Penalty if margin used <75% of VAR+ELM
Aug 2021 onwards: Penalty if margin used < VAR+ELM

A well known gents said that there r 3 ways to go broke... ladies, liquor, and leverage.... If somebody thinks that without leverage they cant trade anymore that basically means he is getting saved from going broke in future .. leverage is good/okay to some degree .. Beginners always look for leverage and professionals shy away from leverage..
Leverage also means i can keep less capital with the broker and reduce my broker risk. And LTF intraday systems can need some extra leverage even with acceptable drawdowns and no excessive risk.
 

Schatz

Well-Known Member
Right now for Reliance Var+ELM gives about 4x leverage. So till Feb we should have 16x+

Dec 2020- Feb 2021: Penalty if margin used <25% of VAR+ELM
Mar 2021- May 2021: Penalty if margin used <50% of VAR+ELM
June 2021- Aug 2021: Penalty if margin used <75% of VAR+ELM
Aug 2021 onwards: Penalty if margin used < VAR+ELM



Leverage also means i can keep less capital with the broker and reduce my broker risk. And LTF intraday systems can need some extra leverage even with acceptable drawdowns and no excessive risk.
I agree with reducing broker risk part. But how many of us have such supreme control and manage capital in such efficient way. Many of us keep pumping small amount of money frequently and gets wiped out multiple times. Psychologically losing 50k 10 times over 1 year is better than losing 5 L in a day. Isn't it.
 

TracerBullet

Well-Known Member
I agree with reducing broker risk part. But how many of us have such supreme control and manage capital in such efficient way. Many of us keep pumping small amount of money frequently and gets wiped out multiple times. Psychologically losing 50k 10 times over 1 year is better than losing 5 L in a day. Isn't it.
I cannot speak for others, but those who are out to kill themselves will find a way to do it anyway.
Too much leverage is harmful as broker is at risk and too less leverage is also harmful and will reduce liquidity. For broker, bigger risk is in EOD moves over which they have no control ( crude negative !!) vs intraday which can generally be squared off.
 
Even after complete implementation, we will get around 4x for most of f&o stocks. ( post Aug 2021)
Whom will you trade against. People and liquidity, both will disappear. Slippage will kill the edge most systems that operate on 1:1.5 risk reward. Meaning, most systems that are making money today will cease to make money under the new rules because of excessive slippage.
At that time, even if you have unlimited money, that particular system will stop making money
 

Schatz

Well-Known Member
I cannot speak for others, but those who are out to kill themselves will find a way to do it anyway.
Too much leverage is harmful as broker is at risk and too less leverage is also harmful and will reduce liquidity. For broker, bigger risk is in EOD moves over which they have no control ( crude negative !!) vs intraday which can generally be squared off.
Generally true. Some exceptions are surgical strike day or us election day. Bid ask goes so wide that over leveraged positions can put whole system at risk. Less leverage makes a healthy environment and less chance of any broker going broke.
 

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