As retail traders we trade in very low quantity. Our orders don’t affect the price at all and are absorbed without any slippage. But when does the big quantity starts to become disadvantageous to the extent that our own orders start to become too big and move the market against us? How many lots in bnf or nifty FnO can one trade without worrying about the slipagge? How can this be resolved? Since professional traders deal in huge quantity they might have also faced this and how do they deal with it?
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I have seen some professional traders who trade heavy quantity (30000+ qty banknifty). For such a large qty slippage is a huge factor to worry about. What they do is, send orders with gaps of few seconds or spread it over few strike ranges like instead of all 30000 qty in 40000CE options, they will send orders like this:
39900CE - 10000 qty
40000CE - 10000 qty
40100CE - 10000 qty
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thanks for the reply!
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The biggest advantage the retail trader has over large ones is that they can be nimble. Get in and out at will. Larger traders like you rightly said can’t enter or exit very easily. Ideally this ability to be nimble should increase the odds of a retail trader winning significantly as compared to larger traders.
How many lots depends on the day and time of the day. Trading volumes happen in spurts and the impact cost is least when the volumes are the most. But on an average I think anything more than 200 lots will start impacting.
This can be resolved by trading lesser with larger quantities. 
By the way larger traders also use execution algos to improve execution. For example an iceberg order. Btw we are working on something to reduce the impact cost, hopefully in the next 3 to 4 weeks we can announce.
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There is another thing which I observed - why does returns tend to diminish with increase in trading capital. Not just because of impact cost , I mean for example have personally observed it’s easy to generate x amount of return with capital of say twenty lakh but becomes difficult to match same performance with capital of say few crores. In both cases liquidity or impact cost is almost same .
What according to you is the reason a typical traders finds difficulty to scale his business and capital , apart from liquidity issues.
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If you are trading in nifty I think impact is comparatively lower. You may lose 0.1 to 0.15. But with bank nifty you will lose 0.5 to 1 point.
Also what I do is I do not place order for full quantity at once. I place max allowable qty at once. That is 1800 for nifty. If you put multiple orders for max quantity in basket and place market order there will be huge impact expecially on bank nifty contracts.
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This is because of the influence of Fear on you. When the money on the table becomes too large, the pressure to be right becomes too high and that is when the performance drops as well. This pattern is consistent with most traders who quickly jump up their trading capital. The right way to go from Rs 2lks to Rs 1crore trading capital is slowly and not suddenly on one day. This is the best way to control the influence of fear on your trading, which can in turn have detrimental effect on your trading.
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very excited about the iceberg order
In addition to what @nithin mentioned above, I feel we are not able to control our emotions when money involved is big. We will see the absolute value instead of relative. When we start with 2lakhs, 2 percent is just 4k. But if we are trading with 2crore, 2 percent is 4lakhs. We will easily absorb loss of 2k but to accept that that have lost 4lakhs in a day is difficult and thats when we do not follow our own strategy.
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A great analogy to this, I read in some book…
If there is a foot-wide plank lying on the road, one can easily walk on it.
However, if that same plank is placed between 2 buildings on the 25th floor… that’s a whole different story.
It’s the same plank 
(plank = your trading plan).
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simiplicty at it’s peak
Good to see iceberg orders being implemented on Zerodha. @ShubhS9, is the brokerage for them same as regular orders?
Since each leg is a separate order, the brokerage is charged separately. That is, if the order is split into 5 legs, then the brokerage will be applicable for 5 executed orders individually.
Yup, meant the individual leg only.
Searched for this initially, but couldn’t find it. Thanks.
Each leg of Iceberg is a separate order, the brokerage is charged separately on each leg. That is, if the order is split into 5 legs, then the brokerage will be applicable for 5 executed orders individually. You can check out more details here.
Yup, meant individual orders only, in the sense that whether there are any extra charges for using the iceberg feature, like it’s there for equity delivery orders placed using icebergs (Rs 20) compared to non-iceberg equity delivery orders which are free.