We all want to leave our jobs and become a full time traders. This is good but there are certain things that you should keep in mind before leaving your job.

See the feelings of a person not happy in his job thinking of becoming a full time trader after doing my course:

Here are some important points that you should remember before leaving your job and becoming a full time trader:

• You cannot become a full time trader with Rs. 10,000, 15,000 or even 1 lakh. At least 10 lakh is required to become a full time trader. With this 10 lakhs you will be able to live a modest simple life.
• You must have another 10 lakh in your bank account for emergencies. For emergencies you cannot take money out from your trading account.
• Risk management is very important whether you are a full time trader or a part time trader. You must not risk more than 5% of your trading capital in one trade. For example if for one trade money blocked is 1 lakh then you cannot lose more than 5000 in this trade else your account will vanish in no time.
• If for three months you are continuously loosing then forget about becoming a full time trader.
• If seeing profit in a small account slowly increase the amount size to make it almost 10 lakh. Once you are able to trade 10 lakh account profitably for 6 months at least then only think about becoming a full time trader.
• That you have intention to become a full time trader should be known clearly to your spouse/parents if unmarried. You cannot leave your job without mental support of your spouse/parents. If she/he/they are not happy with your decision then the stress prevailing in the house will disturb your trade set ups – you will not be able to concentrate. Family support is required to become a full time trader.
• If you are making good profits in a 10 lakh account then it makes sense to increase the money in your trading account to try to make more. But you should not add 5 lakhs at one time. Increase it by 10% a month as you make profits. Add 10% more only after three months of profits.
• If a positional trader you must hedge your trades for overnight risk management.
• Keep a low profile and never boast to your friends/relatives/neighbors about your trading income. They will start asking you too many questions and will ask you for tips as well. Well my friends used to do. So a few months back I told them (a lie) that after suffering huge losses for two months I stopped trading and am freelancing here and there. They fear asking me tips now 🙂

I have given you correct and true information on when and how you should become a full time trader or take trading as a business. I am sure you must have read a lot of different stories from people in many websites but frankly this is the only truth – full time traders do not live a fancy lifestyle as advertised by tips providers. But yes we do not have a boss to order us anything – however we do have other problems like which trade to take – how much capital to invest – risk to keep etc.

The best way out is whether you are a full time or part time trader – invest in at least 5 blue chip stocks and ask collateral from your broker and trade conservative strategies on the collateral margin money. You will be relaxed as your account will grow slowly plus the dividends hitting your bank account will make you very happy. That is money that you got as a bonus just like you get a bonus in your job. There is no need to leave your job until you are absolutely confident that you can live comfortably from the trading income plus the extra cash you have saved for years for emergencies.

So give yourself time, become a good trader, prove yourself that you are good trader then leave your job and become a full time trader.

Good Luck.

Everyone knows derivative stock/index trading is done on cash, however, many people do not know that if they hold stocks in their Demat account they can use them to trade derivatives (futures and options selling). Yes, you can save money by having your stocks act as collateral margin and also increase your ROI (Return on Investments). Read to know how.

Do you know future and option shorting can be done free of cost? By free of cost, I do not mean that you do not need cash to trade futures and option selling – you need. But you can easily use this money to buy quality stocks and keep them in your Demat account and ask for collateral margin from your broker and trade futures and options with that money without bringing extra money in your trading account.

If you want to know the names of 17 quality stocks that will become multi-baggers then open an account with this broker who does not charge anything for stock buying and selling. Click Here to register your mobile number and start the process of account opening. Once your account is opened I will send you the names of these stocks and will also give you the reasons why these are multi-baggers.

What Is Collateral Margin?

