Software Engineer up 400%

July 19, 2013

Traders,

Find following interaction with Pawan, a software engineer from Bangalore who has made over 400% on his trading capital with consistent profitable trades during the 60-day challenge.

Pawan

Education: B.Tech (Computer Science)

Profession: Software Engineer

Hobbies: Teaching Quants to students preparing for CAT and playing badminton.

Following is the interaction on July 19, 2013.

You don’t seem to come from a capital market background, how did you get into trading markets?

When I joined a software company, I had a lot of my colleagues who were already trading the markets who introduced me to it. The interest developed, and when I was abroad on work for 1.5 years I spent time researching and developed my trading skills.

What type of a trader are you?

I trade both intraday and positional. Intraday trading is usually via options and positional trades using futures, but most of my trades are positional futures. I never keep my option positions open for the next day, they are always squared off intraday.

What do you trade on?

I prefer trading only on Nifty futures and options. Nifty options for intraday and futures for positional trades.

What is your bet size? How much % of the capital do you bet every time you trade?

Usually my bets are never more than 25% of my trading capital.

As Nithin’s favourite quote says, “If you don’t bet, you can’t win. If you lose all your chips, you can’t bet.” So you have to make sure that you won’t blow your account in a single trade. You have to make sure that you should be in this game for a longer period rather than coming and vanishing in weeks and then cribbing that trading is gambling.

What do you follow, Technical Analysis, Fundamental Analysis or anything else?

I rely completely on Technical Analysis.

You have made a fantabulous return on your capital, up 400% in 60 trading days! Anything that you can share with fellow traders?

Every trader has a different style, but I believe that the bigger the time frame on which you trade, the better it is for your health and ledger. To filter all the short term noise, I use the hourly charts.

I am a trend follower and I don’t keep a target for profits. When I get into the trade I define the stop loss to know the risk of the trade. The stops keep getting pushed higher when market goes in my favor and if you look at most of my trades I never put target orders to exit, usually the market stops me out.

Let’s take a hypothetical situation – I have a long position and want to book Nifty longs at 5940 level. Nifty is currently trading at around 5920. Now there are two scenarios: either it will take a U-turn before touching the 5940 level or it will go past 20-30 points 5940. In both the cases I will repent – In the first case, “Why was I so greedy? I should have sold it at a lesser price.” In the second case, “Why did I sell it at 5940? I should have held onto my temptation to book a profit.” I will only feel good when I sell at 5940 and Nifty takes a U-turn right after that point. At that time I will feel on top of the world. But how many times can it happen? The answer is – very rarely.

Until and unless we take out this feeling of regret (should have done that, would have done that) out of trading, it’s very difficult to be successful. In the month of April I had made more than 600-700 points because Nifty zoomed up from 5500 to 6200 Levels, and it went up without giving any major pullbacks. So if I would have booked just because I want 40-50 points per trade, I wouldn’t have made that much money. It’s not that I was not stopped out in between. I was stopped out, but my system is a trend following system and it gave me re-entries again. So my one advice to traders – Trend following is the best way to sustain in market.

Any advice for others?

1. Try to make a continuous trading system, which means you will be either long or short at any time in the market. You won’t feel left out if there is any major move on either side, but because you are following the trend, you will most likely be with the move. Make sure to have the stops to ensure that the loss is minimal if it goes against you. Such systems can go wrong in range bound markets, so be careful while designing the system.

2. Don’t overtrade. I believe this is the biggest mistake made especially by beginner/novice traders. Because markets don’t move in a linear fashion, traders mistake a small retracement for a trend change. With every such small illusive move, traders tend to change their stand and convert short to long and vice versa very frequently and overtrade.

How do we avoid overtrading? Start working on larger time frames, move to hourly charts rather than minute charts, you will get lesser signals, wider stops and will remove all small intermittent noise.

Future Plans?

Trading full time.

———————————

We thank Pawan for sharing insights and wish him all the best for his future endeavours.

Happy Learning,

Do check out the otherΒ Winners

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.

94 comments

  1. Ramesh_HT says:

    Congratulations.

  2. JEROME says:

    Very Nice & congrates Pawan !!

  3. Vent says:

    WOW !!! Congrats Pawan!!! I would also like to congratulate ZERODHA!!!! You Guys are really amazing !! In Today’s World who recognize the Good trader and give so much IMPORTANCE !!!! You are unique and completely different from all other Broking Firm… Nithin, you really come up with the innovative and great ideas…You have unique skill of impressing client like us!!! I feel proud to be part of Zerodha!!! YOU DO WHAT YOU SAY!!! ZERODHA Rocks !!!!! Cheers!!!!!

    • Lakshmikanth Jadhav says:

      Hi Pavan, how are you doing today. Now that you would have become a full-time trader, could you share some of your current thoughts.

  4. currencyandnifty.com says:

    Thanks ,Nithin,zerodha and Pawan,Result is a combination of man,mechine and idea or skill. we at zerodha have many oppertunities in the ocean of stockmarket ,with the vision of Nithin,the CEO.He has a dream of making all his traders profitable and happy,so cheers,Happy days are here again with zerodha.

