This strategy is good if you are taking a stock delivery, if bought the stock early in the morning and if stock start collapsing , you can sell it in MIS, and square it off before market close , so that you can reduce your buy price.
If 2 different entities or persons or 2 different Demat account involved , is illegal and called circular trading , that too if that particular stock price moves beyond reason, circular trading involves many people( cartel)
If the same person or the same Demat account involved, is a kind of hedging .
If one person/entity is performing the trade I don’t believe that is deemed circular. Is it not the same as buying a call and a put at the same strike? In both situations you’re betting on volatility to push one leg much higher while minimizing the loss on the other leg.
It can be termed ‘circular trading’ only if both Buy n Sell is done at the SAME price. If Buy n Sell prices are different, then I think it can’t become circular trading.
@Soorajmishra… The same idea came in my mind and thought of googling it and found this discussion… Hw did it work for u?? Did u face any issues with it…?plz rply
What do you mean here by doing so ? I assume it’s cause of some dormant account to some other broker which have same stocks or something like that ? Like some people posted already it seems to me that you will loose no matter how you will do that.
Almost all newbie active traders think atleast once about this strategy - to Buy & Sell a stock at the same price with a fixed SL and make some money.
But it’s a Loss making strategy on an average. If you want proof then try doing this on live mkt (not paper trading) & you will get a practical proof after 8 to 10 trades.
I think u havent thought deeply about your strategy. Let me explain…
your strategy says I should buy BOB @ 100 and also SELL BOB @ 100.
Now if it will go to 102… i should exit from sell trade and stay tuned at buy trade and should exit from buy after booking some profit like sell it at 103 or 104.
So why i cannot just observe the price action of BOB ? Why should i trade actually ? I would like to just wait and watch or do some paperwork… and when one of the stoploss will bw triggered on my paper… i will go for the right trade…
in that way i will save my power consuption, system setups, brokerage, taxes and etc etc.
So u should also do just paperworks for identifying price action.
if u like this strategy the mosy… i think u should trade on different scripts attached with a same index… like AXIS BANK and ICICI BANK. I think if u will buy a bank and sell a bank… u will frequently see some small small profits and losses… in case of seeing losses just wait and watch and in case of profits just collect it…
Hi
my idea of trading is not like this somewhat similar. Concentrate on low margin required futures options like Marico, Tata Chemical , ITC. Study high and low points for three years on per day basis. For Marico it is something 8 points on average difference between high and low. Open two accounts in two different names (say hubby and wife). Open one single position in either buy or sell (say 1 lot 2000 units) as per market strategy . There is a time frame to enter market in two accounts either to sell or buy . when profit is 4000 rs per position close. to safeguard against stop loss , take another position at specific time. It will go minimum 2 points up and down. when profit is 4000 exit in both the cases. Per day 4000 for one lot, If in case somehow cannot close convert to normal and next day when profit comes exit. Dont keep a position for more than a week. it works well forme.