Manojkumar is a college student with interest in day trading. He aspires to be financially independent one day. In this account, he shares his lessons from two years of tracking the charts. Investors tend to take a disrespectful holier-than-thou approach towards traders without often realising they are essential for market stability. Yes, trading is not easy and not for everyone, but then again neither is investing (or anything else)!
Trading while studying in a college is no easy task as we have to look upon various factors to get consistent profits. Trading itself is not an easy job, but when it combines with studies, it can be quite stressful! I have been trading for the past two years, along with my studies, and I believe many of you will be trading like me or wish to do so. So let us see what all the hardships and mistakes I had in my trading journey and how you can avoid these and start a successful career in trading are.
My journey so far: As a firstborn child of a middle-class family, I came to realise the importance of having a secondary source of income which can help us to lead a stress-free life. So I had come into this realm of stock trading only to attain financial independence in a relatively earlier phase of my life. I have been trading since 2018 right after finishing my higher secondary studies. Since I am a first-generation stock trader, I didn’t have any proper strategy or trading plan whatever you call it.
Because of that, I tend to depend more on indicators rather than learning the price action patterns. Right from RSI to CPR to MACD and all other famous indicators which were available with my broker’s platform, I had used everything until it gave me profit.
There is no holy grail in trading!
It may seem like a story of a typical Indian trader who is new to the stock market but believe me every person who enters into this realm of stock trading will most probably make the same mistake. Then after incurring some losses, I had decided to find the correct way to analyse the charts and predict the market movements. I won’t say trying out all the techniques and indicators that are available in the market is wrong, but try to find what suits you after all.
Trading is all about probability
I learnt that one should not copy or fall for any other big heads trading strategy. They may have designed their trading plan according to their capital, and the amount of loss they can afford, and they will have an exit plan if it goes wrong which they won’t say. All these YouTube traders are publishing only their profitable trades and will trigger you to pay a lump sum for their “JOIN BUTTON” or their “PRIVATE TELEGRAM CHANNEL” in which they give Buy and sell signals. Don’t ever consider that because it may provide short term profits, but what will you do if they stop their service? You will end up wiping all your capital.
When I was a newbie to trading, I too thought of buying an iPhone, a Royal Enfield and all fancy- fancy stuff just by connecting the price action patterns that occurred in each stock. In reality when I deployed the hard-earned money of my dad into a trade and if it goes wrong, my whole body shivered, my hands trembled, and even though it came near to my stop loss, my heart didn’t let me book the loss.
Likewise, recently one day in June, when India – China border conflict suddenly came into news out of nowhere, both Nifty and Banknifty crashed like anything. Unfortunately, I had taken a position in HDFC Bank. BOOM……… I had to take a loss of about Rs.7000 on that day. It ate nearly 15% of my capital. I will never forget that day and it still remains the most significant loss in my trading career.
Key takeaways from my trading experience
- It would be best if you first defined your goal and what you want out of trading, according to your circumstances.
- Avoid taking trades based on signals from trading gurus.
- Design your strategy or Trading plan which give you greater odds of success
Elements of a trading plan
A trading plan should tell you:
- Under what market conditions will you enter a trade
- When do you enter a trade?
- How much risk do you put on a trade if the market goes against you?
- When will you bail out of that losing trade?
- If the market moves in your favour, where will you exit your winners?
- You must understand the concept behind your strategy, so you don’t give up after a few losing trades.
- Don’t quit after incurring a series of losses. Trading is not a scam because again, it’s all about probabilities.
Finally, I have realised that anything worth pursuing in life will not come easy. If you’re going to reap the rewards, you have to go through the hurdles. Even after going through serious losses, mental pressure and other hardships I still want to continue trading with a motto of converting this then BIGG LOSS of Rs.7000 as a one-day brokerage to my broker.
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M. Pattabiraman(PhD) is the founder, managing editor and primary author of freefincal. He is an associate professor at the Indian Institute of Technology, Madras. since Aug 2006. Connect with him via Twitter or Linkedin Pattabiraman has co-authored two print-books, You can be rich too with goal-based investing (CNBC TV18) and Gamechanger and seven other free e-books on various money management topics. He is a patron and co-founder of “Fee-only India,” an organisation to promote unbiased, commission-free investment advice. He conducts free money management sessions for corporates and associations based on money management. Previous engagements include World Bank, RBI, BHEL, Asian Paints, Cognizant, Madras Atomic Power Station, Honeywell, Tamil Nadu Investors Association, IIST Alumni Association. For speaking engagements, write to pattu [at] freefincal [dot] comAbout freefincal & its content policy Freefincal is a News Media Organization dedicated to providing original analysis, reports, reviews and insights on developments in mutual funds, stocks, investing, retirement and personal finance. We do so without conflict of interest and bias. Follow us on Google News. Freefincal serves more than one million readers a year (2.5 million page views) with articles based only on factual information and detailed analysis by its authors. All statements made will be verified from credible and knowledgeable sources before publication. Freefincal does not publish any paid articles, promotions, PR, satire or opinions without data. All opinions presented will only be inferences backed by verifiable, reproducible evidence/data. Contact information: letters {at} freefincal {dot} com (sponsored posts or paid collaborations will not be entertained)
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