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Do Not Take A Loan To Trade

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Yesterday a young man just out of college called me in the night and inquired about the option course. I told him what I tell everyone. Then he asked about the returns. I said approx 2-3% a month. Then he said in Bangalore I will get a loan at 18% per year then how can I make a living with just 30% return a year. 30-18 = 12% return a year. He went on to say if I drive a rickshaw I will make more. He wanted to loan at least 10 lakh and trade. He told me that Rs.30k is not good enough to survive in Bangalore.

I told him the first principal of stock markets is that trade with the money you can risk. It is not at all a good idea to take a loan and trade.

Here is the article that explains why it is not good to take a loan and trade.

A young graduate should first take a job and then think about trading. When I told him this, then he said he do not want to do a job he wants to make trading a profession. When I asked him how much money he has to start trading business? He said 50,000.

Think about this? Which business in the world you can start with 50k?

Anyway there was no point in talking to him anymore, so I told him – young man first get a job, think about becoming a traders later. Then I kept my phone down.

If you want to make trading a profession make sure you have at least 20-30 lakhs to risk. You should have some extra money to run your home for the next six months at least, so that you are not worried about day to day expenses.

Even after this you must trade conservatively. At least do not make losses. Even 1% profit initially as a trader consistently every month for six months is much better than making 10% a month then losing 12% next month then making 20% next month and losing 26% next month.

Small steps every day ahead will take you ahead, not a big jump then a big fall.

Think about it.

I have been telling this for years now but it looks like – well what can I say?

Learn conservative options trading and make small profits a month. Small profits are much better than huge losses to make huge gains.

Update: After I wrote this article. One of my email subscribers wrote an email that I would like to share with you all.

His email:

Dilip you are absolutely right, I am reading your mails since last 2 years. I also asked same question from you in 2015 & you gave me exactly the same answer.

But I took risk on my own hope of becoming rich & I took Personal Loan of Rs.3.50 Lakh.

Initially I started with equity cash and I was making small profits too. But after few days I entered into the ocean of F&O.

And after 3-4 profitable trade. I started loosing it. And in emotions and hope of recovering I kept trading without any SL & Hedging.

Mean time I was also reading your mails. Always I thought why to give you 5 or 6K for course, I will learn hedging by myself as you (Mr. Dilip) has learned.

But till now I don’t know ABC of hedging. At that time one of my heart corner was always have feeling that Mr. Dilip is right I should take the course. But I ignored that every-time.

Anyway, I kept making positions overnight & one day came when I put all my money in averaging DLF CE of 170 in year 2015 without any stop loss. And you can guess what would happened with me.

I quiet trading completely & then I realized you was always right.

I understood one lesson that greed & indiscipline in trading can destroy you completely.

Now I am paying my loan EMI from my salary. 🙁

I want to restart but I don’t have courage & I fear to loose.

Many time I thought that I should share all this with you but I didn’t. Today I saw your email with same subject I decided to reply this guy that you are right don’t take Personal Loan for trading & if you take than at least maintain discipline.

In the end I have high desire to learn hedging techniques. May be soon I will pay you course fee.

Thanking you for your free but highly Valuable daily mails.

Keep in touch.
Name Withheld

To him I then replied:

Sad to know this. What has happened has happened.

Tell me one thing. What stopped you from doing the course?

1. Course fee too high?
2. Dilip is wrong? 3% a month is less, profits are more so I will not do his course.
3. Hedging cannot make money.
4. I do not have 75k.

Or any other reason?

You see like you there are many traders who do not do my course and suffer.

Of course the course cannot be free as it takes too much of my time plus free is not valued.

So tell me frankly, please do not feel shy saying the truth.

What was the reason that you did not do the course?

I will not mind even if you say something disturbing but please open up and tell the truth.

To which he replied:

Dear Sir

If I say true then.

I thought that 3% per month is too low because I had taken Personal Loan @14.5% interest annually.

Secondly I did not want to give 6K in one go just to do your course in which I didn’t have full faith.

Name Withheld

I think this is very common. 3% too low. Why to pay for the course for such a low return. etc. Fact is it is not a low return if compounded.

And of course some traders are doing much better than this. So take your call.

