The power of beliefs is amazing! I lost almost a 1000 followers because many were offended when I said that one required a crore to make a living from Trading. People desperately want to believe that they can regularly churn out 60-75k monthly with an investment of 3-10 lacs
By the same token they want to ignore Nithin Kamath's recent statement that only 1% on Zerodha make better than FD Returns from Trading. They would much rather believe Trainers who claim that 80% of their Trainees make outsize Returns from the Market.
The other reason many were upset was that I never discussed any charts or strategy. That's because I don't believe in the one size fits all approach. How you form a view is important and is the soul of your trade. How you structure a strategy around that view is unique to you 1/2
Every Trader will have a unique way of expressing his view and copying someone else never leads to a good outcome over time. To put it poetically
tumse milti julti main awaaz kahan se laaungaa
taj mahal ban jaaye agar mumtaz kahaan se laaungaa...
My follower count in the last 2 days has been like the Nifty in recent days. Went up by 700, then went down by 1000 overnight and is now up 500 today. Had I gone to sleep day before and woken up now, it would be like nothing had happened😀.
Thanks to all the new followers.
Back to ATH. Hope it's not a Double Top😀. Thank you all
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Have had a number of DM's following the elearning video. Clarifying some issues. Please understand I am not an intraday Trader and obviously my methods will not apply to short very term time frames. The first was on how I identify levels
I do it in the evening after the Market and I look at Support or Resistance on Candlestick Charts Also for common Patterns both for entry and failure. I look at P&F Charts- 1% on a daily TF. I will also use Relative Strength to identify sectors and the best/worst stocks in them
Will also look at Renko Charts as Swing Points are easier to identify on them. Sometimes I will also look at OI for underlying where I have larger stakes. Of course will always keep an eye on IV's. Once I have these levels, I will use them to take positions the next day
There is a popular saying- 'lies, damn lies, and statistics.' Most Risk Management philosophies that Traders base their systems on are grounded on some form of statistics be they Expectancy, RR, Win Loss Ratio, Drawdowns etc. But how realistic are these really?
So a system with an Expectancy of 1 means you will make 1 on every 1 Risked. But over how many Trades has this Expectancy been calculated? 100, 1,000, 10,000? Statistics on such types of analysis generally follow a Normal Distribution represented by the famous Bell Curve
To get a good representation of how a system will work out, you need a very large set of observations. Very few Traders capture these. Secondly, and more importantly, the figure is not absolute. It is subject to a fairly wide range of variance
There are many great setups from some of the world's best Traders in the world available for on the web- all of which have edge and provide a great living for their practitioners. Some such as breakouts, pullbacks, flags, pennants etc are simple and well known even to beginners
Unfortunately 95% of Traders are unable to Trade them profitably and waste their entire life in trying to discover one which they can. The problem is not in the setup per se but with other issues such as Capital Allocation, Position Sizing, Money Management and Psychology
All these issues appear to be very simple in nature, and can probably be summarized in one page, but turn out to be extremely difficult to implement in practice. To some extent they are counter intuitive to the way we are conditioned to think.
There is a feeling that by System Trading you can somehow miraculously dramatically cut down the time to become a Profitable Trader. Nothing can be further from the truth. forbes.com/sites/brettste…
And I feel that many new System Traders are too quick to pronounce it as the best way to Trade. Let them take one of the inevitable big drawdowns that this type of Trading results in and then we'll talk.
Lot of feedback on this tweet. I am not against System Trading. In fact I have been trying to find one to deploy some part of my Capital unsuccessfully for the last 2 years. Let me attempt to explain the difficulty in another way
I have always been a discretionary Trader. Have made several attempts at trying my hand at System Trading but somehow have never cottoned on to the idea mainly for 2 reasons. Firstly, the concept of backtesting goes against my core beliefs.
Unlike others who have attained great success with backtested Strategies, my belief is that every moment in the Markets is unique and just because a certain Strategy worked in the past doesn't guarantee it will work in the future
Secondly, I find the idea of accepting big- and I find 10% huge- unacceptable even though the end result may be a huge payoff in the long run. Trading high Probability Options Strategies has spoilt me and I rarely have losing months let alone drawdowns.
The biggest fraud on Social Media is the idea that one can make a living as a Full Time Trader with a small amount of Capital. So many MTM Screenshots showing huge Profits and Traders talking about earning fantastic ROI's on Capital employed.
I've watched the best Traders in the business Trade and any of them would be content with a 30% RoC-very few make it. Trust me, it is impossible to consistently generate 60% type of RoC's on Capital on an amount which will enable you to live decently by Trading full time
While this kind of Return may be possible fo a short time, it will come with a level of Risk which is certain to blow up any account in short order. My personal view is that if one needs say Rs 1.5 lacs/month, they should have a Trading Capital of at least Rs 1cr