Jagoinvestor

October 1, 2014

How I failed into stock trading and 4 amazing things you can learn from my experience

Today you are going to learn some valuable lessons of stock market trading from experiences of a person who traded in stock markets for 1.5 yrs and failed miserably during those 1.5 yrs. This person is no one else, but myself

My mistakes in Stock Market Trading
Background

Let me share my story

Sometime in June 2007, I got recruited in Yahoo from campus placements. I was 23 yrs old, fresh into job and had no idea how my life is going to take shape at that time. Suddenly, I saw a huge inflow of money (salary) in my life and I was not very clear what to do with it.

I had some weird notions about “Getting Rich Quick” back then. I was good with numbers, knew about stock markets basics and considered myself to be “analytical”, so I thought I am smart, very disciplined internally and can “possibly” do better than “average” in stock markets (every one thinks like that only).

So I was ready to enter the world of stock markets.

Now, there was one more guy in our new joiners group who was equally enthusiastic about stock market (that guy is now an IAS officer) and just like a smoker finds another smoker in a big group, we found each other and became buddies.

Over the next few weeks we made various plans on how we will get rich trading in markets. We were already millionaires on an excel sheet and we thought even in worst case scenario, we will do well.

So our next step was to open trading and demat accounts.

When God Sent that guy!

Things were all set, we were about to start the race.. and one day one ICICI Direct guy was in office (targeting new set of employees to open trading accounts) and we thought he was god sent ! . We opened our trading + demat accounts in no time.

The Rs.500 annual charges seemed too small to us compared to what we would be minting in coming months. When he said its “FREE” for the first year, we were like – “We won’t mind even if you charge 10X for that in the first year” .

We got to know about “options”

While we were ready to start our journey in stock markets . We got to know that there is something called Options (derivatives) apart from regular stocks. This was something new for us. We googled and searched about options, and we came to know it’s a high risk/return thing. We didn’t focus too much on “high risk” part , the only thing we could read was “high return” part.

So next moment, 20-30 eBooks got downloaded on our laptops and we decided we will learn about it and make sure we don’t leave any stone unturned for make our “millionaire dream” a truth. It was a bit hard for us to delay our “trading” for few weeks 🙁

Learning about options was FUN

Learning about Options trading opened up to a whole new world for us. We learned that options trading is an amazing leverage tool which was very fascinating. I learned about technical analysis also and used all the office bandwidth to download technical analysis eBooks and videos (at one point of time, I had 1000+ eBooks on stock markets and I didn’t read 998.8 eBooks out of it).

For those who want to learn about options in detail, I would recommend an excellent resource on it from Deepak Shenoy of Capitalmind. He did a webinar on the topic and it was recorded and uploaded on youtube. You can see it below

After getting introduced with Options, our greed went to next level and now we became much more rich on excel sheet. Our profit margin went really high (but we didn’t focus too much on risk factor, infact we were not even clear on where we are entering into and how risky it can turn out to be).

So were all set with high energy, but could not take any action because our trading account was still not active that time and we were waiting for it.

Finally we started Trading

So, one day I got a sms – “Your Trading account XXXXXX9484 is Activated – ICICIDirect” . I logged into my account, transferred 10,000 from my ICICI bank account to ICICIDirect account (they were interlinked already) and there was one stock we were following from long time. We bought an OPTION for that stock , I had to pay approx Rs 6,000.

  • We went for lunch and were back in 3o min
  • I logged in my trading account and saw the current price of the Option trade
  • It was Rs 8,500. I SOLD it

I made Rs 2,500 profit , a 24% profit during LUNCHTIME and now we were planning, if we can I leave our jobs ?

I realized years later that one should never make profits in their first trade in stock markets, it fuels the overconfidence in you like anything and gives you a false sense that you are really some smart guy !

Now the Learning Starts

Till now I was giving you the background of what all happened before we started our options trading journey . For next 1.5 yrs, we were very much involved each day into stock markets, made some money, lost a lot more money, got frustrated, some short-lived happy moments came in too and finally one day I put a big break on my options trading.

I learned a lot of lessons in those 1.5 yrs of my journey in stock markets and realized that I can pass on some learning’s to others who are now trying to enter the markets or are fascinated with the potential stock market trading holds .

