1⃣ He gives the owner ₹10,000 as advance for booking his one week stay in the hotel.
2⃣ The hotel owner takes the ₹10,000 and goes to pay his debt to his food supplier.
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3⃣ Food supplier rushes to pay the farmer and dairy.
4⃣ Farmer runs to pay the land lord from whom he took a loan for his crop.
5⃣ The land lord rushes to pay the event manager who managed his daughter’s wedding on credit.
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6⃣ The event manager then runs to pay for the wedding event which was hosted in the same hotel.
7⃣ The hotel owner receives ₹10,000 from the event manager.
8⃣ The man who had booked the hotel, cancels his booking and takes a refund of ₹10,000 from the hotel manager.
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⭐️ SO WHAT REALLY HAPPENED?
A lot of transactions happened between multiple parties, no one actually made any money but everyone was cleared off their debt! That’s the magic of a credit cycle!
Economy of a country works exactly in the same cycle repeated over and over.
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🔸 A lot of traders (especially intraday) look at a stock’s market depth table to determine the upcoming moves and accordingly take their BUY / SELL decisions.
🔸 Read below how market depth data can sometimes be misleading and lead to losses
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Here's how most traders read the market depth:
🟢 If there are higher number of buyers (bids) means the stock is in demand and will go up.
🔴 If there are higher number of sellers (offers) means the stock is in supply and will go down.
But that is not how it works.
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🔸 Let’s say, for a given stock the market depth shows as below (1 qty):
- Total Buyers: 50,000
- Total Sellers: 2,000
🔸 Many will interpret this as a high demand stock & expect it to go up.
🔸 But still sometimes the stock rapidly goes down despite more buyers.
But that T+2 days cycle leaves a possibility of you transferring those shares to someone on Tuesday i.e. before the shares are debited from your demat on Wednesday.
This creates a short delivery settlement risk.
Brokers already have systems in place to avoid this.
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But still this might happen for about 5% of the times whereas 95% of the times the settlement is done correctly.
Now, SEBI's new rules will make sure that those 5% cases are also taken care of and the risk is completely avoided.
1⃣ As per new SEBI rules, buying and selling of shares will require upfront margin.
Eg: If you want to buy shares worth ₹1 lakh then you must have ₹20K margin cash in your trading account & the balance of ₹80K to be paid within 2 days.
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2⃣ If you want to sell ₹1 lakh worth of shares from your holdings then too you must have minimum ₹20K margin cash in your account, failing which penalties will be levied.
You can keep extra cash / or can pledge your other holdings for the stipulated margin required.
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3⃣ Buy Today Sell Tomorrow (BTST) closed.
Shares bought today cannot be sold tomorrow.
Eg: If you bought shares on Monday then you can sell those shares only after recieving the delivery of shares in your demat account i.e. you can sell on T+2 day, Wednesday.