Madan Profile picture
Trading Nifty options(buying) | Partner @aalintech | Systematic trader |…
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May 24 15 tweets 3 min read
Cultivating patience --

Many understand in trading that they need to exhibit patience in

1) Waiting for their setup
2) let the trade do its thing once we are in a trade
3) come out only when setup gives exit

but still they act impatient..

Let us see why...

1/15 There are 3 parts in bringing about a change in our behavior -

1. Identifying the change (awareness of the issue)
2. Ways to make changes
3. Sustaining those changes for long term (this is tantamount to making money is easy but keeping it is difficult 😊)

Mar 19 11 tweets 3 min read
Some random thoughts about trading --

1. Attitude
2. Losing trades does not make us a loser
3. Succumbing under pressure
4. Leverage

Lets see them 1 by 1.

(1/n) 1. Many folks talk about the right attitude for getting successful in the markets. Why that 'right' attitude is needed?

Attitude is how we deal with the inevitable adverse situations we face frequently in the mkts - handling the constant 2 steps fwd & 2 steps backward😊

Feb 28 18 tweets 4 min read
If we ask a simple question to people- "Which is more important - being happy or being right?" 😊

I am sure many of us would answer being happy. But if that’s true, why do so many of us, me included, frequently choose the opposite?

Lets dwell deeper into it.

(1/18) Even when it is a relatively minor point like what shower-gel/shampoo to buy, many of us will clutch to our opinions like a dog with a bone.

Let us see it from the trading perspective quickly.

Dec 18, 2021 6 tweets 2 min read
Few Qs i received(in email and WA) in the last couple of days - let me clarify

3L to 15L –> Monthly Options buying
15L to 25L –> Options selling
26L to 60L –> Synth. futures
60L onwards –> Weekly options buying

PFA pic of the journey from 3L to 1.2cr with timetaken/max DD 😃 I would like to call myself as a trader rather than restricting to mere terms like option 'Buyer' or 'Seller'

Both buying and selling can make money but just needs a bit different mindset. As you can notice, i tried few modes and everything works if basics are right.
Nov 12, 2021 16 tweets 4 min read
When i was in the states, i had attended few courses and one of the greatest learnings for me in money mgmt(MM) came from Van Tharp's course.

Tharp always let the participants play this marble game that has a winrate of 60% and expectancy of 0.2

1/n Expectancy of 0.2 means that we make 20 paise for every rupee we risk.

Over the long run, this system makes money (assuming the trader is 100% efficient in executing it). I remember being in a group of two dozen folks & we all had varied results. Intriguing isnt it?

Sep 18, 2021 7 tweets 2 min read
Market is a great teacher.

If a trader is not very pious/does not 'pray' much, then markets are a grt place to imbibe those thoughts 😊

Too many people get into 'prayer' mode once the market starts to go against them. Few Qs/observations that come to my mind immediately--

1/n 1. Do we have a stoploss?

2. If yes, why not just take it and move onto the next trade?

3. What is the need to pray to the mkt to go in our direction? 😊

4. Have we really accepted 'losses' are part of trading?

5. Hope is not an exit strategy. But stoploss is.

Sep 12, 2021 15 tweets 3 min read
White water rafting and markets --

Recently, a trader friend was lamenting about how he always wanted to buy low/sell high (knowing that he's going against the trend).

Talking to him, i realized that many traders might be facing this struggle

Hence this thread (1/n) Lets assume that we are doing white water rafting in Ladakh/Manali or Grand Canyon 😊

We clearly notice that when we move in one direction, with the flow of the river, we move swiftly. When we move in another direction, against the river, we move slowly or not move at all. (2/n)
Aug 16, 2021 7 tweets 2 min read
Few folks were asking about the lesser number of trades i get in the recent times (compared to the past) - guess, its due to shrinking of volatility. One person mentioned that it is tough to sit tight 'waiting' for a trade.

A small thread about it 😊

1/7 If we really think about it hard, trading is just a 'waiting' game. Most of trading involves only waiting. Nothing beyond that.

First, it involves waiting for a setup. It might take minutes, hours or even days sometimes..No matter what, we dont jump the gun - we wait 😊

Aug 4, 2021 6 tweets 2 min read
It has been close to 6 months since i started NF/BNF "weekly options buying" intraday.

Wanted to share some observations about it & hence, a small thread.

Options buying is not as bad as it has been portrayed 😊

Trading journal can be found here…

NF option pts made = 201
NF absolute P/L = 7.6L

BNF option pts made = 1204
BNF absolute P/L = 17.6

Initial expectation was to make 40-45% of futures points in options as i trade ATM.

Pls note that VIX moved from 27 to 12 in this period 😊 - apparently seller's kinda mkt

Jul 27, 2021 7 tweets 2 min read
Exits and stops

When a trader starts to trade the markets, his/her whole focus usually revolves around the entries and exits are generally ignored (no exit plan) or random in nature. They come out whenever they 'feel' like 😊

1/ Trading seminars/books are not helping much in changing this thought process as most of them focus on the holy-grail entry method

You might have heard trading pundits talking about "come out of the trade based on your 'comfort' or 'greed' level" - whatever that means 😅

Jul 20, 2021 5 tweets 2 min read
To those who say trend following is easy --

I am in good DD in my intraday trading & around 10:45pm, MTM was around 8.5L (video attached)

MTM went to 13L 1st & went to 3L before exiting the day at 6.5L

1. When it was at 13L, i thought great trending day in progress 😅

1/ 2. Then mkt consolidated, moved up (i was long puts) and took the MTM to 3L from 13L.

