I am new to trading especialy i have no idea on how future holding and its MTM works.
In relation to that I have a query on following trade, please explain.
I am holding PFC Nov Futures from 9th November. I have been selling the same in morning and buying it back in the closing session. On 14th November i did the same and earned 15K, but to my surprise when i saw contract note i had earned only 4K before brokerage and taxes.
Hence i want to understnad how futures MTM works.
Today 15th Nov 2017 morning i sold PFC one lot from my holdings at 125 and bought it back at 122. Apart from market to market adjustment, this profit will be credited to my trading account right?
To my surprise, again there a debit of 443. I don’t know how this happening. Could anybody please let me know the reason behind this?
You are new to trading & started trading futures straightaway!!
Clearly tell us, what price you bought for the first ever time. Did you bought it on 9th November & been holding it?
You are selling it in the morning & buying back in afternoon.
Whenever you sold it for the first time, it squared off your position. And later you bought it again then it is regarded as new entry. And you again sold it next morning so again your position got squared off. But again you bought it in afternoon so this is again a new entry.
I feel you are paying taxes like stamp duty, exchange charges , STT , brokerage , GST everytime you closed your position.
Thank you for your answer.
Bro, My 3 years journey is not straight line into futures. It’s been rollercoaster in cash trading. I recently started future intraday trading, position trading is very minimal.
But is this first time I am selling my holdings and buying it back not able to understand profit and loss calculation.
I bought it at 133 and been selling and buying it back.
Then why it is showing 18,000 profit?
Make a note of these points and then make your calculations:
- All carry Futures trades profit/losses are settled on a daily basis. So if future of stock A(lot size 1000) closed at 120 previous day, and you have a carry buy position and it closes at 122 today, then your daily M2M profit is 2k. F&O obligation amount in ledger = 2k
2.a. Case 1: If you sell the stock during the trading day say at 122.50 and buy it back at 121.50, then this will be considered as an intraday trade with its own M2M of 1k. So now total daily M2M is 3k.
2.a. Case 2: If you sell the stock say at 120 and buy back it back at 122.50, then this is an intraday loss of 2.5k. Now your daily M2M becomes 2k - 2.5k = -500.
Use this logic to calculate.
Calculate daily M2M separately for your carry trades based on close prices and calculate daily M2M for your intraday trades separately based on your trade prices.
Thank you for explaining in detail. Now I am clear.