Comment on Mr Consistent returning incredible returns
commented on
29 Dec 2013, 05:54 PM
Vinay,
First of all, welcome to the markets. You are one decade younger to me and i wish there was someone who told me about markets when i was your age 🙂
1. With 20k, you don’t even have enough margin to buy a Nifty lot and keep it overnight. So, please increase your capital base to atleast 1Lac. Lets assume it takes around 12 months to do that.
2. While you are building up that capital, read couple of books like ‘Trading for a living’ , ‘Trading in the Zone’, ‘Psychocybernetics’ and few more. Start implementing the ideas discussed in psychocybernetics – basically visualizing as if you trade properly with fine details (some form of meditation, you could call)…This is not some crap i am making out of thin air..this is being practiced by almost all the achievers in every field..esp. in sports..Trading is also a performance related activity like sports.
3. Promise to yourself that you won’t put up a trade until your capital reaches 1L…not when it is 90K…Biggest bane for newbie traders is the ‘urge to trade’. If you can have the trading capital of 75k-80k and still not trade but just patiently read books, understand things and watch the market – i think you won half the battle.
4. I know the next 12 months would be agonizing to just patiently watch the market and do nothing else…basically, you are developing an important virtue called ‘patience’ and you are learning how not to trade at your every whim and desire (very important)
5. Don’t waste your money on tech analysis courses. You can learn much more than that from books.
6. Once you reach 1L or 12 months (whichever comes first), it time to think about what to trade..if you are sitting on hands for the past 1 year, you probably would have identified the instrument you want to trade. For convenience purpose, lets assume its Nifty futures. I am assuming Nifty futures as most of the newbies automatically lean towards buying NF options for obvious reasons.
7. Based on our assumption of trading NF, start with only 1 lot. By that time, you would also have identified a system/idea/strategy (backtested) to trade NF and start implementing the idea. Here, you would start feeling emotions like fear of losing, greed, euphoria and so forth.
8. There is absolutely no way to handle the above mentioned emotions without experiencing it and market would take away your money while teaching you about these emotions. No choice.
9. Assume that you lose your 1L and if you still want to trade the mkts (most of them wanna come back to mkts to recoup the losses but the right reason is the ‘passion’ one has for the mkts), then rebuild the same 1L capital and come to the mkts. There is a thin line b’ween ‘addicition’ and ‘passion’ and it won’t make sense to you now.
10. This new 1L may last for a while. It depends on whether you are learning from your first account blow-up. If you have not learned anything from the first blow-up, mkt will again take all your money. But if you are learning from the mistakes and vow to yourself that you will never repeat the same mistake, you are much better off than previous phase and the learning starts.
11. Eventually, you will attain a point where the losing would be minimal but you would still not win much..but, keep at it and you will be probably on the way to making money in the mkts.,
12. Assumption 1: I have assumed that you trade the second account because you have ‘passion’ for the mkts and not trading to recoup the losses.
13. Assumption 2: I have assumed that you put in the work to identify your personality (some ppl like short term trades, some ppl are swing and some are long term) and also have identified an idea (lot of work involved here too).
14. Assumption 3: I have assumed that after1 year, you would have stopped looking for a better idea (ppl call it ‘search for the holy grail’). But, if you are still looking for that idea which rakes in money every trade, you are still stuck in that vicious cycle.
15. Assumption 4: I am assuming that you would have learned how to manage your risk in every trade (money mgmt)
Contrary to the popular belief of newbies, trading is not that easy. Millions of people all over the world come into markets to make their next million in a short period of time and they also vanish in no time. So, if what i have said is not correlating with your belief on trading so far, you are not alone. So, atleast for your sake, get ready to put the work in and you would be rewarded with fruits (no timeframe can be predicted here)
I wish you good luck and hope that you could persevere the next few years !!