Stock Trading as a Career: My success Story in Options Trading

Stock Trading as a Career: My success Story in Options Trading

Stock trading as a career is not popular in India because it has more social reasons than economical. When someone wants to embark upon a career in stock trading, there are no precedents to tell your parents.

As there would be no sure salary at the end of the month, there is hesitation and uncertainty.

All business has the element of uncertainty.

But their people see some activity, staff, inventory, sale, turnover and it matches their concept of business.

Trading in the stock market does not have inventory, does not have sales in the conventional sense and as most of the traders are the lonely warriors, there is no staff.

So it does not fulfill the stereotype requirements of a business or job.

Hence the lack of social acceptance. And it is tough to take up a career without social acceptance.

This is the social acceptance level of trading that even at the age of 60, you can not engage in your passion if you care for the social norms.

These are just prejudices.

People do not have any knowledge of trading, therefore do not consider this as a good career.

But people do not have knowledge of coding and software also. They are okay with these careers as there is a salary at the end of the month.

They get worked up if you wish to establish a startup business doing what you would be doing a job.

We are not risk takers as a society.

We want others to create and own the businesses while we seek employment.

We are a society of takers, not givers.

And our thought process does not permit us to take up activities like stock trading as a career.

To Summarize:

Risk avoidance and lack of social acceptance are the two main reasons for people not taking up a career in stock trading.

Lack of knowledge about this field is another reason.

Due to lack of knowledge about trading, most people consider it akin to gambling. This again is a reason not to seek a career in such an activity.

As more awareness comes in, the situation may change in future.

 

My Story:

I started trading carrier way back in 2014, I have started in stocks initially but due to the requirement of more capital & less gain, it forced me to trade Options.

Initially, I was trading with blind guessing, which wiped my account several times, but thanks to my mentors who suggested me to trade small initially.

A trader is an inquisitive person. Whether winning or losing, one would still like to know if there could be some better method for trading. For that, a trader has to know himself (herself) first.

Option Buyer has the potential for Unlimited Profit and Limited Loss.

But the probability of the Limited Loss is very high. Option Seller has the potential for Limited Profit and Unlimited Loss.

The probability of profit is higher than that of loss.

So most traders believe that selling Options is a surefire way to win the game.

Remember to be careful about the unlimited loss probability.

It can wipe out your capital. One can be a profitable both ways, by appropriate exit when losing in a trade.

Options are not as complex as they have been made by the creation of strategies.

Strategies are needed for large portfolios.

 

My trading summary: FY18

Here is my summary of trading options, started my performance tracking from June 17 to Mar 18, with a target of multiplying my capital based on my past trading experience form Optin trading,

 

I have created  a trading plan, where I have started with NAV of 1, where you can see month on the month I have been able to gain consistent profits in options trading, here are some of my trade details:

Here you can see how I trade Options, below are some key points to watch for:

  • I do not trade every single trade, I trade only on defined pattern I know
  • I have defined Risk: Reward ratio for each trade
  • I am not winning 100% of trades, my success ratio is just 57.57%

 

Watch video on my trading performance: Click here

 

Well I am also not winning huge percent wins on a single trade, I have trading based on the pattern  formed Intraday with defined risk: Reward, here you can see my percentage wins & loss over the course of trades!

 

 

Here you can observe that I also have losses in trading, everybody has, but no one showcases publically as they post one screenshot of big wins & they are lost over time, Trading is not a one-time activity, to be consistent & profitable trades one should have the edge in trading!

 

My trading strategy:

Markets are on a high. New traders are coming to the markets every day with a dream of huge profits. Beginners luck gives them some profits and then the dream goes bust.

The learning process starts. Looking for Options Trading strategies is the part of that learning process.Every trader goes through it.

Looking for the Holy Grail. Looking for a method which works every time. Looking for sure-fire profits.

Looking for the best Options Trading strategies. Let me give you the truth in the beginning.

There is no options trading strategy which can be called best.

The quest for the best strategy or even a good strategy is an endless pursuit. Every trader whether trading Options, Futures or Equities is looking for a strategy to stay profitable.

Read more about most profitable pattern basedon technical strategies: Click here

Precious time is spent, huge data is backtested and the experts come out with some formula, method or strategy with the fancy name.

The success ratio may improve to 60–65% with best of the strategies. Will they ultimately be profitable? No, if applied blindly.

 

As the sucess of trading is not about strategy it is all about Psychology, here is the bifercation of perfect trading plan!

 

Is Option Trading Really Complicated? 

It is human nature to look for problems where none exist. Life is simple, we complicate it ourselves and then spend our time clearing the mess.

