Thoughts on "The A to Z of trading career - musings of a professional trader !!"

@ST sir, for me putting 1/3rd of my total net worth (50 lakhs out of 150 is still a risk). Somewhere i read, or heard in his interview that Rakesh Jhunjhunwala out of his complete net worth of 30k crore, puts only around a few lakhs for trading - An amount so insignificant that he doesn't really mind, if it is lost any number of times, to get him back to the markets whenever he can, and here we are talking about one-third of net worth.

And if someone have a few thousand crores, they won't really bother about their trading income, and taking all that pressure putting 50 lakhs at stake, unless he is someone like Rakesh Jhunjhunwala, who is one in a million.
When one is in wealth building stage,he has to risk 30 % of his capital ,else how did he build 30 K crores ? RJ is well past his wealth building stage but when RJ was building his capital,he was trading with very large capital.....in multiples of crores....he can never build his wealth trading on few Lakhs capital....I know that for sure....if in capital building stage one is not prepared to put 30-35 % capital on trading how does he meet his expenses plus build wealth ?And if one is afraid of losing full capital multiple times, then he is still not ready ( experience wise) to build his capital by full time trading and support the house. We all are short term or max swing traders but we give examples of RJ who is more of a long term Investor than a trader now....but in his capital formation days he was trading on very large capital....and not few Lakhs.

But it is upto every individual.....if you are willing to risk 5 Lakhs in trading capital out of total Rs 1 Cr that is fine but then making a comfortable living and capital generation on 5 L as a full time trader is not possible..... it that should fine....people like Ramdeo Agrawal had large broking income which they invested and multiplied.....so the critical mass has to be created either through trading or some other income stream.

Anyways...each can have his own capital management so no arguments on that.

Smart_trade
 
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ncube

Well-Known Member
Its important to understand that Trading capital & Risk Capital are not same, Risk capital is the max drawdown amount that one is ready/comfortable to lose on a trading system before concluding trading system is not working or trading is not for him.

The suggested 50L for full time trading is the trading capital and it dependents on how much one needs to generate as returns comfortably without taking much stress. For example if one needs to generate 10L per year as returns and if only 5L is the trading capital then he needs to generate 200% returns consistently on 5L ending up taking unrealistic risks and easily blowing up his account unless he is among the top 0.001 % of profitable traders as mentioned by ST da in one of the posts. However with 50L as trading capital one just need to generate 20% returns which is quite feasible.

During wealth building stage if the trading capital size is less than 10L, one can conservatively target 25-50% returns but once it goes above 10L its better to start diversifying/use higher time frames and attempt for returns in the range of 25%. The thumb rule I follow is that if the system backtesting result gives me a return of 100% then in real trading my expectation is only 1/4th i.e 25%, and any additional returns is an added bonus. Having a lower expectation will have a positive psychological effect on our mind and we can trade with more confidence.
 

augubhai

Well-Known Member
Great thread. Just went through the entire thread today. I have been infrequent on TJ for sometime, but I don't know how I missed this thread.

Wish Madan all the best in his book authoring venture. Or has he already completed the book?

I wish he had also shared his thoughts about "execution" before he stopped posting on this thread.
 

iwillwin

Well-Known Member
Great thread. Just went through the entire thread today. I have been infrequent on TJ for sometime, but I don't know how I missed this thread.

Wish Madan all the best in his book authoring venture. Or has he already completed the book?

I wish he had also shared his thoughts about "execution" before he stopped posting on this thread.
Welcome back augubhai
 

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