Professional Trading is an art as well as science ! At CD Group, professional trading has been a passion and challenge and the Professional Trading Group has been consistently exploiting the exciting opportunities on a daily basis.
Professional Trading is one of the relatively safer ways of making consistent money from trading any volatile market and here money can be made irrespective of bullish or bearish markets, as basically ultra short term trends are exploited by trading strategies and also normally the open positions of a trade does not last long enough which also limits the down side risk of the trades. The more the liquidity and volatility of any market, the more are the opportunities of making money in professional trading. While investors try and avoid participation during some big event days in the markets (like Union Budget, Election Results etc.), such volatile days are some of the best days for the professional trader.
The qualities needed for a successful professional trader are agile mind, quick decision making, fast trade execution, strong risk management and analytical strength. Professional Trading is probably the only one exciting and lucrative full time career in the ever changing, erratic, dynamic world of financial markets, and even after being hands on full time trader, you are still not affected by the vagaries of the financial markets. High volume based professional trading provides liquidity and price discovery in efficient markets.
At CD Group, Professional Trading has been a niche area since the inception of C. D. Integrated Services Ltd., and Parashar Patel himself has been and still is an active professional trader and constantly tries to evolve himself as well as his team of professional traders to stay at the top end of trading activity. The group has evolved a comprehensive in-house training program, which helps in honing the skills of a trader, from basics to advanced level, and this training program is a continuous program, as a trader would need continuous study and mentoring to exploit his skill levels to the maximum.
Professional Trading is a wide area of activities, which mainly contains day trading, jobbing, arbitrage between spot and futures, arbitrage between futures to futures (spreads), options arbitrage, options and futures arbitrage, inter-exchange arbitrage, pair trading, directional strategies, cross currencies and a host of other strategies, which can be exploited by a trader on a daily basis and this is what is being done successfully on a consistent basis since the year 2000 by the Professional Trading Group of our company.
Earlier, most of the trading done was manual, a lot of human intervention was required and now with the Regulator approving algorithm based trading, the focus has shifted to automated trading, use of latest trading platforms, trading softwares, latest technology, sound risk management systems and human intervention is at its minimum, and the technology and trading strategy is at the forefront of a professional trader.
At CD group, we have taken note of the current trends, and a focused Algorithmic Trading Desk has been set up, to exploit opportunities available in the Indian Financial Markets.
SPREAD TRADING / ARBItRAGE
Spread trading is one of the strategies employed by professional traders, where they take advantage of the prevailing spreads in stocks / indices in the derivatives segment. It is a strategy with hedged position and the profit / loss depends on the spreads between the two month contracts. For example, one is long 1000 Reliance June Futures and short 1000 Reliance July futures, and if the spread moves in his favor, he makes a profit or if it moves against him, he makes a loss.
OPTIONS TRADING / ARBITRAGE
Options is also a kind of a derivative contract, which is typical in nature in the sense that for a buyer of an option contract, the loss is limited to the premium payment that he has made and his profit could be unlimited depending upon the price of the underlying. The seller of an options contract limits his gains in terms of the premium amount that he receives but his loss becomes unlimited, if the price of the underlying asset moves against him.
There are various arbitrage strategies possible using option contracts, a combination of futures and options contracts etc.
CASH – FUTURES ARBITRAGE
If a stock trades around Rs. 250 in spot markets & Rs. 253.50 in (near month) futures market, this spread turns out to an annualized return of 16.80%. Here, one can buy in cash market & sell in futures market. If the price difference reduces drastically in the following days, or even the same day, one can reversed the position and book profits. If the positions cannot be reversed immediately or shortly, at the last trading day of the near month contract, the prices would converge and the positions can be reversed. Such a method can be employed, when the cost of carry in any stock is more than the opportunity cost. Since this is a completely hedged position, there is no effect on profitability due to the market swings either up or down.
REVERSE CASH – FUTURES ARBITRAGE
Sometimes, the stock futures trade at a discount to its underlying spot prices. Such opportunities arise when the demand for a stock is more than its supply. In such cases, if one holds such stock, one can buy the same in futures market and sell it simultaneously in spot market, earning a risk free return + temporary funds from the sale proceeds of the stock. The position can be reversed when the differences converge, or on the expiration day of the futures contract, when the prices in spot market and futures market are bound to converge.
Index Arbitrage can be divided into two broad strategies
Arbitrage between Nifty futures (in futures market) and its underlying stocks (in spot market) : When Nifty futures is quoting at a higher cost of carry (than the opportunity cost), then its spot price, one can buy the underlying stocks from spot markets (in same proportion to their weight age in Nifty Index) and sell nifty futures, and the reverse leg of the same can be done when the difference narrows or at the last day of near month contract, when the price of spot and futures market converges. There is no market risk involved in this transaction. There is a trading mechanism, where at one stroke, one can buy or sell a basket of securities, of predetermined value.
Arbitrage between Nifty futures and underlying stock futures (basis arbitrage) : There are situations, where nifty futures is trading at a discount to underlying spot nifty and its constituent stock futures are trading at a premium to underlying spot prices. Here one can create a long position in Nifty futures and simultaneous short positions in its underlying stock futures, taking advantage of the basis between the two. These positions can either be reversed or at expiration of near month, they can be reversed as the prices would converge as the closing price in equity segment as well as derivative segment shall be same on the expiry day of the derivatives contract.
CD Integrated Services Ltd. 2005 All rights reserved | SEBI SINGLE REGISTRATION NUMBER: INZ000190932 | NSE SEBI Registration No. Cash Segment: INB-231094237 |
NSE SEBI Registration No. F&O Segment: INF-231094237 | NSE SEBI Registration No. CDS: INE-231094237 |
BSE SEBI Registration No. Cash Segment : INB011094233 | BSE SEBI Registration No. F&O Segment : INF011094233