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How To Trade Stock Markets When Everyone is Selling

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First a note for people who bought my course in January 2016.

After the mayhem in August 2015, we are in somewhat similar satiation in January 2016.

The point is every 6 months or so option sellers will have issues in managing positions.

INDIA VIX has shot through the roof and is currently at 20.75 up 12.59% since yesterday at 1 pm today. Nifty is down 1.52% at 7300.00 down 1.79%.

All this because of turmoil in China and Crude prices hitting 12 year low. We all know all this will phase out and again markets will get stable and start rising.

China will act fast and get its economy running again. Demand for Crude oil will start rising due to low prices and it will start going up again. Result? VIX will fall, Nifty will rise. I assume not until the budget is over. VIX will be between 25-30 until budget.

If you bought my course in January 2016, you might be seeing a small loss in the first strategy. This is perfectly OK. This is normal. The strategy works 80% of the times. The rest of the times there can be small loss and we as traders have to accept the fact that no strategy in the world can make money always. I hope you remember that when you call me asking about the course I tell you in plain language that the success rate is 80%. But one thing is guaranteed that over a period of six months you will be in profits.

Another thing that is guaranteed is that you will trade in peace. Even now when we are seeing a small loss we are OK and we know we are better than 95% or traders who may have lost lakhs of rupees during the month of January 2016. Comparatively we are much better.

This is for everyone:

If you are trading with one or two lots there is nothing to worry. But if you are trading with more lots you can do a few things:

1. Close a few lots – half is good enough. This reduces risk. Strategy 1 may hit SL or may not hit SL – this is irrelevant. Right now there is panic in markets, so we will take less risk. When times will be stable we will trade with maximum capacity. Currently its not the right time to be aggressive. PERIOD.

2. Buy more protection. This will give amazing protection. If swift move one side happens with VIX not dropping, it may actually be profitable. One side is guaranteed to make money, the other side will also make money. Try it.

3. Close all option trading and start buying stocks. Remember the phrase – Buy when everyone is selling and sell when everyone is buying. I cannot tell you how many times I have profited from this simple basic strategy alone. Today also I bought my favorite stocks. In fact I never trade options in cash. I am always invested in some stock and ask collateral from my broker. If you read strategy 3 – the conservative stock option trade you will see how beautifully you can use this strategy and make money from three places. Unfortunately traders in India want to make money only in options. This is nothing but ego. For God sake leave ego behind and trade smartly. Money is money is money. How many times I have said in my blog that profits are profits – it does NOT matter from where you get them. The only thing that matters is how much taxes you are paying on that. One year investment in stock and you pay ZERO taxes. Even if you make 10% that is free money. Ask collateral and trade conservative option strategies – and you are now easily hitting 30% + a year mark. You only need to make 20% from trading options. Which you can easily achieve from my course. Remember you pay taxes only on the options profits not on the stocks. How sweet is that?

Agreed stock may not rise. But for how long? Go and see history. Great stocks deliver great returns every three years.

Click here and see this graph of HDFC Bank. You will see 20% compounded return per year return on average whatever happens to the stock markets. Now see its 6 month return, it is almost ZERO. Who cares? Your broker is giving you collateral to trade options – you are making money anyway. One good year and HDFC bank will double – doubling your money. 🙂 How simple is that? But your ego to trade options and make money is actually taking your money away. It is not the stock markets fault. Its your ego and you are not letting it go.

I buy MORE when everyone is selling in panic. Yes and I did that today as well. This is the best time to buy stocks. Some of the stocks will double when Nifty will be at 9000. And you do not need a technical analyst brain to understand that it will not take 5 years reach there. Even in the worst case scenario it will be there in three years. Money doubling in three years – do you really want more from the stock markets? If yes, you will lose half your money in three years. Yes I am not joking. Because you will trade aggressively to make more and lose. Some people are really good at it like Ravi, but can you be Ravi – that is the question.

Do not get me wrong, great traders make amazing returns from the stock markets. But not all can be great traders. Learn to accept that.

Bottom line is learn to use leverage. Options and Futures are leveraged product – why trade them on pure cash?

4. Try the directional strategy: Yes markets are moving and how. On 30% of your capital try the directional strategy of the course. All it needs is movement and you are done. But please DO NOT copy Ravi.

After Ravi’s success story I get lot of emails on teach me to trade like Ravi. In the hindsight what they mean is also tell me the secret to make 40% return in a week. Simply put that cannot be taught, that needs practice and a lots of practice. I can show you the path, but it is you who need to walk not me. Remember on a new year’s eve on a weekend this person was working on the directional strategy. When most of us were having fun, Ravi was working. Why shouldn’t success come to him?

One person who has taken the course told me that he is willing to pay again for the course – but I need to teach him to trade like Ravi. 🙂 The only difference is that Ravi chooses different strike prices on different situations. THE TRADE IS THE SAME. This comes only from experience and practicing. So please practice if you really want to trade like him. I did not reply him I hope he is reading this.

Tomorrow again I will write on how to trade when VIX is high. I hope you will read that as well.

Thanks for reading and being my subscriber.

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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.

{ 8 comments… add one }
  • amit mishra January 20, 2016, 3:27 pm

    Again a great article.
    Thank you sir.

  • Mahendar Singh January 20, 2016, 3:59 pm

    Thank you Dilip. In times of turmoil, your words are of great wisdom.

    Keep writing. Was wondering what to do in such times n yes tho right time to buy stocks. Quantity blue chip.


    • Dilip Shaw January 22, 2016, 4:23 pm

      Yes see how today itself markets bounced back 2%. How important it is to see an opportunity and jump. Had you been lazy the opportunity goes away. Of course I do not buy in bulk. Always go by the systematic investment method. However on a sudden fall buy more.

  • Yogesh Rajput January 20, 2016, 4:28 pm

    Really a very good article. Lots of message in that and I have not seen people giving this type of advice specially for stock market.

    There is 1 point :- Buy more protection. :- Does this apply to non-directional , directional or both. If In case of non-directional, I guess you mean more protection on the buy side. Please correct if I am wrong.

    • Dilip Shaw January 22, 2016, 4:30 pm

      For non-directional. Directional already has too much protection.

  • mayur January 20, 2016, 10:22 pm

    Add me in your mailer list

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