What does it take to win at trading?

June 26, 2020

Hindi: इस पोस्ट को हिंदी में पढ़ने के लिए यहाँ क्लिक करें।

Contrary to what most people think, trading the markets isn’t easy. The stock market is probably the toughest place in the world to make easy money, especially in the long run. While opening and funding a trading account is perhaps the easiest way to start a “business”, making money trading isn’t.

What is the difference between trading and investing?
I think if you enter a position with a time frame in mind (typically shorter-term) to exit, it is a trade and not an investment. For example, if you buy a house to live in with no intention of selling, it is an investment. If you buy a house just because the price is attractive so that it can be sold when the price rises, it is a trade.

Countless people have been lured to the markets by mis-sold dreams of getting rich quickly and achieving financial freedom. The ease of getting started adds to this allure. Here is the thing though: less than 1% of active traders earn more money than a bank fixed deposit over a 3-year period. While this percentage seems abysmally small, it is, in fact, similar to the success ratio of ordinary businesses; just that the ease of entry entices a large number of people to give it a shot.

I’ve been a trader for nearly 25 years now, most of my adult life. I’ve been immensely lucky to have interacted with thousands of traders in this period, both before and after starting Zerodha. I felt it would be a good idea to share with you the learnings from all these interactions and my own successes and failures as a trader.

Define a hard stop — money & time

Markets can remain irrational longer than you can remain solvent – John Maynard Keynes

The best traders I know are those who stopped trading when they knew that either they are not good at it (they lost money) or they didn’t enjoy it. They didn’t wait for huge losses to force them out of trading. Like how not everyone can play a sport or make music, or run a successful business for a living, not everyone can profit trading the markets. Stock markets are like a black hole where you can potentially lose unlimited amounts of money if you aren’t good at trading. So make sure to define and stick to a sensible stop loss, an amount you can afford to lose, and a time period you will wait to turn profitable, more so, if you are a beginner.

Have a stop loss on every trade as well

Two basic rules when trading: (1) if you don’t bet, you can’t win. (2) if you lose all your chips, you can’t bet – Larry Hite

I had the luck of hosting this podcast with Jack Schwager — author of Market Wizards, a must-read for any aspiring trader. I concur with what he says in this conversation after interviewing some of the best traders in the world — “you should make sure that you don’t lose more than 1% of your trading capital on any trade”. The larger your losses get on a trade, the higher the chances of you acting irrationally during or after the trade, so much that it can potentially ruin your trading career.

And for those who buy call or put options, placing a 1% stop is only possible if your buy option trades are never more than 2% to 3% of your trading capital. Remember, buying naked options is almost like buying a lottery ticket. If you had one lakh rupees, how much of it would you spend on buying lottery tickets?

Stick with the trend

In trading, what is comfortable is rarely profitable. – Robert Arnott

Intuitively, we are tempted to buy stocks whose prices have fallen and sell those which are expensive. While it might be a decent strategy when investing for the long term, it reduces the odds of winning when you trade short term. Stock prices tend to trend, i.e., move up or down in one direction for long periods. Going against the trend — buying a falling stock, or selling one that is going up, is a bad trading strategy.

A common beginner strategy is buying stocks which are at their 52-week low. The thought process being that the prices that have fallen are bound to bounce back up. This is probably one of the worst trading strategies ever. While we are all wired in our heads to buy when something is on sale or has a big discount, the optimal way to trade stocks is buying those that are doing well (going up) and selling when they are not (going down).

Averaging down is a wealth destroyer

Don’t throw good money after bad.

“Averaging down” is when you buy a stock at 100 and buy more as the price falls, say, to 90, some more at 85, and so on; buying more in hopes that a bounce will help recover the losses faster. Unfortunately, hope isn’t really a trading strategy. Stock prices tend to trend (go up or down for long periods), and buying more as it goes down may work out once in a while, but is generally a losing strategy in the long run. Buying more of the falling stock is essentially you trying to fix a trading mistake, which could have been avoided by having a stop loss. What makes it worse is that retail traders typically end up selling stocks which are profitable to average down on ones which are losing (also called the Disposition effect).

At least when you average down on stocks, you can afford to give it time to bounce. But when you buy stock or index options that have a limited time to expire, this strategy of averaging down is a sure-shot recipe for disaster.

To win at trading the markets, the idea is to hold on to winners and cut loose the losers, and not do the opposite. I’d even go on to say that averaging down is the single biggest wealth destroyer for retail traders. Check out this post on lessons from trading Yes Bank illustrating this.

Leverage is a WMD (Weapon of mass destruction)

Money can’t be the goal; it has to be the process.

Leverage (including futures & options) is trading with more money than what you have. It is extremely dangerous in the hands of someone who doesn’t know how to handle it well. While it might lure you into believing that you can make substantial returns quickly when right, the fact is, you can go broke on a single bad trade if you’re over-leveraged. If you speak to any active trader who has stopped, he or she would most likely tell you it was because they traded with too much leverage. If you do decide to use leverage, make sure to use it sparingly and only when you are really confident about the trade. Even then make sure to have that stop loss!

Combining fundamentals with technicals

Buy on rumours, sell on news

Many beginner traders start their journey in the markets by learning fundamental analysis, the most popular strategy being Price to Earnings (PE) ratio. While fundamental analysis is an excellent way to invest for the long term, it isn’t for short term trading. For example, stocks that have a low PE can maintain that low PE and keep going lower for extended periods becoming even more attractive, while the stock price continues to fall. If you did wish to use fundamentals, it is best to mix it with some Technical Analysis (TA).

TA is based on the fact that markets discount everything and is reflected in the price (you don’t wait for the news to buy, you buy when prices go up (rumour) and then sell when it goes down (typically when the news is out)). Most TA strategies don’t let you trade against the trend. So by mixing in TA, if you did decide to buy a low PE stock, you would buy it only if the price of the stock is going up. For example, if the price is above the 50-day moving average (a simple TA strategy) — a trading strategy with much higher odds of winning than buying a stock just because it is low PE.

