I invested 1 crore , now down 30 lacs, how to recover?

[pontingg]

Hmm, I did not mean institutions do not loose Money, they too do but what I meant was all the players in the Market do not get the same benefits. It's not a level playing ground. Institutions have a greater advantage than any individual does. That's what I intended to say. The Cash market is perhaps good for the individual but the derivatives market is not so good and the leverage involved in the derivatives market can get very dangerous for the individual investor because they can not act as quickly as the institutions and they do not have access to all the information the institutions have. I am not trying to say institutions have better traders than the common man but they have the odds in their favor and it's an unfair game. Mr. Kingpin, I am not saying academics are great traders and the common men who trade are complete idiots, No SIR, i am not saying that. A good example is, LTCM, they had Nobel Prize winning economists but it still crashed spectacularly in 1998. In the Russian Roulette example, we do not know where the Bullet is so we can not say it will come only in the Millionth pull of the trigger and we'll make profits until then. That example was just to emphasize the randomness in the markets and nothing else. Given the randomness in the market, It is good if an individual investor sticks with Stocks w/o much leverage rather than go for the derivatives market which usually involves a much higher leverage. This is what I intended to say and did not mean that the Institutional investors are better than the accumulated wisdom of a few traders among the common men and women. Since, you have studied Finance, you must be knowing how badly leverage can go against you. The fact you mentioned about the common trader "And we are humble enough to suggest that they are successful only 70-75% times and fail during the remaining period." is 100% on target but if we fail in the derivatives market with a huge leverage I think failing 25% of the time is enough to ensure that we're close to getting wiped out. Our portfolio is going to significantly depreciate in value even if we consider a realistic Stop-Loss, unless we have a minuscule stop loss which is just a couple of ticks below the Purchase price. So, that's what I was trying to say. It is usually good if the individual investor stays away from instruments which have a very high leverage like the derivatives Market or the Forex Market. You're bang on target in saying "we are here to make money, not make theories. " No one comes to the markets "Just" to create theories. Most of the academic theories intends is to "give you a sufficient predictive ability." Well, I am honored by what you said but again I must emphasize that due to the high leverage even if we're wrong 20% - 25% of the time, it can hurt us badly. That was my only intention when I suggested that individual investors stay away from Derivative trading, I have no intention of proving the academics are better than the people who trade daily and have accumulated knowledge over a few years. The fight between these two groups of people with different thoughts is going to continue until Markets exist on Planet Earth, neither you nor me can prove that one group is superior and the other is inferior. I was trying to emphasize the dangers involved in Derivative trading and the markets are "unfairly" in favor of the Big players i.e., institutions and I must again say that this doesn't mean that individual investors are hopeless and can't make money. They too can make money in the Market. I believe i have now conveyed my message clearly and have no intention of proving one group of traders are inferior.

 

[basfrnt]

Thank you for information veluri1967.

 

[kingpin]

Hmm, I did not mean institutions do not loose Money, they too do but what I meant was all the players in the Market do not get the same benefits. It's not a level playing ground. Institutions have a greater advantage than any individual does. That's what I intended to say. The Cash market is perhaps good for the individual but the derivatives market is not so good and the leverage involved in the derivatives market can get very dangerous for the individual investor because they can not act as quickly as the institutions and they do not have access to all the information the institutions have. I am not trying to say institutions have better traders than the common man but they have the odds in their favor and it's an unfair game. Mr. Kingpin, I am not saying academics are great traders and the common men who trade are complete idiots, No SIR, i am not saying that. A good example is, LTCM, they had Nobel Prize winning economists but it still crashed spectacularly in 1998. In the Russian Roulette example, we do not know where the Bullet is so we can not say it will come only in the Millionth pull of the trigger and we'll make profits until then. That example was just to emphasize the randomness in the markets and nothing else. Given the randomness in the market, It is good if an individual investor sticks with Stocks w/o much leverage rather than go for the derivatives market which usually involves a much higher leverage. This is what I intended to say and did not mean that the Institutional investors are better than the accumulated wisdom of a few traders among the common men and women. Since, you have studied Finance, you must be knowing how badly leverage can go against you. The fact you mentioned about the common trader "And we are humble enough to suggest that they are successful only 70-75% times and fail during the remaining period." is 100% on target but if we fail in the derivatives market with a huge leverage I think failing 25% of the time is enough to ensure that we're close to getting wiped out. Our portfolio is going to significantly depreciate in value even if we consider a realistic Stop-Loss, unless we have a minuscule stop loss which is just a couple of ticks below the Purchase price. So, that's what I was trying to say. It is usually good if the individual investor stays away from instruments which have a very high leverage like the derivatives Market or the Forex Market. You're bang on target in saying "we are here to make money, not make theories. " No one comes to the markets "Just" to create theories. Most of the academic theories intends is to "give you a sufficient predictive ability." Well, I am honored by what you said but again I must emphasize that due to the high leverage even if we're wrong 20% - 25% of the time, it can hurt us badly. That was my only intention when I suggested that individual investors stay away from Derivative trading, I have no intention of proving the academics are better than the people who trade daily and have accumulated knowledge over a few years. The fight between these two groups of people with different thoughts is going to continue until Markets exist on Planet Earth, neither you nor me can prove that one group is superior and the other is inferior. I was trying to emphasize the dangers involved in Derivative trading and the markets are "unfairly" in favor of the Big players i.e., institutions and I must again say that this doesn't mean that individual investors are hopeless and can't make money. They too can make money in the Market. I believe i have now conveyed my message clearly and have no intention of proving one group of traders are inferior.

Pontingg bhai... Totally agree with you that in the world of trading even 20% probability of mistake is disastrous.