I am not saying my learning’s are some hidden secrets which are very new, but I can share what all I learned in my style , I am sure it will help someone who wants to learn from my mistakes.

These few points will help you to not make mistakes I did and help you overcome some myths and notions associated with stock market trading . Just a request – Note that these learning have come from my trading in Options (which is derivatives) and not regular stocks, but that does not change the learnings you are going to read below.

Mistake #1 – I focused too much on Knowledge

When I entered into stock markets, I was of the impression that I need to acquire a lot of knowledge on how things work, how various strategies work ? How technical analysis can help in trading ? I learnt all the technical indicators, back tested them on the past data, wrote lot of programming scripts to test my hypothesis.

I even went on to download lots of videos online and watched it over and over for many months and I realized that my knowledge had gone up significantly. I now understood lots of concepts, strategies, complex terms .

I could see a chart and instantly see lots of hidden patterns and could tell more than a normal person who does not know how to read a chart.

But then, over the months, I realized that “knowledge” is just a secondary element to trade successfully in stock markets. Almost all the good traders around the world agree that “knowledge” does not contribute more than 10-15% in being a successful trader. It’s an important thing , but certainty not the holy grail

I am not saying that one should not focus on “knowledge” part, all I am saying is that it’s not that KEY thing to succeed. Over knowledge will only create problems for you.

One of the famous stock trader Ashwani Gujral says in his book – “How to make money trading derivates” – that as per his experience over many decades, he feels that knowledge of charts etc contributes to just 10% of success for any trader. Here is the chart which explains what he mentioned in the book

elements of successful trading

So, learn things in stock market and then concentrate on the other important elements which you will learn in some time. Dont overthink about knowledge part.

Mistake #2 – I went against the Trend

What I have seen is that all the new traders somewhere want to challenge the markets and want to predict when markets will fall and when it will rise. They want to predict when the trend will reverse. They want to catch that top or bottom.

This is the essence of where most of the failed traders are stuck . If markets are rising , somewhere inside me, I wanted to catch the top and wanted to prove as if I “almost” know that now markets will fall OR if markets were going down.

However in this process, I realized that all the time I was just trying to swim against the trend, If markets were going up, I tried to predict when it will fall and how much and vice versa, and in that process I never stayed with the trend. There was some kind of fun in going against the trend. It was very tough to accept that markets can be simple (not easy)

Below you can see last 1 yr graph of NIFTY Index and see that there has been an uptrend in market and it has risen from 6000 in 2013 to around 8000 now . That’s 33% increase , but imagine someone who didn’t stay with the trend and always tried to predict when will market fall and looked at markets with suspecting manner and never got in the trend itself.

Don’t go against market trend

So just make sure that you never go against the flow in general. If I have to compare this trend following with some adventure sports, then I will compare it with Surfing, where you ride on the flow of the water. The flow of the water itself will take you with it, you just need to stay with it. Imagine what happens if you try to go against the water flow, the chances of you getting crushed is high.

So, try to identify the overall trend (upside , downside) and then make sure whatever is your trading style , be with the flow itself.

There is nothing wrong in having a contrarian view and predict when the markets will turn its direction, but be sure you know how you will take that decision. You can surely take a call against the trend , but make sure you accept that you were wrong in case you fail. Don’t try to prove yourself right if you are wrong, because it’s only going to harm you.

Mistake #3 – I didn’t realize that Money management is supreme

I personally think this is the most important part of being a successful trader . The biggest reason for my failure was that – I was very casual about money management and made the biggest mistakes in this area. Money Management in context of trading is all about managing your overall money and how much part of your overall trading capital you put at risk in each trade.

