GOLD Spread : Less risk Good profit

ashu1234

Well-Known Member
#21
Spread already weakened to 400, will trade it tomorrow if i'm lucky to get spread above 450.:thumb:
 

TraderPRO

Well-Known Member
#23
Today, my expectation is that GoldMega will have a spike to narrow the gap.

Already a 50 point convergence happened.

Did anyone trade the spread yday?
 

neo1599

Active Member
#24
I just read through this thread.

You boys have no idea what the hell you are talking about. Why there is a price difference, what factors influence it etc etc.

I also saw similar opportunity a few months back, took it. Luckily earned a bit. And then set out to research. But I didn't post it up as gospel.

While I agree that same month contracts having a difference of 500 Rs. is unusual.

Don't go into this blind or you will end up with blown accounts.

I will not share the reasons about why I say this, because frankly you guys already chased Tamil Trader when even though not exactly on the money he was close and was just putting up a warning for you to do some more homework.

Oh, Just by the way: Trading and paper trading are different things completely.

If I sound offensive in this post, I mean to be offensive. Someone might read and follow advice given in this thread.

--------------------------------------------
 

ashu1234

Well-Known Member
#25
I just read through this thread.

You boys have no idea what the hell you are talking about. Why there is a price difference, what factors influence it etc etc.

I also saw similar opportunity a few months back, took it. Luckily earned a bit. And then set out to research. But I didn't post it up as gospel.

While I agree that same month contracts having a difference of 500 Rs. is unusual.

Don't go into this blind or you will end up with blown accounts.

I will not share the reasons about why I say this, because frankly you guys already chased Tamil Trader when even though not exactly on the money he was close and was just putting up a warning for you to do some more homework.

Oh, Just by the way: Trading and paper trading are different things completely.

If I sound offensive in this post, I mean to be offensive. Someone might read and follow advice given in this thread.

--------------------------------------------
hi,
thnx for enlightening us...
don't know why people here try to act here super cool,
if you have something to share then why not simply share here,
spread can be traded both way, if u have good logic to back up your
spread trading then fine enough, otherwise spread can be technically traded
like normal chart with stop loss, no big deal.If you have no idea of money
management, then any kind of trading will result in blown account.
fyi what we discuss here are ideas nobody is forcing anything here
so its sort of take it or leave it.
Btw plz care to explain here how this spread trade discussion could
result in blown account as this spread has gone on same day below
300 on the same day, and still at 450.
 
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neo1599

Active Member
#26
Mr. G,

Thank you for taking time out to explain. However I don't think that you've understood this correctly.

GoldM & Gold both have same expiry i.e. 5-Oct

Margin to be paid for (sell 10 GoldM & buy 1 Gold) is Rs. 3,72,000

Difference is Rs. 500 (hence we can anticipate profits around 45K)

Time remaining to 5-Oct expiry is 15 days (Today is 17-Sep and Tendor period will start by 1-Oct)

Hence, simply maths says... by investing Rs. 372,000 (may be you wish to keep 10-20K for m2m if at all required)

So by investing 400K (upperside) you have opportunity to earn 45K. This is whopping 11% return (over 250% if annualized) in just 15 days.

LMK your thoughts.
Note that the above is wrong. How are you defining risk? The Profit A 45k return assumes: Gap shrink to 50 Rs. Check previous data.

When you trade with leverage, you do not have to pay any interest separately. It is actually included in price. As here both position in future, you're negating that component.

Also I do not understand why I need to pay 372000 - Full value of both contracts. What I've to pay (or get) is difference of spread between both the contracts. That's it.

Again for clarity sake, I'm not going to hold these positions till expiry. This is with a view that this price difference will narrow in coming days. Historically price difference between GoldM & Gold is about 50-70 Rs. only. Hence I'm hoping to achieve 500 - 50 = 450 Rs. on my investment of 37200 (for 10 GM base unit).
Right, I think what you didn't understand by from the post to which you replied is: Arbitrage in the commodity i.e. true arbitrage would require taking delivery and giving delivery.

Which will require all funds, now calculate the interest factor.