Just trading the price irrespective of what the stock is, isn’t a good strategy either. Penny stocks (companies with less than Rs 100 crore market cap and mostly with no real business) are wealth destroyers as well. These stocks are generally manipulated and tend to go up fast and then down even faster without even giving you an opportunity to exit. If Fundamental Analysis is part of your trading strategy, you’d end up avoiding such stocks.

Avoid stock tips

Always start at the end before you begin (think of all possible outcomes and be prepared before taking a trade). Professional traders have an exit strategy before every trade. – Robert Kiyosaki

While “advisors” who claim that they can give you stock tips that can generate high returns or make you quick money are a dime a dozen, it hardly ever plays out that way. When trading on a tip, you wouldn’t know the reason to enter, and hence wouldn’t really know when to exit, the most crucial part of the trade. Most of us are terrible at following advice as well, which means if you somehow found an advisor who gives good tips, you might still not follow it properly. Either way, this generally doesn’t work out well. Also trading on tips is almost like being spoon-fed, your learning curve and growth as a trader suddenly plateaus. More importantly, the bulk of the unsolicited stock tips dispensed on social media and as text messages are “pump and dump” scams. These scammers drive the stock price up by generating hype via tips, only to dump large blocks they hold at a profit at the expense of the traders who fall prey to it.

Diversify

Don’t put all your eggs in one basket.

If you are creating an active trading portfolio of stocks, ensure that you don’t have more than 10% of your trading capital in any one stock. Make sure that not more than 25% of the portfolio is exposed to a single sector. While diversification might reduce returns, it also reduces risk. Lowering risk has to be the most important prerogative in the first few years, as a beginner trader. Think of it this way: you have to go through 16 years of education before finding a job. Similarly, you need to give yourself time and chance to learn and grow as a trader. But you can get that time only if you survive trading long enough, and that is possible only if you reduce the risk as much as possible.

Compulsive trading & bet sizing

Many times, no trade is the best trade.

Trading is extremely addictive. Most traders enter trades just because there is nothing else to do that was more interesting or exciting. It is imperative not to become a compulsive trader. Take breaks whenever you feel trading is taking over your life. If you are finding it tough to stop trading altogether, reduce your trading size to 1/10th when you know you are trading just for the heck of it.

By the way, this strategy of changing the size of the trade based on the situation is called “bet sizing”. Essentially, not trading all the time with the same quantity — decreasing bet sizes when you have a drawdown (losing streak) or when you’re not confident, and increasing them when you are on a winning streak and confident about your trades. Having a bet sizing strategy will improve the odds of you being a winner significantly in the long run.

Have alternate income to improve your odds of winning

Confidence is not ‘I will profit from this trade.’ Confidence is ‘I will be fine if I don’t profit from this trade’. – Yvan Byeajee

If trading and making money is tough, making a living off trading is many times tougher. Very few succeed under the added pressure of having to earn from trading to put food on the table. This decision of trading for a living should be taken only when there is large enough trading capital, a source of income to cover your lifestyle, and hard stops in place. Even when all this is in your favour, it isn’t a decision to be taken lightly. The alternate source of income could be from a fixed income instrument, rental income, a salaried job, or anything that reduces pressure on having to earn a profit on every trade. In my experience of meeting countless traders, most of those who were profitable were also those who had another source of income.

And finally, remember that trading isn’t life. Trading is an exciting way to generate income. If you don’t enjoy it or are losing money trading continuously, stop it. Don’t let bad trades or missed trades affect your personal life. As they say, opportunities always look bigger after they have passed. And remember, there is always another trade; if not on the stock markets, something else entirely.

If you are a beginner, make sure to go through Varsity, our education portal on everything you need to know to get started trading and investing. For those trading for a while, make sure to go through this collection of Innerworth newsletters on trading psychology. They are amazing. If you have any follow on questions, you can post it here on TradingQ&A.

Happy trading,

Nithin Kamath

CEO @ Zerodha and partnering startups through Rainmatter to help grow and improve the capital market ecosystem in India. Love playing poker, basketball, and guitar. @Nithin0dha on Twitter.

241 comments

  1. Prashant says:

    I an a beginner, I want learn from the scratch

  2. J d savani says:

    Please hindi me

  3. NRUSINGH says:

    i want to learn

  4. Tapovan vashisht says:

    Thanks. feels like u wrote what’s my experience is

  5. Bala R says:

    i WANT TO LEARN

  6. Manish says:

    I want to learn fundamental

    • Matti says:

      Check out the module on Fundamental Analysis on Varsity. 🙂

    • Amar says:

      You start with some trades or you won’t ever learn.
      Author’s suggestion about FA and TA are a good start.
      My sincere advice is that don’t visit moneycontrol message board. Thats the place where you would get the shittiest advices from a whole lot of effed up people.

  7. Sirinivas says:

    Very good lesson sir. … I like you ..zerodha. .. and team

  8. AKASH Banerjee says:

    Outstanding writing with detail explaination and quotations

    • Om kundra says:

      Thanks for the very needed words as i am in exactly in loss side situation and will stand strong in future life by taking all types of breaks.

  9. Arvind says:

    Nice info. its very helpful for new trader.

  10. Ravikumar Rai says:

    Its my dream to work with zerodha …

  11. Divyank says:

    In one of your posts, perhaps in an interaction with other colleague, you mentioned you never used stop loss in your trading life, but here you promote it. How can this doubt be resolved?

    • Karunakar says:

      Probably he is confident about his trade and that’s why he didn’t put stop loss.!

    • Matti says:

      Hey Divyank, nice question. Please post it on this Trading Q&A thread. 🙂

    • Yugansh says:

      Good question

      That’s a personal choice actually, but as a sound advice written in the form of this article he’s right

    • Shaurya says:

      He left trading for a reason & became a broker. That should tell you something.

      But please always define your risk. Always have a stop loss.