I will give you an example – Let’s say you have set aside Rs 10 lacs for stock market trading . Now let’s say you make 2 rules

Rule 1 : You will never use more than 20% of your capital in any given trade, no matter how promising it looks to you. Which means out of Rs 10 lacs you have , you will not put more than Rs 2 lacs on any single trade (so even in worst case, you will lose only 20% of your capital)

Rule 2 : The maximum loss you will allow on any give trade is 10% , which means that if you put Rs 2 lacs on a trade, you will not let the loss cross 10% , which is just Rs 20,000

If you see these 2 rules, you can see that the maximum loss in any single trade will not be more than Rs.20,000 which is 2% of your overall capital. So assuming you make 1 trade each month, you have 50 months of quota with you to go wrong fully

No one is so bad that they will make bad decisions every time, you make good and bad both decisions , but important point is that you should survive in markets till that time when you start taking right decisions .. Hence it’s important to be in the game and unless you take money management very seriously , you are bound to get out of the game some or the other day.

This is exactly what happened with me. By the time I started realizing that I am moving from “bad trader” to an “average trader” zone , my capital was over and I was already in loss and I never went back to the game itself.

Why one should use Money management ?

The biggest reason why money management should be used is that it does not expose you heavily to the risk on a broader level, even if there is very high risk on individual trades.

And the next big reason why money management is crucial is that it brings some kind of consistency in your growth overtime.

Below you can see 3 versions of money management, which is BAD , Average and GOOD money management, where the overall risk taken on a single trade is moving from high to low.

I did some simulation on excel where we are measuring how capital will grow over 36 months (assuming 1 trade is done in a month) . I ran 25 tests and plotted them on a graph together. You can see how in case of bad money management the growth of capital is very random, unpredictable and varies from very high (lucky) to very low (unlucky)

But in case of good money management , the growth of capital a trader has moves up over time and with high consistency .

money management system case study

So to sum up , I would say money management system is like having a great stamina . If you are there for longer time in markets, in a way you win the battle to some extent.

Mistake 4# – I thought trading is all about WINNING

Psychology plays a big role in being a good trader. From the childhood we are programmed to WIN and that same mindset takes over rational thinking in stock markets trading too. We want to WIN on all the trades , It’s hard to accept that you were wrong , being wrong means taking a LOSS . LOSS equals FAILURE and we are never taught properly how to take failures. And that’s exactly what happens in trading, novice traders don’t cut their losses fast, they let them grow (ego) and keep hoping that they will WIN

This is what also happened with me. When I bought an option for a stock, every time I wanted to WIN, every time I wanted to make profit on that option. I thought I will become a great trader , if I WON more and more ..

I was so WRONG

Winning MORE times is not same as making MORE money in stock markets trading. I know some of you who are reading this are confused with this statement , but let me explain this important point

So when it comes to stock market trading, you can’t choose how many times you WIN or LOOSE, but can control HOW MUCH you will win or lose !

All you can do is 3 things

1. You can control how fast you can get out of loosing trade (getting out of a bad decision)

2. You can control how long you will stay with a winning trade

3. And You can control when you will take the decision using your knowledge.

WINNING MORE , but still LOOSING

Every trade you make in stock market, you should make sure that your profits potential is generally much higher than the risk potential. Here is how it should look like

risk reward of money management system

It’s very much possible that a trader wins 6 out of 10 times and still looses the money and in the same manner, it can happen that a trader wins just 4/10 times and still makes a lot of money.

Let me explain this with an example. Let’s say a person has Rs 10 lacs to start his trading .

A good trader wins just 4 times, but he makes sure that he will make big win and every time he makes a bad decision, he cuts the loss fast.

And in same way, a bad trader might win 6 times , but every time they are in hurry to book their profits (so they earn small every time) and when they are in loss, they do not book their losses fast (no money management rules in place) and hence let their losses grow because they can’t accept they made mistake (Ego) . The chart below will explain you this .

Why Winning in stock markets is not important

This is the only big difference between a good trader and bad trader .

Conclusion

Today I have shared my mistakes I did when I traded OPTIONS and I hope you will learn from my mistakes . But this can just be starting point only, you will only learn when you get on the ground and do the real trading. Till then it’s just a practice no matter what you do.

It’s extremely addictive to trade and if you are like me, you will feel a great thrill trading either stocks, futures or options (or any other instruments) , while I didn’t succeed in trading, I at-least know why I failed, I at least came to know my weakness and now I can improve upon it. I can at least help others to not make the same mistakes I did.

