what happens when buy and sell transactions exceed the actual volumes in the market

id4trade

Active Member
#1
Hi all,
N00b here,

Doing all sort of research before entering in real market (mainly for intra-day).

While researching what all things can be avoided in an intraday trading scenario to minimize losses, this occurred to me and i can not figure out a proper resolution of my query-


What happens when buy and sell transactions exceed the actual volumes in the market for a particular equity?

Or just assume an opposite case scene.

Is there a technical term for this like upper circuit
/ lower circuit or price bands etc? http://www.nseindia.com/products/content/equities/equities/price_bands.htm


I am asking this, as I do not want to stuck in a situation where i cannot able to sell my stocks at the end of the day to square off my position and then the worse case arrive of delivery shortening and NSE penalty 20% etc etc.

Any reply or guiding light would be heartily appreciated.

Regards
 

id4trade

Active Member
#2
Re: what happens when buy and sell transactions exceed the actual volumes in the mark

oops! no reply yet,

looks like my question does not compute. But still i should get some error msg. :) a
I guess, any kind of reply would really encourage a newbee like me.

Regards
 

Iron_Man

Active Member
#3
Re: what happens when buy and sell transactions exceed the actual volumes in the mark

Hi all,
N00b here,

Doing all sort of research before entering in real market (mainly for intra-day).

While researching what all things can be avoided in an intraday trading scenario to minimize losses, this occurred to me and i can not figure out a proper resolution of my query-


What happens when buy and sell transactions exceed the actual volumes in the market for a particular equity?

Or just assume an opposite case scene.

Is there a technical term for this like upper circuit
/ lower circuit or price bands etc? http://www.nseindia.com/products/content/equities/equities/price_bands.htm


I am asking this, as I do not want to stuck in a situation where i cannot able to sell my stocks at the end of the day to square off my position and then the worse case arrive of delivery shortening and NSE penalty 20% etc etc.

Any reply or guiding light would be heartily appreciated.

Regards
Just think.. how can buy/sell transaction exceed the total volume. Market exists because there is equal amount of buyer to the seller. (may not necessarily be at the same time that is why supply/demand is created and we see fluctuation in price)


Now, coming to your fear of unable to sell the stocks that you bought. This is where the liquidity comes. Buy stocks which has some good volume traded. You can always check the volume of the scripts traded on the daily basis before you invest. If you do this, you will never get into this scenario in reality. In fact, for retail traders this never happens.. you might not be able to get the price that you want at the exact moment but getting out is never a problem unless you buy scipts in crores.. may be ;)
 

id4trade

Active Member
#4
Re: what happens when buy and sell transactions exceed the actual volumes in the mark

Thankyou for the reply @Ironman,

What do you mean by
"you might not be able to get the price that you want at the exact moment" ?

Pls elaborate.
 

Iron_Man

Active Member
#5
Re: what happens when buy and sell transactions exceed the actual volumes in the mark

Thankyou for the reply @Ironman,

What do you mean by
"you might not be able to get the price that you want at the exact moment" ?

Pls elaborate.
What I meant was this..

Lets say you bought X script @ 100 and you are targeting to get out @ 110. Now the price going up.. 105, 106, 107, 108.. then suddenly it goes to 111 and starts reversing. You couldn't get out coz it was too fast. Now you place your sell order at 110 but the highest bid is 109. Now here 3 things will happen

1. you an either wait for 110.. if price has to go further up then you will getur price.

2. You want to get out even if you get 109 because you know that price now ill reverse (based on ur analyssis etc etc). So you sell @ 109 and get out.

3. You wait @ 110 to sell but it never goes there and it reverses back to 100. Finally you give up and get out.


All the 3 scenarios possible and nothing is ever 100% known. This is why trading requires a good strategy, good money management nd trade management.
 

id4trade

Active Member
#6
Re: what happens when buy and sell transactions exceed the actual volumes in the mark

Really appreciated your elaborate reply @Iron_man.

Thank you very much.

Also, could you please throw some guiding light on few possible scenarios where a new Intra-day trader might get stuck in a situation where he can't able to square off during a day.
Or a case where he might have to face a penalty from NSE or some regulatory authority for a possible error or mistake (knowingly or unknowingly) done by a new trader.

Regards
 

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