You may have not had sufficient margins for this, hence the square off. You do have the right to ask your broker for an explanation.

Swarnava, you’ve identified the right skills needed to pull of good arbitrge trading opportunities (stats, maths)..but you also need programing skills to go along with this. I’d suggest you get this going. Without programming skills, it wont be possible to do arbitrage.

I have conducted a self-analysis to determine which trading system best aligns with my mindset and long-term goals. My analysis indicates that Arbitrage trading system is the most suitable system for me.

I am eager to dedicate significant time and effort to studying,researching, developing, and implementing arbitrage strategies in commodities,stocks,options,futures.

Could you please guide me on the all specific domains and topics (anything even if not from finance, may be math,calculus,stat and cs) within arbitrage that I should prioritize to maximize my results?

Thanks,
Swarnava

You can get that on Kite or via Kite Connect APIs. You can download to excel. Do speak to our support desk for this.

You can switch to continuous charts for this. I’d suggest you call the support desk and check once.

Sure, you seem to have factored in the 2 big risks. Add to that taxes and costs, and figure if it makes sense. Wishing you the best 🙂

There is an idea sparked in my mind, sharing with you

If I have 5 lac :-

If I invest that 5 lac rupees in a government bond with an yield of 7.5%.

and pledge the instrument with zerodha, I will get a cash collateral margin.

So it can be used to trade futures.

so I am getting 7.5% risk free return from the gsec annually.

if you take an example as of today.

Tech mahindra january futures are trading at 1764 rs (short) 1 lot

And Tech mahindra december futures are trading at 1754 rs (long) 1 lot

the lot size is 600

so if we multiply (10*600) = 6000 rs is the profit.

the margin required is 3,71,000 rs, fund will be blocked = around 37000rs

so there are risks associated with it :-

1) Execution risk = both the orders has to be executed same time to get the price difference and also has to be exited at same time

2) there can be a slippage and charges let’s take it 1000rs.

I am currently doing this as paper trade in sensibull.

planning to exit this before 1 day to expiry.

Your Thoughts on about the planning and the (worst-case-scenario) risks associated with the trade ?

I dont know if its worth the risk. But since this more than usual, I’d be tempted to place a trade (but this is just me being curious and adventurous). You can choose to track the trade closely as well.

Yes, if the spread does not converge, then it will return a loss, but that is the trade here. You expect the spreads to move. You can use continuous data to get a sense of historical spread movement, and then use that as a peg to estimate the current spread and figure if the current spread is worthy of taking a trade or not.

Yes, limit orders are good for these things :)….but there is nothing much you can do about execution risk.