      • Gursharan says:

        Shaurya, you got it right. That’s what lot of ‘successful’ traders do – become brokers or advisors or trainers/coaches or portfolio managers. Because they all know that the real game is not in trading, but into making money from those who aspire to trade/invest.
        In their tutorial literature/videos – they will tell us DOs and DONTs”. But they won’t tell us that even if you get good amount of DOs right – you might still not make much money. They won’t tell you how exhausting it can be to get DOs right.
        Making money from trading alone for a life-time is not impossible. But it’s too much grind. That’s why eventually many successful traders become advisors/brokers. I like Zerodha folks a lot. But even these honest folks won’t tell you the real reason they gave up (or reduced) trading on personal basis.

        • Matti says:

          We’ve never hidden the fact that trading is a difficult way to make money. In fact, we even say in this post: less than 1% of active traders earn more money than a bank fixed deposit over a 3-year period

  12. Akash More says:

    I want to learn

  13. Yogeesh says:

    Great info…

  14. Ravinder Singh says:

    I am new in this Field I want to learn more

  15. Dr Shreya says:

    I loved ds article. Was helpful. Thank you

  16. Pankaj says:

    I m beginner

  17. J Singh says:

    I start at my own in Jan 2020, I found this fruitful…

  18. Ramu kuja says:

    I want learn trading I am losses 1.5l

  19. SUJAY SHAW says:

    start with zerodha varsity

    • Nesan T. B says:

      Great write up. At a time when getting into trading in stock market is growing phenomenally, not realising risks involved, this article has come as a speed breaker. Without learning and patience Stock market can create huge losses. Thanks for the timely advice.

  20. Learner says:

    How do I learn technical analysis?
    Are there courses in z connect I can use to learn and then leverage?
    Are there any recommended books?

  21. RAGHUNATHA M K RAO says:

    A very good initiative. Instead of learning from other sources, it is more comfortable to learn from our own Brokerage house. This is because of the high level of comfort I derive as it is from the horse mouth who is my trusted Brokerage House.

    Thank you once again for this excellent initiate. Please keep updating.

  22. Prashant says:

    Dear sir.

    Is the Intraday is best for money making. Or
    Long term Holding is important to money making.

    Which is the best.
    I am beginner….
    And i am gaining a profite…

    Suggest me which is the best???

    • Ankur says:

      Short-term or Intra-day trades given their huge risks involved can guarantee smaller amounts of earnings over a normal time period.

      Investing or holding stocks for longer term more than 5 years, is a slow but better than bank’s FD rates. But the catch is you need to learn about how to pick growth stocks/value stocks for a long run.
      Read books, read varsity app, follow the news and then decide where you want to invest.

      Both methods have their own pros and cons. Its just about an individual, what is his liquidity level and the target returns.

      Good Luck

  23. Ramakonda says:

    Good

  24. R.S.V. KUMAR says:

    I am a beginner & want to learn from the scratch

  25. Ramkishor says:

    Very truely advisable points for every Traders and investors..

  26. Shankar N. Bhaire says:

    I am newly learning
    and god lot of loss
    will try try and win

  27. Abhilash.E says:

    I want to learn

  28. Vikas says:

    Excellent insights for a beginner like me. Thank you Nithin for taking time to jot this down.

  29. Parag says:

    Excellent article Nithin. Love your posts and especially the content in Varisty app. Keep writing and spreading the wisdom.

  30. Sachin Thakur says:

    Wonderful 👍

  31. Abhimanyu Kumar says:

    I am learning

  32. sathish says:

    thanks bro

  33. Gagan yadav says:

    Thnq sir for valuable inputs I have learnt that many people in the market are forced investor since they take a trade for short time and it goes wrong . They have to hold it for long and feel the stress of mkt. Since March many newbie accounts have opened and they will be suffering huge losses when small caps and midcaps will turn their journey. I request you to guide these beginners and save them from hands of operators by making good videos on new investment in stock market. I know much material is available in varsity and learn app but still needs it from proved hands. Thanx for enlightening many lived through ur valuable experience and information.

  34. CShekhar says:

    Hello sir,
    I think, I am an longterm investor so what are the perameters that I can find a stock like MRF. And what is the technique to raise my holding in winning stocks and reducing loosing stocks.

  35. Santosh chowdhury says:

    It’s a well written article but the important part for any trade and trader is dicpline, pragmatic approach, trading plan to include loss management,mental robustness, ability to think it through in crisis which separates the winners in the market by huge margin.. hence 5-10% make money rest get lost in the wilderness

  36. aswathanarayana kn says:

    I WANT TO LEARN & EARN IN OPTIONS

    • mukesh2400 says:

      There are lots of learning material in this site, explotre it , its very very good material we have in this site

  37. OMKAR RAM MAJAGE says:

    Excellent words fir beginners like me.. thanks for the inputs..

  38. saravanan says:

    I have recently started intraday with only technical analysis and I am not able to win. I have spend time and studied the fundamental and technicl together. Also, I entered into option where the the pressue of closing the entry is not there. I can abale to consistenety get good margin. Yes, I agree. there must be proper study and disicpline. The varisty material has helped lot understanding option. Great.

  39. Bharath says:

    Really helpful and almost every point mentioned here cleared my dilemma whether to trade or to invest. Thanks

  40. mukesh2400 says:

    If we read and follow all above , we have handsome winning ……..

  41. Prakash says:

    ap k sab app english m h, kaise sikhe ye to vaisa ho gaya jaisa sirf convent school vala hi stock trading
    sikh sakta h

  42. ANKIT SINGH says:

    I WANT TO LEARN…

  43. Rohit says:

    Sir please bring drag and drop in zerodha then it will awesome no any can fight in future and right now

  44. Rahul says:

    Many people misguide on YouTube showing thousands of profits in intra day. People need job and money so they jump in stock market and result every body knows.

  45. Ravindra Kakran says:

    If you have money in lakhs then don’t trade, you should go for investment, because trading is a big game. You can,t beat big players .
    If you have enough money for game changing then you play, like a smart player.

  46. Pratik says:

    Amazing. Just what i needed.

  47. srinivasa B V says:

    Such advises are useful to the beginners like me.
    thank you.

  48. Raghavendra says:

    Nice one, looks simple to read, but follow it definitely you will be successful trader – Trader

  49. Rahul B says:

    Precious advise ! Worth a lot !

