I also offer a Conservative Nifty Option & Future Course to earn a monthly income. This course is good for new option traders. Its very easy to learn. And for experienced traders I offer a Banknifty Weekly Options Course. Click here to know the course fees.
I started trading stock markets in 2007, and did a lot of mistakes in every sector like, Intraday equity and options trading, share buy and hold, Intraday futures trading, speculative trading and lots of other mistakes. Even went to tips providers and lost money.
My total loss from year 2007 to 2010 was Rs.700,000.00 (7 lakhs). Out of which I lost Rs.500,000.00 (5 lakhs) on my own mistakes and greedy trading and approx Rs.200,000.00 (2 lakhs) on trading on tips from various sources. Rs.40,000.00 I paid as their fees in 6 months and lost close to Rs.160,000.00 (1.6 lakhs) trading as per their calls. After this I was literally slapped by my 8 months pregnant wife after she knew about my losses witch was 100% of our savings. That one slap and one sentence from her, “If You Want to Make Money from Stock Markets Read & Learn About It, Research It, Work Hard, Do Not Speculate and Do Not Be Lazy”, changed my life and I am very thankful to her for slapping me. I deserved it.
I request you to please read the mistakes I did and save your hard earned money and not destroy it the way I did. Please do not repeat the mistakes I did in those years.
I repeat – Please DO NOT DO these mistakes, if you are doing while trading. It has cost me more than Rs. 7 Lakhs in Three Years and I Seriously Want You To Avoid the Mistakes I Did. So Please Read Carefully.
Note: This article is for people who do trading mistakes again and again. I have done them too. Please avoid these mistakes and you will save a lot of money. Please read the warnings carefully.
Before reading further let me give you a warning please educate yourself as much as you can on stock market investments and trading. Please avoid stock trading tip providers and advisory services because I myself am a victim and lost more than one lakh paying them for tips monthly and investing in stocks or options as per their advice from 2007-2010. After that I realized that only education can help me to trade stock markets properly nothing else can. So from 2010 and even till today I keep reading books and good websites on proper investing and trading ideas in stock markets and finances. I devote three hours everyday even on Sundays to read about investing and trading.
NOTE: If you are an option buyer, before you read any further I request you to read this article on why you cannot make money buying options. Of course you will lose a lot more selling naked options too. I get many calls from traders selling naked options. Unfortunately all of them are losing money. So you should always hedge your positions.
People looking for tip providers are also doing a big mistake. Read why tip providers will not make you any money.
Just like you I had a share trading account. I got it in early 2007 and was excited. I was having a well paid job, so could afford to fund it with some cash. I thought that now I can make a lot of money trading apart from my salary.
I asked my friends to tell me some shares to buy. I also researched same on the internet. I started buying shares without knowing anything about the company. If someone told me to buy XXX share I would buy it. In short, I bought shares randomly, a BIG MISTAKE.
A tip in some website – buy the share, in a magazine – buy the share, paid tip provider offering free advice – buy the share.
Unfortunately every time I lost money. Sounds familiar? Yes many of us have burnt our fingers because some expert advised us and we bought the share only to lose money.
First and VERY Important Warning – NEVER GO TO TIPS PROVIDERS. YOU ARE GUARANTEED TO LOSE MONEY TRADING THEIR TIPS AND PAYING THEM. That is DOUBLE LOSS.
Small update June 2018: See what was happening to one person who was chatting with me before he did my course. He was losing money everyday by trading on tips by a reputed advisory firm. When I told him not to trade on tips – he said he doesn’t have patience and still has hopes that there will be some advisory firm that will give him great tips and make him rich one day:
Hope you learn a lesson from his and my losses too when I used to trade on tips, and never pay a single penny to them ever.
Help to stay away from tip providers: Install True Caller app. When someone calls if it shows red sign, just do not pick the phone. They will never be able to talk to you.
Warning 2 – Never buy a share because one of your friends or family members told you. Never buy a share because some random tip provider gave you a hot tip. Do your own research and buy shares only on dips with small quantity. Add them over time. Bring the average cost down. Buy only good company’s shares. You may have to hold them, but eventually you will be able to get out in profit.
Then came the meltdown. In 2008 I had more than 6 lakhs in my trading account. And unfortunately just like many others I was caught in the stock market crash that year.
Within two to three years I lost 50% of that. By the time it was 2009 my account showed a balance of 2,90,000. 🙁
I had a few shares in my account. They were lying idle. They were 50% of their value. I wanted to hold them. I asked my broker if I could do something with the money that was there in my account. He told me that most share broker companies give a certain percentage of the total value of the shares to trade in Futures and Options (F&O). That is called pledging the shares.
It means you can trade even if you don’t have cash but shares in your account. However it may be limited to 70-80% of the market value of the shares. Its called collateral. The collateral value differs from stock to stock. This depends on the brokerage company.
This got me excited that I can trade without selling my shares. Wow, I thought I will recover my losses. Read further to know what happened!
I immediately asked my broker to sell one lot of futures of Yes Bank as I thought it was trading way above it should be. Pure speculation by the way, very dangerous.