If you also think 3% a month is too low then think about this. When will you ever make more than 3% a month? After 50 years? By that time you will have lost 50 lakhs or more then even 10% a month will look small. Then you will try for 15% a month, then you know what. Everything ends.

Those who think making 10% a month is possible every month let me tell you clearly – it is just not possible at least every month.

Over all if you make even 25-30% return a year on your trading capital then it is a great return.

Another email:

To answer your questions:

1. Course fee too high?
Answer: There is no cost that one can pay for good education.

2. Dilip is wrong? 3% a month is less, profits are more so I will not do his course.
Answer: This is good return.

3. Hedging cannot make money.
Answer: It can, but only if required trades execute at asked price.

4. I do not have 75k.
Answer: I have this much for trading.

I am skeptical to buy your course because I think everything is available on google and I have read a lot :). The hedging techniques I have learned are only good if they execute at asked prices. If the price is not right then you have to buy overpriced Item that will end up with loss. Do you suggest your courses will control prices 🙂 ?

My reply:

Thanks for the answers.

Limit Orders is your answer. But frankly if trading Nifty, this thing is not required as Nifty is highly liquid.

My course strategies except one, needs to be traded in Nifty.

Instead of trying to control prices – try to control your emotions, plan your strategy, have an entry exit plan. Rest hedging will take care.

Hope I was able to solve your problem.

And yes just because you read hedging techniques online does not mean you learn hedging.

To become an expert in hedging like strike selection, entry, exit all this takes time.

You are paying for that, not just the “hedging” word.

One more thing – there are a lot of people who keep waiting for a discount to do my course.

Let me tell you clearly this course deserves Rs.10,000 at least. And the price you see is already discounted so there is no need for any discount.

In any case 1k saving is not a big amount.

That’s the reason I have made my course 100% risk free for you. If you do not like the course within 7 days just ask for a refund and I will refund your money.

You are now at 0% risk while paying for the course.

So go ahead and pay, at least try to learn something or keep loosing money trading – the choice is yours.

Once you pay I will be with you.

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Open ZERO Brokerage FREE Share Trading Account - Buy and Sell Stocks Without Brokerage - Set GTT (Good Till Triggered) Orders on System and Forget

Traditional brokers charge a lot for brokerage; however, this broker does not charge anything for stock buying and selling. Also, you can set GTT (Good Till Triggered) order after buying a stock, so that the system can sell the stock automatically at your target price even if you are not monitoring the market. Only 25k is blocked for option selling with hedge. Also, you get a lifetime free account in Sensibull (virtual trading app & strategy builder) which charges Rs.800/-+GST a month. It takes 5 minutes to open an account online. Click here and Open Free Account with Them Today >>

About the author: Dilip Shaw I started trading stock markets since 2007. However my first 3 years were losses. Then I dedicated almost 1 year on studying, researching, paper trading options and learned a lot in that time. Since 2011 I am trading Nifty options profitably. Call me if you need any help trading options on 9051143004.

{ 9 comments… add one }
  • Suraj July 18, 2017, 4:23 pm

    Dilip Sir,

    The ONLY thing we can get from this is, people like these are necessary in this stock market to create speculation. Every trader goes through this kind of fantasy and then accept the truth of trading with stop loss rules and risk management.


  • Ashok July 18, 2017, 10:24 pm

    Sir , day I will write u my experience how I lost by tips providers. thanks

  • alok ray July 24, 2017, 11:48 am

    Appropriate suggestion was given to that young star.

  • SANJAY BHATIA July 24, 2017, 11:57 am

    Hello Dilip,

    I genuinely like what you write.

    I’ve been waiting to do your course but before that I want to build up enough trading capital ( around Rs.2,00,000) which is going to take some time.

    Hope you have a fantastic life ahead as an options trader.

    • Dilip Shaw July 24, 2017, 11:58 am


      You should start small.

      My strategies need 75k.

  • bittu July 24, 2017, 12:11 pm

    Dear sir
    I have lost my 99% money in trading so I am not pay your fee.
    But I believe that you have great knowledge about option trading.
    Please sir help me and give me your option course and strategy.
    Please please sir.

  • S DODDA July 25, 2017, 6:01 pm

    Great thanks for sharing all the information.
    Same thing happened to me.

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