In technical terms is it should be called Margin on Collateral. The invested stock is used as a Collateral (asset) to give margin (loan) to trade to the owner of the collateral (stocks). Let me give you an example. Suppose you bought 100 shares of a company XYZ whose current value is say 100,000.00 (1 Lakh). Now it’s held in your Demat account with a broker. You are not holding it but your broker is holding it on your behalf. Legally he is not allowed to sell them. What if you get into a contract with your broker and ask for a loan (only margin loan not cash loan) to trade futures and/or options selling. If they give you a loan they will need some kind of collateral. The stocks you hold can be used as collateral and now they can give you margin (loan) to trade derivatives. This contact is legal and is done by almost all brokers in India. However, there is some risk for the broker here. What if the stock crashes 50% in the next few days?

See this Yes Bank Crash. From 400+ in mid 2018 to 16.15 in 06-Mar-2020. Source Google Finance:

In percentage terms this is 96% crash. Imagine if you were a broker and given collateral in Yes Bank to thousands of your clients what would have been your position.

In such a situation what can a broker do to survive?

1. Brokers do not give 100% of the value of the stock as collateral to their clients. It depends on the historical volatility of the stock. Blue-chip shares get 80% of the actual value of the stock when a client asks for collateral margin. This can go down to 50% w.r.t the stock. For too volatile stock collateral margin is not given to reducing the risk. 

As you can see in the above case the broker is safe up to 80,000/- (80% of 1 lakh). But Yes Bank tanked 96%. In such a case brokers are allowed to do this:

2. On the day Yes Bank falls 17-18% of the margin given – the broker gives a margin call to their client explaining the situation. If the client does not pick up the phone or does not reply to the email or just does not transfer funds in their Demat account, the broker sells the stocks of Yes Bank to recover the margin blocked to keep the derivative trade alive. But if the margin shortfall nears 80% of the margin required to hold the derivative trade overnight – they have the right to sell all the shares left and close the derivative trade. This post explains collateral margin shortfall well.

The above point no 2 is very important if you are looking to take collateral margin to trade derivatives.

Please note that some brokers charge a fee to give and close a collateral margin plus also charge a daily interest if the collateral margin is used more than a certain percentage. In most cases, it’s 50% of the collateral margin. Since this differs from broker to broker I recommend you ask them directly or search their website for a fee on collateral margin and associate charges then proceed for a collateral margin if you still need it. 

Side note: For Nifty BeES, as far as I know, most brokers in India give 100% collateral margin against Nifty BeES without charging any interest. Nifty BeES is treated as cash holding. If you lose in option sold or future trading traded in that collateral margin – some holdings of the Nifty BeES will be sold to recover the loss. However please check with your broker before buying Nifty BeES for getting collateral margin. Note that for stocks brokers give up to 80% collateral margin and charge some interest on more than 50% of that if used. However, for Nifty BeES 100% collateral margin is given without charging any interest on the full margin. Again my knowledge is limited to this broker only – please confirm with your broker before buying Nifty BeES for getting collateral margin.

What is a collateral – explained in details?

Collateral is a property or other asset (here another asset are the stocks in holding), that a borrower offers as a way for a lender (the broker) to secure the loan (margin). Suppose you lose money more than the collateral amount given to you by the broker then the broker has every right to sell your shares and recover the loss. Since collateral offers some security to the broker they allow a loan to their customers to trade derivatives. This collateral comes at a lower interest than normal personal loans.

Please note that for Group A stocks (large caps) most brokers give an 80% collateral margin. It can go down for volatile stocks. Please consult your broker for collateral margin rules. Every broker has different collateral margin rules. Since the rules are different for every stock broker I cannot write a defined rule here. The only thing I can say is that some brokers charge a fee for collateral margin money. Make sure to know all terms and conditions before asking for collateral margin.

However, most brokers do not charge any fees if you use only 50% of the collateral margin – anything above that is considered as a loan and charged a small fee. So you should read the full terms and conditions before asking for collateral margin.

One good stock (Disclaimer: This is not a recommendation to buy or sell. Please do your research before investing in this stock) is HDFC Bank. It is a fundamentally strong company unlikely to fail. This is one stock that you can keep for life. There is no entry here and target 1,2,3 in this stock like the tips providers fool us. 

