Life and Journey of a Trader

sibu3168

Well-Known Member
#11
Hi,

From my experience, I will tell now what I have learned as a trader to start trading for a living.

Before you go for a trading career, first consider the following facts.

1. Family support is the most important factor. Your family should know what you are going to do. To survive for a long run, one's family should constantly encourage him and should stand by him in thick and thin of life. So it is advisable that one should not start this career with family money. So to survive this stage, one should opt for a trading job in a proprietary trading firm so that one can learn it with others money and without risking his own capital.

2. It will be better if you have an another source of income (minimum 5000/-) from other source like house rent, fixed deposit interest or even some part time job.

3. From the very begining, first decide which type of trader (jobber, arbitager, positional trader or day trader) you are or for what type of trading your personality suits. As per my view, the current condition is not suitable for jobbing for beginners. For arbitrage, it is better to go for a job.

4. Ininially it is better to go for positional trading (spanning from 1 day to 5 day) or Day trading (1-2 positions per day and no overnight position).

5. If you opt for a trading job, then you must know that it is the most unstable job and your status will be the lower hierarchy of a company. I have seen very few people with good educational back ground in trading.

6. When you opt for a trading career, you must know that, in trading like any other business, there are two parts, one is income and the other is expenditure.
In expenditure, there are two components one is fixed (Your monthly expenditure, Trading cost (software charge, internet, equipment cost) and the other is variable (transaction cost like STT, stamp duty, brokerage etc.). Why it is variable? That means more you trade more will be the tranasaction cost. That means even if you manage to close a month with no profit no loss level, then also you have to bear these costs. If it is a borrowed money, then there will be a chance of interest payment along with principal repayment. So never ever dream about trading to start with a borrowed money. Apart from that, there is a hidden mine field called LOSS. If you continuosly make loss for two to three months, then it will make a severe dent on your principal.
So there are four ways(Your monthly expenditure, Trading cost (software charge, internet, equipment cost),transaction cost and interest payment if any) where you will make loss. Here I am ignoring loss.
Now consider the income part, It is only profit. Unfortunately, it is not fixed but variable. That makes the trading most difficult job. So have some back up money to take care of these expenditure for few months.

7. I have seen from my experience, 95% of the retail trading client accounts(unless they add more margin money) are smashed within the first three months and it is a universal phenomenon.

8. In trading, each and every new position is a potentially mine field. So every position has the capability to potentially wipe out all your trading capital unless you take some rigid money management position. Even if you make consistent profit for two years, there is no guarantee that you will make profit in the third year.

9. Once you start trading as a full time job, then definitely it will be very very difficult for you to switch from trading to other profession. In early part of the trading,in case in adverse situation,you may switch immediately but as day passes, it will be much more harder.

10. Trading is a very very lonely job. Gradually you will cut off from society. So you have make special effort to keep your social contact intact. One thing you must keep in mind that unless you are successful, society may not give respect to your profession.

I am telling you these things not to discourage but to have strong mindset towards trading. Trading is not for weak persons. You should be daring in this profession with some precautionary measures.

Wait for my next post,

Till then

Good Bye
 

Gaur_Krishna

Well-Known Member
#12
Great Reading.... This must have taken hours to write.. Thanks
Hi,

From my experience, I will tell now what I have learned as a trader to start trading for a living.

Before you go for a trading career, first consider the following facts.

1. Family support is the most important factor. Your family should know what you are going to do. To survive for a long run, one's family should constantly encourage him and should stand by him in thick and thin of life. So it is advisable that one should not start this career with family money. So to survive this stage, one should opt for a trading job in a proprietary trading firm so that one can learn it with others money and without risking his own capital.

2. It will be better if you have an another source of income (minimum 5000/-) from other source like house rent, fixed deposit interest or even some part time job.

3. From the very begining, first decide which type of trader (jobber, arbitager, positional trader or day trader) you are or for what type of trading your personality suits. As per my view, the current condition is not suitable for jobbing for beginners. For arbitrage, it is better to go for a job.

