Hello,
If one is trading intraday and has capital to trade futures, what is better ? To trade intraday cash market for the stock or the future of that stock ?
@nithin What is more scalable and cost efficient or like what do your big traders trade if they are trading intraday ?
If you are trading only for intraday and the trading account isn’t at least between Rs 5lks to Rs 10lks, it is best to trade in the cash market. The reason is that even if you have sufficient capital to trade just one lot, you will be forced to bet your entire capital on every single trade, which isn’t wise.
An essential aspect of trading is learning the concept of bet sizing. 90% of your trades, ideally, you should be trading with the least amount of capital possible. Only when there is extreme conviction due to multiple signals asking you to trade should you trade with higher capital.
But yeah, if you have Rs 10lks and over, it makes sense to trade futures. You don’t have to worry about orders getting filled (lower impact cost), and you can also trade until 3.30 pm and not till 3.20 pm when intraday cash trading is blocked.
I trade cash with decent capital. Working on adding stock futures. Also hoping that impact cost will be lower for stock futures.
Ideally, all trades should have equal risk i think as its almost impossible to say what any trade will do. Position sizing is much easier with cash. + we dont have to deal with banned futures + we can also trade some non fno stocks + intraday leverage is more for cash so you can keep some capital outside or use more leverage.
If you trade with trigger orders, one potential issue is that you have to wait for someone else to trigger your order. Futures trades less in terms of transaction count, so its possible that no one triggers and price gaps as bid ask will follow stock cash. So you can get more slippage and if using limit, order may not fill as bid ask passes through trigger/limit price.
I am thinking of some workarounds for this, but not sure if there is a clean and fast solution. This caused problems to me when trading in 1st five minutes.