  5. arcus says:

    Awesome initiative Zerodha. I’m pretty sure you are the only brokers who are going out of the way to reward and appreciate winning traders in India. It definitely makes us strive to be better traders.

    Can you also post some interesting factoids about the 60 days challenge. It would be great if you can also make a separate post about the underlying common characteristics among all the winners.

    Congratulations Pawan. You trade very well and you look very smart as well! πŸ™‚

  6. RAJN62GF says:

    Congrats Pawan,

    your point were very sensible.

    Regards
    Rajesh

  7. IrfanMansuri says:

    Hi Pawan….congradulations…..

    You show that trend following system works…….bravo!!!!!

    Could you provide us how many nifty point you earned in 60 days chanllenge period please!!!!

    will be a great help to novice like me!!!!

  8. virtualram says:

    Congrats pawan . Very nice to hear about your success

    using your system one can turn 10 lakhs capital to 1.6 crores in 6 months!!!!!

    Can you suggest some good charting software paid or otherwise that one can use apart
    from yahoo

    thanks
    Ram

    • Pawan_Arora says:

      Hi Ram,
      Thanks. I use Icharts.in. Its good enough for me.
      But one word of caution, We can not make the similar returns every quarter. Markets were trending at that time and all trend followers made money, I made some extra because I was trading options also for intraday, a very risky business, but with very-very strict stop losses. All we need to do is make a system which can give us 2000-2500 points of nifty per year. Take emotions out of the system and follow it religiously. Rest will fall in place.

  9. Abrar says:

    @zerodha/Nithin

    Please take questions from the other members of zerodha family and ask the most relevant questions to the winners. We have many questions for the winners like pawan.

    Also you could have a chat session with winners from your city on a saturday.

    • Nithin Kamath says:

      @Abrar, Let us know what questions you would like to ask, we will try to get it for you. You can post those questions right here.

  10. palanikumar says:

    congrates Pawan

  11. Pawan_Arora says:

    I am very thankful to Zerodha who considered me worthy enough to take my inputs and shared it with fellow traders. Thanks Nithin, Nikhil, Vinay and the team of Zerodha.

  12. RightDigit says:

    congrats Pawan, I hv some queries here. 1) How many pts is SL for nifty options intraday? 2) How does the trend following system work in sideways market?

  13. Saurabh says:

    Pawan: Many many congratulations – On making the money and being recognized for the same!!
    Pawan and Nithin/Zerodha: I (and perhaps some other folks) am having issues grasping the concept of derivatives. My trading horizon is 12-18 months and I usually profit from the same. However talking delivery and holding stocks seldom gives more than double digit returns annually. And when I see folks like Pawan making 400% in 60 days, it makes me inquisitive.
    I request Pawan & Nithin/Zerodha to guide folks on how to start/what to read and other such aspects of derivatives trading. Given the common perception of how people loose their all on derivatives because they do not know the finer aspects of the subject, I am very reluctant to “put my money and then learn”. I am really hoping somebody from the community can hand hold me initially. My belief is that there must be other folks on Zerodha as well who are in the same boat as I am.
    Regards,
    LTT

  14. Vishvajeet says:

    Hi Pawan,

    Hearty Congrats!!!
    Really Awsome!!!

    Can u pl. share 2-3 sample trades of nifty futures/options.. so that we shall get a guidance where to enter in trade etc.
    Ofcourse we shall be using icharts hourly charts.
    Pl. also tell which indicators u folllow.

    Thanks in advance.
    Vishvajeet

  15. niftymetals.com says:

    congratulations for great highs

  16. Sara says:

    Congrats Pawan,
    Everybody have their own trading style, so copy once trading style is not match for everybody. No fixed formula is in the market, here i request you how a nifty trader mold himself with technical aspect.

    Regards,
    Saravanan

  17. kishorekumar2k13 says:

    Congrats! Pawan….Nice to know someone who succeeded in markets for 60 days!! taking money from markets!! Keep growing ur money!! Gud Luck!!

  18. appan says:

    Congrats Pawan !,

    Could u pls share,how u choose stocks for trading,which source u use for intraday news and other facts.

  19. Pawan_Arora says:

    Thanks everyone for their Wishes… But there is one important point to be made otherwise there would be a big debate on the point of 400% Return made in 60 days.

    I have kept only 25% of the money in the trading account, Rest was not used at all, It was lying in my Overdraft Home Loan account. And Zerodha off course calculated on the money which I kept with them. Let me explain.. Lets say … I have total capital of 4 lac and I kept 25% of it (1 Lac) in Trading account. And grown it to 5 Lac in 3 months (60 Trading days).

    So From Zerodha perspective its 400% return because they will calculate on what I kept with them, but if I see from my perspective its gain of 4 lac on my initial 4 Lac rupees, which is 100% Return. Sorry for the Confusion.

    I hope this clarification will help and people will not be so excited about it.

    • amitabh says:

      Dear Pawanji,

      Congrats and best wishes !
      So what was the general % of capital used (count only cap with zerodha). ?

      Can u share max loss u ever took in a NF or option trade in this 60 days ?
      Average sl and avg tgts ?

      Thanks!
      Regards

  20. Nazar says:

    Pawan,
    Hearty Congratulations for your success and all the very best to win more and more.
    I hope Zerodha will continue to hold this 60-Day Challenge forever so as we people will be motivated to succeed in this contest every 60 days or at least try to safeguard our gains. Thank you Zerodha for your innovative program.