4. Ininially it is better to go for positional trading (spanning from 1 day to 5 day) or Day trading (1-2 positions per day and no overnight position).

5. If you opt for a trading job, then you must know that it is the most unstable job and your status will be the lower hierarchy of a company. I have seen very few people with good educational back ground in trading.

6. When you opt for a trading career, you must know that, in trading like any other business, there are two parts, one is income and the other is expenditure.
In expenditure, there are two components one is fixed (Your monthly expenditure, Trading cost (software charge, internet, equipment cost) and the other is variable (transaction cost like STT, stamp duty, brokerage etc.). Why it is variable? That means more you trade more will be the tranasaction cost. That means even if you manage to close a month with no profit no loss level, then also you have to bear these costs. If it is a borrowed money, then there will be a chance of interest payment along with principal repayment. So never ever dream about trading to start with a borrowed money. Apart from that, there is a hidden mine field called LOSS. If you continuosly make loss for two to three months, then it will make a severe dent on your principal.
So there are four ways(Your monthly expenditure, Trading cost (software charge, internet, equipment cost),transaction cost and interest payment if any) where you will make loss. Here I am ignoring loss.
Now consider the income part, It is only profit. Unfortunately, it is not fixed but variable. That makes the trading most difficult job. So have some back up money to take care of these expenditure for few months.

7. I have seen from my experience, 95% of the retail trading client accounts(unless they add more margin money) are smashed within the first three months and it is a universal phenomenon.

8. In trading, each and every new position is a potentially mine field. So every position has the capability to potentially wipe out all your trading capital unless you take some rigid money management position. Even if you make consistent profit for two years, there is no guarantee that you will make profit in the third year.

9. Once you start trading as a full time job, then definitely it will be very very difficult for you to switch from trading to other profession. In early part of the trading,in case in adverse situation,you may switch immediately but as day passes, it will be much more harder.

10. Trading is a very very lonely job. Gradually you will cut off from society. So you have make special effort to keep your social contact intact. One thing you must keep in mind that unless you are successful, society may not give respect to your profession.

I am telling you these things not to discourage but to have strong mindset towards trading. Trading is not for weak persons. You should be daring in this profession with some precautionary measures.

Wait for my next post,

Till then

Good Bye
 

sibu3168

Well-Known Member
#14
Hi,

Again sorry for being late. In fact I am busy with my father's treatment. His codition is deteorating gradually and now his lower part below waist is completely paralysed. So I've to spare much time for him.

Now I am going to tell to those who wants to pursue a career in stock market. Here I advise from an analyst prospect only.

First, when you are in a job, your first priority should be your company's interest and nothing else. At the same time you must create some way so that your job will be some what more secure. In stock market, majority of your employer will be the stock brokers.
When you work for a stock broking company, there are two type of jobs, one - A routine type and the other is thrilled type. In fixed type job, you can go for surveillance, marketing, back office, accounts, DP related, dealer and front office type etc. For these jobs, educational back grounds like simple graduate to MBA will work. Along with these educational background you will also need NCFM certificate in Cash, F&O, Currency and Commodities segment. Anybody can apply for NCFM qualification. For details one can refer to NSE website or contact NSE personnel. Similarly, BSE and MCX have such type of certification. So you may go for their certification also. So for details refer to their websites also. These jobs are relatively secure jobs and salary will be in the range between 7500/- to 50,000/- depending on your position, experience etc.

Now come to the other part. There is a highly lucrative job called analyst. There are various segments where an analyst can work. They are generating various financial reports, generating intraday as well as positional calls, Portfolio management services, interaction with good HNI clients and also trading in pro account. But some how, this is the most unstable job and you do not know at what point you will be fired. It all depends on your responsibility.