Also in future, if I get into trading again, I am sure I will be 10X better compared to earlier version of mine. I know it will still be very though, but I can try at least and when I stopped my trading, somewhere I felt bad about leaving it. I felt as if I am turning my back and got a feel of leaving the battle ground, but it was a right decision because I could have damaged my own net-worth to a big extent had I not stopped.

I would love to hear what you feel about the points I shared and if you would like to share your own experiences

Subscribe
Notify of
guest

This site uses Akismet to reduce spam. Learn how your comment data is processed.

84 Comments
Inline Feedbacks
View all comments
Diptiranjan Moharana
Diptiranjan Moharana
2 years ago

Hi bro,
Although I am little late to read your story still I went through all those ups and downs like you. Learned every penny rules, strategies, mindset to apply in option trading and before in intraday stock trading. But gradually I am getting into the loss zone only. Everytime I quit, accumulate money, enter and at last same story. Now after reading all your faults, I realize that all that matters to cut your loss and wait for profit.

But sometime one wrong trade,fear or greediness takes all the profit you made throughout the day.
Although I know how to overcome it, but some wrong decissions are bad enough to keep you away of your dreams.

Is MEDITATION the cure for all these misconduct of mine? How one best trader keeps his/her mind in control throughout the day?
Do you think if I manage my money in right way and trade only after having ample amount of capital, it will be helpful for me?

How much capital is enough to do option trading and do money management well?

Tapan Kumar
Tapan Kumar
3 years ago

It is really helpful for both beginner and experienced investor.

Amit Kumar Mishra
Amit Kumar Mishra
3 years ago

Thank you for telling your story and we learned a lot of thing from it. I wish that you will become a successful trader in future. Because you know the mistakes which are done by Normal and novice traders. Thanks

Venkat
Venkat
7 years ago

Thanks a lot buddy …the post is great….

ramadevi.s
ramadevi.s
7 years ago

I have a question on IPO investing; tough not related directly to this article, this is the closest I can find relating to my query. By the way, there is no place in your website for asking questions unless we reply as a comment on any article; could you please provide a link for general queries not necessarily related to particular articles?

Anyway, my query is this? I invested in 2 IPOs recently – well before the last date and through ICICI Direct. The 2 IPOs are RBL and MGL. Both applications I got NIL allotment. I wrote to the registrar asking for reason – I got a standard reply stating that the allotment was on Draw of Lots basis. What does this mean? Is it simply luck of lottery who gets allotment. I would have thought allotment should be on proportionate basis or first come first served basis. I also notice in both cases, the issue was listed at very good price on opening day. Now I wonder whether there was any suspicious circumstance in this?

Samuel
Samuel
8 years ago

Thank you so much. Learning from failures is a good thing,but putting effort to teach people who u don’t even know, to not to make the same mistakes is great thing. The article helped me a lot. Thank you again.

som
som
Reply to  Jagoinvestor
7 years ago

Great post!!!

sagar
sagar
8 years ago

http://www.nsebsecharts.com has recently started showing realtime stock trends along with buy signals. This may help a little better!!

ramreddy
ramreddy
8 years ago

I am sure this is really a good message to people who is about to start trading like me. I really appreciate your work, hope you will rock the trading while your come back. Looking forward to hear your success in trading (doesn’t matter how extent it is).

mahipal
mahipal
8 years ago

Excellent article with good analysis.

Dan
Dan
9 years ago

Hello,very good and informative views from all.I would like to know from all traders online about the the companies which have the lowest brokerage for intra day and delivery based trading.

