We have already discussed what is a circuit filter on the stock market. Almost same kind of restriction is taken on certain stocks those fall under the T2T segment. In this article, we will discuss what is the trade to trade segment meaning.
Trade to trade segment is also known as T2T segment in short. Let’s take a real-life example. Jack is a small child who is very naughty. So his parents try to confine him inside the room with a steel guard wall and partition in the room so that he can’t come out of the room and start messing up. Once Jack grows up, he becomes more patient and his parents take him out of the confinement and set him free.
Trade to trade segment meaning is just like the same. It’s like putting some stocks in jail who are very naughty and shows unpredictable move. If there is too much speculation inside a stock or the stock exchange notes that there can be some circular trading in a stock, the authority ban the stock for the time being. Here, before moving on let me clear the concept of circular trading. If few people or a group of people start trading a low volume stock among themselves and thus increasing volume and price in an unnatural way, this is called circular trading.
So excessive speculation or circular trading in a stock leads to a temporary ban on the stock. This banning means the stock is placed in the T2T segment or trade to trade segment. Once it is pace in the T2T segment you can only buy the share for delivery trading and intraday trading is not allowed in the stock. So you can not buy and sell the stock on the same day as you can do in other stocks. So trade to trade segment meaning is if you buy a stock in that particular segment, you need to take delivery of the same by any means and if you are a seller of the stock you need to deliver the stock to the buyer by any means. If you don’t have the share with you and sell, you need to pay the penalty and buy the share from the auction market and still make the delivery.
T2T segment has been introduced to control the shares where too much speculation is going on. The exchange does so to save retail traders from circular trading and stock operator traps. Whenever the behaviour of the stock is once again back to normal it is taken out of the trade to trade segment same as Jack is taken out of the confinement only after he becomes patient.
Indrajit is a professional blogger and trading system developer. Amibroker expert, WordPress expert, SEO expert and stock market analyst.Trading since 2002, he has started the journey of StockManiacs.net on 2008. He follows Indian and world stock markets closely.