It is ridiculous to ask about this thing…I know professional traders dont follow this technique…!! This idea suddenly flashed in my mind few days ago…There are many experienced intraday traders here on Zerodha…I just want to ask you guys…is it possible to buy stocks on intraday basis from one terminal and at the same time selling the same stock from different terminal ( may be from other borkers terminal…). Has anybody tried it ever…?? what could be the problems that may come while doing this kind of trading??
My guess is this…for example I buy BOB 500 quantities at 180 with stoploss Rs 2 from one terminal and at the same time I sell BOB 500 quantities at 180 with same stoploss of Rs 2 with different terminal…
and suppose stock went down to 173 and therby my buy stoploss got hit at 178 but I have profit of Rs 7 from shorting the same…
so overall trade profit is: loss from buying stock (5002= 1000)
Profit from shorting stock (5007=3500) hence overall profit : (3500-1000=2500)
I want opinions from experienced traders…especially from Mr Karthik and Mr Nithin…!!
Buying stock from one terminal and selling the same stock from another terminal at the same time...!
Hello,
It is in some sense a trading strategy to buy a position at a certain price and also short this position at the same price but the risk involved will depend on the type of trading day you are dealing with.
We can broadly categorize a trading day into either a range-bound day or a trending day.
Your strategy, if executed at the right price levels, will more probably hold good on trending days where one leg of your strategy will hit its stoploss while the other leg will ride on the trend and give you a higher profit as compared to your loss.
On a range-bound day, it is highly probable that both the legs of this strategy will have its stoplosses triggered while none reach its target.
This has to be used cautiously provided you understand the type of day you are trading in after the market has given you enough information.
Hi Sooraj,
I agree with what Bharat says - you will lose out on days when the stock trades in a range. Besides this, you also need to pay attention to execution. In both the accounts you need to ensure the exact same trade occurs at exact same price and quantity. You also need to pay attention to circuit limits…especially in situations where the stock tends to hit the lower circuit.
But that said, you can do this…you open two account with the same broker (maybe one in your name and another in a family member’s name).
You can also alternatively execute your Buy position in CNC and execute your Sell position in MIS for this strategy.
In that way, you can perform this on the same trading account and watch more closely.
The hitch here is that although you will receive a margin for the Sell position, you will have to pay full cash to take a Buy position in CNC. But both the positions can be squared off on the same day.
Another drawback with CNC orders is that you cannot place a Target and Stoploss for it at the same time. You can monitor this by placing a Stoploss first and then cancelling the Stoploss and squaring off your CNC Buy position when your target is achieved.
is it possible with BO/CO orders?? I mean buying with Bracket order and selling with Cover order?? or Buying with Bracket order and at the same time selling with bracket order same stock ??
I am actually doing it I bought 100 quantities of PNB @ 145.95 and sold 100 quantities @ 145.90 using Bracket order…and both order are placed with any problem…I will inform you what would happen later on…!!
Hey,
Yeah that’s a pretty cool way of getting this job done. Each bracket order will be treated as an independent order. It will not interfere with any other order placed.
You can place a Buy BO and a Sell BO at the same Limit price with your respective targets and stoplosses.
Do let us know how this 2 way BO strategy works for you today.
HI, why even bother about buying and selling at the same price?? Your strategy boils down to ‘ I will short if the market moves 2 points less and long if the market moves two points above some reference price’. So, use stop orders to place those trades and chill. I don’t see any point in opening multiple accounts and so on. The Idea is ok but backtest it before you place real trades. I suggest atleast with 3 months of daily data before jumping into the market.
Hey,
This would require calculating a reference point, which could be a support or resistance value for the day or it could also be a break-out point above which increased buying or selling could take place.
This is not what Sooraj is trying to achieve. He is picking a comfortable price and going long and short at the same price with the hope that his profit on one way would be more than his loss the other way.
Anyway let’s wait for him to get back to us with what happens today now that he has already initiated this strategy.
that comfortable price which you are talking is his reference point. the price at which he places both sell and buy orders.
Hey,
It need not be a reference point. It could even be the current market price.
Thanks for your replies Mr BharatW and Mr harshakns…
I have squared off my position…as I bought PNB at 145.95 and at the same time shorted it at 145.90 and I was having Rs 1 as stoploss for both trade…what happened next is PNB corrected and went down to 144.60
in this case my buy order stopped out at 144.95 but my shorting order was still live…I exited at 144.60 and having profit of Rs 14…!!
although less but here strategy was important…and it worked a bit… I am happy that Bracket Order is working and I dont need to open another account for this strategy…!!
u r right Mr harshakns, Backtesting is essential before applying it with more capital…I will reach to my comfortable level by practicing it more before going for real trade…
Ant talking about reference point is actually what technical analysis you use daily for entering the trade…
you know when you think of buying referring to your trade set up, another guy thinks of shorting at the same time with his own trade set up…either of them is going to make certain money…
but if we try both buying and shorting at the same time with our own trade set up…profit may be less but probability of having it rises…provided that particular stock doesnot go sideways…
how did you get a profit of Rs 14…you bought at 145.95 in which your stop-loss triggered at 144.95(1 Rs loss)…and you squared off your position for the one you sold at 145.90,later on bought at 144.60…so overall you profit/loss is 1.30 - 1 = .30 paise…correct me if I am wrong…Cheers
right bro…you are right…profit is less but chance of having is becomes more in this strategy just stock should be in certain trend…PNB just reversed from 144.50 and now trading again at 146.30…so stock selection was not good…
Hello,
The profit of Rs.0.30 is for a quantity of one stock. The total profit will depend on the total quantity traded.
yes you are right.
Hi
This looks interesting… I am new to trading. I heard doing this is illegal. I mean buying a stock for a price and short selling the same stock with same quantity at same time with same price may be with CO or with any other options. Is it really illegal to do so? By the way i want to do it with the quantity of 1000 to 5000. My qty will not move market in big way. Has anyone done this? Is it safe to do so with said quantity?
Thanks.
@santhu, why would it be illegal, you are trading with this strategy and you are responsible for the actions and outcome.
@santhu Yes, you can do this. Nothing is illegal.
But there is a possibility that your both orders Stop-loss can get Triggered.(for Volatile stock)
It’s Better not to use Stop-loss for Volatile stock.
Example:-
Stock trading at 100.
I give a buy call at 100 and Stop-loss at 98.
I give a sell call at 100 and Stop-loss at 102.
Now, Imagine Stock will come down at 98 it will Trigger your Stop-loss of buy call.
Now, suddenly it Jumped to at 102 and it will Trigger you sell call Stop-loss Loss.
In this way you will end in Loss as well as you have to pay twice Brokerage & Taxes.
For Non Volatile stock you can execute both Order and when you see a trend in stock exit from the other stock position.
It’s Better not to use Stop-loss for this strategy.
(Or give some space for your Stop-loss to swing and not get hit)
Note:- Whatever strategy Traders will use Three people are always make huge Profit no matters what’s the Market trend, what the global cues, what going in world economy, domestic economy. Nothing Effects their Profits.
1.Exchange’s
2.Investment Bank’s.
3.Brokerage House’s.
Thanks for your answers. Yes, we should be careful for volatile stocks. I agree your point. I read it online in some blog that this strategy is called circular trading and its illegal to do circular trading. I read few examples where people get caught in doing circular trading. Is it what a circular trading?