Surya Tiwari
Surya Tiwari
9 years ago

Given below details came purely on my own experiences, hoping it may benefit many people……
Intraday trading requires proper self-discipline… (It should be your primary source of income, while secondary income is also essential).
So From my experience Golden Rule is given below
1). In this trade you don’t need to love your stocks, love their movement. Here risking amount should be low, profitability should be high.
2). Ideal amount = Rs 5 lakh (4 lakh in trading a/c +1 lakh in bank saving a/c.) this amount should be free for 3 years even not emergencies.
A. One lakh – investment holding
B. One lakh – regular holding (for shorting purpose)
C. One lakh – intra-day trading (buying first, then sale)
D. One lakh – keep idle in trading a/c – for golden opportunity (when panic situation arises)
E. One lakh – keep in saving bank a/c.
Note.
 If you may divide in same ratio for capital & profit if amount is less or more than 5 lakh.
 Step A,B,C,D,E should be inter-changeable according to market behavior
 If profit seen, immediately book it, do not wait your target in first/last hour of trading.
 You have to make yourself emotionless during trading time. Keep yourself cool/alone when panic is in market- it should be best time to you to capitalise this panic situation (it only happen if you have cash in your hand – do use only IDLE amount kept in trading A/c.).
 If any share falling very fast (please make brief analysis from historical data and try to find how it recover in situation in past) then act accordingly- it is possible by minded people only.
 I am not recommending to put stop loss, however if you struck badly, first earn loss amount from other shares, and then book loss.
If you buy 5000 UNITECH share @19.3 sell it 19.75. Amount is on stake Rs. 95000, possible profit = Rs. 3375……is it looking too much risky. Once book profit…….then do the same thing with 3000 units, in next time with only 1000…be continue as long as you feel uncomfortable to sit in front of your PC.
 If share price is between 16-25 5000 unit @ first two attempt
 If share price is between 25-40 3000 unit @ first two attempt
 If share price is between 40-55 2000 unit @ first two attempt
 If share price is between 56-100 1000 unit @ first two attempt
 If share price is between 100-170 500 units @ first two attempt
I am sure you may earn on an average 3000 per working day. Means 60000 in a month with capital amount of Rs 5 Lac
3). While buying intra-day, do not think about no. of shares; think about how much amount you are risking.
If you buying SBI 100 SHARE it needs 2.5 lac, and
Practically earning capacity = 100*20=2000 (generally SBI gives 20-30 points movement).
If you go for UNITECH for same amount you may buy 12000 share, as UNITECH give 0.4-0.6 movement per day(average) earning capacity would be = 12000*0.4 = 4800
Now you decide which type of stock is better for you, but you should be habitual to book profit.
4). Only 3-4 hours working best time (best time to trade in given below time)
 9.15-10
 10.3-11.15,
 11.45-12.45
 2.25-2.4,
 3.05-3.3
Criteria of selecting Intra-day Stocks
Please try to select beaten down (Group A) stocks with the price range of 20-40 to generate good amount of profit. Some of stocks is given below, as per my trading experience
(OPTOCIRCUIT, UNITECH, JPASSOCIATE, TV18BROADCAST, ADANIPOWER, HDIL, ALBK, RCOM, DLF, UNIONBANK,IRB, SHASUNPHARMA, SBI and many more)
Please select 15-20 stock, and keep it on display of your PC screen analyse. Do trade maximum 2-3 stock in a day (which shows movement) them according to mindset. One more important thing, trade in only those shares, which one follow the market (analyse this from historical data). Please avoid those stocks for intra-day trading which behave unnatural.
Driving a car on same road regularly is more comfortable and controllable, because driver knows all holes & doles in the road. In the same way, you should trade only in selected 2-3 stocks daily in fix period of time say 15 days or one month. After trading fix time period, you may switch on those stock that shows movement at that time. Some Key points are given below
Price movement
Good bouncing history in a trading day
Selective stocks with high degree of volume
Be flexible to target- so habitual to book profit
Trade intra-day while keep in mind for intra-week (for square off purpose)
Do not try to break your own made rule
If you have trading experience less than 2 year, please avoid trade on margin money completely. However it is applied for all person who is trading, 1/5 of capital amount can be used on normal working hours. But extremely avoid margin money during panic time.
Key Points for Yourself
