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Life Time Savings Gone in Stock Trading

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What happens when there is no risk management and you lose your life time savings in stock trading? Yes this happens to some people who cannot stop their greed and keep trading on hope.

I got one email from one such now retired from job trader. Here is the transcripts from the email: (Read to know how selling good company shares at the wrong time can be painful, and its not always wrong to diversify your investments and invest in at least one real estate apart from your home of course if you can afford. Please note that this is contrary to what financial experts keep writing not to invest in real estate. If invested for more than 10 years in a prime location in real estate it will certainly give a great profit when you sell it – or if you have two kids you can gift your home to one kid and your real estate investment to your other kid. Both will be happy and money will remain in the house. Please also note that property in prime locations are vanishing fast. I do not think our next generation will find new apartments in prime location. Anyway real estate investment is not the topic here so I stop here.) read more

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When And How To Become A Full Time Trader

We all want to leave our jobs and become a full time traders. This is good but there are certain things that you should keep in mind before leaving your job.

See the feelings of a person not happy in his job thinking of becoming a full time trader after doing my course:

Here are some important points that you should remember before leaving your job and becoming a full time trader:

  • You cannot become a full time trader with Rs. 10,000, 15,000 or even 1 lakh. At least 10 lakh is required to become a full time trader. With this 10 lakhs you will be able to live a modest simple life.
  • You must have another 10 lakh in your bank account for emergencies. For emergencies you cannot take money out from your trading account.
  • Risk management is very important whether you are a full time trader or a part time trader. You must not risk more than 5% of your trading capital in one trade. For example if for one trade money blocked is 1 lakh then you cannot lose more than 5000 in this trade else your account will vanish in no time.
  • If for three months you are continuously loosing then forget about becoming a full time trader.
  • If seeing profit in a small account slowly increase the amount size to make it almost 10 lakh. Once you are able to trade 10 lakh account profitably for 6 months at least then only think about becoming a full time trader.
  • That you have intention to become a full time trader should be known clearly to your spouse/parents if unmarried. You cannot leave your job without mental support of your spouse/parents. If she/he/they are not happy with your decision then the stress prevailing in the house will disturb your trade set ups – you will not be able to concentrate. Family support is required to become a full time trader.
  • If you are making good profits in a 10 lakh account then it makes sense to increase the money in your trading account to try to make more. But you should not add 5 lakhs at one time. Increase it by 10% a month as you make profits. Add 10% more only after three months of profits.
  • If a positional trader you must hedge your trades for overnight risk management.
  • Keep a low profile and never boast to your friends/relatives/neighbors about your trading income. They will start asking you too many questions and will ask you for tips as well. Well my friends used to do. So a few months back I told them (a lie) that after suffering huge losses for two months I stopped trading and am freelancing here and there. They fear asking me tips now 🙂

I have given you correct and true information on when and how you should become a full time trader or take trading as a business. I am sure you must have read a lot of different stories from people in many websites but frankly this is the only truth – full time traders do not live a fancy lifestyle as advertised by tips providers. But yes we do not have a boss to order us anything – however we do have other problems like which trade to take – how much capital to invest – risk to keep etc. read more

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Why Should You Trade On Collateral Margin

In India derivative stock/index trading is done on cash. Frankly its foolish. Do you know future and option shorting can be done free of cost? By free of cost I do not mean that you do not need cash to trade futures and option selling – you need. But you can easily use this money to buy quality stocks and keep in your demat account and ask for collateral margin from your broker and trade futures and options with that money without bringing extra money in your trading account.

What Is Collateral Margin?

read more

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Post date: 01-Sep-2018

In a recent circular SEBI has asked to block more money as ASM a.k.a Additional Surveillance Margin for selling options and trading futures. The an Additional Surveillance Margin (ASM) shall be levied on all gross open positions on futures contracts and on short positions in options contracts.

To which NSE issued the circular which you can find here.

This circular basically says that more margin will be blocked for selling options and trading futures. This will happen:

Should you worry? read more

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Update: 18-09-2018

SEBI defers October 1 deadline for extension of trading hours. Here is the conformation:
Click here to read.

Article Date: Tuesday, 28 August 2018

I hope you know the news that SEBI has allowed derivative trading (future and options) from 9.15 am to 11.55 pm from 01-Oct-2018, similar to the trading hours for commodity derivatives segment which are presently fixed between 10:00 am and 11:55 pm.