  21. Ragu says:

    Pawan,

    Very Impressive man. Congratulations. Good job at you.

    Take care

  22. Ragu says:

    Pawan,

    Very Impressive man. Congratulations. Good job at you.

    Take care

  23. Rahul123 says:

    Congratulations Pawan! I have heard that many professional traders use just price action to trade. Do you also trade pure price? Thanks!

  24. trunals says:

    Congratulations Pawan!!

    Looking forward to have your personal blog site,to guide fellow retail traders..:)

  25. Upendra says:

    Congratulations Pawan. Great to see a software engineer committed to trading with winning strategies. I would be happy to know if you have learnt technical analysis through books or some other media. Can you suggest some material to learn the subject before implementing it for live trade? I lost huge money (for me it was huge, not willing to divulge it now) with my own analysis and following some charts. Can I get your contact details? Thank you.

    • Pawan_Arora says:

      My favourite book is “Trading for A Living”. I generally read books for the trading psychology. Technical I read a few but didn’t really help. I had to live those dancing candles in charts . It takes some time but you will get a feel of them. Take some chart subscription and start watching the market moves, without worrying about news or anything.

  26. amitabh says:

    Dear Pawanji,

    Can u please share how u manage trailing sl ..like in NF how many point sl u keep in general and in nifty options ?
    Any thumb rules as % or points ?
    When I trail it gets hit and most often reverses from there only πŸ™

    Regards,

    • Pawan_Arora says:

      Hello, See when I take a heavy leveraged position with options, I take a small stop loss of lets say 4-5 points in option. But for my Futures positions, Its not fixed, it depends on the some pivot point, a visual pivot most of the time. it can be 30 points away, or sometimes it can be as away as 70 points. But That may not be your style. Please find something which suits your personality.

      • Seema says:

        Hi Pavan,
        first of all congratulations to you and thanks for sharing valuable insight.
        I have a question about the statement you have made ‘it can be 30 points away, or sometimes it can be as away as 70 points’.
        When you say as away as 70 points… why you have chosen a number as 70 here. Is this the max limit you always use? I am asking this as sometimes, pivot can be around 100 points away or even more.
        Thanks.
        -Sagar

  27. Pawan_Arora says:

    Hello Guys,

    People want to know my system, But to me, making Profit from markets is not about the system, Its about winning over your own emotions,its about the commitment, the determination and some motive behind it. Find some motive, give your sweat and blood to it, Success will come for sure.

    I found my motive from somewhere – will tell you my story – When I was In 12th standard, I came to know about IIT, I dropped one year after 12th, joined one coaching institute, tried my best but couldn’t go past preliminary round. Second Attempt means waiting for one more year.. So I joined a PVT Engg College in a city near my hometown. My dream was shattered. I knew that I was just near the success, but due to societal pressure, I didn’t drop one more year and failed to get into IIT. Then came 3rd year of Engineering, I thought, Lets try IIM now :), wrote CAT.. couldn’t crack it. I used to get good score in Quants in Mock Tests but my verbal was not up to the mark due to my schooling from small town. In the mean while I joined an IT company after finishing my college. After few years, I wrote CAT again that too when I was married, had daughter and had a home loan. But again couldn’t crack πŸ™

    That unfulfilled desire to get into IIT/IIM was always there in some corner of my mind. Then One fine day I thought -“I am bad in verbal, so what.. but I am good in Quants, Let me work on my strength than to crib about my weakness. Moreover, Many of the Guys from IIT/IIM get into number crunching game and work as Investment banker only. Let me try something of this sort. So what – If I don’t have formal degree” I knew that there is unlimited potential in financial markets which can be tapped.Why shouldn’t I excel in this field to satisfy my burning desire to do something for which even IITian and IIM guy will look me with respect. I found my motive that day, and started working on my goal. I had trading account opened few years ago, which I had blown up a couple of times. I started trading again with my new motive to excel in this field.

    One key point which I kept on reminding myself – “CAT/JEE aspirants have to wait for one year to improvise to write CAT or JEE exam again. You have this market open everyday. you can learn from your mistakes everyday. I was fully determined this time . No matter what – I wont give up.” I had met one full time trader named Speculator(“ichart handle”) with help of Rainbow(“Ichart handle”). There were many other examples ( to name a few, “Twist”, “Jimmie” from icharts) who were working full time in trading. So I had the evidence that yes its possible to be profitable even if the odds are against the trader. I kept on working and working trying to learn something new everyday. In the process I started treating money as number, Yes its purely a number. Even its a money making game, Detachment from the money is necessary to win this game.

    Many times I am up M2M with 50k-60k, while my TSL locks only 20k, I am ready to give back my 30-40k to the markets and wait for my stop loss to be hit. And many times, this 50-60k M2m reaches to 80k-100k M2M and my TSL moves up and locks up 50k, and then further M2M reaches 140k , My TSL locks up 100k. How many of us can do it comfortably. If we can do this and ready to give some paper profit back to market -> We can win this market over long run. That’s why I said its not the system, its the winning over the emotions of greed and fear.