These kinds of stocks are called All-Weather Stocks. Whatever happens to stock markets these stocks will keep giving good returns over the long term. These kinds of stocks come under the Warren Buffett style of investing. He has once said in an interview that – “Our favourite holding period is forever.” This is what you should do with a few stocks.

You must stay invested in good stocks until you retire, ask for collateral margin on them and trade options conservatively with proper hedge so that you keep making a monthly income that comes for free apart from the dividends you get from these quality stocks.

If you want to know the names of such 17 fundamentally stocks that will become multi-baggers then open an account with this broker who does not charge anything for stock buying and selling. Click Here to register and start the process of account opening. Once your account is opened I will send you the names of these stocks and will also give you the reasons why these are multi-baggers.

Frankly, I have summed up how you should invest and trade and make good money in small steps, accumulate them by the time you retire or in 10 years in stock markets. Then either leave your job or do whatever you want. Rest is plain noise that’s going on about stock markets in media – Television and the Online world. Unfortunately, people follow the myth about the stock markets told in golden words and get trapped to lose money.

Post date: 01-Sep-2018

In a recent circular SEBI has asked to block more money as ASM a.k.a Additional Surveillance Margin for selling options and trading futures. The an Additional Surveillance Margin (ASM) shall be levied on all gross open positions on futures contracts and on short positions in options contracts.

To which NSE issued the circular which you can find here.

This circular basically says that more margin will be blocked for selling options and trading futures. This will happen:

Should you worry?

Well the only problem is margin block will increase. Worrisome for people who trade with less capital – not so much for people who have more money to deploy. But still a worry.

But most importantly huge worry for traders who do not hedge their positions. If you are reading this and you trade without hedge – my sincere advice is learn hedging. Either do my course or someone else course or research but stop trading without hedge.

Exactly how much margin will increase will finally be known by 30-Nov-18.

What is the current margin block?

Currently, the Initial margin to trade options and futures includes SPAN and Exposure margins. It covers the risk of around 8% movement in Index and 12.5% to 30% movement on stocks in one trading day. Due to the above circular, by November 2018, margin requirement for trading Index contracts may go up to 10% (approx 70,000) and for stocks between 17.5% to 35%.

Please note that Additional Surveillance Margin (ASM) was meant to be added to the exposure margin. Note that exposure margin does not takes into account the positions that hedge each other. Which means whether you hedged your positions or not you were required to add more money as per ASM rules to sell options or trade futures. Currently traders who hedge their positions get benefit of hedged positions, so less margin is blocked.

For example if you were long in current month future and short in next month future a lot less margin would be blocked as positions were hedged. However due to the above rules the hedge benefit would not be there. 🙁

There is another news – slowly all stocks will come under full margin block rules. What I mean is that in the last week of expiry your broker will ask you to either close the position or get full margin to trade options and futures. Right now it is limited to 46 stocks. Read this for details:
https://www.bloombergquint.com/markets/2018/04/23/a-fifth-of-stocks-in-nse-derivatives-segment-to-move-to-physical-settlement-from-july

So its better to trade only index options – Nifty and Bank Nifty. Avoid trading is stock derivatives – if you want then you trade for first three weeks only – DO NOT ENTER THE LAST WEEK OF EXPIRY JUST TO AVOID MARGIN CALLS.

Note that the above rules may decrease liquidity or derivative trading from India markets.

Update 12-Sep-18: It looks like market makers realized their mistake and made another circular relaxing the earlier riles. This time they came up with another circular dated 12th Sep 18, which says that instead of adding the Additional Surveillance Margin as specified in the circular dated September 01, 2018 to the Exposure Margins, Price Scan Range (PSR) used for computation of Initial Margins shall be amended, in steps, to increase the coverage of risk arising out of change in underlying Index or stocks.