3. Finally, ended the day at 6.7L (pic attached)

Few observations:

1. If one is counts his money when on the trade, trading is not for you. Mere MTM swings would stress you inside out

Jul 10, 2021 14 tweets 3 min read
Crowd or mass psychology from a system trader's point of view -- a small thread

As they say, the psychology of an individual can be esoteric but the mass psychology is more often than not predictable

Did i say predicting? 😅'Predicting' is a word despised in system trading

1/ 2/

The problem with this 'predicting' is that we dont have access to all the traders (trading the mkts at any given time) & their minds. Even if we do, there is no definitive way to know how they will react next second.

Then, why so much gaga about this 'mass psychology' term?
Jul 2, 2021 7 tweets 2 min read
How bias affects our trading – a typical battle in a budding trader’s mind 😊

Scenario 1 - My last 2 trades whipsawed, I'll not take the 3rd trade now - the mkt is out there to get me (and the 3rd trade will be a huge winner - we end up cursing someone or mkts) (1/7) Scenario 2 - I dont have a good feeling about this trade- as soon as the trade triggered,mkts have stopped or gone slightly against me.

Let me close this trade before it hits SL (& the mkts actually reverses & trade goes in deep profit) - we end up cursing someone or mkts (2/7)
Jun 26, 2021 7 tweets 2 min read
There was always a debate bween System vs Discretionary trader and i wanna talk a bit about one of the issues faced by System traders - sequence prediction.

Knowingly or unknowingly, many traders try to predict their trade sequences.

1/7 Image Winners in a row -- If 5 trades are winners in a row, then they expect the sixth trade to be a loser and would not pull the trigger or would reduce the size drastically expecting a losing trade.

The worst part is when we reverse the situation..

Jun 15, 2021 5 tweets 1 min read
Apt question in the current mkt environment --

If you are a trend /momentum trader & have 5 losers in a row, would you increase your position size as you have seen only 5 losers in a row on an avg in your system(from both backtested + real trades)?

If yes, why?

If not, why? Wow....90% of the replies are pretty clear about not meddling with the position size. You guys are smart.

In my initial years, i have tried this --

Initial size =100 lots, increase 10 lots every trade after the 5th loser until i get a winner 🤣
Jun 4, 2021 20 tweets 4 min read
Trading education - why i feel it is upside down?

Was going through some YT videos - so much of info & nicely filled with non-actionable stuff

In my opinion, trading education (all over the world) in a broader sense is done upside down...there is no structured process to it

1/ Usual routine is this --

1. Pick a strategy from a forum/SM -> see last few days charts --> fund acct (if not done already) -->start trading from trrow --> win first few trades(random exit based on rupee value) --> after few days/weeks/blow the account

May 10, 2021 10 tweets 3 min read
Let your profits run --

I am sure we all have heard 'cut your losses & let your profits run' so many times. As a matter of fact, once a trader get some 'learnings' from the market, they are very good at cutting losses 😊

Very few let their profits run - why? Lets explore

1/ 2/

There are 2 things at play when it comes to profits

1. Need to be right

We all have the urge to be right in any argument or discussions. Most of us were raised that way 😊

Win - even if its only by a rupee or a point. This makes us close that winning trade too soon
Mar 26, 2021 23 tweets 5 min read
Thread on 'no stop loss', 'adjustments' and 'Risk'

Wanted to share my thoughts on this topic for a long time but this email sent by someone yday woke me up from slumber

Pls read the email 1st before delving into thread

(1/n) In the past 1-2 years, there has been a sudden surge of traders who just talk about theta decay, option selling, adjustments and stuff like that..

It is all fair as long as the trader knows what he's doing. But the reality is far from what we see/perceive...

Feb 4, 2021 16 tweets 3 min read
𝗦𝗼𝗺𝗲 𝗰𝗼𝗺𝗺𝗼𝗻 𝗽𝗶𝘁𝗳𝗮𝗹𝗹𝘀 𝗼𝗳 𝘁𝗿𝗮𝗱𝗲𝗿𝘀 (both novices and experienced ones) :

1. Being dependent on others
2. Setting High expectations
3. Dont like to give money back to the mkts
4. Performance comparisons

Let me try to elucidate further --

1/ 1. Consistently profitable traders do not care about anything or anyone’s opinions of what the market will or might do.

They never watch what other traders do as they are independent in making their trading decisions 😊

Jan 16, 2021 13 tweets 3 min read
Backtesting and optimization

Lot of talks about optimization recently& hence a small thread 😃

Even though am not a big fan of optimizing a system, there are certain things a trader can do to come out as a marginal winner in optimization

1/13 1. If one has couple of indicators in the trading system or just a simple PA concept, optimizing can eliminate useless rules and parameters. Good news !!

2. Optimization is also useful to determine whether certain kind of stops are useful 😊

Jan 11, 2021 11 tweets 3 min read
Subjectivity in risk management --

I would like to briefly talk about risk mgmt in this thread (something that is not talked about much anywhere else)

The whole question of risk management is far from an objective subject.

1/11 One need at least one subjective piece of the puzzle to put it together, and that is an individual’s acceptance to risk.

Now that is subjective, meaning there is no rule that says how risk averse you should be. That is an integral part of your emotional makeup 😊