    One Last piece of advice – Don’t give up, There will be times when you will feel like giving up, but Just don’t give up.The only problem with the Financial market is that “not giving up” means burning some more money.. But remember we can not just come and straight away making money from very first month. It took me 5-6 years to start making me money. So You have to understand that you will have to pay tuition fee. The cycle has to be completed.The steps are – Blow up your account for few times -> Break even for a couple of years – >Start making Profit. You can not directly jump to third step, no matter how many seminars you join, how many books you read.

    Its my personal opinion is that – if one is ready to invest 5-6 years in this field and ready to blow up his account a number of times then only he should invest time and money in this. otherwise there are many other fields, where you can excel.

    I believe that – One will be successful or not ? It just depends upon how strong one’s desire is.

    Having said all this – I am still a learner. There are many better traders than me who trade in Zerodha itself, but by God’s grace I was given a chance to be profiled first. I have a very long way to go to become a better trader.

    Happy Trading And All The Best
    Pawan

    • Nain Cheema says:

      Great story Pawan. Truly inspiring !

    • Jeet says:

      Hi Pawan,
      I don’t know why Zerodha publishing the stories of the winner if they don’t want to share their System. Those who are praising him and Zerodha is good emotional guys and completely missing the eye of the bird and the purpose of you not getting solve here. So try luck on youtube so many EXPERTS traders share their system. Try it out on dummy account if you think that’s work then go for it.
      1) Good system(That tells you buy /sell/ NOT to trade )
      2)Risk Managment (For ST use multiple of ATR, depends on which time frame you are using )
      3) Control your emotions(This takes practice)
      Create your system, try it out on past chart – do some dummy trading and manage your money and emotion.
      Stop looking BS stories.

  28. Srp says:

    Mr Pawan, congratulations. I have also subscription with ichart as Srp83 id, what is your id name in ichart ???

    Thank you.

  29. Manish says:

    well Nitin said, he has tried to remove flukes. I am afraid 400% return on equity is a FLUKE in capital letters. Even if you divide your returns by 2. With a starting capital of 10 lakhs, you would end up making 72 crores in an year and soon will break rajesh jhunjhunwala and not long from now Warren Buffet.

    This is called Recency bias and can hurt us really bad.

    Read fooled by randomness by Nasem Taleb to know wat i m talking about.

    • Nithin Kamath says:

      Manish,

      The idea behind this section is to introduce people who are profitable trading the markets and who are doing it by being consistent and not a few fluke trades that can get them there.
      Yes, Pawan making 400% in 3 months may never happen again, no one can predict how much return a trader can make. What is important though is that he did outperform everyone else, by following system and rules. This definitely merits him to be acknowledged.
      Today in the world full of tipsters who claim 99% accuracy and guarantee a million every week without any real account performance to go by, we will be putting forward in this section traders who are making real money in different styles. Today 90% of the retail end up learning wrong style of trading from people who are losing trading the markets. Our hope is that knowing what winners do, will motivate others to get there following the right rules.
      How much returns is not something which is under our control, but following the right rules is, only if you know what the rules are. That is what we intend to achieve!!

      Cheers,

    • Pawan_Arora says:

      You didnt read one of my comment …There is one important point to be made otherwise there would be a big debate on the point of 400% Return made in 60 days.

      I have kept only 25% of the money in the trading account, Rest was not used at all, It was lying in my Overdraft Home Loan account. And Zerodha off course calculated on the money which I kept with them. Let me explain.. Lets say … I have total capital of 4 lac and I kept 25% of it (1 Lac) in Trading account. And grown it to 5 Lac in 3 months (60 Trading days).

      So From Zerodha perspective its 400% return because they will calculate on what I kept with them, but if I see from my perspective its gain of 4 lac on my initial 4 Lac rupees, which is 100% Return. Sorry for the Confusion.

      I hope this clarification will help and people will not be so excited about it.

  30. enmy says:

    Congrats Mr.Pawan:)

  31. abhinav says:

    pawan sir…

    While Trading, were you sitting in front of the screen
    all time or you used to monitor it at intervals?

    I am trading since past 3 years and have observed that
    sitting in front of screen leads to early profit taking and majorly overtrading

    Although my success rate in trading was 55%, I ended up at break even
    ,moreover my trades were more profitable when i was away from screen
    and had set pre-decided SL &Tgt

    Pls comment on above question

    congrats and wish you more successful journey ahead

    • Pawan_Arora says:

      Pl call me Pawan only. Yes, the more we will watch the screen, the more anxiety we will feel. A small dip of 10 points lets say in nifty can give us a anxiety and when it will again go back up to the same price, we will tend to square off, and can miss a big rally.

      But again, Not watching at all can also lead to problem, because there could be big reversals in a single day. Market can tank from +100 to -200 . To save yourself for such scenarios keep TSL in place.

