General Trading Chat
- Thread starter timepass
- Start date
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I think, it was NOT meant to be broken ! Why ?
I dont know if anyone can catch such freak trades in reality or these are just Algo System generated flash points happens due to conivence of already decided two set parties to convert some money .... you know !
In reality , the 10Feb 5m BN 39k PE chart show , even at @10 AM premium was 400 and at 12 PM 650 - means 250 pts favour to whoever traded it !
Same way, 39k CE premium was 580 @10 AM and at @1 PM 300 - means some sellers pocketed 280 pts in just 3Hrs !
So the O=H was just a kind of gimmick from Biggies , which retails can NEVER catch !
At least, I can digest only this much - God knows actual reality !
I dont know if anyone can catch such freak trades in reality or these are just Algo System generated flash points happens due to conivence of already decided two set parties to convert some money .... you know !
In reality , the 10Feb 5m BN 39k PE chart show , even at @10 AM premium was 400 and at 12 PM 650 - means 250 pts favour to whoever traded it !
Same way, 39k CE premium was 580 @10 AM and at @1 PM 300 - means some sellers pocketed 280 pts in just 3Hrs !
So the O=H was just a kind of gimmick from Biggies , which retails can NEVER catch !
At least, I can digest only this much - God knows actual reality !
I think, it was NOT meant to be broken ! Why ?
I dont know if anyone can catch such freak trades in reality or these are just Algo System generated flash points happens due to conivence of already decided two set parties to convert some money .... you know !
In reality , the 10Feb 5m BN 39k PE chart show , even at @10 AM premium was 400 and at 12 PM 650 - means 250 pts favour to whoever traded it !
Same way, 39k CE premium was 580 @10 AM and at @1 PM 300 - means some sellers pocketed 280 pts in just 3Hrs !
So the O=H was just a kind of gimmick from Biggies , which retails can NEVER catch !
At least, I can digest only this much - God knows actual reality !
I dont know if anyone can catch such freak trades in reality or these are just Algo System generated flash points happens due to conivence of already decided two set parties to convert some money .... you know !
In reality , the 10Feb 5m BN 39k PE chart show , even at @10 AM premium was 400 and at 12 PM 650 - means 250 pts favour to whoever traded it !
Same way, 39k CE premium was 580 @10 AM and at @1 PM 300 - means some sellers pocketed 280 pts in just 3Hrs !
So the O=H was just a kind of gimmick from Biggies , which retails can NEVER catch !
At least, I can digest only this much - God knows actual reality !
Abt these high values in 'open' - no gimmicks or biggies eating retailers. Just read about how nse calculates open prices and everything will be clear.
Thanks - point noted ! You may have more info on this system adopted by exchanges !
What I know is , Freak trades cause large price swings often because of mistakes in order entry, made worse by the freak trades triggering stop-loss orders.
Some time back , there were rampant freak trades happening prvsly due to Market Order flaws in the system itself. And some traders were in losses of a few Lacs of Rs.
And to avoid this, may be in around Sept, 2021, exchanges made some changes in StopLoss procedures in Market Order type execution , which were supposed to accept only LIMIT orders ( and which restrict such execution to a predefined price. The move was expected to help contain damage if there are freak trades that cause large price swings often because of mistakes in order entry ).
QUOTE
"Such freak trades are possibly occurring on account of low liquidity caused by new stringent margin norms of SEBI that have increased the capital requirement for traders/speculators. Thus, drying up most of the liquidity from the futures market ecosystem,"
Another reason could be, since august 16, 2021, the National Stock Exchange of India (NSE) has completely discarded execution ranges, price bands within which contracts can trade.
Prior to this, the NSE used Trade Execution Range (TER) mechanism as a risk management measure which ensured that market orders didn’t execute beyond a defined execution range.
"This system was avoided because when prices of underlying securities swing dramatically, it created a barrier to price discovery,"
This change of stance puts the exchange in line with practices that are followed by other exchanges around the world, which is not to have such restrictions and allow demand and supply at any given time to determine at what price a trade gets executed.
"Their (NSE) stance seems to be that traders have to be careful about this while placing orders on the exchange and that contracts being completely banned from trading for a few minutes is a lot worse than a few freak trades,"
UNQUOTE
... So the saga of freak trades still continue albeit in a lesser instances - since traders are now more Educated to avoid Market Orders and use only LIMIT orders !
May be , more development might have happened recently - which I am not aware-of !
What I know is , Freak trades cause large price swings often because of mistakes in order entry, made worse by the freak trades triggering stop-loss orders.
