Importance of Risk Management
(Real Life Examples)

1) On 21st Sept 2018, I had sold 330 PE overnight and YesBank opened 10% lower and closed the day at -33%. But I survived as I bought 320 put as protection.

If I had not bought 320 PE then would have lost 10 L

#risk #trading
2) MS. Nirmala Sitaraman Candle

On 21st Sept 2019, BankNifty rallied almost 10% intraday with huge IV spike in calls.

I had 27200 CE sold and booked loss in that at 220. The same option was trading at 2230 few hours later.

Would have lost heavily if I had not exited my calls
- Demonetisation
- Flash Crash in March 19
- Lower Circuit on index in March 20

Have survived all these black swans without any major loss.

After making huge losses at the start of my career, I have realised that good trading is all about managing risk.

4) Rules I follow to manage Risk

- Never open any trade without knowing the initial risk ( R)

- Define PnL in terms of R

- Limit losses under 1 R and profits should be >1 R

5) Read this book

Van Tharp’s Definitive guide to position sizing

It’s a great book risk management & position sizing…

(End of thread)

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More from @sourabhsiso19

10 Oct
Thread on system trading and conviction to follow them.

1) On Aug 2016, I had my highest ever loss of 18 L due to illiquidty risk. I had shorted JustDial 500 CE and was in profit at 3.19 pm but at 3.20 pm lost -18 L due to a risk I wasn’t aware at that time.

#trading #risk Image
2) I had huge qty in Just Dial CE but as my position was huge and Just Dial being an illiquid script. My position got squared from 0 to 10 Rs. I was in 1.3 L profit at 3.19 & 3:20 -18 L.

Lost almost 20 L in a min

Check my email to Zerodha and their reply to understand more. ImageImage
3) I was totally upset as I never thought that I could lose so much due to illiquidity.

There was nothing wrong with system or risk management but this was a risk which I was never aware.

This made me believe in risk management ever then before. Image
Read 6 tweets
28 Aug
Thread :

How I managed my today’s option selling trade inspite of spike on the call side

Overnight position :
I had carried overnight 23000 PE ( sell at 155) & 24200 CE (sell at 135)

In the morning I booked profit in 23000 PE and shifted to 23200 at 120

(1) ImageImage
24000 was a resistance for BNF and above that good spike was expected. So I kept SL in 24200 CE at 200 (as per system)

The SL in 24200 got hit at 200 around 10:30 am and I shifted to next resistance level 25000 CE at 63

Open now(Sell) :
23200 PE at 120
25000 CE at 63

(2) Image
Calls were rising rapidly so I sold additional 23200 PE and also bought 25000 CE (10th sept expiry at 200)

The 25000 CE bought in next week was managing the deltas and MTM.

(3) Image
Read 6 tweets
14 Aug
Today was a testing day for option sellers & robustness of their systems.

Glad to have done reasonably good & ended in green😊

How did I end up in green via option selling inspite of the crazy fall and spike on put side premium ?

Check the entire thread !

#trading #data
At around 12 pm, I had 22200 straddle and was in a profit of 35
points per lot.

But around 1:30 pm markets fell sharply and I had an otm buy stop on 21700 PE at 145 (I keep these orders in the system to protect mtm if there’s a big directional movement)

The protective order got executed at 145 and BNF also broke 22000 (crucial support)

I sold additional calls of 22000 at around 220 with a SL as system had turned bearish.

(3) Image
Read 6 tweets
23 Jun
Thread on trading lessons & mistakes:

I always keep my mistakes & lessons learnt in front of my screen while trading.
Bcz we as traders tend to commit the same mistakes everytime.

So seeing your learnt lessons everyday ensures that you avoid them.
#trading #mistakes
In 2017, I analysed all my trades and saw that I have majorly lost in stock futures and profits came only via index trading.

I accepted that I am not great at stock trading and been trading index only majorly since then.

I decided to adjust all of my past losses to 1 % of capital to see what the effect of capping the downside.
I would have had a gain of more than 230 % if I had capped losses at 1% of cap.

Lesson: Keep losses less than 1% of capital

But still sometimes losses are >1 R😓

Read 8 tweets
18 Jun
Thread on Books/Resources which I find useful

1) Basics :

2) Quantitative Resources :

#data #books #quant #trading
3) Position Sizing & Risk Management

Van Tharp Guide to Position Sizing

4) Pyschology

Trading in the zone
The Disciplined Trader
The Market Wizards
5) System Building & Backtesting

Trading Systems by Emilio Tomasini

6) Fundamentals by
Read 4 tweets
24 May
Did a webinar to discuss about your Quantitative Trading Program.

Few takeaways & resources

1. If you do not have minimum 10lakhs of capital for trading or find our course a bit expensive then, you can get started with this basic udemy course.…
2) Free Quantitative Resources :
(Dr. E.P Chan’s Blog where he talks about quantitative strategies and trading ideas)
(It talks about quantitative strategies across various time frames)
3) Algorithmic is just a way to backtest and automate your ideas

It does not mean that algorithmic trading is 100% always profitable(misconception people had)
Read 5 tweets

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