Basically there are two types of analyst job. One is Technical and the other is fundamental, in my view fundamental analyst job is more secure than technical analyst job. Since we are talking about job, so our first priority should be job security. In fundamental analyst job one can rise upto a fund manager because as I see from my experience when the word investment comes, then no one talks about technical part only fundamental part. As an Technical analyst, your first responsibility will be to generate intraday calls and generate some report based on technical analysis. When you excel in your first part, then your boss may take interest in you and allow you for traing in pro account. Here the problem starts. In fact, An analyst and a trader are both different and both have very different mindset. Generally, an analyst can not be a trader and a trader can not be an analyst. There are very very few people who have excelled in both areas. So when you are in a job, then try to avoid trading as far as possible. In these two type of jobs, salary will be in the range of 30,000/- to 2,00,000/- depending on your skill, experience and educational background. In some companies, salary will be in the range of 15,000/- to 25,000/-. Because they recruit fresher to semi qualified.

Now come to the educational part.
For fundamental research analyst, the best qualification is MFC (Master in Finance and Control) or MBE (Master in Business Economics). It is given by almost all good instituions. Otherwise go for CFA (US charter). If you complete this course, then a whole new world will be open for you. You can even go for CFA (Indian charter provided by ICFAI, Hyderabad). Even a CA (Charted Accountant) degree with MBA (Finance) will be of great help.When you are in a research job, try to conversant with these softwares (if available), they are Reuter, Bloomberg, Capitaline, Ace Trader.

For Technical Research Analyst, there is no formal course available in India. Although sometimes back, there was a course given by ICFAI, called PG diploma in Technical Analysis but right now they have discontinued it. So it is better to go for some international qualification. Internationally the following courses are available : (1) CFte, Certified Financial Technician (offered by IFTA, International Federation of Technical Analysts), (2) CMT, Chartered Market Technician (offered by Market Technicians Association). Now in the age of high speed software trading, it is better to go for a Quant course (Financial Engineering) like CQF (Certificate in Quantitative Finance). Apart from these courses A MBA (finance) degree and knowledge in software application will be of great help.

Finally, the research line is the most lucrative segment in the finance sector. Research Analysts are the highest paid workers in the job arena.At the same time, it is the toughest job in the job arena. Real problem starts when financial markets down or economy starts under performing. At that time, analysts are the first to become the casuality. It is a job which gives you thrill on everyday. For an analyst, like a trader, everyday is a new day with new hope, new challenges and new targets. It is the only field where you can get a chance to know throughly about every other field be it IT, be it Pharma, be it manufacturing or be it economy, be it about demand - supply or anything else.

So whatever I know about this line, are presented honestly. If somebody wants my help in this regard may ask me in this thread. I will try to answer him with my best knowledge.

Till my next post good bye.
 

sibu3168

Well-Known Member
#15
Hi,

Since education plays a major part in trading as well as in investment, now, I'll tell you my favourite books on this subject (both fundamental & Technical). In fact, I refer these books almost everyday and in fact they are always on my trading desk. Apart from these books, I hardly refer other books although I've lots of books (more than 3000 either in pdf or soft cover or hard cover format).

My first major purchase occurred at New Delhi International Book Fair 2000. At that time I purchased books worth 15,000/- at a single go. After that I purchase some books relating to trading and investing in each and every month regardless of my condition.

Here are the lists :

Fundamental Analysis

(1) Investment Valuation : Tools and Techniques for Determining the Value of Any Asset - Aswath Damodaran
(2) Financial Modelling, 3rd Edition - Simon Benninga
(3) Security Analysis - Graham & Dodd
(4) One up On Wall Street - Peter Lynch and John Rothchild
(5) The Intelligent Investor: The Definitive Book on Value Investing - Benjamin Graham, Jason Zweig and Warren E. Buffett
(6) Common Stocks and Uncommon Profits and Other Writings - Philip A. Fisher and Kenneth L. Fisher