  32. Pawan_Arora says:

    Here is How I used to think my early days of Day Trading :).. Sharing my Personal notes of my daily Observations about Nifty with all of you.. .This is just to show that keeping so many rules is not good.. Because at every price, few rules will saying you to go short, few would be saying you to go long.. and you will break your head and then market will move away and you will finally miss the bus.. Make your system as objective as possible, There should be either a Buy or Sell or Out from market. But again, what suits me may not suit you.
    This is a draft copy which I am sharing you unedited. So please excuse me for bad writing. And Again.. Dont break your head too much for these observations.. Just read it for entertainment.
    —————————————————————————————————————————————-
    When i say uptrend, it means 15tf is in uptrend.
    1. when we are in uptrend try to find and trade bullish wolfe waves and vice versa.
    important – Whenever I see +90 +100 in nifty spot, i should exit any long positions if any.. and exit short if vice versa… there is no point betting against it. i had observed it many a times and been punished many a times too playing against this.. If possible try to play contra against it with 10 point of stop loss.
    When there is a old trend line coming, the best strategy is to assume that it will work atleast for 20-30 points and price will give a pullback for atleast few points, so stop loss of 20-30 points is not valid for such trades, better exit and then take a fresh call once that level is crossed.
    2. Try to book profit fast for morning shorts/longs in contra trades .

    3. if nifty comes down or up 30-40 points in just 5 mins. .try to exit the position fast .. because price can not be stable with such a fast move. [very important rule.], u will get a better chance to enter again

    4 Sometime a price is moving 5-10 points in every 15 tf candle and nifty moved 50 points straight in one direction and suddenly there is a big point candle formed with good volumes…. No need to take an entry now because very good odds are there that this is the climax of the trend. But there could be 50 points move and then 25 points correction and then again 15-2- point candle is formed with good volumes.. this could be a safe entry.

    5. mostly the third rejection on 15 tf fails, but before failing it mostly try to retrace 61.8% to its intraday move and whenever rejection fails there is at least 40 points move after breaking the fake rejection high/low. So use this info to catch more points than scalping for just 20 points.
    6. Whenever 34 ema on 15tf starts turning flat , try to see price movement wrt 34 ema on 30tf and 60tf, it will guide the next move.

    7. After a big move of 150-200 points , always buy or sell the first bullish/Bearish 15tf 34 ema rejection… it is bound to make a new high or new low and accordingly a new pivot, almost all the times. There are many participants who are looking for this pullback..So all big shots will push the price away from 34 ema.
    8 . I have observed that i predict targets of the moves very accurately, but not using of it for exiting my position. so lets use my knowledge to exit at targets rather than just catching plane 20-30 points.. I can catch 35-40 points generally with my understanding of the price flow. so lets not settle for less and make more of nifty..
    But again i m not in favor of TSL in my best trading system. because price has to pullback after massive moves….. So i will exit at targets without trailing TSL
    9. Keep on trading every singal my system gives.. and be prepared to take profits any time after 20 points.. Generally price will give me second chance to enter again with the same stop loss..no harm in that but keep the same stop loss and dont take entry for the third time.. 2 times is enough.
    Today i entered pretty late because my order didnt get executed.. so when near ur buying price always ready to buy at market price too
    10. sometimes even after breaking new high price dont go up very fast.. its okie.. It doesnt mean that every new high will follow with big volumes….
    11. Most of the intraday reversal comes from the three little indians.. So always watch out for those three little indians…. there would be a ww also along with three little indians.. but mostly point 4 of this ww is objectionable.. but three little indians are enough to exit position.
    12. if market gaps up or gap down heavily, entering too early on OL or OH can be risky especially if going against the 15tf trend.. But can always enter if my jackpot system says…. Always wait for the ema’s to catch up , i.e 8ema on 15tf to short or long accordingly.. thats the best entry one can have. and it works almost all the time.
    13. Dont demotivated by the loss.. take every trade as a fresh trade, if i see some good pattern and if i can get an entry with 5-6 point of stop loss go ahead i mean… only thing is the risk should not be increased.

    14. Whenever RBI declares 25bps raise, people have divided opinions and we see the choppy markets.. . I traded on three RBI policy days and two times i lost heavily and once made moderate gains when it declared 50 bps. 50bps days are one way to the down and every one is a seller those days we can make tonnes of money, so dont exit early on 50bps days… 25 bps days are best to be ignored or play contra, means buy on weakness and sell strength with small stops..
    15. if playing ww then respect its targets.. after reaching target there is no point entering without any proper signal..
    16. Whenever a prior day is a compressed day with tight range, the breakout from that range is massive so make sure of this point to make maximum points of nifty..
    17. very steep ww doesnt work…. on big bullish and bearish days.. WW are contra methods and when market is in steep trend, ww doesnt work.. so better not to play ww on such days and save ur ass..rather be with the trend and enjoy the big gains…… better to identify trending and trading days.. and dont trade wolfe waves on trending days.. keep it only for trading days.. with volume and the slope of TLs we can identify trading vs trending days.
    18. Try to play every entry which i get, dont miss any valid entry just because i had made enough money.. at the max i can reduce the quantity by half if there is big stop required, otherwise play every entry of my systems… and try to get full points of nifty.
    19. what i observe is I tend to book profits early sometimes even at less than 10 points…, but keep stop loss as more than 20 points for those positions.. This way even if i m wrong 1 out of 3 times i will give away all the gains.. I need to increase my risk -reward ratio.. without it its very difficult to survive in markets… I have to have make myself strong enough to resist my temptation to book early.. If i am trading a channel then until I am booking at the other side of the channel , there is no point trading..
    20. playing wolfe wave – since ww entries are from the sweet zone and sweet zone keeps on increasing with the time , So i have to enter at the sweet Zone at the right point.. i can not enter my whole quantity at the trend line and then keep on going thru the pain till the price trades in sweet zone.
    Good entry always keeps us at physiological edge otherwise we tend to book early and loose.
    21. I haven’t taken big gain on such big bullish days. though i have identified it many a times…. So once try to eat up big by trailing stop loss….

