If you observe daily bulk deals data, there will be many trading firms or rather operators who would buy stocks in bulk and sell it immediately to make huge profits. Even though these profits appear significant, when you account for other charges, most of the trades results in minute profits or even loss most of the times.
I was wondering how do they make money consistently or rather why would they take such huge risks for small profits which also results in huge losses most of the times.
Firstly operators are loosely defined as people who manipulate the stock price by either controlling huge trading volumes of a stock or through insider information. As you’d guess, being an operator is illegal and would get the entity banned by SEBI.
Just because there are large transactions done by these entities doesn’t mean they are operators. There are many trading desks that take intraday positions in stocks, especially on those stocks which have lot of volume and volatility.
And like you know in trading, no one is guaranteed profits. Anyone can lose and anyone can win. Actually the chances of a lower volume retail trading client to win is higher considering the impact cost to enter/exit. People with big positions can’t just place a market order to buy/sell, they take a huge execution risk.
Probably because it’s still profitable in the end and you do not see the big picture, if they will do that with totall loss most of times in the end, they would stop it altogether. Correct ? I also thinks so. They also have smaller traders and for whom they are brokers.
U ve mentioned that there are legit entities which take intraday positions…so can sebi ban an entity without clearly defining what is an illegal operator activity?
can u explain the difference or direct to any article explaing difference between a legit and illegal activity?
That ll be really helpful.