Hi,
Mr G, when you don't trade on commodities please don't put in wrong comments. The margin to trade gold is 3.7 lac that is right. If you buy one Big lot then you have to pay 3.7 lacs for m2m and if you want to short 10 gold mini against it, you don't have to pay extra margin for that, its called hedging against mini contract. So simply you can both buy and sell in the same margin, charges and brokerages are always there who asked for charge free return, 400-500 points making in gold is by all means is good trade even if you have to pay two side brokerage and taxes coz daily traders fight for 50-60 points of gold intraday. So if one is able to make 500 points over capital of 3.7 lacs in 15 days, calculate roi on your calci. 500 points matlab 50 hazaar hote hain!!!
So 500 points arbitrage is a good trade.
BTW I can make it happen in under 1 lac if I want, so please comment only if you actually have done any spread or arbitrage trade before.
Wish the Exchange would agree to your margin calculation.
Please enlighten me on the "below 1 Lac". Unless its a dabba trade.

See above for the ROI calculation and check previous data.

Really?
Do you know spread of gold some days before????
It was around 250.
http://www.traderji.com/metals/87569-gold-goldm-price-difference.html#post862253
If anybody has done spread on that time i.3 3-4 days back, he would have been paying 25000 as m2m. Do you have any idea of the cutoff date of Gold expiry??? its 30 sep not 5 oct. After 5 oct margin increases day by day. What will be the rate of gold at expiry i.e 30 sep???
Nobody can tell as real expiry rate is calculated very differently in case of Gold as price are cut off from international rates and are marked for delivery as Ex-ahemdabad rates. So don't put up crap that profit and loss of gold at expiry is decided in advance. Its a physical commodity and rate changes every day.
Don't even want to fault here. Just re-read and check your premise.

Friends,

The price difference between had been increasing for weeks now, from today, I observed it narrowing a bit and hence my suggestion.

Even 200 pts profit will be a good trade but, need patience. Also, be prepared for worst case as well. :)

Good luck Amit.
Getting lucky on a 200 point trade is possible, just checking the friday data. Trade able difference had popped up quite a bit in between.

Yes, there is 30-40 points narrowing of spread today. Even 200 points of risk free trade is good by all means.
Again check data.

Code:
Date	             Gold 	GoldM 	Diff
01-Aug-13	27934	27905	-29
02-Aug-13	28068	28058	-10
03-Aug-13	28047	28034	-13
05-Aug-13	27856	27860	4
06-Aug-13	27614	27631	17
07-Aug-13	27677	27690	13
08-Aug-13	27913	27916	3
09-Aug-13	27900	27904	4
10-Aug-13	27906	27909	3
12-Aug-13	28923	28931	8
13-Aug-13	28882	28894	12
14-Aug-13	29186	29193	7
16-Aug-13	30755	30797	42
17-Aug-13	30840	30863	23
19-Aug-13	31165	31181	16
20-Aug-13	30812	30819	7
21-Aug-13	31444	31444	0
22-Aug-13	31140	31141	1
23-Aug-13	31905	31907	2
24-Aug-13	31756	31771	15
26-Aug-13	31876	31869	-7
27-Aug-13	33715	33744	29
28-Aug-13	33405	33398	-7
29-Aug-13	33650	33649	-1
30-Aug-13	33034	33057	23
31-Aug-13	32989	33002	13
02-Sep-13	33064	33099	35
03-Sep-13	34439	34471	32
04-Sep-13	32604	32636	32
05-Sep-13	32218	32311	93
06-Sep-13	31861	32003	142
07-Sep-13	31884	32039	155
09-Sep-13	31540	31657	117
10-Sep-13	30753	30890	137
11-Sep-13	30682	30876	194
12-Sep-13	30047	30289	242
13-Sep-13	29571	29915	344
14-Sep-13	30128	30566	438
16-Sep-13	29787	30295	508

Actually price difference has started increasing from 5th Sep (last expiry of GOLDM contract).

Both above are closing of 5-Oct contracts. Such difference never existed & more than earning, I'm interested in learning reasons for such high price difference.

Regards,
I respect this post for wanting to learn more about it.

So you are interested in reasons behind the spread and not in 200-500 Rs earning opportunity :)
Good Point.