What Do You Want To Achieve? :

You want to be a good trader. Work towards that goal.

You want to learn driving. Learn it. Do not aspire to be Michael Schumacher on the first day of driving.

And do not try to become automobile engineer when all you want is to learn driving.That is where most people waste their time and energy.

For crossing a railway track, look left and right and cross. Do not try to memorize the train timetable just for crossing the track safely.

 

To Conclude:

A beginner should observe the movement of Index and the stocks linked with the Index first. The observations should be made in uptrend and downtrend both.

Subscribe to Free Nifty observation course where you will learn how to trade Nifty options intraday: Click here

After few days of general observations, one should become stock specific. Follow just one or two stocks for about a week and make notes about the movements. These are going to become your bread and butter trades once you have gained enough experience.

There are only two lessons to follow initially.

The only way to make money is to buy low and sell high.

It is a universal truth and needs no proof. Only that it is not very easy to accomplish this in practice.

Keep your loss small and wait for big profit.

Again a simple principle but difficult to do.But no profits will accrue if this rule is not followed.

Secrets in day trading in the stock market

Secrets in day trading in the stock market

Stock Markets are full of experts.

There is fundamental analysis and there is technical analysis. And then there are a plethora of technical indicators and charts.

Armed with so much firepower of data and analysis a trader sets out to trade.

His indicators tell him to enter a trade at Rs. 1130.

It is a day trade.

Same indicators tell him to exit at Rs. 1137.

The exit is done.

The lot size was 750. A profit of 5250 taken.

A good trade.

Only minutes later, there is another surge in price and stock keeps moving up and ends 4% higher at the end of day at Rs. 1175.

The trade which could have given you Rs. 45 was exited after taking Rs. 7 only.

This is what happens with most traders.

Sorry, this is not true.

What actually happens is that if the stock fell by Rs. 40, the trader will book a loss of Rs. 40 but while booking profit, it will be booked at 3–7 Rupees.

Sounds familiar.

It happens to everyone.

Still we do not learn.

After wiping out the initial capital, traders return to market again. This time they come with better technical analysis and better indicators.

The results remain the same.

Profits still remain a distant dream.

 

Why does this happen?

We have made trading very complicated.

It is quite unnecessary.

Most of the traders are small traders. They do not need bucket loads of data to enter one trade to get Rs. 1000–2000 profit.

Even big traders do not need it, but I am nobody to talk about them.

I like to tell stories.

A Small Story : Conversation between two guys A and B:

A: Can you tell me how many sheep are there in this herd?

B: Sure, there are 168 sheep.

A: Real smart. How did you count them so fast?

B: It was easy. I counted the legs and divided by 4. I do it quite often. I am a stock market analyst.

Most of the technical analysis is like the above example.

Doing the simple things in a complicated way.

It is like using a sledge hammer to drive a nail.

The trader gets awestruck by the number of strategies and data points and misses the most important point— Trade.

How to succeed in day trades or What are the secrets in day trading ?

There are two secrets.

They are so obvious still I call them secrets.

Because people are missing the wood for the trees.

They ignore the obvious and go in search of secrets.

I have stated them earlier and I repeat these two facts without following which, no profits can ever be made:

  1. Buy Low Sell Higher.
  2. Keep the loss in losing trade lower than the profits in winning trades.

Without (1), there can not be any profits.

And (2) is about loss management.

Some trades will go wrong and some will go right. Maintain the risk reward ratio.

Let me keep it simple.

Exit the losing trade at a fixed loss.

Keep waiting in a right trade. Protect the profit by trailing stop loss. Do not exit till the move ends or the day ends.

Easy to say but difficult to practice.

But who said making money was easy?

Profits will take care of themselves.

To understand more clearly on how to keep it simple stupid, watch below video!

 

Top 10 facts about F&O trading!

Top 10 facts about F&O trading!

Following are the top 10 things to know about F&O trading before entering into trading, these data were analyzed from NSE India, these data will help to identify the most volatile & liquid scripts to trade!

 

Nifty Index futures have a leverage of 12.5 times for overnight positions. For intraday positions, you can get a leverage of around 31 times. Effectively this means that you can either lose or make 100% if the price moves by 8%. However, if you take on extra leverage, you can make or lose 100% if the price moves by 3.2%!

 

Stock futures on an average have a leverage of 8 times for overnight positions. For intraday positions, you can get a leverage of around 20 times. This effectively means that you can either lose or make 100% if the price moves by 12.5% for overnight positions and 5% for intraday positions.

 

Options are more complex than futures. Learn more about time decay and option greeks before you start trading aggressively.

 

Always square off your In the Money options positions before expiry. Otherwise you will pay a hefty sum as Securities Transaction tax which is unreasonably high.