Here is the circular:
https://www1.nseindia.com/content/circulars/CMPT38879.pdf

The amended circular says that this additional increase in margin will be only on SPAN margin.

What this mean?

This means that this additional margin will be reduced on a portfolio that hedges its trades. Which means that if you hedge your positions then you need not worry. You are not required to keep additional money to sell options or trade futures. The margin blocked to sell options / trade futures will remain almost same if you hedge your positions.

So Who Suffers?

Traders who trade naked or without hedge. This is a double edged sword. One they pay more to take the same risk and reward, and another their risk will increase and reward will decrease.

Why? Because now they will pay more for the same trade. For example if they made 5000 on 1 lakh, now for the same profit they will make 5000 on 1 lakh 20 thousand approx. This 20k increase in margin is due to ASM rules. This effectively will reduce the return on margin blocked. However traders who hedge their position – the risk reward will be the same.

Hence margins for trading futures and options selling, especially for not-hedged trades will go up in 4 phases starting September 14th, 2018 (it has already started). Traders who do not hedge must make sure to have sufficient margins for your F&O positions to cover for this increase. Any shortfall in margin will attract margin shortfall penalty and your trades may be squared off at the discretion of your broker’s Risk management (RMS) team.

So you have two choices now:

Be stubborn do not hedge and take more risk by increasing your capital to trade FnO. Or,
Learn to hedge and trade peacefully – be happy with small profits and low risks.

DO NOT FORGET THAT FROM 1-OCT-2018 YOU WILL BE ABLE TO TRADE EQUITY FnO FROM 9.15 AM TO 11.55 PM.

Update: 18-09-2018

SEBI defers October 1 deadline for extension of trading hours. Here is the conformation:
Click here to read.

Your money will be eaten by HNIs, DIIs and Smart Trades who hedge their position. Do not let that happen to you. You will learn all kinds of hedging in my courses – option hedging, futures hedging and equity hedging. Details below:

Nifty Conservative Hedging Course: Course fees is one time fees, but you can ask me questions on the strategies for one year.

Bank Nifty Weekly Option Aggressive Hedged Strategies: It is more aggressive hedging for advanced traders.

Fees can be paid here.

Update: 18-09-2018

SEBI defers October 1 deadline for extension of trading hours. Here is the conformation:
Click here to read.

Article Date: Tuesday, 28 August 2018

I hope you know the news that SEBI has allowed derivative trading (future and options) from 9.15 am to 11.55 pm from 01-Oct-2018, similar to the trading hours for commodity derivatives segment which are presently fixed between 10:00 am and 11:55 pm.

As written in many websites you must be thinking its a good news – no its not. Why? Because 99% of derivative traders loses money. Now this 99% will increase to 99.9% as traders who were not able to trade during the day due to their busy schedule and/or job/business will now trade after their job/business commitment ends. I think volumes will increase from 6 pm until 11.55 pm.

I do not know about you – but if you are losing money now please do not trade more than you are trading now. You may suffer more losses. 🙁

If your trading plan, style, psychology, knowledge is not good – changing the time to trade will not help. The result will be same. Of course if you are good at trading its a good news for you.

Revenge trading is even worse.

On top of that there will be health issues. From 9.15 am to 11.55 pm that is approx 15 hours. Think about monitoring your trades 15 hours a day for 5 days in a week. 🙁 🙁

I fail to understand how traders who do not hedge their position will spend their days. If you are reading this email please either hedge your trades or keep your losses small but please do not over trade just because you have the money. 

Life of derivative traders is going to be very difficult from 01-Oct-2018 – in greed to make more money they will trade more and lose a lot more than they are losing now.

You can learn hedging in my Nifty Course or the Bank Nifty Course. The fees is less than what you are now losing in a single trade. And if you enroll for both the courses you will get a discount. Click here to know the fees for the courses.

