Playing for profit

[Gaur_Krishna]

ST da, you are a real MENTOR for many of us here at Traderji. You have given not only great entry and exit rules but also posted about MM and mindset of trader. Now adding to that are these TRUE stories. Many of us come to market hearing the bright side but nobody wants to hear or know the dark side. But thats painfully true .....

These stories must have made tremendous impact on the way you trade and this realized knowledge is what we are getting from you.

Thank you Da.

Regards,
Gaur_Krishna

Actually stock72, I did not want to say but as the topic has come, let me put some very hard and bitter facts . I dont know how many years you have traded the markets, but I am sure I have traded much longer than you so consider this as an sincere advice from a wellwisher.

Markets are not fergiving every time...sometimes they are ferocius and they kill trading careers,destroy families and even kill a person. I have known a very large traderfrien who was an operator and used to trade 1 to 1.5 Lakhs RIL position...had capital of over 1 Cr and he went on adding to his long positions and finally had to borrow from the pivate financers to keep the position....this continues and he made a loss of 2.5 Cr and finally committed suicide as the creditors were after him and market was crashing. He had jumped in a river bed from a bridge and was 10 feet deep in mud.I had gone to the police station and the hospital to claim his dead body and you know something ? in next 1 month market improved and he would have made small profit on his long positions, but at that time he was driven to the extremely step and the trading career and the family is destroyed.

Another trader I know came from other business, he made money and came to markets and he was overconfident...he also went on building long positions in TISCO and over 3 months lost over 1 Cr...that man has become a mental patient and is destroyed now.

One very close friend had huge positions in software boom period and had kept that position on outside badla. He told me that he had an Excel sheet and at one point he was in profit of more than 60 Lakhs...them markets crashed...some shares were on downside trigger and he just could not liquidate, so his financers forceliquidated and he lost all the money so much that he had to make his wife work and had problems paying his son's school fees...he had to liquidate his 1600 sq ft AC office, his 2 storied bunglow and 4-5 plots ....

Given the above cases to tell you how bad and ruthless the markets can be if we are overconfident....

Wish you all the very best for December and thereafter.

Smart_trade

 

[techtrader2]

nice points ST...it is helpful for all of us to hear such stories....becos regarding stock markets normally people brag about profits...but when losses they hide from all including wife, friends etc.....

Actually stock72, I did not want to say but as the topic has come, let me put some very hard and bitter facts . I dont know how many years you have traded the markets, but I am sure I have traded much longer than you so consider this as an sincere advice from a wellwisher.

Markets are not fergiving every time...sometimes they are ferocius and they kill trading careers,destroy families and even kill a person. I have known a very large traderfrien who was an operator and used to trade 1 to 1.5 Lakhs RIL position...had capital of over 1 Cr and he went on adding to his long positions and finally had to borrow from the pivate financers to keep the position....this continues and he made a loss of 2.5 Cr and finally committed suicide as the creditors were after him and market was crashing. He had jumped in a river bed from a bridge and was 10 feet deep in mud.I had gone to the police station and the hospital to claim his dead body and you know something ? in next 1 month market improved and he would have made small profit on his long positions, but at that time he was driven to the extremely step and the trading career and the family is destroyed.

Another trader I know came from other business, he made money and came to markets and he was overconfident...he also went on building long positions in TISCO and over 3 months lost over 1 Cr...that man has become a mental patient and is destroyed now.

One very close friend had huge positions in software boom period and had kept that position on outside badla. He told me that he had an Excel sheet and at one point he was in profit of more than 60 Lakhs...them markets crashed...some shares were on downside trigger and he just could not liquidate, so his financers forceliquidated and he lost all the money so much that he had to make his wife work and had problems paying his son's school fees...he had to liquidate his 1600 sq ft AC office, his 2 storied bunglow and 4-5 plots ....

Given the above cases to tell you how bad and ruthless the markets can be if we are overconfident....

Wish you all the very best for December and thereafter.

Smart_trade

 

[Cubt]

Smart_trade, thats really a horrible fact u shared. Thanks for sharing it, I was just showing this post to my wife. She read it n in few minutes she did some calculation and asked me transfer the idle money from trading account immediately

I still remember the day I lost 1.5 lacs in a single day, in just one infosys trade. I would have never taken such a large position if I had given a thought about money management.

All am trying to do now is to survive as long as I can.

