I’m doing intraday cash trading from last year and moderate successfull so far(generating 15-20% returns on avg/month) i’ve developed my own strategies and have full conviction in my system.
i have started with 23802 Rs/ as my starting capital and right now trading with 1.2Lacs(regular withdrawal happened due to financial crunch)
since my capital is very less at present i’m not facing any liquidity issue(though i trade only in nifty50 stocks)
my only concern is i’m unable to find any experienced person anywhere who is interested in doing intraday cash trading in stocks.
everyone is busy with FnO it seems or in equity either investing or swing trading.
i just have few minor doubt of mine,if anyone is interested please revert so we can initiate a discussion about the same.
15-20% per month is not moderate, it is very high, your CAGR is more than 400%.
It is possible to go from 6 digit to 7 digit, but what time frame are you looking at? If you can make 15% from here on too, your 1L will become 10L in less than 2 years.
The chance of this happening, by analyzing what has happened so far from your past returns, will be explained by experienced investors
I have done rigorous backtesting on my system and spent lot of time only to find anomalies in market and then build my system accordingly. i’m getting more or less similar returns as per my backtesting(done on last 7 years intraday data)
my major doubt is how much amount one can trade in a single trade in equity intraday(in nifty50 stocks) without much slippages issue because based on that i’ll deploy my other strategies and distribute the capital accordingly
if anyone here who has done that in cash market,it would be great to get some guidance from them.
From what little I know, I think as you are trading only Nifty, the slippage will be less, as these stocks are very liquid. Also, do you trade all the stocks in Nifty or trade only the biggest of the biggest 15-20 names including PSUs?
So you did not check the aspect of maximum capital allocation per trade with your system, you did not back test it?
i checked whatever i can,but wanted to know from someone who did in real market with huge capital in cash market,
my universe in nifty50 ,whatever stock got selected based on my parameters i trade with it
It depends on which scrip you are trading. Slippage on something like RELIANCE will much much less vs something like PIDILITE. Also can depend on where you execute, some spots can be less liquid than others.
In general, avg slippage is manageable till around 15-20L for most stocks in cash market with volume > say 150-200cr avg over last 1 year. There is no exact number ofc, but avg slippage costs begin to increase. Threshold can be higher if you restrict to high volume scrips.
Best thing to do is to scale up in steps and measure your slippage. That way you can see how it responds to increasing size. Even this is not fixed, when markets were falling recently my slippage began to increase much more and in the upmove it has gone back done. It seems to be a bit cyclical but averages out over time …
Thanks for vaulable info,
15-20 L you mean amount per trade?
so without margin it will become 3-4L of your capital
if it’s true i’ll be more than happy.
Leverage does not matter here, so yes i mean the contract size. And you seem to have very strong edge if true, so even if your slippage increases a bit - so what. You will make less % returns but on higher capital.
Manage your risk and compound your capital.
**Assume your slippage will be around your transaction charges ** This is a reasonable approximation for trades size of around 15L, again depends on stock.
yes, my avg profit % per trade is around 0.25%(after deducting all brokerages and other charges) i will be happy as long as it will be greater than 0.15%
also i did backtesting by taking avg price per minute of candle(i mean for short selling: i consider my sell price: O+L+C) and for squareoff price: O+H+C) so my backtested retuens won’t be inflated
Thanks again Sir for great insights!
it means i can place a trade of aroud 15L rupees in equity cash intraday market(in nifty50 stocks) without so much fuss.
am i right?
You have to approximate prices based on actual execution else backtest numbers will be misleading. try to match with what you get in live with your backtests - you can judge it best yourself. And real numbers are best numbers so you have that.
Anyway to repeat ( since i edited my post and you may have missed ) —
**Assume your slippage will be around your transaction charges ** This is a reasonable approximation for trades size of around 15L, again depends on stock.
Best thing to do is to scale up in steps and measure your slippage. That way you can see how it responds to increasing size. Even this is not fixed, when markets were falling recently my slippage began to increase much more and in the upmove it has gone back done. It seems to be a bit cyclical but averages out over time …
Good luck
There is increasing impact ofc, but its manageable for me. Slippage you get with 5L orders will be less than what you get for 15L orders on average and it will keep on increasing. Measure it. But these are tradable amounts in intraday.
Agreed.
as i said i match my daily journal with my backtested reports and from last one year it’s more or less same.
since i place only one trade a day it’s easy to track and match these things by trading journal and amibroker
i have around 9 more strategies in pipeline(will use them only when existing strategy starts facing slippages issues)
Right now capital is low, so there is also brokerage issue for you. But eventually its much much better to trade multiple systems. This mistake i had made in my first couple of years where i focused only on my main system.
If systems are different enough and if you normalize volatility of returns a bit - then combination of systems reduces risk very well - Max DD / max loss per day etc
A single system can stop working or returns can reduce.
Yeah!
i have selected 10 strategies based on all these parameters and more or less avg return per trade for all strategies varies between 0.12%-0.35%
but yes when we diversify them it creates magical effect on drawdowns or number of negative months
actually my only fear was i simply do not understand Fno segment(never tried though) and on every social media platform only FnO traders are talking about straddle,strangle,etc
i wanted to stick with my systems and stick with cash market as long as possible.
F straddle strangle. They cant compete with your returns if true. They cant compete with mine and i am nowhere near 20% per month. ofc they might be much more scalable and in stocks you will need to distribute impact.
I highly doubt your returns, you might be risking too much - but what i think is not your problem, run the numbers and make sure you manage risk. And then focus on compounding. 1L is too low a capital. Make 2-3L or more from outside market and add it to trading and keep compounding.
i have mentioned true numbers whatever i got in real market. yes maybe i’m risking much more than that conventional traders(placing 60% of total capital with strict SL of 1.2% which turns out as 6% with margin)
but i have done my research thoroughly and confident enough to take this much risk
ok, i dont really understand what you said, i look at my max DD in backtest and try to keep it within 10-15% of capital. Margin does not matter here as long as its enough to take risk. Future DD will be worse but generally remains under 2X. And then multiple systems can bring real DD back to around 10% of capital.
You can trade low 8 figure capital ( not trade size) with multiple systems trading multiple stocks. So that is not a problem. Distribute impact and trade in more liquid areas if needed. We also have stock futures.