If you want to survive, make profits and trade the markets in peace there is no other way than to hedge your trades. In fact trading hours have become so long that intraday may also need hedging. Bank nifty has an options strategy that can be traded intraday.
 
Updated: Wednesday, 29 August 2018

After sending this post as an email to my 27k subscribers I got a lot of responses. Most important questions were:

1) Derivative trading timing extended that is fine, but cash market will close at 3:30 pm. How will derivative market derive its prices?

2) If derivative trading hours are extended then is it beneficial for buyer or writer of options?

3) Future price is mimic of cash market price so if cash market will closed then how it will future prices will be derived?

Well frankly Indian stock market is entering in a new zone from 1-Oct-2018. Let us wait and watch. I can  research some online websites written by experts and write here. But I always believe in getting first hand experience before writing in my blog or emailing my subscribers.

So please wait let the reality kick in then I will write in this blog and inform to my subscribers by email. 

Article Date: Monday, 27 August 2018

Many traders and investors must be wondering why Nifty 50 (NSE) is rising continuously since last one year. Here is the chart:

NSE 24-Aug-17 to 24-Aug-18

52 Week High and Low:

Percentage Increase (20.39%):

Some important notes before you read further:

NIFTY 50 is a diversified 50 stock index accounting for 12 sectors of the economy. It is used for a variety of purposes such as bench-marking fund portfolios, index based derivatives and index funds. NIFTY 50 is owned and managed by NSE Indices Limited (formerly known as India Index Services & Products Limited) (NSE Indices). NSE Indices is India’s specialised company focused upon the index as a core product.

Source: https://www1.nseindia.com/products/content/equities/indices/nifty_50.htm

Basically Nifty tracks the market performance of 50 largest cap companies’ stocks of india, and hence, broadly reflects the sense of the Indian economy.

Is NSE (National Stock Exchange) same as Nifty 50?

No. Nifty 50 is a collection of large cap or in other words very big companies which may not collapse. NSE is a stock exchange where thousands of companies stocks are traded – bought and sold. NSE has more than 1,600 companies listed on its platform. Nifty is a collection of 50 large companies which are traded in NSE.

Similarly BSE (Bombay Stock Exchange) is also a stock exchange just like NSE where shares can be bought and sold for companies listed there. There are about 5,000 listed companies in the BSE.

If you check the difference approximately 3000+ companies are not listed in NSE, hence not traded in NSE. Thousands of companies are listed in both BSE and NSE. If you want to buy stocks of a company listed in BSE but not listed in NSE – you have to buy from BSE exchange only and sell in BSE exchange only. You cannot buy a stock listed in BSE and sell in NSE, if not listed there.

Companies listed in both NSE and BSE can be bought from one exchange and sold in another and vice versa. But this cannot be done intraday. Means you cannot buy a share in BSE and sell in NSE and vice versa the same day. This is arbitrage and hence not allowed.

Full form of NIFTY is “National Stock Exchange Fifty”. When you want to see chart of NSE you will end up seeing charts of NIFTY everywhere. In fact you will see NIFTY being branded as The National Stock Exchange (NSE). Fact is NIFTY is only a part of NSE but index of NSE is calculated based on NIFTY, therefore when you search for chart of NSE you end up seeing chart of Nifty 50.

People get confused thinking its NSE chart. Market apps and websites show the Nifty 50 chart and brand it as NSE. It’s not wrong as Nifty 50 is most popular and most traded index derivative (future and option).

Now coming to the question of why NIFTY is rising since last one year. If the stocks in the Nifty 50 rise then NSE will also rise.

See list of stocks in NIFTY 50 that have risen the most in last one year (from Aug 2017 to Aug 2018):

Top Nifty 50 Companies Aug 2017 to Aug 2018

Source: https://economictimes.indiatimes.com/marketstats/company-true,exchange-50,indexid-2369,indexname-Nifty%2050,pageno-1,pid-37,sortby-yearlyPercentageChange,sortorder-desc.cms

Please note that by the time you see the list may change.