Technical Analysis

(1) Beyond Candlestick - Steve Nison
(2) Japanese Candlestick Charting Explained - Gregory L. Morris
(3) Technical Analysis of the Financial Markets: A Comprehensive Guide to Trading Methods and Applications - John J. Murphy
(4) Technical Analysis of Stock Trends - Robert D. Edwards, John Magee and W. H. C. Bassetti
(5) Technical Analysis: The Complete Resource for Financial Market Technicians - Charles D. Kirkpatrick II and Julie R. Dahlquist
(6) Five Waves to Financial Freedom : Learn Elliott Wave Analysis - Ramki N. Ramakrishnan (Printed Material)
(7) Come Into My Trading Room: A Complete Guide to Trading - Alexander Elder
(8) Market Wizards : Interviews With Top Traders - Jack D. Schwager
(9) Stock Market Wizards: Interviews with America's Top Stock Traders - Jack D. Schwager
(10) The New Market Wizards: Conversations with America's Top Traders - Jack D. Schwager
(11) Reminiscences of a Stock Operator - Edwin Lefvre
(12) Trading in the Zone: Master the Market with Confidence, Discipline and a Winning Attitude - Mark Douglas
(13) Trading in the Zone : Maximizing Performance with Focus and Discipline - Ari Kiev
(14) Technical Analysis & Options Strategies - K.H.Shaleen
(15) The Bible of Options Strategies : The Definitive Guide for Practical Trading Strategies - Guy Cohen
(16) Encyclopedia of Chart Patterns - Thomas N. Bulkowski
(17) Intermarket Analysis : Profiting from Global Market Relationships - John J. Murphy
(18) You can Win - Shiv Khera (To develop positive attitude)

In fact my favourite stream is technical analysis and I spent much time in reading the charts (simple price action no indicators). I refer indicators at much later stage. For money management, I devise my own method. Apart from these books, I hardly follow other books as I find the above books are more than sufficient for me for trading as well as investment purpose.

I hope this post will be definitely helpful for new traders as well as experienced traders.

With best wishes
 

sibu3168

Well-Known Member
#16
Hi,

Let us come to the trading arena. Again I've decided to resume trading again.

From Monday onwards I will give live markets calls in Currency segment. In fact, these calls will be the real calls where I will have also the live position. Here I am not trying to show my geniousness, but my intention is how I trade in the market. I will flash my call here for one to two month only. So any comment in this regard will be highly appreciated. Also I think, most of the people here are more or less experienced, so it will be better to learn in a practical way rather than discussing it in a theoretical way.

Why I choose currency segment? Because I think the major factor for successful trading is focus. In currency segment, there are only four instruments with USDINR having strong liquidity. So it will be lot more easier to monitor them.

In my next thread, I will write my criteria regarding trading.

If for any reason, I want to stop my trading, then also I will intimate here in advance.

Till then

Good Bye
 

sibu3168

Well-Known Member
#18
Hi,

Before start trading, let us define the rules first.

(1) Capital Requirement

25,000/-

(2) Lot Size

For Intraday

USDINR - 8 lots
EURINR - 5 lots
GBPINR - 3 lots
JPYINR - 3 lots

For Overnight

USDINR - 4 lots
EURINR - 2/3 lots
GBPINR - 1/2 lots
JPYINR - 1/2 lots

90% of our trade will be squared off in the sameday.

(3) Risk Management

For every entry, our stop loss level will be just 10 points above or below my entry point depending on the type of trade. For example, If I buy USDINR @ 54.74, Then my SL will be at 54.6375. Similarly in case of sell, our SL will be at 54.8425. That means for every trade I will assign a risk capital of 800/- to 1,000/- rupees.

I will exit every trade either at SL or at 4:50 P.M. or at my price. There is no target. I only book 50% profit at a price of 15 points and revised the SL.

If the first trade is a loss and the loss is more than 700/- then there will be no trade for the day. Similarly in case of overnight position, if there is a loss and the loss is more than 700/- then there will be no trade for the day.
If the first trade is a profit, then we may consider for a second trade with half of the volume of first trade. But there should not be a third trade. That means maximum one to two trades per day and no more.

That is it.

With best wishes