Friends – Intra-day trading require some essential things.
1. Mind (Controlling Power) –
Friends doing intra-day trade is like driving a car (riding bike). How fast or slow you are driving is not much important, how much control you have on your car it is the main thing. When it comes to CONTROL, it connects directly with your mind, not from any other part of body. Your hand/leg is for supporting roles only. So Mind drives the car, not your hand/leg.
Frankly I am saying here if you have mind (Good Analytical Power, how fast you can observe the things happening surrounds you), then only you are made for Intra-day Trading.
So please re-study yourself about this features (you know yourself more than others). If you think you are not fit here, just focus on investment, forget intra-day trade. (however you may consider Intra-week OR Intra-month)
2. Skills
Knowing everything means not confirm here, you can do everything. Doing needs regular practice. Many people know each and every part & features of a car, even also know how to drive a car, but can’t drive the car. At the same time many don’t know clearly part & features of car, but they drive car smoothly.
So person, who wants to be in intra-day trading, needs mind and skill more than others. It is extremely essential things. You know the movement of share, but can’t buy/sell timely…..waste everything here.
You should know very well that how to place order quickly (you may go virtual trading for making yourself skilful)
3. SMART & Quickness
S – Specific M – Measurable A – Attainable R – Relevant T – Time-bound
Smartly placing order timely is essential things. If any movement show opportunities to earn just do it…..waiting in such situation is not allowed
4. Emotionless
It is the thing which decides that you are going to make profit or loss. When panic situation arise, emotionless people capitalise this like opportunity, while emotional people just book the loss and saying thanks to god, I saved today (and if loss is high, don’t explain what situation they feel)
5. Pleasant Environment
 Sleep Well. Please keep yourself cool, tension – free,
 Make a room exclusive for trading purpose, good quality music sound.
 Do not too much focus continuously on computer screen
 Positive environment
 Remove all of friends/relative from your group who know/ask/discuss only NEGATIVE words – most important things
Broker
 In intra-day trading, it plays an important role to decide your trading (life). My advised to choose a brokerage house which give unlimited trading facility, at the same time, never compromised with quality features and value added services.
 If you pay Rs. 100 as a brokerage, actual cost of trading would be Rs 170-300 depending on brokerage house.
 Family members of brokerage –STT, Service Tax, D-mat charge, Stump Duty and many more……
 Be informed brokerage amount should not cross Rs 10 per lac trade @ any cost. In better word, there should be lowest cost of trading.
 Low brokerage also reduce tensions if target is not meeting, you may square off all your trade low profit/ zero profit/low loss because it is not going add some more loss / reduce profit during intra-day profit/loss booking.
 When I traded at Karvy, intra-day cost was Rs 200 per lac after losing about 0 .75 lac in 6 month, I switched to Bonanza & Ventura……bonanza costing Rs 60-80, Ventura- costing Rs 18-22 . Presently by last 2 year, I am happily trading @ Ventura and making good profit.
Use of Margin Money facilitated by broker.
An Intra-day trader is like mobile shop owner who is dealer cum retailer (precisely only dealer)……here you work start…..
Many people in share market consider intra-day trade like gorilla war….these people not only use own tools but also borrow it from others (sometimes even don’t know how to use the borrowed tools). They go in war with pseudo confidence (you know why). As long as they face small kind of contenders, they win and acts like a king. But when real attack comes from all corners, they not only lost the war, but also, they have to work for own survival (for existence).
So when it comes use margin money for trading, it’s like killing yourself with own hands. You work very hard to generate tools to fight; you should know how to use the tools. So train yourself. Generate skills (But be sure, it does not come in one day, need regular practice)
Intra-day traders lose money just because of working like gorilla war. This type of person wants to just live their life. They understand themselves a king. These traders win 4-5 days in small amount , and lost all with one big attack that come around all corners….and if you fighting with someone other’s sward, and lost it, think what happen