You can see that the top companies have risen approx 30-70%, but NIFTY has risen 20.39%. Why only 20.39%, why not 50%? Here are companies that gave a negative return in the same period in NIFTY 50:

Negative return companies NIFTY 50 Aug-2017 to Aug-2018

On top of that some companies are given more weightage in evaluating the price of NIFTY. So if all the averages are taken along with the weightages of these 50 companies you will see that it’s a 20.39% rise only.

Some more information on Nifty calculation:

Base year of NSE is 1995 and base value is 1000.20. NIFTY is calculated based on 50 stocks. List of 50 stocks can be found here.

The main difference between SENSEX and Nifty is that SENSEX is the stock market index for BSE Limited, while Nifty is the stock market index for National Stock Exchange (NSE). SENSEX is comprised of 30 stocks, while Nifty is comprised of 50 stocks.

Everyone wants to trade and make money fast – this is fine, but everyone is looking to make a home run expecting to make 10-15% per trade. In this post you will learn that 10-15% per trade is impossible to make.

To try to make 10% a trade, a lot of gambling in stock market is going on and the result is obvious – they lose money. They just do not know what to trade and how to trade so they gamble. Stock markets do not work that way.

Actually its not their fault – there are a lot of misleading things happening online and offline. This is screenshot of a person taking an offline course in derivatives. See his fees (he promises huge returns from a single trade – more than 100%):

Of course please do not ask me the name – I will not reveal. Due to the greed of making xxx returns in a single trade I am sure a lot of people pay him for the course and repent.

Please note that such returns are impossible to make in stock markets – please do not fall in such traps.

Coming to some real returns from the stock markets. Lots of people believe stock trading can give unlimited profits. Please check facts on the ground. How many traders have made over 40% consistently for 10 years? Not a single retail trader till now. Yes some hedge fund managers have made good returns but if you average them out to three years the highest return is only 26.21% CAGR. Only the top 4 funds were able to clock over 20% annual return for three years. Here is the proof – list of top 100 hedge funds:

https://www.barrons.com/articles/penta-top-100-hedge-funds-1497665963

Here is the screen shot in case the website cease to exist:

Top 100 Hedge Funds

In other words if you make over 20% return consistently per year, your portfolio return will be inline with the best fund managers in the world. Expecting anything over 40-50% every year is expecting something that is NOT happening in this world of stock markets. My course will help you to make over 20% yearly returns consistently. This is a realistic expectation and possible. In fact returns up to 30% a year is possible from the bank nifty course due to its aggressive nature, but anything over that I do not promise. It will totally depend on your capabilities as a trader.

Here is one such trader who has made very good return in one financial year after doing my course:

60% Profit Using Just Strategy 1 In A Financial Year – Results may vary for users – Such a return is not possible every year.

Another problem is tip providers. They also promise huge. They call on you mobile and tell they can help you make a lot of money trading Intraday. They promise 2000-3000 everyday with 30000 capital. Really? That’s pretty insane.

I have just explained above that making over 40% consistently for 10 years is impossible. At least in today’s world no fund manager has done. Proof given above. Now 2000 profit on 30000 is a return of 6.66% in a day. This is 146.66% in 22 trading days in a month, which converts to 1760% in one year.

I will not say anything more than this. If someone is looking to make 1760% in a year from share markets then either they do not know how the stock markets work or they are an easy prey of tips providers. Its people like them who can be easily fooled by tip providers. If you do not believe me pay any tip provider and see how they will make sure you lose money trading intraday. Well even I am a victim of tip providers.

Moreover why do you want to take tips? Do you have no interest to learn to trade yourself? And for how long you want to depend on tips?

