note- i only trade in stocks that comes under f&o with 1L, with leverage its worth 5L (1Lac x 5x leverage= 5lac)
What’s the question bro?
So, you have 1 lakh. And you are using max leverage of 5x provided in most fno cash stocks.
If you are implying how much money you can bring in the game using leverage, then you can bring lots. As most fno stocks are liquid, and will absorb whatever money you bring.
Considering,you won’t bring that kind of money, and leverage it up 5x, to move the stock.
Seems you are in a winning streak. Care to narrate your story? We ld love to hear.
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Slippage begins to increase depending on stock. CHOLAFIN for example isn’t the most liquid among say the top 150 stocks. Not much issue for say 5-10L.
RELIANCE SBIN type of stocks will take much bigger orders easily vs something like CHOLAFIN or PIDILITIND and the like. It perhaps also depends on execution.
So best answer is - measure it and check its cumulative effect on your edge. Its easier to do that for SL orders as you have a reference price and a filled price. For market orders you may have to measure against bar close for example or you can record ltp at the time of sending order. Limit obv has no slippage but may not get filled.
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5-10L base capital, without leverage included ryt?
do you know where i can find a list of all fno stocks which have poor liquidity?
Once you start sending say 20L contract size, slippage starts to get much worse in less liquid stocks. Again best to measure it for your execution.
An approximate way is to sort stocks by last year average rupee volume. Higher the avg volume more liquid it is.
By 20L u mean
20L capital
Or
4lac * 5x leverage= 20lac
20 L contract size = 20L contract size. So ex price = 1000, qty = 2000.
What leverage you get from your broker is not in picture here. You want to buy at 120, some one has to sell at 120. If you want to buy urgently, then you will have to take what you can get at 120 and perhaps slightly higher. You can keep a limit but that means if no one is willing to sell at that price, your order does not get filled fully.
This is only a rough number based on my experience trading many scrips. Beyond 15L-20L slippage tends to increase quickly on average. Again, all of this depends on which stock you pick. Reliance is very liquid, CHOLAFIN much less so. Best to measure yourself.
so that means if im trading with 5x leverage if i will face huge slippage after 4lac (as 4 lac* 5x leverage = 20 lac)
It is not a binary on off thing and slippage does not become infinite, but your costs will keep increasing. For a stock like CHOLAFIN, certainly orders bigger than 15-20L will start having more and more slippage. But instead of taking my word, you should measure it too. Look at orderbook and you will get some very rough idea too.
Leverage is all about risk management. Only experienced traders can handle high leverage. I advise you that don’t trade with too much leverage.
It’s not bad to invest 5x leverage but it is risky. You’ve to have a proper risk management strategy to avoid losses.
I would say just pay attention to risk management while using leverage. Only take calculated risks with higher probability of resulting in profits. Leverage is a double edged sword but can give you great power if you handle it wisely.