Can you please elucidate the rules, that you guys use (internally or specified by exchange ) for allowing or disallowing MIS trades. This will help me backtest my strategies more accurately. Otherwise I am seeing a lot of discrepancy in my theoretical and practical pnl.
Risk management rules are dynamic, so no concrete rules as such. Margin requirements, which stocks to allow/not allow is based on risk as perceived by the broker.
We disallow MIS trading when we expect extreme volatility (e.g Brexit) both on an individual stock or the market as a whole.
MIS trading can't be allowed when stocks are moved to T2T/BE category by the exchange.
We will stop MIS when stock starts hitting circuit.
If you are trading MIS on stocks which are also on F&O (no circuit limit set by exchange), 99.9% of the days MIS will be allowed (except maybe few hours on budget day, election results, or international event like Brexit etc)
Thank you for your reply. I completely understand point 2 and point 3 and partially point 1(Days of extreme volatility like Brexit).
But please tell me what is your measure of extreme volatility on an individual stock on any normal day (Like upper circuit in recent past or volatility greater than the index) because my universe gets limited and I should know about it and incorporate it in my backtesting. I hope you appreciate my predicament, it will help me get a better theoretical estimate and adjust my trading accordingly.
Extreme volatility on an individual stock is when it starts hitting circuit, cause risk management becomes impossible. When do we allow it back again depends on when we feel the volatility has dropped. I am guessing you have seen this list of stocks for which we allow intraday leverage when using MIS.
I have seen this list of stocks and we both know, its incomplete. You provide leverage on the stocks in this list, but there are other stocks which you allow to trade Intraday without leverage. I have the right to know the complete list. If the rules are dynamic, please let me know so that I can incorporate it in my backtest for more accurate results.
It is best if you limit use of MIS only to the stocks on this list. For stocks outside that list, rules are dynamic and we don't encourage trading using MIS because of the huge risk it carries in terms of short delivery.
Speaking to the guys, let me see if we can put up a list of all stocks which have MIS enabled without leverage. In any case, I think it is best to avoid MIS on them.
Here is a link which has a list of all stocks on which MIS is not allowed. We will give a link for this on our equity calculator and will be updated daily.
Risk management rules are dynamic, so no concrete rules as such. Margin requirements, which stocks to allow/not allow is based on risk as perceived by the broker.
- We disallow MIS trading when we expect extreme volatility (e.g Brexit) both on an individual stock or the market as a whole.
- MIS trading can't be allowed when stocks are moved to T2T/BE category by the exchange.
- We will stop MIS when stock starts hitting circuit.
If you are trading MIS on stocks which are also on F&O (no circuit limit set by exchange), 99.9% of the days MIS will be allowed (except maybe few hours on budget day, election results, or international event like Brexit etc)Thank you for your reply. I completely understand point 2 and point 3 and partially point 1(Days of extreme volatility like Brexit).
But please tell me what is your measure of extreme volatility on an individual stock on any normal day (Like upper circuit in recent past or volatility greater than the index) because my universe gets limited and I should know about it and incorporate it in my backtesting. I hope you appreciate my predicament, it will help me get a better theoretical estimate and adjust my trading accordingly.
Regards,
Vishi
Here is a link which has a list of all stocks on which MIS is not allowed. We will give a link for this on our equity calculator and will be updated daily.