As written in many websites you must be thinking its a good news – no its not. Why? Because 99% of derivative traders loses money. Now this 99% will increase to 99.9% as traders who were not able to trade during the day due to their busy schedule and/or job/business will now trade after their job/business commitment ends. I think volumes will increase from 6 pm until 11.55 pm.

I do not know about you – but if you are losing money now please do not trade more than you are trading now. You may suffer more losses. 🙁

If your trading plan, style, psychology, knowledge is not good – changing the time to trade will not help. The result will be same. Of course if you are good at trading its a good news for you.

Revenge trading is even worse.

On top of that there will be health issues. From 9.15 am to 11.55 pm that is approx 15 hours. Think about monitoring your trades 15 hours a day for 5 days in a week. 🙁 🙁

I fail to understand how traders who do not hedge their position will spend their days. If you are reading this email please either hedge your trades or keep your losses small but please do not over trade just because you have the money. 

Life of derivative traders is going to be very difficult from 01-Oct-2018 – in greed to make more money they will trade more and lose a lot more than they are losing now.

You can learn hedging in my Nifty Course or the Bank Nifty Course. The fees is less than what you are now losing in a single trade. And if you enroll for both the courses you will get a discount. Click here to know the fees for the courses.

If you want to survive, make profits and trade the markets in peace there is no other way than to hedge your trades. In fact trading hours have become so long that intraday may also need hedging. Bank nifty has an options strategy that can be traded intraday.
 
Updated: Wednesday, 29 August 2018 read more

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Why Nifty Is Rising Since Last One Year

Article Date: Monday, 27 August 2018

Many traders and investors must be wondering why Nifty 50 (NSE) is rising continuously since last one year. Here is the chart:

NSE 24-Aug-17 to 24-Aug-18

52 Week High and Low:

Percentage Increase (20.39%):

Some important notes before you read further:

NIFTY 50 is a diversified 50 stock index accounting for 12 sectors of the economy. It is used for a variety of purposes such as bench-marking fund portfolios, index based derivatives and index funds. NIFTY 50 is owned and managed by NSE Indices Limited (formerly known as India Index Services & Products Limited) (NSE Indices). NSE Indices is India’s specialised company focused upon the index as a core product. read more

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Everyone wants to trade and make money fast – this is fine, but everyone is looking to make a home run expecting to make 10-15% per trade. In this post you will learn that 10-15% per trade is impossible to make.

To try to make 10% a trade, a lot of gambling in stock market is going on and the result is obvious – they lose money. They just do not know what to trade and how to trade so they gamble. Stock markets do not work that way.

Actually its not their fault – there are a lot of misleading things happening online and offline. This is screenshot of a person taking an offline course in derivatives. See his fees (he promises huge returns from a single trade – more than 100%): read more

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How To Scale Out of Your Intraday Trading

If you trade a stock intraday make sure to trade with at-least 5-6 lots to scale the position, or if you do not have that much money to buy so many lot futures, trade in cash. Here is how to scale out of your Intraday trading:

Decide your trade long or short by 11 am

Its not just about deciding the long or short its also about deciding the profit taking and stop loss for the day. Please note that stop loss/profits should be decided on the basis of how much you are willing to lose and take from a trade not what your system is saying. Your system does not know your worth or your financial situation, so do not leave it to the system. read more

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Post date: 20-08-18

NSE Mar-Aug 18

Due to the recent turkey news you may have gone short in Nifty. In that case its better to exit or hedge your position.

If you are long then book profits.

Then wait for the trend to be clear.

India VIX is on the rise indicating volatility in the markets.

India VIX 20-08-18

Its strange that during these times so called market experts have different opinion – some say nifty will go up and hit 12000 by December 18, and some say Nifty may fall.

I am sure you may also be confused as what to do.

My advice do not listen to what the experts say in business channels or websites that you read. Tips or free advice both are bad and will be in your favor 40% of the times – rest of the the times you will lose money. read more

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Newsletter date: 09-August-2018

According to news sources NSE has applied for extending equity derivatives trading hours till midnight from 1 Oct 2018.

If you do not know this news let me take back to a news sometime back in May, 2018. SEBI proposed a committee to look into extension of trading hours and finally in May 18 it gave a nod. You can read the news here:

https://www.business-standard.com/article/markets/sebi-allows-exchanges-to-extend-trading-in-derivatives-till-11-55-pm-118050400653_1.html read more

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