"A mind needs books as a sword needs a whetstone, if it is to keep its edge".

Have been interacting with many traders and realized that many folks have a limited/lack mindset on 'making' money.

This thread is to promulgate the concept i read in 2 books

1/9 It says that many a times, we are the one standing between a wealthy and our mediocre life 😊

Both these books were written 2500 years apart but still deliver the same message essentially

Both books elaborate upon the importance of wealth in a person's life.

2/9

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 needs at least one subjective piece of the puzzle to put it together: an individual’s acceptance to risk.

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

2/11

Someone sent a WhatsApp message about how to trade without emotions, and i think there is a huge misconception going on that if you are a mechanical /system trader, you trade without emotions..😄😅

Nothing could be further from the truth.

(1/5) Science says we express our emotions in the same six ways. Many believe that when a trader is successful, he trades without emotions.

Let me break the bubble now - one can't eliminate our emotions, nor should you. We have to keep them from becoming destabilizing.

(2/5)

Unresolved Trauma !!

If we live life with the attitude that 'my trauma messed me up (the proper word would be the F word but not in the public domain 😊) and thats why I am the way I am, instead of learning, healing and ...

1/4 .. growing, then we are now the problem. We are not responsible for our traumas but we are responsible for breaking the cycle and not hurting the people that love us.

This is actually very important in trading. Let me tell you how ---

2/4

Recently I wrote a thread about Trainers, coaches, and mentors. Here it is --

https://twitter.com/madan_kumar/status/1559540334832472064

Following up with that thread, I am going to write about a mentor's essential qualities in this one.

Please bear with me for the length of this thread 😊

1/15 1. He cannot be a teacher only. His primary occupation must be trading (albeit a consistently successful trade).

How to figure that out? Honestly, No idea. It is not as easy as finding the sun in the morning, but some of the pointers below might help 😅

(2/15)

Trainers. Coaches and Mentors --

Many folks are back in vacation mode - much needed one actually.

Well, the topic discussed in this 'LONG' thread has not been confabulated much in the trading books/seminars and articles but nevertheless, a very cardinal topic (1/24) Think about this...Before we embark on a road trip, i always wash my car (along with filling my tires with air and the tank with petrol). Not only is a clean machine more pleasing to the eyes, but a clean windshield is more transparent to the eyes 😅

(2/24)

Many get stuck with this three letter word 'EGO' - make no mistake folks, we all have ego😊

But, why it is being despised upon in trading?

When personal self-worth entwines with trading, it sabotages trading

Here is a blogpost i wrote sometime ago

marketswithmadan.com/egoless-tradin…

1/ Usually, traders have inflated ego. Who does not want to tell a great/big story? They tell how grt they are & how they just breezed through the hurdles of trading😊

There are lot of examples of traders with inflated ego bringing everybody(including them) down - sad but true

2/

TA patterns - expectation vs outcome

I have had my fair share of encounters with these patterns in my early years of trading but could never get my head around it. It felt great to see this in hindsight but real markets always looked awry😅

Discretion at its purest form😊 1/5 Identifying these TA patterns is a big conundrum by itself. No question about it.

Hindsight, everything will look like H&S if the probable trade worked and on the other hand, everything will look like no H&S if the mkt moved against the pattern 😅

2/5

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 😊)

2/15

Being realistic about trading
--------------------------------

One of the key mindset required in becoming a consistent/profitable trader is to get realistic about things that happen in the realm of trading.

There are few things we need to keep in mind first

(1/8) Being realistic about

1. Capital reqs
2. Time taken to become profitable
3. Failures

A simple way to get more realistic in trading is to consider it as a 'full-fledged business'. To succeed, one should be no less serious than any other individual who starts & owns a biz

(2/8)

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😊

(2/11)

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.

(2/18)

Internalizing the trading plan --

We all know losses are part of trading. Almost everyone does...Fair enough !!

Stoploss is the small price we pay to the market to know if market wants to move in our favor...simple thought process, isnt it?

1/12 When one gets stopped out of a trade, it is just 'exiting' the trade right? True but there are certain follow-up Qs that can arise in a trader's mind

1. What about re-entering the trade? and where?
2. What would be our trade size(if its gonna change - based on our MM)?

2/12

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.

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?

2/n

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.

2/n

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)

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 😊

2/7

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

marketswithmadan.com/intraday-optio…

1/ 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

2/

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 😅

2/

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

2/