 

Open interest analysis helps gauge the demand/supply of the underlying. It is extremely useful to trade options. Read more about it here.

 

Option Strategies are underutilized by retail traders. It is a more sane approach than directional trading.

 

Maximum positions by retail traders are in Nifty & Bank Nifty contracts.

 

Derivatives contract expiry in a month. However, currently Bank Nifty weekly contracts expire every week. Going forward, Nifty weekly contracts are expected too.

 

Futures has mark to market settlement whereas options buying doesn’t.

 

If you don’t square off your own position, the broker will square it off based on their margin policies.

Trading provides liquidity and as a consequence true pricing in the market.

 

Following are the key insights about Future & options trading data analyzed from NSE India!

Exact data regarding percentage of full time trading by people may not be available, but enough information is there on NSE web site to tell us that bulk of the volumes are generated by trading.

Total turnover in Futures and Options is shown as Rs. 3,73,908.05 Crores.

It is also seen that in Option trading, it is the Index Options which generate more volume, whereas in Futures trades, Stock Futures are about 4 times the Index Futures.

Thanks for reading, Subscribe for more updates on F&O trading!

 

What should one have before entering into F&O trading?

What should one have before entering into F&O trading?

Options trading is the most lucrative business anyone could ever have in their life, provided you know how to entering move the right pawns at the right time. One can bring consistency in trading provided they have the skills, technological advanced and the mentality to stick around in any situation whatsoever. So let’s jump in to understand how to learn options trading.

 

But the well-known secret is where to trade options and what gives you the information to trade particular option.

 

There are traders of different types, who trade in different instruments and time frames, I am sharing my experience purely from an Intraday Index trading experience.

Personality Fit :

 

Sitting for hours in front of the screen for 5 to 6 hours at least.

Ability to manage stress all through.

Ability to take decisions on ones own and in stressful situations

Ability to spend time with oneself  reflecting LiveJournal

Ability to spend hours reading, analyzing, researching by oneself

Follow a routine and be serious about the business of trading, by putting in hours day in and day out for at least 2 to 3 years to start with.

 

 

Technology for trading:

A Laptop or a PC configuration

 

Basic laptop with at least 4 GB of RAM and 500 GB of storage space

Affiliate link: Lenovo IdeaPad 520 15.6-inch Laptop (7th Gen Core i5-7200U/8GB/1TB/Windows 10/4GB Graphics) 

 

A fast speed Broadband connection which stream the live price movements of stocks from the exchange.

High speed internet connection, preferable 4 G got better access

Affiliate link: TP-Link TL-WR841N 300Mbps Wireless-N Router

 

The next question is the knowledge of trading options. I have given you almost everything you need to know about trading options with respect to the theory in the video on YOUTUBE!

However you will still not be able to trade options a right out of the bed.

Like a child grows there are stages of you knowing the knowledge of trading options.

  1. The first one is the knowledge of Technical Analysis.
  2. Next big thing is to know why trade Options!
  3. How to trade Options!

 

Subscribe to my blog to get latest updates about trading,

Watch more about technical analysis in the following video!

 

Thanks for reading!

24 Basic Stock Market Trading Terms You Should Know

24 Basic Stock Market Trading Terms You Should Know

Learn these basics term first and then continue to expand on that knowledge throughout the program. Here are basic 24 terms that you need to know if you want to be a profitable trader.

 