Warning 3 – Let me warn those who trade futures without hedging, you are playing with fire. Be ready to lose a lot of money. Hedge your futures.
My broker warned me but I ignored. After 1 hour my broker phoned and told me that I was making a profit of Rs. 3000/-. I felt so happy and asked him to book profits.
I was traveling at that time and felt like a genius.
You know what just after half an hour my broker told me that had I not booked profits, I would have made a profit of Rs. 10,000/-. Though I felt bit unhappy, but I was OK as I thought markets will open everyday and I now have a great opportunity to make money and recover my lost money. I was feeling like an expert. What an jackass I was!
That was just beginners luck, and this happens to most of us.
Next was IDBI bank. I asked him to buy one lot of futures of this bank. Done. IDBI bank was at that time trading around 104. I used to always see IDBI bank at 115, so that decision. My broker went on a holiday and asked me not to trade until he comes back.
You must be wondering why my broker was so concerned about me. He should encourage me to trade more as he can make more commission. Well he was taking a long term view. He knew if I lose money I will stop trading and he will lose one customer for life.
Well anyways IDBI bank started falling. I couldn’t take it. How can my view go wrong? At that point IDBI lot size was 2000. Today it is 4000. One point fall in IDBI bank means INR 2000 lost. 103-102-100-99-97-96 all this in 3 days time. I just couldn’t believe what was happening. How can a trade go against me?
Warning 4 – No egos with stock markets. You cannot control them. They will behave the way they want to. Praying to almighty will not help either. The only thing you should do is what is in your control, and that is taking a stop-loss.
I thought enough is enough, IDBI bank cannot fall further so instead of taking a stop-loss I bought one more future of IDBI bank at 96.
Warning 5 – Huge mistake again. Do not do this, never ever average a losing trade, rather get out of it.
My average came down to around Rs. 100/-. IDBI bank kept falling. Now one point loss was equal to Rs. 4000 – yes Four Thousand Rupees. When IDBI bank fell to around 90 I sold both my futures in panic. A total loss of 100-90 = 10*4000 = 40,000/-. 🙁
Warning 6 – Never over trade. Especially on a leverage. I lost 40,000 in 3 days. Just because I traded above my capacity.
No came some more pain. RMS (Risk Management Service) team of my brokerage company sold some of my shares which I had pledged to trade F&O to recover the loss. Another loss. 🙁
However it was not all losses I made a few profits too. But unfortunately profits were booked at 3000 and losses at 10000 or more. You get the point I was losing more than I was making.
Warning 7 – Always have a trading plan. If you are making 2 you should lose not more than 1. In this case even if you are 50% right, you will make money.
At the end of the year in Dec 2010 my account balance came below 100,000.00. I got very frustrated and closed my brokerage account and took the money out.
I had another account where I used to buy high risk mid-cap shares to make some quick profits. There too I lost money.
Total loss by the end of year 2010 was around Rs.700,000.00 (Seven Lakhs). Hell I could have bought a 3 bed room flat at that time with a small loan. It feels very frustrated to think about that time.
I stopped trading and started doing research. There is nothing in this world that you cannot learn. You need to have a will to learn.
While I lost a lot of money in Futures trading I found that most derivatives traders trade in options for the great limited loss leverage they give. And I also found that most of them trade index options for their liquidity.
Then I started doing research on Nifty options. My research included what were the best ways to make money from nifty options, whether selling them is beneficial or buying them, should we hedge our position or not and why, etc. Some really interesting things came out of my research.
I also read a lot about stock markets, mutual funds, and any other financial related instruments. I still do. The idea was to know enough to make money from the stock market.
If you do not have any knowledge in a particular field how can you expect to take the right decisions? For certain most of your decisions will be wrong. Stock markets are no different.
In 2013 when I was trading full time for a living profitably since quite a few years, I thought why not to start a website and share whatever I have read and know with people who visit my site.
And this website was born.
Learn To Trade Options To Make Monthly IncomeLearn to trade options in such a way that you make money irrespective of Nifty direction. It does not matter where Nifty goes - up or down or stays there - you will still make money. It takes 10 minutes to trade in a day. Details of the course is here. Click here to know the course fees.
Dilip Shaw, Founder
INCOME DISCLAIMER: Any references in this site of income made by the traders are given to me by them either through Email or WhatsApp as a Thank You message. However every trade depends on the trader and his level of risk taking capability, knowledge and experience. Moreover stock market investments and trading are subject to market risks. Therefore there is no guarantee that everyone will achieve the same or similar results. My aim is to make you a better & disciplined trader with the stock trading and investing education and strategies you get from this website. Please note that I DO NOT give tips or advisory services by SMS, Email, or WhatsApp or any other form of social media. I strictly adhere to laws of my country. I only offer education on finance, investments on stock markets in the best possible way as much as I can through this website. Still, you must consult an authorized advisor or do thorough research before investing in any stock or derivative before trading any strategy given in this website. I am not responsible for any investment decision you take after reading any article given in this website. Knowledge is the only way to get success in stock markets. I try my best to give stock market investing and trading knowledge through the articles posted in this website. Thanks for visiting my website.