    22. Buying at pull back is very important because by this way because of the good entry i can have good stop and can have very good reward… Today on 3 oct, because i entered early without waiting for pullback and because of it my stop triggered a bit early and i sold at low… and then it make a new high.. my bad.. i lost 32 points of oppurtuinity…
    23. when there is a huge gapdown of 80-100 points, then even though the first candle is a red one it will fail , because people tend to book overnight short positions especially when the prior day trend is -ve and people build short positions… for them buying twenty points costly is not a big deal and they can trigger my stop loss… The first point to short is 8 ema on 5tf, if that doesnt work, then 8ema on 15tf but with atleast 10 point stop and the best is 34 ema on 5tf……..

    I hope you all enjoyed πŸ™‚

    Happy Trading
    Pawan/Shahi
    http://rideniftywithshahi.blogspot.in/

  33. Manoj says:

    Many congrats to Pawan.

    Tons of thanks to Zerodha and Nithin. You guys are doing amazing and awesome job. I must say that for fellow traders Nithin and his team Zerodha are inspiration in itself. Kind of initiatives taken and strength demonstrated by you guys are highly motivating. Hats off to you all.Lets make our association more stronger.

    Regards,

    Manoj

  34. Pawan_Arora says:

    Few members from icharts wanted clarification on the 23rd point on my observations list. Gave a real example for illustration in the below link. Go through it, if you are interested.

    http://www.icharts.in/forum/won-zerodha-60-day-challenge-thanks-to-i-charts-and-zerodha-t5265,start,45.html

  35. Kingg_kinghh says:

    Ideally we should see the trades you took in the zerodha challenge. Not doubting it but it would be nice to see the trades.

  36. RightDigit says:

    Pawan, As per my understanding, you must be pursuing job in a IT firm. I wonder how you manage to get time to trade & watch terminal. Is your BOSS not a watchdog? What if you get a meeting call in between a vantage point of trading? Also trading platforms are blocked in many firms thereby rejecting access to terminals.

    • Pawan_Arora says:

      You asked a very good question. First of all i won this competition when i was Trading from USA in nights. Now I am back in India. But as i said moving to higher Time frame will not take that much attention of yours. I update my TSL/SAR only once twice a day and i was managing in on my Android Phone ZT, dont need my official system to punch in the orders.

      But there is something to tell- Today I am putting down my papers because I feel that if Part time I can do this, In full time i can explore many more opportunities,
      I hope no one will ask me this question anymore after that. πŸ™‚

  37. AmitDhakre says:

    Hi Pawan,
    Congratulations. All the best for trading.

  38. praveen98 says:

    HI Pawan,
    Congratulations…You told in the interview that you prefer Futures for EOD positions and Options for intraday trading…..Can you please tell me why you are preferring so? I am doing just the opposite. I am doing this just because the risk is limited to the upfront premium paid….and i will not be effected by gaps and black swan days…Any way its personal choice of the traders, but i would like to know the reasons for your preference if you don’t mind.

    All the best
    praveen

    • Pawan_Arora says:

      Hello Praveen,
      I can understand your concern for the days when nifty gap up or gap down by 500 points, on such days whole margin to buy futures will be used to cover loss by the exchange and we will be left with nothing. That’s the reason I play with only 25% of capital, So that I am still in the game. Because I know that 25% drawdown can be recovered in 4-6 months.
      From My perspective,There are many problem to play swing and keeping options overnight:
      After few days of ups and down, Nifty Future will be trading at the same level, but due to decay in premium the same option will be decreased by 20-30%, which will be a loss to me. To reduce the % decay, we have to buy “In the Money” options, which wont be liquid anyways and will lost points in slippage also. And moreover, we have to pay 40-50 points extra at the name of premium, e.g Nifty Fut is at 5840, and 5700 CE option will be trading at 180-190 rs. So we will be wasting 50 points every month to get saved by 500 point gap up/downs which happens once/twice in 5 years. To me it does not make sense. And moreover buying option worth 200 rs will anyways be worthless on 500 gap up/down days.. So basically one will save 300 points but will have to waste 50 points every month.
      2) Since my SAR/TSL levels are based on futures,I will have to keep looking for the corresponding TSL for the option position, which is a big pain. Future may not make a new low, but call option will make a new low. Difficult to deal with these kind of scenarios.
      3) Since I punch in the SAR order, Stop and Reverse order with double quantity, the execution happens to be very easy if I trade futures without any delay, If I have to reverse my position from long to short in options, I have to sell the calls first and buy the puts, you can always say that keep both the sell and buy trigger in the system, but then we will not be able to take advantage of the price decay while buying option. options have to be bought manually to save some points.
      You may agree to disagree me. But this is why i dont play swings with options, Though I buy options on some high probable setups just for intraday.
      Thanks Pawan/Shahi http://rideniftywithshahi.blogspot.com/

  39. praveen98 says:

    Hi Pawan,
    Thank you and welcome to the full time trading …..
    All the best for your future trades
    Regards,
    praveen

  40. Abrar says:

    Hi Pawan

    Congrats!