  1. Averaging Down: This is when an investor buys more of a stock as the price goes down. This makes it so your average purchase price decreases.
  2. Bear Market: This is trading talk for the stock market being in a down trend, or a period of falling stock prices. This is the opposite of a bull market.
  3. Beta: A measurement of the relationship between the price of a stock and the movement of the whole market. If stock XYZ has a beta of 1.5, that means that for every 1 point move in the market, stock XYZ moves 1.5 points and vice versa.
  4. Blue Chip Stocks: These are the large, industry leading companies. They offer a stable record of significant dividend payments and have a reputation of sound fiscal management. The expression is thought to have been derived from blue gambling chips, which is the highest denomination of chips used in casinos.
  5. Bull Market: This is when the stock market as a whole is in a prolonged period of increasing stock prices. Opposite of a bear market.
  6. Broker: A person who buys or sells an investment for you in exchange for a fee (a commission).
  7. Day Trading: The practice of buying and selling within the same trading day, before the close of the markets on that day. Traders that participate in day trading are often called “active traders” or “day traders.”
  8. Dividend: This is a portion of a company’s earnings that is paid to shareholders, or people that own Hat Company’s stock, on a quarterly or annual basis. Not all company’s do this.
  9. Exchange: An exchange is a place in which different investments are traded. The most well-known in the INDIA are the SENSEX & NIFTY.
  10. Execution: When an order to buy or sell has been completed. If you put in an order to sell 100 shares, this means that all 100 shares have been sold.
  11. Hedge: This is used to limit your losses. You can do this by taking an offsetting position. For example, if you hold 100 shares of XYZ, you could short the stock or futures positions on the stock.
  12. Index: An index is a benchmark which is used as a reference marker for traders and portfolio managers.
  13. Initial Public Offering (IPO): The first sale or offering of a stock by a company to the public, rather than just being owned by private or inside investors.
  14. Margin: A margin account lets a person borrow money (take out a loan essentially) from a broker to purchase an investment. The difference between the amount of the loan, and the price of the securities, is called the margin.
  15. Moving Average: A stock’s average price-per-share during a specific period of time. Some time frames are 50 and 200 day moving averages.
  16. Order: An investor’s bid to buy or sell a certain amount of stock or option contracts. You have to put an order in to buy or sell 100 shares of stock.
  17. Portfolio: A collection of investments owned by an investor. You can have as little as one stock in a portfolio to an infinite amount of stocks.
  18. Quote: Information on a stock’s latest trading price. This is sometimes delayed by 20 minutes unless you are using an actual broker trading platform.
  19. Rally: A rapid increase in the general price level of the market or of the price of a stock.
  20. Sector: A group of stocks that are in the same business. An example would be the “Technology” sector including companies like TCS and INFOSYS.
  21. Spread: This is the difference between the bid and the ask prices of a stock, or the amount someone is willing to buy it and someone is willing to sell it.
  22. Stock Symbol: A one-character to three-character, alphabetic root symbol, which represents a publicly traded company on a stock exchange.
  23. Volatility: This refers to the price movements of a stock or the stock market as a whole. Highly volatile stocks are ones with extreme daily up and down movements and wide intraday trading ranges.
  24. Volume: The number of shares of stock traded during a particular time period, normally measured in average daily trading volume.

 

These are basic terms related to trading, Learn more about technical analysis form my YouTube channel where i explain with real case studies.

 

Thanks for reading subscribe to receive daily updates.

The right trading mentality

The right trading mentality

How to Mentally PREPARE before starting Day trading:

 

People get attracted to stock markets because they are under the impression that this is where they can make a fast buck. In other words, they are attracted by the aspect of quick, big profits.

People come to stock market with only one objective and that is making money, forgetting all that is required for doing so successfully. They forget that it is there hard earned money and forget the mental torture that a person has to go through if it does not work out properly.

This casual attitude surprises me. When it comes to buying a mobile phone, the same people would thoroughly check the pros and cons of the device. But when it comes to stock markets, we only see the pros and not the cons. This is a recipe for disaster.

Therefore I believe that before you decide to enter the stock markets, you should consider these three factors:-

  1. Are you mentally prepared for stock market?
  2. Are you physically fit for the stock market?
  3. Are you financially fit for the stock market?
Investment:

Once you start investing, there are many indicators, charts and techniques that tell you what should be done next. There are various sites where you get daily calls but I would suggest you to rely only upon your information, knowledge and experience.

 Terms related to share market :-

Open, high, low, close, intraday, delivery, leverage, Japanese candlesticks, charts, indicators-{super trend, momentum, moving averages, MACD, stochastics, Bollinger bands, RSI }, heikin ashi chart, equity cash, margin trading, BTST,(t+1) settlement, (t+2) settlement, market capitalization, beta, bid price, offer price, dividends, EPS, face value, P/E etc..

As this stream is very vast, everything will be discussed here in detail context.

Following are the topics which will be discussed in my blog in coming future:-

  • how to trade,
  • which stock produces best results,
  • best broker,
  • when to invest,
  • how to choose the right stock for the day,
  • Which books to read and more about stock market…contact me…
Intraday Trading:

Intraday trading is one of the most risky segments in the market but with proper knowledge, technical analysis and your own strategies, you can definitely earn a decent amount of money from intraday trading with rigorous practice and experience.

Many people trade by the ‘I know it all Syndrome’ which is the worst thing. They trade just by intuition and inner voice without analysis. This could be a recipe for disaster.

It is not possible that you will earn only profits and incur no losses.

Every trader incurs losses in the market. Accept the losses and move ahead. Your aim should be to maximize profits and minimize losses.

Strict stop loss and trailing stop loss should be implemented to drastically minimize your losses.

It is not an easy rather uphill task. Not only knowledge but experience is what counts. Master the technique of decision making in the market and you will be successful.

It takes time, have patience. Don’t give up.