Maintain minimum 10% free cash all the times to act as buffer when there is sudden change in price or increase in volatility. This is one of the rule proposed by many successful traders in their trading plan and to succeed in long term.
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I use one of the money market fund instead of liquid fund or liquid ETF. Liquid fund invests in securities with maturity upto 90 days but money market fund invests in securities with maturity upto 12 months. With higher duration it’s subjected to relatively higher volatility and higher return compared to liquid fund.
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Can we confirm our account is not in negative balance by checking KITE balance by 5pm or even after 5pm account balance can go in negative? What’s the cut-off time?
If the balance is in negative, then what’s the cut off time to add cash to the account in order to avoid negative balance penalty?
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Most of the times by 4.30pm your kite balance should have updated margin as we upload new span margin file by 4pm. Very rarely there can be change in eod span file which is released by exchange to report margins. Anyhow I personally would suggest to maintain 10% additional free cash to cover those cases.
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If you dont mind please share which money market fund you are investing ? and I guess because they have longer duration - they are more risky.
Check below
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Currently I’m investing in Aditya Birla Sun Life Money Manager Fund.
As per the post shared by @pankushri - I see people are talking about investing in gilt and SGB along with money market fund. I do considered both the option but came to conclusion - present scenario may not be good for both.
Gilt fund may give even negative return in interest rate hike scenario, and it’s safe to assume we are somewhere near to the bottom of the interest rate cycle, chances of going down is very very slim.
SGB - Gold generally has inverse relationship with equity market i.e. Gold generally appreciate when there is global calamity (1970s Iran oil crisis, 2008 financial crisis, 2020 Corona pandemic), now since we have vaccines and more or less economy is coming back on track so gold may not perform good - can even deliver negative return which is actually the current course for last 6-8 months.
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consider SGB is a hedged asset class in your portfolio ,. always have a 10 % allocation to gold in your portfolio , its will protect your portfolio from bleeding . forget about corona , tommrow what will happen no one knows in the world , so always before any kind fo bad situation will come in future before have a gold exposure in your portfolio
I think you should fix the problem with margin file (why it is coming after 12 night) - instead of asking traders to keep 10% free cash …(on which you don’t pay any interest) on which you earn some interest.
I am not sure if its intentional that Zerodha send margin file after 12 night.
Most other brokers send early like before 9 pm.
When will you fix the margin file problem? Also margin file has errors sometimes mainly when we sell shares - it does not reflect early payin credit on margin file until next day.
Maintain in liquid collateral, no need to pay us any interest. Point here is one should always has a bit extra cash/margin to cover sudden changes in margin or if position moved against them, this is right way of trading, said that it is up to user and broker has no right to say that, just this is my personal suggestion.
I guess you mean margin statement, it is coming a bit late because there is delay from exchanges in sending files todo EOD processes at our end and also it may take some more time to process all files considering our client base, we are working on fasten this process.
Also margin statement won’t cover all cases of shortfall, there are cases which are missed so it not foolproof.
I guess this happened with you once, are you facing this regularly?
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It happened twice - Since than I stopped trading FNO with Zerodha - why go through all this stress …late margin file - wrong margin file and more…not worth it
If you are buying only for trading F&O then, I will give you suggestion not to invest in any of these. I have done for a year and now i am un- pledging all these securities…
Why?
Consider 10 Lakh investment, we only get 9 Lakh after haircut. plus risk also. And returns not guaranteed.
But cash has no return …so what is the option for to meet that darn 50% cash requirement?
Cash itself is return. Consider 1 lakh haircut that you will not use in case of pledging.
Same 1 lakh you can sell one extra lot of BN or Nifty and make good returns
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I believe government bonds are a good option. 10 year bond will give around 6.2 %. No default risk. Moreover I’f you sale after say 5 years, high probability of having some capital gain as for shorter maturity, rate of interest will be less.
I am talking about daily margin statement…ideally 80% of sold shares value should be added on T day to available cash margin but I have seen somehow it is not added to daily margin statement by Zerodha …due to which you could get a margin statement with negative balance and you may end up paying margin penalty
Some times EPI gets delayed by then we might have triggered the margin statement, it will not include the EPI value in what is received in email.
One can download the revised MS from Console the next day and it will have the EPI value. So, no need to worry.
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Some times? I have seen that multiple times or in other words whenever I sold shares and checked that day’s margin …I never seen that 80% added to margin statement.
What are you talking about? I have not received margin statement anytime before 12 night even for a single day.
To my understanding - exchange charges margin penalty on the day it occurred and it charges penalty as per what broker reports to exchange. So if broker does not report correct margin on T day - it will lead to margin penalty by exchange ..we can not tell exchange - oh please go look at revised statement. @Vij @TradeB2B
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