I was monitoring the LTQ and best bid and ask quotes today, all I saw was a few lots being offered at the best bid and ask. Even the last traded quantity was updating at 1 or 2 lots traded at every tick.
1 nifty lot requires 25189 INR to trade. That means all its doing in a minute is around (25189 * 60 * 3) = 4534020. Averaging at 3 lots per tick.
How are you going to do intraday trading with 50Cr with such abysmal volumes, let alone volumes of individual stocks.
But I always hear people/brokers saying the market is very liquid ?!?!
Can some one clear this shit out for me?
This is due to high margin requirements in derivatives segment.
Derivatives segment is almost closed for a retail participants(intraday or positional) That leaves institutions and they probably use derivatives for hedging.
Intraday liquidity is going to be low because institutions don’t do intraday speculation with derivatives.
But there should be sufficient liquidity for positional trades for anyone in derivatives segment.
You just need to 25189 INR for one lot, thats not high. Even in individual stocks liquidity is abysmal.
Margins are higher for stocks than indicies.
but your question was not specific to nifty or indicies. so i assume your are talking about the entire derivatives segment.
Doesn’t matter if the margin is just 1000 , the point is there is low volatility in intraday and after taking out the taxes/charges/brokerage , there is very little left in the hands of traders. So there is not enough profits to be made intraday.
If people don’t figure this out now , they are only going to lose money intraday trading until their account blows up.
So why do people say there is enough liquidity in the market ? They say you can takeout 100Cr in minutes but from what I see with last traded quantity and the bid ask qty, I don’t think thats possible.
Who are these people?
liquidity could also be low during mid day , high during market open and close time.
Who are these people who say they can take 100 cr out in minutes. They must be running some super profitable HFT algos. hehe.
Edit: another point to note is liquidity will be high on certain S/R levels , whatever those are.
you cannot have high liquidity at every tick level. if that were so , price would find it very very hard to move.
Let me correct you people. Also tell me if I am wrong.
@keshav_bhide you can now see the EOD data of whatever Scrip you are referring. For eg today SBIN Feb fut Vol. is 7,40,46,000. Each for nearly 280 rs. Can you see the liquidity now?.
You are puzzled because what you are seeing are just 2-3 ticks that broker system can get out of literally thousands per sec traded on NSE. Also almost all big bids/offers have 10% discLosed quantity.
Currency and stock markets have huge liquidity due to the exchange of huge amounts. These markets are growing quickly all across the world and with the increase in social media and online sources, these markets are becoming more popular. Is it a viable reason for the liquidity of the market?