  50. Roopam Marewad says:

    Very useful knowledge. Thank you for sharing.

  51. Harish Moolchandani says:

    Well written. I see most of articles are written by you and in every article I learn something valuable.

    As I’m a beginner in trading, I can relate to most of these points.

    Kudos to you, keep writing articles like this to encourage us more.

    Happy trading.

  52. Santosh Garad says:

    आपने जो लिखा है वो बहुत बढीया है मुझे समझने में और ट्रेडिंग करणे आहोत साहेब आता मिलेगी धन्यवाद

  53. Santosh guded says:

    Sir
    Last 10 months I am trading through zerodha I have seen some losses during this period that I have stopped trading few days n some webinar attended they classify emotions control and stop loss etc
    Today am doing little with capital amount going well not stressed very equipped less or profit but am doing job making other source i capital income . This webinar very clear sending msgd new beginner thank you

  54. Mohit says:

    I want to learn more about fundamental and technical analysis.

  55. Bala says:

    That’s why I don’t trade any particular stocks. The whole market is manipulated by punters, so called experts, HF traders, AMCs, brokers, and so on. Rationality doesn’t exist in the markets. I trade only for the fun and not for making money. The fun of watching the height of stupidity!

  56. Abhilash R says:

    Be different and be a Beast 👊. Invest time for trading stocks and learn from each loss you incurred. Think of the time you spent as the duration of the course and loss as fee for mastering it. This is the way I recommend anyone who wants to be a successful trader. Don’t learn from others as real experts don’t spend time for teaching novice instead they make millions without anyone knowing about it. All the best.

    • Ram S says:

      True

      Being successful for long run requires self learning and realization.

      Initial loss can be be considered as tution fee or expenses if running business

  57. Ashwini Toppo says:

    It is a very interesting article. It has grain of truth. Very few people make money in the stock market and also very few earn a living from stock. I am a beginner but fast learner and avid reader and with good analytical skills. First thing, I am taking stock market not as a hobby but as a profession. And I want to make a living from this. These are my observation. Stock market wants full attention it can’t be taken as a hobby or side job. Secondly each person has a style – as a stock trader we have to find that style which is in sync with our personality and helps us win. Analysis of all success and failure is key in making profit. We do make mistakes so it is important to have spare cash which can be mobilized to save the invested capital. As I said I am new in this game – but going is so far so good. I have a feeling that on consist basis I can make more money here than anywhere else. And I am betting on this.

  58. Nityagopal Sarkar says:

    When is the proper time to trade for a beginner. Give me some guideline in chronologically.

  59. Shiva.g says:

    Nice auticle and since I’m beginner in the trading and I have done most these mistakes what you told thanks

  60. Shiv says:

    Thank you for this article. Every word from Zerodha is precious 🙏

  61. Deep Patel says:

    The world needs more business man like you.
    Thanks a lot Nithin.

  62. rajiv kadam says:

    I have tried to buy the stock which are in uptrend but suddenly when I buy uptrend stock for Trading purpose and next day it goes down from my purchased price.

    • Suraj Kumar says:

      To avoid loss use Stop Loss or Trailing Stop loss it will reduce your loss and keep you safe from a long down trend.

  63. Naveen Kumar Shetty says:

    I am a beginner, I want to learn from scratch

  64. Hemant says:

    Brilliantly explained

  65. PARAS SHAH says:

    this article is amazing. every new trader has to read it on regular interval and understand it will. because i pass through it and it is difficult to get up by following down. it is better to not following down. thanks for such good article

  66. Manu says:

    Thanks for the wonderful article. Appreciate your efforts helping both traders and investors.

    But many a times, BO type is blocked which otherwise makes it easy to set stoploss.

    Also in GTT can you also provide option to enter value in place of %
    Thanks
    Manu

  67. vishwas Ramesh Karve says:

    Sir,
    I have a demat account in with khambata securities but now I am doing on my own so I don’t have that much experience I u guide I will pay for it

  68. Santosh palled says:

    Very informative thank you for a good article..

  69. vishwas Ramesh Karve says:

    now I have account in zeroda in this month

  70. Raju says:

    Nice article. Must read for all the beginners. Covers almost all mistakes a trader can make.

  71. Prakash says:

    I am a newbie in the stock market, but I have loads of experience from another field of speculation which is perhaps more difficult.

    The reason for writing this feedback is your comment about the leverage. Since I take what you write very seriously, I am really shocked you saying leverage is the dangerous thing. My opinion is that leverage is a fantastic thing if your stop loss is in place. I fail to see how one can lose more because of the leverage if your stop loss is pre-decided, in your comfort zone, and set meticulously. Can you explain how leverage will make one lose more than the stop loss?

    • Prakash says:

      Mr Nithin, can you please spare a minute to answer my query? I am seriously puzzled. Thanks in advance.

      • Matti says:

        Leverage is a double-edged sword, Prakash. While you can make profits with it if you use it right, you could also end up over-extending yourself, which is what a higher proportion of traders do end up doing and eventually busting out. Hence the caution.

  72. Sheik Mohaideen says:

    A good article…. but the fate is beginner’s wont believe that if we tell the reality of market is not ‘easy money’ they will think that that we are discouraging them…they will realise only they hit huge loss…

  73. Bhargavaram says:

    Sometimes no trade is a profitable trade..100% true.

  74. Shamim Akhtar says:

    I am a beginner.Nice auticle and since I’m beginner in the trading and I have done most these mistakes what you told thanks

  75. Selva says:

    அருமையான பதிவு நன்றி..இது ஒரு உண்மையான தகவல்

  76. Abhishek Dubey says:

    Being a Broker sharing such an article only goes to show how good are principles of Zerodha and it starts from the Leader. Thanks Mr. Kamath

    I am a loser since i started 2 years back and short by 2 lakh but i still see that as my course fees and it was 8% of 2 years take home salary

    Still Learning. …..

