Strategy and Money Management for Increased Lot Size in NSE


 

The lot sizes have been revised and the small traders who were able to earn by shorting the market will face lack of capital, while bigger players will not get affected by the lot size increase. Now small traders are left with two options-

1. Intraday- Either they will to do intraday in stocks and close positions each day.

2. Positional- For Positional trade they are again left two options.

A. They will only be able to go long or take buy only and not take positional shorts. They will only have one direction to trade, which only Buying. What could be the consequences when Market is going down?

B. They will try to trade the Options , where again the chances of loss have increased coz higher lot size has decreased the liquidity.The Lot size of 8000 in a stock while its options buyer standing @ Rs0.60 and Seller @Rs 0.90 brings in the spread of 30 Paisa and 30 Paisa for 8000 lot size is Rs2,400.

 

Trading could still be done but you need to keep few things in mind which may help you.

 

1. Choose Liquid options, these could be of the stocks like INFY, SBI, Reliance Ind, TCS, or other Large Cap Companies and Nifty and Bank Nifty Options.

2. Choose the Stocks, Indexes that have lower trading margin, obviously there should be some reversal because of which you trade. otherwise lower margin of no use.

3. Lower margin stocks will also help you some times to average.

4. You can also move towards Currency Trading if you are a Technical and Chart trader. (Currency could be Traded in the same NSE trading account). You can also move towards Commodity Futures and even Mini Commodity Futures which require margins less than 10,000.

 

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