 

[Smart_trade]

Smart_trade, thats really a horrible fact u shared. Thanks for sharing it, I was just showing this post to my wife. She read it n in few minutes she did some calculation and asked me transfer the idle money from trading account immediately

I still remember the day I lost 1.5 lacs in a single day, in just one infosys trade. I would have never taken such a large position if I had given a thought about money management.

All am trying to do now is to survive as long as I can.

Thanks Cubt...that does not mean trading is bad....I have lived on trading and made good money myself and I know a few very successful traders, but a trader however big, successful and smart, if he does not respect risk, he is walking on the field full with landmines and he cannot be lucky everytime.These are from some real incidents which make me shiver when I even think of those scenes again.

ST

 

[saakk]

Thanks Cubt...that does not mean trading is bad....I have lived on trading and made good money myself and I know a few very successful traders, but a trader however big, successful and smart, if he does not respect risk, he is walking on the field full with landmines and he cannot be lucky everytime.These are from some real incidents which make me shiver when I even think of those scenes again.

ST

:clapping::clapping::clapping::clapping: Amazing...... no wonder......:thumb:

 

[bthakwani]

there was a guy who first taught me about options.. and he said make it a point to only buy options with premium in between 50 and 70... at the start of the series such options would be out of the money and will move towards at the money as the series enters 3rd week and in the money during the last week..

this thumb rule has helped me a lot.. so much so that in some months i have tripled my capital..

if it were not for the late bounce that came in the last hour last friday.. i would have made a lot of money.. but just failed to capitalize..

but buying option only between 50 and 70 is a golden rule for me..

 

[imbatrader]

Futures are almost always better than In the money options. In the money options have time decay, the delta is almost 1, which means you can at best get gains equal to futures but your losses will be worse than futures. Moreoever, liquidity is tigher in ITM options, and bid ask spreads will eat into profits.

@ bthakwani: that is a really interesting statistic. Do you think it is because of psychological bias that traders usually focus on this band?

 

[bthakwani]

@ bthakwani: that is a really interesting statistic. Do you think it is because of psychological bias that traders usually focus on this band?

yes i think it is psychological too..

an expensive option will have faster moves both up and down.. i wouldnt want to get nervous due to wild moves and lose out... whether in initiating a new trade or booking profit/loss in an old one...

a very cheap one on the other hand would move so less that i would get frustrated and maybe end up doing something foolish..

so i guess this 50-70 wale options are apt.. they move in a steady way giving sufficient time to enter and exit and also make money..

 

[BenjaminGates]

Here it goes ( comes ?)

TOTA Version 2 is ready. let see .. how Dec going to be ...

Stock72,

While the big swings are part of the reality, it looks like a stock chart.. given that it is big event for you to recover huge amounts, you could've considered stashing half of your gains under mattress (seriously, banks are not too safe these days like in Cyprus).

However what's more concerning is the downside. Whatever way you design your system, make sure that it gives lesser downside when it fails while compounding gains if it goes right in a series. I thought it was doing that way in the August-Sept time. But then there after the sharp pullback means it has become just another stock that can move in any direction by any amount.

You want to be in a stock that moves less on downsides and more on upside. Today one of my stock nitinfire gained 18% (touched UC intraday) in a single day. My position in it turned from 6% loss to 12% gain. It was dipping down little by little slowly for months with occasional single day sudden jumps, bringing it back to square one.. so overall not much downside. Same way I was holding mpsltd which had struggled to cross 150 after I bought at 123. While market fell down from May, it didn't go below 105. Suddenly in last month I closed it for 52% gain after a waiting period of almost a year. I had sold some stocks for stop loss, like max india, mcleod and another junk starting with letter 'm' in 'm'ay (bad month) because they were sliding cutting through base after base and hardly ever went up by more than 10% in any rare single day.

Stock trading may not excite you as you do big ticket and fast track option trading. I have told about your fast track story to several people around me whenever they get bored of listening to small ticket deals (these days people are interested in big ticket real estate deals . So don't go to other side man.

It takes some perception to not call a miss a mistake. Risk is necessary to make big profits which when fail may appear like mistake in hindsight. I hope you have crossed that level. However nothing is more important than limiting downside when things are not right while still making sure to gain high when things go right. The statistical nature of these things takes a different brain to perceive than the brain washed by Macaulay system of education. No offense intended for anyone.

 

[vittal]

sir wat about consistent profit in options?pl