  77. Prakash says:

    Hum sirf apk zerodha k brokerage k liye hi trade karte h Nithinji.. profit to hota hi nahi, kitna bhi strategy use karo bade bade trader k video dekho, sab dhokha hai.., bade trader, exchange, government aur brokerage house hi kamate hai hum nahi, hamara LOSS hi inka PROFIT h.. mere jaise chhote trader to thoda thoda paisa bachak shares m lagayenge aur phir THANN-THANN-GOPAL saving khatam.. sab khatam.. trading karne se to acha h khud ki brokerage firm khol lu..

    • Suraj Kumar says:

      Sir I think buy on dips and sell on high is beneficial strategy for you..and using trailing Stop loss reduce loss probability…

  78. Zainulabidheen says:

    Experience rich words ..really helpful for beginners. Thanks

  79. Suresh says:

    Sir I am new trader but I know share market but Sure very big loss me in zerodha in 5 month
    My account is nil so no trading in future

    Thanks

    • Suraj Kumar says:

      Same thing happened with me, but we can’t blame zerodha or share market for it, it’s all our decision to trade, entry and exit. I personally recommend you to start with paper Trade when its going in your favour then start with small quantity in market.

      Thanks 😊

  80. Sanjiv Lombar says:

    Wonderful article ..Keep writing
    Write your experience on EMA

  81. SORABH SHRIMAL says:

    when will we get the opportunity to use the bracket orders again ?

  82. Manoj Savaliya says:

    Sir i want to learn and make regular income. Is this possible??

  83. Haresh Shah says:

    I am beginner. I want to learn.

  84. Kamath says:

    You say cut the size if it is the F&O how one can cut size of the trade?
    More over the size of the trade change as per exchange rules

  85. Pravin Patil says:

    Really Inspiring.. I also have many of experiences mentioned above (Especially in losses)… Now learnt and controlled emotional trading.

  86. Jitendra Chaudhari says:

    Sir mujhe Abhi sher market ki kuchbhi jankari ya Dshyan nahihey
    Sir mujhe sikhana has Aap meri
    Madat kigiye

  87. sami dijoo says:

    As Usual – Always High energy Message.
    Bless You Dear Nithin.

  88. Jitender says:

    I am 100% agree..Trading is not easy..but is possible to earn a regular source of income…

  89. Pankaj P S says:

    Yes You are Right…Informative good job sir……

  90. Venkatesh says:

    Thank you sir, Nice information, could you pls provide the more ideas depending of market situation.

  91. Anant says:

    THANK YOU. ZERODHA. FIRST PARAGRAPH OF THE ARTICLE IS 100% CORRECT. NO ONE CAN DENY THAT. EVERY ONE SHOULD READ THIS ARTICLE BEFORE TAKING TRADE. TRADING IS NOT LIFE. PPL LIKE ME WHO HAVE JUST STARTED THE JOURNEY OF SHARE MARKET MUST FRAME AND PLACE THIS ARTICLE AT HOME OR OFFICE. SO THAT THEY WILL NOT LOOSE MONEY. THANK YOU.

  92. Shweta sharma says:

    Please suggest a good bok for biggeners.

  93. Santosh says:

    Nice article Nithin, I like the comment on money making. Great lawyers and doctors make more money because they are good at their profession and money is a by product of them being great at their profession.
    Similarly one can make money when he/she becomes a good trader.

  94. Prem Ballabh says:

    Instead of searching and learning from other site this is easy to learn from our Brokerage house i.e. Zerodha. Zerodha is the best brokerage house in India and thinks good for its account holders/traders.

    Thank you once again for this excellent initiate.

  95. SATEESHKUMAR THEAKEVARIKOTTLE says:

    Are there any traders in Zerodha who are trading for living?
    If there are any, please give us all the insights into profitable trading

  96. DR. RANJIT M. V. SURYAVANSHI says:

    Yes this is really best i formation and according to me everyone should believe in investment ton in trade.

  97. Boby says:

    The real challenge is when (which time) to enter into the trade and exit from the trade. I had a trading strategy, but it hit the Stop loss in the morning, but the same trading strategy was successful after 1 hour. I’m a beginner who lost my capital in F&O and stopped trading for 3 years.

  98. Gangadhar says:

    Wow, this article makes me to change whatever the experience which I had till now, definitely I follow your suggestions. Thanks a lot many times.

  99. Manoj says:

    Excellent write-up

  100. Benson khonglah says:

    Sir, i want to learn how to make money in trading, and to recover all the lost, I have lost huge money. Please help.

    • Suraj Kumar says:

      Don’t think to recover money when you take trade with this intention it means you are taking trade emotionally, i recommend you take trade to make profit and do fresh start by learnings from past.

  101. Bharat says:

    It’s a good article for beginners and the losers in the market.
    You covered almost everything a beginners should know.
    From define a hard stop , to stick with the trend, to averaging down, Leverage, fundamentals and Technical combining, to Diversifying ,bet sizing and need to have alternate income to survive!
    Beginning is always tough, generally and particularly in the market. Actually losing in the market is a big lesson
    Everybody trading should be prepared to lose and learn.
    Thanks

  102. Suresh says:

    I am a small time intra day trader to keep myself busy. However much sense I apply, based on the day cycle of the stock when it is increasing or decreasing, I always face a reversal or opposite actions. i.e., when I buy the price always decreases or when I sell the price always increases. The stocks would be down trending but when I sell, it changes direction and I always have loss. Why?
    So as per your above article should I keep away from the intra day trading?

  103. Umang says:

    We’ll written Nithin!

  104. Bharat says:

    Dear Suresh
    it happens in the market. Just watch the behavior of the market, without jumping into it.
    Just watching is tedious and tiresome activity and trading is exciting!
    By watching you will get insight of the entry and exit
    Enjoy watching, trading, earning and enjoying!
    bharat

  105. Babin says:

    Dear Sir,

    Hard stops are only for traders or even for investors also ? Pls guide

  106. Rajat Rastogi says:

    sir, when looking at the volume (10 day moving average line) confirmation after candle stick pattern confirmation. For long/buying, volume confirmation should be green or red also fine. Similarly, for short/selling, volume confirmation should be red or green also fine.