What I am trying to say is first think about saving your money while trading. Capital protection should come first – not capital appreciation. If you are trading with proper hedge then you are giving priority to capital protection – capital appreciation will also happen but slowly. My course is liked by many traders because I teach them what actually works in stock markets and how to protect their capital first. I teach them to be very conservative with their trades so that if there is a loss it does not pinch their pockets and of course the profits will be small but consistent.

These are the courses I offer:

Nifty Conservative Option Trading Course:

The above course is good if you have just started trading options. You do not need to see any charts,or you do not need to know any technical knowledge. You do not even need to constantly monitor the trades. And the best part is you do not need to try to find the direction of Nifty. Its 100% non directional and very conservatively hedging strategy. Approx 1 lakh 10 thousand is required to trade the strategy.

Bank Nifty Weekly Option Aggressive Strategies Course:

This course is good for advanced trading or in other words professional trading. These are high risk and high reward strategies with 100% aggressive hedging. If you want to trade aggressively futures and options you can do the bank nifty course. Here too technical charts are not required but slightly more monitoring is required than the Nifty strategy. There is one intraday strategy in this course. All other strategies are positional in Nifty and Bank Nifty. One strategy of Bank Nifty can be traded in stocks. Minimum required is 70-80k in the strategies.

If you are ok with reasonable and consistent returns you can do my course. If not, tomorrow when you lose a lot of money doing speculative/gambling trading you will realize the mistake of not doing my course earlier. You can find the fees and payment links in this page to enroll for the course:
https://www.theoptioncourse.com/bank-details/

If you enroll for the course do let me know. I will send you the materials to read today.

If you trade a stock intraday make sure to trade with at-least 5-6 lots to scale the position, or if you do not have that much money to buy so many lot futures, trade in cash. Here is how to scale out of your Intraday trading:

Decide your trade long or short by 11 am

Its not just about deciding the long or short its also about deciding the profit taking and stop loss for the day. Please note that stop loss/profits should be decided on the basis of how much you are willing to lose and take from a trade not what your system is saying. Your system does not know your worth or your financial situation, so do not leave it to the system.

This is unlike what the person who sold you a trading software must have told you – but this is for your benefit.

Now coming to how to scale out. It is one of the best ways to enter and exit positions for day trading in the stock market in my opinion. Scaling out is selling only a part of your intraday holding and keep the rest at entry point or next level.

By learning this way of taking out positions in a step by step manner you can make very good profits some days and small loss the other days.

You will never know when a big move is coming – so you must scale out partially. Once even a small profit is booked for rest of the trade you must move your stop loss to the original buy/sell position. Then if the second step is captured (means second step of profit booking) then move your stop loss to the first level of profit booking for the rest of the trade.

Please note that since you are keeping two levels of profit booking and stop loss in the system – you will need 2X (double) the margin.

Do not worry about the margin – worry about the profit or losses.

This way your loss will be fixed for every trade but you can make very big gains when the stock goes in your favor. I

Move Your Stop Up After Taking Partial Profits – Do Not Change Your Plan Whatsoever Happens

I have seen that some traders change their initial plan when they see Mark-to-market (MTM) losses in the trade. This is a trade – its not a FD (Fixed Deposit) – you may see a small loss or small profit from the very next second. Do not panic and close the trade. Let the system and your planning take care.

If you keep one stop loss and one profit booking level then sometimes you will see that the trade was in profit but the stock reversed and hits the stop loss. This problem can be solved by scaling out of positions at different levels.

One of the biggest benefits of scaling when you are doing intra day trading is that it allows you to realize profits when you have them while still keeping some of your position in the stock to capture a bigger move if they come.

When you get a good gain its always better to capture that gain instead of leaving it for a bigger gain.

Once you sell some shares, you can move your stop up and ensure that no matter what, you will have a green trade.

You Can Move Up Your Profit Taking Levels

After your first target is met and if the stock has crossed 50% path between the first target and second target then you can move your stop loss to slightly higher position than the first profit taking level to ensure more profits. However this is a very intelligent move and can be done only if the gap between the profit taking levels are big. In small gaps do not do this as it may soon hit the stop level.