    I have a few queries for you.

    1) Now that you are a full time trader, are you planning to venture into any new products of the market like options strategies, or currencies/commodities?

    2) I guess you are profitably trading the markets from last 2 years, can you tell us what has been the maximum drawdown in a month, in other words any particular month when your account was in deep red? Similarly for profits..

    • Pawan_Arora says:

      Hello Abrar,

      Thanks again. My answer to your questions:

      1) From Last 4-5 years I am only watching Nifty charts, So right now no plans to go to some other instrument, and moreover one of the reasons to trade full time was that I can spend more time with my family after 3:30. If I start doing Commodities/Currencies – I will have to trade till 11:00 PM, which I don’t want. Nifty is very liquid, Scaling is not the issue so I can always increase the size in nifty whenever I need to.

      2) I wont get into the minute detail, But For me one month performance doesn’t matter, because I know that 2 days of trending days can compensate the whole month of small-small whipsaws.. In fact this Jul series is one of the worst month for me, where we have seen 2-3 times, 100 -100 points of gapdown/gap ups against the swing traders due to Dollar/Rs related news/rbi actions. Profit wise April -2013 month was the best for me.

      Thanks
      Pawan
      http://rideniftywithshahi.blogspot.in/

  41. kiruba says:

    Hi Pawan,

    My hearty Congratulations for your success and best wishes for your future endeavors. It would be great if you give your opinion/suggestion for my below questions.

    Why many successful traders only stick to Index Futures? Why not stock futures?
    Do you exit based on your TSL or you have any fixed % target for every trade?
    How did you over come greed & fear? To be successful in trading we need to treat money at stake as just numbers. How did you attain this mind set?

    Regards,
    Kiruba

    • Pawan_Arora says:

      Thanks Kiruba, Let me reply your questions:

      1) The reason is simple, you would have seen many stocks going down 50-60% in a single day. Successful traders don’t want to blow up their account with just one such bad unforeseen event. Index futures are much safer because the % movement is not too much and one gap up/gap down wont define trader’s destiny.

      2) I generally don’t keep targets for Futures, but for options I book when there is enough money on the table.

      3) There is no simple answer that how did I manage to treat money as number, There are too many days of loss/profit has gone into the process to overcome that emotional barrier. But we can not treat money as mere number when we are trading with the money which we can not afford to lose. So one advice – Don’t play with big money initially, keep trading with small sums so that in the learning process when you are bound to loose, you don’t make big losses. Don’t just dump call options and then hoping for market to turn around, These actions can blow up your account in couple of weeks. You can not escape from losses but what you can do is to keep your losses less so that you can trade for few months rather than giving up after few days just because you blew up account fast enough. Just make sure that with every loss you are learning some lesson. Rest all will follow.

      Thanks
      Pawan
      http://rideniftywithshahi.blogspot.in/

    • kiruba says:

      Pawan,

      Do you Amibroker ? Pls recommend any reliable RT data provider

  42. PradeepKumarA says:

    Hi Pawan,

    Congratulations!

    You have elucidated very well on how to win in the stock market.

    Best wishes for your endeavours.

    Regards,
    Pradeep

  43. tejes says:

    Congrats Pawan! on emerging as the winner of Zerodha 60 day challenge πŸ™‚

    I had a question on History repeating by itself in Stock markets. I have seen in the markets that usually during august september the markets have usually gone up drastically as per history & also the markets on most occasions are positive in December.

    Do you also follow this seasonal pattern of Markets & any valuable inputs on this would be very useful.

    Also i am completely blank on Candle Sticks do you suggest any books to learn candle stick basics?

    Thanks,
    Tejes

  44. kiranshares says:

    First of all Many Congratulations Pawan.

    I read all the above comments and you rreplies to all questions.
    Your story and trading system are inspiring for new bees. Thanks for posting your thoughts as well.

    I will also go through your blogs when i get some good time.

    I have one question:
    These days many websites offering signal based trading or Providing signals for Amibroker users.
    By charging around 2000 Rs / month, Data feeds and Buy sell signals.

    How good is to follow those systems, are they always going to be profitable ? (or most of the times).
    If yes what time frame is good (5 mins, 30 mins or 1 hr as you are doing) ? if no why and how should we get
    to decide when to buy and when to sell ?

    Please advise.

    Many Thanks,
    Kiran.

  45. Neetika says:

    Hi Pawan, Congrats

    You already mentioned that you prefer hourly charts, without going into your strategy, can you please tell from your experience to a new trader which indicators or which all concepts of Technical analysis your think are useful for example EMA’s, RSI, ADX, Stochastic, Fibbonacci etc. SInce most of the softwares provide 100+ indicators and you cant follow all of them.