  107. V.Geetha Rani says:

    Excellent article. Every one study in deep; also follow

  108. Bhaumik says:

    Dear Nithin,
    Thanks for this fantastic piece of advice, I think if I had followed these rules at the start of my trading career instead of being stupidly arrogant, I would have repented less. But for all the beginners out there, mark my words consider these as the Ten commandments of trading, print it, mug it, or cram it everyday, just stick to them and they will guide you through the maze of trading.

    Thanks again
    Cheers!

  109. Srinivas BN says:

    Very good tips for beginners.

  110. Sanjeev chopra says:

    Your views are highly appreciated and basic insight to beginners like me, I am trying to learn the tricks of trade and your article will really add the value.
    Best of luck n keep doing good job 😊😊🙏🙏

  111. Gopalan says:

    Excellent advice sir. Thank you for periodical views and suggestions. We respect your views

  112. Barun Sinharay says:

    Invaluable advices for the new as well as seasoned traders. Keep these spirits up.

  113. manoj kumar singh says:

    Thats great article

  114. Subhash says:

    If possible please post in hindi. Bcoz more people can’t understand English like me.

  115. Muralidhara says:

    Thanks for wonderful suggestions, especially the line”trading is not life”is the ‘silver lining’ I liked most. Hope to see many more articles like this.

  116. Sandesh nikam says:

    Awesome info, it will help to minimize lose and sustain in market.

    Good luck guys.

  117. Dipak Nimak says:

    Hats off to you, Sir..!!
    The entire trading has been taught in a the best n simplest way ever. I remain sincerely yours.🙏🙏🙏

  118. Ketan says:

    Thank you Nitin for such sincere and apt suggestions …the way you are running Zerodha…it is bound to be successful in the longer run…kudos to you

  119. Dinesh Krishna says:

    useful information. But One need to learn and must have lot of innovation by self learning. we need to keep doing trial and error without losing much as many times you can. keep practicing always.

  120. Yugansh says:

    Ahh this article looked like a leaf out of my trading book.
    It kinda showed me the mirror and the right path at the same time.
    I always invested against the trend and eventually it gave me good returns , but that turned into losses once I started applying the same thing to intraday.

    The three year is the milestone I am going to target and will try not to think as if I am smarter than the ones going with the trends but I am still very skeptical about the stop loss theory.

    Nevertheless a good read, especially the part where it said you sell out profit making stocks to bring down averaging

    Thank you

  121. Karan says:

    Very well explained, you have covered all the points.

    I think it should be compulsory to go through for every new starter in stock market.

    Keep writing, Stay safe and Healthy.

  122. Nk says:

    This article is An eye opener and like a stick in blind man’s hand. Thx. Nitin sir. Traders like me need this dose. As i had been doing many mistakes. For ex,:-The larger your losses get on a trade, the higher the chances of you acting irrationally during or after the trade. This happens with me. I feel lucky i opened acct with zerodha for such kind of advices.

  123. satish says:

    VERY GOOD POST ,FOR TRADER WHO ARE TRADING LIKE GAMBLER

  124. MOHAN DYAVEGOWDA says:

    Worth Reading on Friday Evening 🙂 Thanks for Sharing your experience Mr. Kamath.
    Very much Informative!

  125. prashant says:

    This is awesome and everyone should know what they want to be before start trading whether they want to be trader or investor 🙂

  126. Deepak says:

    It can’t get more honest than this. I have come across many articles and videos glorifying trading how easy and quickest way to become rich but this is different and stopped me, a beginner from committing the very same mistakes you pointed out. Thank you so much.

  127. Deepak Ningombam says:

    It can’t get more honest than this. I have come across many articles and videos glorifying trading how easy and quickest way to become rich but this is different and stopped me, a beginner from committing the very same mistakes you pointed out. Thank you so much.

  128. Raghavulu says:

    Awesome 👍

  129. Geetha Sampath says:

    Hi,
    As stated by Mr Nitin day trading is not an easy job. If you can dedicate yourself fully, then only you can make some money. My sincere advice to retail traders is ‘DON’t’ tarde on intraday. Out of my own experience only I am saying this. For example, even after having 3 years of experience, after knowing the exact level of support and resistence, if we take a trade, suddenly the big institutions/traders will enter and SELL at ‘Support Level’ and make all the retail investers blink their eyes, as to what is going on, on the screen and before opening their eyes the retail investors would have lost their entire capital in a fraction of a second. Instead of intra day trading, we, the retail/small traders, may safely deposit the money in a bank/Post Office FD or invest in good stocks/mutual funds. You will get better returns. Intra day trading will only make your brokers, exchange, depositories and Government, rich. Because of the recent hike in charges and commission. Any Comments on this post is Welcome

    • Sangeetha says:

      Correct. Agree with you. Since most of modern economy is built such a way it can make rich become more rich and poor to become more poor. So market is same. It’s not designed for retail traders with small capital to go rich but as you said it’s game of big FII and DII that are rich and will become richest at the cost of retail investors like you and me.

  130. Prem says:

    You shared informative messages, hope would come more as well. thanks.

  131. Ashu says:

    Super for basic knowledge
    I m beginners from this Apr
    👍👍👍
    ❤️
    😎

  132. Jitendra says:

    @ Nithin Kamath I really admire your intent but don’t you think 1% of stop loss is too less in today’s high volatile market?

  133. Dutta s says:

    Hello,

    This is really nice article for people who recently joining this new world of trading. This article will help all the people who try to earn money by trading. In my experience, defining a simple rule for trading and back test and follow the rule is the key.
    There are 1000 rules in the market and we can’t follow all of these . Think and create a simple rule which is working for me is the best way to earn money in the market.
    Thanks again for sharing the nice thought.

  134. R Dhanasekaran says:

    Great write up. Thanks.

  135. Are Purnachander says:

    Sir..it’s great.please update the chart…your CPR update we want..

