If you have decided to trade with Futures & Options, then be prepared to lose whatever you invest. It's just a matter of time.
The pattern goes like this: The day and the week, you decide to enter, you will be blessed with good/positive trades. This may motivate you to increase your stake higher. This will give you enough confidence to increase your investment size. You may get this amount from your mother & father or close relatives. Slowly, the number of negative trades will increase. You would think that your views & news were correct, but your timing is not good. You may pay money to some technical experts for trade tips. You will act on some trade tips and you may miss some. Interestingly, you will lose money on the trades you execute and your expert claims that his/her clients made a fortune on the successful tips. You are clueless but you would surely curse yourself. Many times, it happens that your trades would first hit the stop loss limit that you have set, eat away your money, and then go and hit the target. Again, you will curse yourself for your bad luck. And for the trades that you don’t keep any stop-loss limit, it's like a free fall. It will eat away your margins. Margin requirements won't allow you to enter other trades. Exactly, at this time, you views/trade tips will work accurately.
Slowly, your investment amount starts coming down. Your email id will be filled with the contract notes sent by your broker. You would never dare to open the contract notes and see how much money your broker makes on your trades and the amount of taxes you paid to the Government and Exchanges. After some time, even if you open the contract notes, you will have a soft corner towards your broker and taxes and you would make sure to please/beg your stars to move around in your favor.
Then you would reach a point where you would figure out that investment amount is not even sufficient to take a position. Instead of exiting from trading, you would start texting messages to your friends for hand loans. Or you may start applying for Personal Loans from your banker. In between, you would start playing with the Options Contracts. The pattern will be repeated here. By luck, if you make big money in one option contract then you would assure yourself that you can recover your entire losses by investing more. If you lose everything, even then you would assure yourself that you can recover your entire losses by investing more. (90% of the traders will experience this pattern)
As there is no money, you may get thoughts to exit from trading. Your mind starts calculating the exact losses that you had incurred. Exactly, at this moment, you may get an approval for a Credit Card or A personal loan or a high-cost hand loan from a friend. This is the moment, where people should say no and exit. But, a very few exit at this point. They would collect the money and invest again.
The above pattern will repeat. The only difference is: You may trade a little longer than earlier. This time, you have more positive trades where you booked small profits and you would have few negative trades where you had lost more money.
By this time you must have stopped looking at the emails with contract notes attachment sent by your broker. You are used to such mails now. And you will have more unread emails now than earlier.
Still, you have a chance to exit and focus more on your business or Career or Profession. But, many people would try to take one last chance. Thanks to companies like Manappuram Gold or Muthoot Finance etc that allows you to take a loan against little gold that you have.
Dejavu. The results repeat. But, you will have a sense of satisfaction that you lost well.
By now, you could have missed one or two EMIs on your loans or Interest on hand loans. CBIL scores would start hampering. Friends, who gave you hand loans, will become a bit rough. You will post more quotations on your Whatsapp, Facebook, and Insta. And you are used to a new way of life.
Some people stop trading after ending up with huge losses. Generally, the losses will be equal to three or four times to their annual earnings.
As you are on Quora, suddenly, you would see somebody’s write-up on “How much fortune he made on trading”? When you read the details, you will figure out that he has made 5000% returns on one day/one week because he invested Rs.5000 in an option contract and it has reached a value of 30000. He proudly says that he booked the profit and living his life happily ever after.
After reading this, you will have a gentle smile. That smile shows your maturity. And you will move on with your life as a learned person.
Peace!
Note 1: I lost 10 Lakhs when my CTC was just about 3 Lakhs.
Note 2: I had used 6 to 7 Credit Cards to survive. And I took close to 5 to 6 bank loans. Later on, Had to settle those cards in one go.
Note 3: I joined a Broking Firm. This time, 99% of my clients ( Around 5000) had lost money in Trading.
Note 4: One of my big HNI clients, had lost 1 Crore in a single trading session. He took 20000 lots of NIFTY. In 2008, the lot size for NIFTY Futures was 50. That day, NIFTY cracked by 100 points. We had to take special approval from our Risk team to open limits for the clients at the branches cannot take such a huge risk. Their accounts must be adjusted separately.
Note 5: I stopped trading in 2008. Never entered again in Stocks and Commodities
Note 6: In 2018, I wanted to learn how cryptocurrency works. So, I invested around 40000 and bought Ripple Currency. I just wanted to leave it forever. The Investment went up to 2.5 Lakhs. I did not book profits. I just left it. In a week’s time investment came down to 5000 to 6000. I don't even know where my coins are lying. Interestingly, that exchange is closed as well.
Last, but not the least: For god sake, please don't trade in Futures & Options. If you have money buy some good stocks and just leave it for your retirement. You will become a millionaire. Stock Market Creates wealth in the long-run and destroys everything in short-term trading.
Stock trading is highly lucrative provided you have a good knowledge of the stock market, a keen eye for analysis, and good risk-taking ability. A common misconception is that stock trading is an easy method of making a lot of money. That is not the case, especially if you are starting. You need to spend some good time understanding the basics and then start trading. Let me share a few lesser-known tips with you:1: Knowledge is crucial: Beginners' luck may help you on a couple of occasions, but if you want to succeed long term, you need to gather as much knowledge as possible. Keep reading and stay updated about the latest trends.
2: Keep your trading funds separate: Only fools will keep gamble all the money they have. Traders generally set aside funds that they allocate for trading. As a beginner, keep these funds around 5-10% of your total investment. This way, you can narrow down the losses, if there are any.
3. Dedicate ample time to trading: If you plan to keep trading as a side hobby and do it when you get time, then there are good chances that you will not make much out of it. You will have to set up a routine and invest ample time to learn to trade and then get good at it.
4. Avoid temptations: As a novice trader, you will be attracted to investing in stocks when they start delivering profits. But it would be best if you were reasonable and not start dumping your money on that stock as there are good chances that the stock might go down in a few days.
5. Have a plan and do not get emotional: It helps chart out an investment trajectory and work towards it. Do not get emotionally attached to your portfolio. If you are getting huge profits, then stay calm and reinvest wisely. On the other hand, if you are making significant losses, don't be disheartened but reevaluate your portfolio.
I hope the above five tips help you in your trading journey. Be calm, be patient and be consistent, this is the advice my mentors have given me, and I will like to pass that on to you. Good Luck!!!!
0 Comments