Well one possible reason for this spread is that there is more deliveries in the goldm contract than in GoldMega(just my speculation), so may be there is premium on goldmini coz of delivery pressure and less pressure of GoldMega as most will settle for cash before expiry.
Brilliant insight.
 
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neo1599

Active Member
#27
hi,
thnx for enlightening us...
don't know why people here try to act here super cool,
if you have something to share then why not simply share here,
spread can be traded both way, if u have good logic to back up your
spread trading then fine enough, otherwise spread can be technically traded
like normal chart with stop loss, no big deal.If you have no idea of money
management, then any kind of trading will result in blown account.
fyi what we discuss here are ideas nobody is forcing anything here
so its sort of take it or leave it.
Btw plz care to explain here how this spread trade discussion could
result in blown account as this spread has gone on same day below
300 on the same day, and still at 450.
See the above quoted for why I wrote a scathing reply to the thread.

Just BTW, discussion is good, but saying something is risk-free/minimal with an upside 4x Risk is a great way for someone to get their account blown.

Let me put it up this way:

1- The upside max: 50k(as per thread assumption)
2- Max Loss: Open
3- Time-frame to exit/carry: 15 days.(calculate CoC)
4- Incase of requirement to carry the position(assuming you get the same opportunity in the next contract, which in itself is asking for a lot), margin requirement and risk appetite will change drastically.

Being cool has nothing to do with trading, I would rather be prudent.

Edit:

Almost Forgot:

In the thread there are many statements/posts which read as risk-free, assured returns, arbitrage, hedge. May be the meaning behind them is to discuss but sure does come across as: We know this as fact.
While the OP is still clear and somewhat keeps asking to understand it better.

Cheers

At the time of posting: Difference: 43x
 
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ashu1234

Well-Known Member
#29
See the above quoted for why I wrote a scathing reply to the thread.

Just BTW, discussion is good, but saying something is risk-free/minimal with an upside 4x Risk is a great way for someone to get their account blown.

Let me put it up this way:

1- The upside max: 50k(as per thread assumption)
2- Max Loss: Open
3- Time-frame to exit/carry: 15 days.(calculate CoC)
4- Incase of requirement to carry the position(assuming you get the same opportunity in the next contract, which in itself is asking for a lot), margin requirement and risk appetite will change drastically.

Being cool has nothing to do with trading, I would rather be prudent.

Edit:

Almost Forgot:

In the thread there are many statements/posts which read as risk-free, assured returns, arbitrage, hedge. May be the meaning behind them is to discuss but sure does come across as: We know this as fact.
While the OP is still clear and somewhat keeps asking to understand it better.

Cheers

At the time of posting: Difference: 43x
Bhai why are you riding your own scooter....
See the very first post — Max loss very well defined as 5000–10000 which means one will squqre off position if spread increases to 550-600 thats it.
Already said that spread might or might not narrow to 500 before 1 oct and in between if one gets opportunity be it intra of more than 200 points then fair enough book it.
So dont ask us to re read our post, i guess the people who wanted to discuss this spread have already understood every term with the flow of the thread.
Calling the trade as risk free was in context to comparing it with naked one sided position, so don't shoot us if u miss the "bhawna" behind the twisted words....see i can also feel the pain of killing the holy terminology of arbitrage and hedge.
Now coming to the point of margin yes i can make it happen sub 1 lac and yes to your
surprise all white....and for dabba its way below sub 50k.
Fyi dont u know what Nsel is doing nowadays....recovering debits from the members.
So enlightened you with this hint, without margin account me debit aa jata hai so i only
said that if i want i can make it happen sub 1 lac. See I do real trading and know all the requirements very well and for calculating roi for trades i dont need calci or big fundas like holding costs etc etc, spare it for valuation of equity only....sounding geeky with terms might make one proud and doing research and claiming that you know everything and other have no idea of what we are dealing with is nice way to boost
self esteem.
So if you think that we are sitting ducks.... so let us be mr Hunter!!!
 

ashu1234

Well-Known Member
#30
Gold oct spread increased to 1500 post 1st oct yesterday it was around 1000. Reason behind mini and mega is because of delivery factor of Gold mini contract(confirmed). If anyone has other reasons to state then feel free to post.
 
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