  136. Vijay Thakare says:

    Nice info…I m using varsity app

  137. Kiran Bhave says:

    Very good article. Every enthusiast should first read this with open eyes before entering this world

  138. Ashwin says:

    He is so right. Can’t believe I did all the things I wasn’t supposed to. Wish I read it long before

  139. Ankit says:

    Very well guidance for those who (like me 😊) are the beginners to keep patience and growing-up slowly by learning, not in hurry to fetch up money.
    Thankyou sir.

  140. Vikas says:

    Thank You Sir. You won’t believe how much you and your team made a difference in my life. I have been trading now almost 3 months regularly every trading day. Whatever minute success that I have- although my net is red- zerodha is the major reason.
    Cheers and regards.

  141. Nilesh Mhaske says:

    Why Zerodha Charged Excess Brokerage?

    I have received Contract Note of Brokerage of Rs.38/- of Intraday Trading. On your website the charges are Flat Rs.20/- or 0.03% (whichever is lower). and Your Price calculator also shows Brokerage of Rs.40/- which should be Rs.20/- as per your charges pricing.

    • Suraj Kumar says:

      It’s due to additional charges like security charges, GST, CGST, Transaction charges, SEBI charge. Learn about all charges let yiu know about all charges..

  142. Beginner says:

    Suggest some good resource that talks about mixing TA with FA for beginners anything like books, articles courses

  143. PRASHANT KECHE says:

    Very informative article. Thanks lot sir for giving very very important advice.

  144. Pooja says:

    HI I would like to know how to apply CPR in the chart window…. few of the You tube window shows that there was update on 28 May by Zerodha and they have induced in from website.

    i am not able to find this, please help

  145. Jeevan Kb says:

    Excellent

  146. JAGAN MOHAN CHEVVAKULA says:

    Excellent article. May be later any time cover how to take profits also. In my experience of 20 years of trading (as I am in IT industry) always considered trading as a FUN. Never too greedy and never feel so sad after loosing. Also learned taking out profit based on % gains. Also took lots of breaks due to work pressure.

  147. Vipul says:

    I’m hoping one day the idiots will stop trading like this. Cutting profits and letting losers run makes my blood boil and I can see it happening on the charts.

  148. Ashish Gala says:

    “Price has all the information and the first information” – SHIKSHAFORTHEMARKET

  149. A B G Reddy says:

    Perfect and honest write up. The fact and truth is 1% gain and 99% loose. What sort of activity?,a human evil . Invented and practiced by Govts to squeeze money from public,by all sorts of disguised multiple taxes. It is greatest evil and criminal act by Govts, worse than all known human evils. Waste of human resources, potential and spreading human misery.

  150. Edward Hovarth says:

    That edge comes from information flow, the ability to correct your habits in terms of the market’s characteristics, .. I came across a video in april this year, I found so many people giving praises to an investment agent called Jubilee Investor who has made a great Impact to so many young crypto investors. I decided to contact him were we exchanged few mails and we agreed he’d work on my accounts with access to weekly withdrawals, My first withdrawal was 9 BTC and I made another key withdrawal of 18 BTC with 24 BTC presently on my wallet, I’m so amazed……He’s reliable and trusted. you can find their website with (jubileeinvestor. com) for assistance and guidance on how best to navigate the crypto sphere.

  151. Purna says:

    Good suggestion & Great thought.

  152. gautam says:

    झिरोधा, प्लीज् मेक सम नेसेसरी चेंज्स ओन योर चार्टस, लाइक ब्लैक थीम, बाय,सेल ओन वन क्लिक लाइक “ट्रेडिंगव्यू”, ड्राइंग शुड रिमेन सेवड ओन चार्ट्स, बाय,सेल पोजीशन एंड पि&एल शुड बी शोवन ओन चार्ट,

    धीज ओल फीचर्स आर अवेलेबल ओन “ट्रेडिंगव्यू”, एंड यू आर डीस्पाईट युसिंग “ट्रेडिंगव्यू” चार्ट्स नोट गिविंग ओल द फीचर्स. इफ यू वांट टू चार्ज
    एक्स्ट्रा फॉर ओल द फीचर्स वी हेव नो प्रॉब्लम, वी विल पेय फॉर देट, बट प्लीज डू ब्रिंग ओल द फीचर्स.

    थैंक यू 🙂

  153. Praveen says:

    Can you please provide paper trade or virtual trade for FNO segment with virtual trades executed at real rates.

  154. Raviraj Sapar says:

    Thanks Nithin for sharing your experience and wisdom. It’s really wonderful read and alarming to those who are addicted to trading.

  155. Jayesh Mehta says:

    One of the finest articles that I have read on stock markets in recent times. It is well-structured and talks about the real issues that traders face. Some of the issues are faced even by the most seasoned traders. The links that you have given are very useful. It would have been better if they open in a ‘new tab’ by default. I have read around 10 books and more than 500 articles on the stock market, have read even the classics such as Nicholas Darvas-How I made $ 2 million in the stock market, but when it comes to actual trading on the platform everything that the wise and the experienced told vanishes and we succumb to our wavering emotions. That’s the reason for all our losses. When I look back most of my trades where correct. I made a loss because I didn’t stick to the plan. Sold early or sold too late. I traded for around 7 years and then I quit. I have a decent job now. But I still regret quitting markets. I still hold two Demat accounts. I wish I could trade back. I was working when I read the mail and saw this article. Couldn’t to myself to read it. I was once a compulsive trader.

    Anyways, Thanks Nithin for a wonderful read and for the best Indian company in this space.

  156. Badarinath says:

    Please highlight on the perils of gap down situation..how to handle this ?
    Sometime you buy an option @ 85 bucks. Next day morning it opens up and has came down to 45 bucks..so we are in a soup because of this gap down . Uncontrollable feature..

  157. PIYUSH Vatsa says:

    “Honesty is a very expensive gift, don’t expect it from cheap people “

    Zerodha varsity has been curated with pure honesty and for me personally, it has become a “yellow metal” standard, so much so that if something is not explained in Varsity, I don’t go for that trade or thing.
    Varsity has become a standard reference for me just like any Pub med articles 😉
    Keep up the good work.

