Scalping
Strategy
Why do Stock Markets attract us ?
Not Investment
Nor Trading
Nor Trading
- This is JOBBING which was done for 100 years and is being done now too
- New name for this concept is market making
How does it Work ?
What happens if
100% capital is deployed
?
Worst Case Scenario
- Rs 1 lakh invested in a Rs 400 scrip @ Rs 1 diff & 5 quantity each step
- Rs 1 lakh will be fully invested at 348
- Total Stocks accumulated – 265
- Portfolio Value @ Rs 348 – Rs 92000
- Notional Loss – Rs 8000
Worst Case Scenario
- Assuming 40 churns a day
- Profits on a/c of Gap Up & Gap Down
- You will earn Rs 176 per day or Rs 3872 per month (NET OF ALL EXPENSES)
- So even if this strategy runs for 2 months the loss on a/c of fall will be compensated by jobbing profits
Selecting Scrips
- Stocks with Volatility
- Stocks with fundamental strength
- Top 200 scrips is preferred
- Stocks with intrinsic value
- Essential Product companies
SIP vs Real SIP
- SIP or systematic investing is a way to invest small sums of money at regular time intervals to achieve our long term financial goals
- Real SIP is a algo trading strategy to invest small sums of money at regular price intervals to achieve short term gains
The Real SIP – Concept
- The algo strategy will keep buying and selling the defined scrips in a clients portfolio at regular price intervals automatically without any human intervention
- Daily small profits are added to the clients a/c as the strategy continuously exits from its profitable positions
The Real SIP – Example
- Mr A plans to invest Rs 5 lakhs in Real SIP.
- Identify’s 4 stocks
- Price interval and qty is calculated for the investment
- For eg. Reliance Capital 10 shares to be bought at every Rs 5 dip
The Real SIP – Algo Process
- The algo starts buying Reliance Capital every time it drops by Rs 5 from the last purchase for example Rs 440 / 10 shares, Rs 435 / 10 shares and so on...
- Vice versa every time the price of Reliance Capital moves up by Rs 5 from the purchase price it exits and books the profit
The Real SIP – Risk
- In the event of price of the scrip falls beyond initial calculations the investment holding period would increase thus having a direct impact on the ROI
- If the volatility of the scrip decreases then the returns will be impacted
Selecting Scrips
- Yes you can
- The risk and reward both will increase 3x
- But 2 major concerns
– Cost of Rollover
– To bear the MTM
– To bear the MTM