aarkay
aarkay
9 years ago

Thanx Manish for sharing your story. It seemed like my story. Since realising that it is no gain game for me, I have been trying to detoxify my self from trading addiction and you have reinforced my resolve. I am now buying shares only in form of Monthly Equity Plan and holding on to them to satisfy this urge of trading.

tarak
tarak
9 years ago

Hi Manish,
This is the story of every first time trader who enters stock market. You have captured every novice’s experience very nicely!

Only few will stick around, learn from there’s as well as others mistakes and create there own winning strategy over the period of time.
1. If you are a fn0 trader, you would not trade many; Many serious traders stick with only one e.g. NIFTY and be with it forever. Although, options look simple (min. risk but maximum gain as projected), they really require complex strategies when compared to futures. While going through the material online I came across a very nice blog (http://niftynirvana.blogspot.in/). Sharing it so that someone might find it useful.

2. Many successful traders with multiple strategies at the same but min. lots.

3. Just investing niftybees on a periodic basis could give a new comer a good introduction to stock market.

Thanks,Tarak

Viral
Viral
9 years ago

Manish,
Thanks for sharing your experience with us all.

Though your experience covers what most of others on this forum have experienced in initial years of investing/trading; I have got a question (for the same topic) for you.

If you have:
– Liquidity (about 3 months of salary)
– Good amount of savings in FDs & PPF (in SBI)
– A primary residence (without any liability/loan associated with it)
– All insurance (Term, Health & Auto)

and you get a surplus amount about 5000 – 7000 a month to invest,
Would you still hesitate to suggest for investing in direct equity?
(Just wanted to know your opinion)

P.S. I am planning for Only short/mid term holding of stocks only. (No day trading – No Derivatives/F&O).

sreenathuuu
sreenathuuu
9 years ago

Thanks Manish for opening up your heart and giving us this valuable advice 🙂 ..appreciate it !

I also want to share my experience in this field..basically I am not a big investor..I have been investing since 2010.
My rolling money is very less close to 5 L…usually trade equities and IPO.
As your said there are times we will be in greed , confusion while trading .
My strategy is to invest for short term…I usually won’t retain the stocks for more months at the most 6-8 months..that too Hot stocks which are performing well at that point of time.

I am happy if I get atleast 1000 Rs profit (excluding the brokerage)..that I can pay my utility bills :)….I will calculate and compare – how much I will get if I deposit in FD for so many days and what is the return if I hold the stock for some many days…it always gives me profit of atleast 200-500 bucks more then FD value.

Hence satisfied. I always keep switching sector of stocks..that is one thing which helps me…more oriented towards IT stocks and upcoming sectors like pharma, e-commerce . Avoid evergreen stocks like NTPC, Bhel…these will have very less change in value daily….as my stategy is short term..I will put ny bet on hot stocks only.

Not sure is this is correct strategy..but small gains helps me to pay by monthly bills and I can save from my salary as well as pay my home loan EMI.

Then you might ask me that why don’t you put FD and sit idle …:)
None of the banks give me FD for 1 month deposit..savings rate is less as well.
One advantage is I can easily withdraw money if I ma in need..some or other sector in my portfolio will be performing well…

Thanks,
Sreenath

Praveen
Praveen
9 years ago

Nice article.Same thing what i wished to convey was done by you.

Jatin Visaria
Jatin Visaria
9 years ago

Nice article & lesson. Once upon a time was heavy trader. Made good initial profits & each time double the trade value. Collected around Rs. 1 L in few months & then lost 90K in single trade within 20-30 minutes. Since then never looked at F&O & individual stocks.
Its all about guessing what millions of other people are guessing. No model on this earth can predict human behavior which is irrational. Better to buy entire market via Index funds. Takes care of everything.

Ravindra
Ravindra
9 years ago

Awesome, Its me in your words

Anand
Anand
9 years ago

Hi Manish,

I am a vivid reader of your blog.With regard to the above topic it seems it gives a wrong view about stock investing/trading. Investment is an Art not a Science. I am not good in number but i have invested in good stocks . In stocks of company which have grown along with me . I emphasing on company like Colgate ,ITC,Dabur,MRF , Reliance and many more . Anyway good information from your side.

Abhijit
Abhijit
9 years ago

Hi Vishal,

It seemed like I am reading my own story in your words. I have felt each and every fact mentioned in this post.

– I was not having any strategy. Just used to look at the charts and predict a turn-around or continuation which used to reverse after some time and I used to see my profits getting converted to losses and still try to hold them till them become too much.
– I was allocating very less money (sometimes Rs. 5000/- to maximum Rs. 20000/-) that too without any money management strategy.
– Many a times, I got carried away due to greed of the recent profit or got into a trap of recovering a recent loss. Both occasions caused me huge losses. A poor show of psychology here 🙂

Finally, I am into Value Investing and doing great there.
Will get back to options when I have enough of money, strategy and knowledge on how they practically work.