  158. Kannan Vasudevan says:

    Iam grateful to Zerodha, really 😊👍 wonderful advice.after fully reading I will comment again

  159. Grv says:

    Now a days everybody seems to get rich quick, everybody is jumping into trading. Nobody seems to interested in mutual fund SIP/long term investing. On asking them reason they say Mutual fund don’t give stellar return, I seriously doubt whether they are in market just for thrill or creating wealth. Discount brokerages has opened the flood gates, now everyone is attracted to trading. In the beginning of this article it is mentioned that less than 1% are successful, still everyone in this discussion thread wants to do trading rather than investing. Reason behind all this chaos is false hope that is being fed to public that you can be successful, but the reality is otherwise. Just think about it why every so called consistent successful traders has started giving seminars, started online tips/blogs and even smarter and having access to capital started brokerage firms when they were so successful in trading in the first place. Why big companies are struggling for just 10 to 16 % ROE when they can earn more than 24% in trading, they should shut factories and start algo trading after all they have best brains and huge capital.

  160. Bharath Srinivas says:

    Words,nay,Gems of Wisdom..Thanks very much Nithin. While the topic lured one with hopes of learning how to win each trade,the article beautifully articulated what kind of an attitude is required- even to start trading.
    I am a beginner and I stand sufficiently informed and cautioned after the read.
    Fundamental and Technical Analysis certainly sounds overwhelming..but common sense that is abundantly found in this article would certainly help one,I reckon.

  161. Vasantha says:

    During my 1st 16 months trading, I have lost 50% of my capital. Trading stopped for the next 6 months. Then I find “Zerodha Varsity”. After reading it once, I feel confident and created an Account with Zerodha and started Swing Trading (Equity only). Now my account shows an average 5% loss. Repeating Varsity study from scratch once again! Hope that with the help of “Varsity” I will become a successful trader next year.

  162. Manoj soni says:

    I open zerotha account last month but still it is not open so help me about it.my contact number is 9998273499…try to call me instead of mailing.

  163. Kiran says:

    I am trying to reach your support team over phone from almost a month. I need to add commodities to my profile. Whenever I call, automatic reply comes giving so many numbers for different issue. I have tried all of them. No one picks. I have raised several help tickets. But only the below message comes in email:

    We are operating under our COVID-19 contingency plan for business continuity and the safety of our team. Over 1200 members of our team are working from their homes. Due to this your support ticket can take up to an additional 72 hours to be responded to.

    This is not expected from Zerodha!!

  164. P Raji Reddy says:

    Excellent

  165. Santhosh says:

    Hello,
    I am just a beginner. Just started two days back. I would like to know why people do intra trading on first place when you anyways have the option to sell when the stock price goes up through delivery. I will have the power to sell today, tomorrow or whenever I want.
    I would like to understand significant differences between day trading and trading through delivery.

  166. Dhirajkumar Pawar says:

    Account not working properly,
    I am using kite mobile app, in this app i can’t buy or sell any share. When i buy or sell any share so invalid target value massage displayed. And CNC option is not highlight i can’t select this option what can i do plz suggest me

  167. lokesh.patil says:

    @Nithin Kamat,
    Hi, this new charting features resembling to trading-view charts are good. But UI is not very clean & using tools on chart, particularly when they overlap on each other…. is a real pain…!!!

    I wish if zerodha can clean the charting UI & can add bit of new basic functions like locking the tool position on chart would be of great help…!!!

    Though this new features are good I still feel trading-view UI is much user friendly than zerodha’s current UI

  168. Mizanur Barbhuiya says:

    Sir, amazed by your indepth explanation.
    ONE thing I want to know why SEBI is so rude towards retail traders😁. Will zero leverage will be implemented.. Plz explains about margin rule which is goint to start frm Dec 2020..

    Thanks

  169. Manjesh GN says:

    Hi Nitish,

    Nice article.

    I am a beginner, learning – unlearning and relearning.

    Having a stop loss is really good, however
    1. most of the time the market bounces back after hitting the SL, – Need to work on the reasonable SL
    2. Many a times (at least for me) the BO is blocked – reason stated by kite is high volatility. Why should it be blocked if there is high volatility?

    IMPORTANT : Most of your videos seems to be using old version of KITE, and features are either removed OR moved elsewhere under a different avatar. Appreciate if your Team have a look at it.

  170. Mohammad Dilshad Khan says:

    Rule no. 1) Reinvestment in business is far better than reinvestment in stock/share market !!
    A person who started his/her business 40 years back with 500/- can also earn rupees 50 crores @1.25 crores/year,,,Yes this is reality

  171. Prusty Sourab says:

    I want to reduce the F&O charges. Flat charge of Rs. 20 / trade is high for Options intraday charges.

  172. PRADIP BHASKAR GUPTE says:

    My User code QX9250
    I have lost 200k in future and options while trading with another broker. Can I recover it through Zerodha

  173. parth says:

    how do i activate my commodity section in kite?

  174. Bangar pradip baburao says:

    New account opening

  175. Vikas jain says:

    In zerodha it is good and easy.

  176. Hari says:

    Why Zerodha not allow to trade in OTM to hedging the sell positions.
    With this reason most people shifting to Fyers platform.

  177. Rahul says:

    Contact the Best SEBI Registered “Research Analyst” not Investment Advisors

    Then check the Difference.. Winning will come your ways.

    Thank You

  178. ANITA TRACY says:

    I will advice you to contact Mr Adam Wilson at adamwilson. trading (at) consultant.com/ for better understanding because his strategies really helped me withdraw my money that was stuck in my broker account and I even made more huge profits. He is genuine and honest. you can contact him if you discover that your broker is scamming you or having withdrawal problem. All thanks to him

  179. Sivakumar says:

    Is there any plan to put the varsity on Mac App store..i find reading in mobile bit challenging

  180. muniraj says:

    Hi Zerodha team I am trading in Zerodha last 4 year I am trading 10 min chart candle price high & low not sowing currently price real market sowing A ther price your trading terminal (chart IQ) RANG WHAT TO DO THIS PROBLEM
    your terminal is a fault or rang fraud fraud fraud

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