On Strong Days Let The Stock Decide Profits

After capturing 2-3 levels of profit some days you will see that the stock is moving very strong then in that case you may only keep the stop loss at the first profit level or your average price and let the stock decide where it wants to be at the end of trading day. Let your RM (relationship manager) close the trade automatically just before the closing bell. However this can be done by experienced traders only – if you are not very experienced please ignore this step.

If Scaling Is A Problem Make A Good Exit Strategy

For some traders who are busy and cannot monitor the trades for them its is recommended to keep one stop loss and one profit taking level. Moving up and down the profit and stop levels needs your attention. So if you cannot monitor the trades full time because you have a job then just keep a stop loss and profit taking levels in the system and leave for your job. But please note that once a target is achieved you will have to cancel the other trade in the system, else it may get executed.

In this one stop loss and one profit taking level make sure to keep stop half or your profit taking level. For example you want to earn 10 points in a stock then keep 5 points as stop loss in the system. This way if you are profitable even 50% of the times you will gain not lose in intraday trading.

Post date: 20-08-18

NSE Mar-Aug 18

Due to the recent turkey news you may have gone short in Nifty. In that case its better to exit or hedge your position.

If you are long then book profits.

Then wait for the trend to be clear.

India VIX is on the rise indicating volatility in the markets.

India VIX 20-08-18

Its strange that during these times so called market experts have different opinion – some say nifty will go up and hit 12000 by December 18, and some say Nifty may fall.

I am sure you may also be confused as what to do.

My advice do not listen to what the experts say in business channels or websites that you read. Tips or free advice both are bad and will be in your favor 40% of the times – rest of the the times you will lose money.

I have been telling you time and again. Learn to trade yourself. See your contract notes and check why you failed when you failed and why you succeeded when you succeeded.

This will help you to become a better trader.

Newsletter date: 09-August-2018

According to news sources NSE has applied for extending equity derivatives trading hours till midnight from 1 Oct 2018.

If you do not know this news let me take back to a news sometime back in May, 2018. SEBI proposed a committee to look into extension of trading hours and finally in May 18 it gave a nod. You can read the news here:

https://www.business-standard.com/article/markets/sebi-allows-exchanges-to-extend-trading-in-derivatives-till-11-55-pm-118050400653_1.html

http://www.zeebiz.com/india/news-sebi-extends-market-trading-hours-heres-what-experts-say-45795

And now in Aug, 18 NSE has applied for extension of timings of derivatives trading hours till midnight from 1 Oct 2018.

Trading Timing of NSE from 01-Oct-18:

Normal Cash Segment (Equity) : 9.15 am to 3.30 pm

Derivative (Futures & Options) 9.15 am to 3.30 pm – break – 5.00 pm to 11.55 pm.

This is good news for wining traders but very bad news for losing traders.

It is a high probability that if Nifty has applied then SEBI will approve it. BSE will obviously follow suit.

From 1-Oct-18 surviving without hedging will become impossible.

Lets assume a trader takes a trade in fist session (9-3) and loses money. He/She will obviously go for revenge trading in the second session (5-12), and lose more. Next day the story will continue.

And if you win you might try another shot in the second session – and will end up losing what you won that day. 🙁

Life is going to be difficult for traders who cannot control their emotions to trade, who do not trade with hedge, who trade without a plan, who trade on tips & who trade on speculation.

If you are reading this before 01-Oct-18 you will see this coming true after 01-Oct-18. And if you are reading this after 01-Oct-18, you will agree.

That’s the reason we should trade equity or commodity derivatives (futures and options) without any bias or direction and we should trade with hedge for protection.

My nifty course teaches proper hedging methods of monthly income with peace of mind. Its better to hedge and trade and be happy with a small but significant monthly income. With hedging there will not be any home runs, but your profits will start accumulating slowly to become big at a later date.