    Many Regards, Neeti

  46. Prashanth says:

    hi Pawan,
    congrats on winning the challenge.
    wish u all the best in future.
    can u plz let us know which chart types and indicators u found useful for ur strategy?
    thanks

  47. Nabajit Bhuyan says:

    Mr Pawan, I wish u a great future in Capital Market.

  48. Mohamed Iqbal says:

    Hi Pawan,

    I have been following continuous trade system and successful at it, One thing that is out of my control is gap opening, for eg if i am long on nifty @6500 my [email protected] 6445 and my target is my reversal trade. Assume that i take 5% risk on my trading capital,ie (Risk capital/ SL points is my quantity for every trade), but if market opens at 6400 my risk becomes 10% and this affects my strike rate.
    My question is how do you manage this situation or any volatile market condition?

  49. Harshit says:

    Hi Nithin,

    My question is addressed to you. I have been tracking the performance of Pawan since the last few months and noticed that he is making losses almost every month. So much so that he has stopped publishing his performance since April 2014. Since you are overall the man in charge of Zerodha and as such might be aware of the current performance of existing accounts (traders) registered with you, my question is,how are the other traders covered in the 60 Day Challenge doing ? Have they blown up their accounts or are still making good returns? Would be great if you could answer this since I am intrigued seeing the performance of Pawan after 2013.

    • Hey Harshit, we don’t track anyone’s performance individually. Trading is not always a one way ride, even the best have off months and it is part of the game. All the ones that we have featured have been consistently winning trading the markets and still continue to do so.

      Cheers,

    • Pawan_Arora says:

      Hi Harshit,
      You could have open the below link and checked my performance.. I have won 4 quarters.. You can see 4 awards against my name .. 5th one is on the way, and I see only 6 guys who have done so far in Zerodha as per their published records.

      https://zerodha.com/60-day-challenge/winners

  50. Nick says:

    Where is the new trading platform Mr. Nithin?

  51. Tradeking says:

    Nice try. We all know how surrogate marketing works.

    Folks – The previous post is a classic example of how ‘surrogate/self’ marketing is done nowadays. This post clearly shows that Mr.Pawan wants to restart his ‘calls’ service within a month or two. What a lame way for marketing.

    If a person is successful in trading, he does not need any money through running calls/tips service. How many ever articles/books written on this subject would not make greedy people to wake up.

    @Nithin – We all understand that you did not know that Pawan is going to run ‘calls/tips’ service when you interviewed him. If you would have known, you would not interviewed a tipster. Fair enough. But immediately after the interview, he ran the service and failed. But, why do you let these kind of self-proclaiming posts to be posted now? This is a big dis-service you are doing to newbie traders. He needs more customers to take them for a run again and guess what, a post like the last one would just lure more traders towards this Pawan. So, you have a choice of letting the last post to be present in this page or remove it. Choice is yours Nithin.

    • I spoke to him a few days back, and he acknowledged that starting the tips service didn’t really work out for him. I think he has stopped it a while back. I can’t comment on if he should have/or not started a tips service, but his run trading the markets on his personal account has been fantastic to say the least.

      • Tradeking says:

        Thanks for the reply Nithin.

        I still got a feeling that he is gonna start the tips service again (have seen these kind of posts/self proclaiming testimonials before). Whether you are right or i am right – only time will tell πŸ™‚

        • Pawan_Arora says:

          Hello TradeKing, Anyone would have got the impression that I only marketed myself using other ID. Even though it is not True, But I am in no position to prove it otherwise. Only Zerodha’s Team/Nithin can verify that and I rest my case. For rest of the comments you made about me, I choose not to reply to.

          Nithin – If possible,I would like the comment of Vikram to be removed as it does not look right.

  52. Harish says:

    Hi Pawan,
    I read you blog today and I am happy that you have explained the strategy which you follow. Doing this not not easy. Hats off to you and thanks for sharing.

    Can I work with you? Please let me know.

    Thanks
    Harish

  53. TraderRavi says:

    Pawan is 9 times winner , congratulations for consistency.
    so far 11 quarters passed since first contest.

  54. abhishek says:

    Hi, Pawan

    I would like to know how and from where did you learn to trade the market?
    If you can name the book you followed or any course you went through?

  55. Vikas says:

    Share market ka account close kaise hota hai

  56. VICKY KUMAR says:

    Congratulations brother!! I am also very passionate about short term trading and want to do it on full time basis. I want to learn how to do technical analysis of stocks for good profits and reasonable losses. How will I learn these things viz Books, Seminars etc. Please guide me as per your experience.

  57. Yashoda mungi says:

    Sir, my 60 day challenge brokerage refund not given.
    Daily saying that you will get refund by end of the day.
    YQ7996.
    Token number 477094
    When will i get refund money?

  58. Yashoda mungi says:

    Thank you received refund today

  59. Shiv Sharma says:

    Very much impressed with Mr. Pawan, as I ‘m a new trader, and want to learn as like you, to become a successful trader. I am loosing in intraday trading till now, and seeking for right guidance to win.

    • Zerodha Social says:

      Hey Shiv,

      You can learn a holistic approach to trading by going through Varsity. Additionally, you can also post your questions on TradingQ&A in this thread where trader and 60 Day challenge winner G.Bharadwaj is a contributor.

  60. Shiv Sharma says:

    Something I am missing in my strategies.

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