Some time back , there were rampant freak trades happening prvsly due to Market Order flaws in the system itself. And some traders were in losses of a few Lacs of Rs.
And to avoid this, may be in around Sept, 2021, exchanges made some changes in StopLoss procedures in Market Order type execution , which were supposed to accept only LIMIT orders ( and which restrict such execution to a predefined price. The move was expected to help contain damage if there are freak trades that cause large price swings often because of mistakes in order entry ).
QUOTE
"Such freak trades are possibly occurring on account of low liquidity caused by new stringent margin norms of SEBI that have increased the capital requirement for traders/speculators. Thus, drying up most of the liquidity from the futures market ecosystem,"
Another reason could be, since august 16, 2021, the National Stock Exchange of India (NSE) has completely discarded execution ranges, price bands within which contracts can trade.
Prior to this, the NSE used Trade Execution Range (TER) mechanism as a risk management measure which ensured that market orders didn’t execute beyond a defined execution range.
"This system was avoided because when prices of underlying securities swing dramatically, it created a barrier to price discovery,"
This change of stance puts the exchange in line with practices that are followed by other exchanges around the world, which is not to have such restrictions and allow demand and supply at any given time to determine at what price a trade gets executed.
"Their (NSE) stance seems to be that traders have to be careful about this while placing orders on the exchange and that contracts being completely banned from trading for a few minutes is a lot worse than a few freak trades,"
UNQUOTE
... So the saga of freak trades still continue albeit in a lesser instances - since traders are now more Educated to avoid Market Orders and use only LIMIT orders !
May be , more development might have happened recently - which I am not aware-of !
Please dont mix and match.
Go point by point.
The question was why "open" Price especially in options show abnormal values which we can't catch or see on price charts... Right?
The answer is, It's because of how nse arrives at open prices of a instrument. So these abnormal " Open" values may appear on all instruments and it is more common in options segment due to low liquid orders in pre open phase and are less common in equity stocks which have more liquid pre market orders than f&o segment.
( please refer to " Open " price calculation mechanism"
Freak trades which you mentioned or price fluctuations due to erroneous orders or flaws in algos happen during market hrs.
Perfectly correct explanation !
Now the Q arises in a layman's mind like me, why anyone would venture to BUY CURRENT week's BN option at such a high price , which the buyer may NEVER be able to sell in profit - due to in-evitable time-decay and weekend un-certainty - unless some one has enough advance knoledge and study of a posible spike in coming days ! Thats why I call them BIGGIES !
As far as, liquid stocks option is concerned , there are prvs instances of such freak high prices in stock options like TCS etc !
Such Qs always go on lingring in the COMMON traders mind ! People are already aware of the term StopLoss mongers !
Please igonre my Ignorance , I am a common layman !
Now the Q arises in a layman's mind like me, why anyone would venture to BUY CURRENT week's BN option at such a high price , which the buyer may NEVER be able to sell in profit - due to in-evitable time-decay and weekend un-certainty - unless some one has enough advance knoledge and study of a posible spike in coming days ! Thats why I call them BIGGIES !
As far as, liquid stocks option is concerned , there are prvs instances of such freak high prices in stock options like TCS etc !
Such Qs always go on lingring in the COMMON traders mind ! People are already aware of the term StopLoss mongers !
Please igonre my Ignorance , I am a common layman !
Such values have no logic to qualify as trade guide/predict direction.
Anyways most of the methods we use have no logic so I tested this long back and the results are absolutely inconsistent.
Moreover the idea itself has a flaw. Because there are multiple strikes which are very liquid in current week and monthly expirys.
In PE's itself one strike can show "open=high and another strike can be open=low" which are opposing signals. So which one do we base on ?Similarly in calls side different strikes may show different signals. Hence the method has a flaw which invalidates testing.
( we may not see these on one or 2 days data. But when we take it up for a test and observe numbers on number of days/ weeks of data we will see all these imperfections).
Anyways most of the methods we use have no logic so I tested this long back and the results are absolutely inconsistent.
Moreover the idea itself has a flaw. Because there are multiple strikes which are very liquid in current week and monthly expirys.
In PE's itself one strike can show "open=high and another strike can be open=low" which are opposing signals. So which one do we base on ?
Similarly in calls side different strikes may show different signals. Hence the method has a flaw which invalidates testing.( we may not see these on one or 2 days data. But when we take it up for a test and observe numbers on number of days/ weeks of data we will see all these imperfections).
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