If you are leveraged and trading derivatives without any strategy and money management skills and for the first time in life, then even God cannot help you. But I think what you are not considering is many people trade derivatives without leverage and with tight stop losses (yes for just few points at a time). They are skilled to make money that way. They are known as the 'scalpers'. They are the ones who look for cheap brokers or negotiate hard for low brokerage promising high trading volumes. In fact Forex market is full of these. Now how do they manage to win day after day and keep their losses small? That is a skill they have acquired through study, practice and a bit of hereditary gift of mindset maybe. Come to see of it they are like tightrope walkers in a circus - very skilled. And they make real good money when the market is trending (30% time or breaking out 10% of the time). It is like they are skilled in growing crops in deserts and so make great profit out of even a brief shower.

But before we marvel at them thinking them as aberrations to the human species, stop and look around, you will find wizards in every walk of life. Look at how a weaver creates amazing patterns on his loom. How a fisherman expertly lays his net on the water. I bet you and I cannot do these things at first go..they require good amount of skill acquired through years of practice. Even riding a rickshaw straight on a road is very tough (I tried it once in my teens - with disastrous consequences - it is much heavier and un manouverable than it looks). I bet you and me will not be able to do so fast stuff we don't usually do. It takes time and it takes good teachers.

If you consider more complicated human endeavors watch this program on National Geographic on constructing the highest bridge in the world at France and the seemingly insurmountable problems they overcame. If you construct odds for that kind of a project , on paper it would be something like 1%. But when high amounts are at stake, people rise to the occasion and take special care, devise special methods, study all possible risks exhaustively and deeply and cover themselves adequately from getting shot by the millionth bullet. That is why trading is not for everybody. And that is why those who are unprepared are mercilessly kicked out of the ring.

Your message on margin trading is well taken. Unfortunately people whom it is meant for scarcely read such warnings. In the final analysis I guess we are both pointing out at the same glass - half filled with opportunities and half with pitfalls. Perhaps I am pointing at the opportunities and you at the pitfalls. And I think both are necessary because you cannot miss either of them. If you miss the opportunities then you are not trading and if you miss the pitfalls then well, you have lost the game.

 

[creatgr8]

Dont Worry - never fear the market - what goes in the market - recovers from it only - Investing 50-lakh is enough to recover ur loss - In 2 Yrs - If find comfortable - then tell me - i am also a trader like Other, but know how to make money In any kind of market ---So i never worries -nor - seek advice - from any -gurus i am my self - my creator

regards

 

[Tavnaz]

Oh my goodness you lost 30 lacs,
Sorry for you dkardale,you lost a great sum,but don't you think you should have opened up with something less like 20 Lacs or something.
And secondly man,you are so,rich a man didn't you consider that such big a sum should have been investing in some other markets like Index futures and options with low risk strategies such as Spreading etc.
I'm sure if you could manage 1 crore you would be quite a business person,dont take it as offensive i am just saying,you should know there are other less risky investments,because financial markets are no casino's.
Every trader in forex is no scalper,i use 400:1 leverage but still come a winner,you need a sound strategy man.
I play daily charts,see if you know where the price is headed why be afraid of leverage.
Regards
Tavnaz

 

[pontingg]

Yes, again you're bang on target. We both are trying to point the same glass -- Half full with opportunities and Half full with pitfalls. I completely agree that No mathematical Model can "Ever" take the Human factor into consideration. Also, it is true that human emotions can never be put into a Model. Especially when Panic selling or buying happens.

Even though I am a believer in the academic theories (because that's how I earn my bread and butter), I too (Like many of the traders) find it hard to believe that great traders/investors can be there just by chance. Their argument is among a few million people that trade 1 or 2 being a super star trader/investor ca happen just by chance. That to mo is one more way of proving what I think, Mathematical models can not take the human factor into consideration. Even, if we take something like Game theory, which is meant to take the best possible decision/follow the best possible strategy to win a game it can also never lead us to a decision which can be as effective as a human's decision.

I read about a story which dates back to the Bay of Pigs invasion/Cuban Missile Crisis. Under President Kennedy there was a scientific Think Tank which was called RAND corporation. These people turned to Game theory and at one point in time, they advised President Kennedy that A Controlled Nuclear War could be won and when they were asked, they could not tell How we'd know when the war finished ? Well, the story goes like this, they were faced with this question: How to Force the Russians to stop building the Missile sites and force them to withdraw ? When it came to this situation, they did not even know whether the other side was rational or not. In the end President Kennedy ignored all ideas of controlled Nuclear War and warned the Russians that even they launched 1 Missile against the U.S.A from Cuba, they'

 

[pontingg]

Oops, accidentally I posted half of the story,

In the end President Kennedy ignored all ideas of controlled Nuclear War and warned the Russians that even if they launched 1 Missile against the U.S.A from Cuba, U.S.A would retaliate with it's entire arsenal of nuclear weapons. In the end the so-called irrational decision made by President Kennedy saved the world from Nuclear exchange which could have turned into WW 3.

In extension to what I said, there are some people who are foolish enough to say that People like Warren Buffet are there just because of chance, 1 out of a few hundreds of millions can easily happen just out of chance. I like any other trader out there do not believe one little bit of this.

So, yes it's very true the human intuition along with accumulated experience that can take us toward success in the markets irrespective of how complicated out trading strategy is -- whether it is based on technical analysis or CAPM or anything else.

Oh yes, I do know about scalpers also but I think such people are few and far between. If I may rephrase what you're trying to say Experience + good intuition is the most essential thing needed for success and I am no different, I too believe that these are vital for success. Perhaps it is fair to say that the way we look at the markets differ but the formula for success doesn't.

What do you reckon about RPOWER, I think it's a good buy. I've heard through some of my colleagues in the trading business that some of the big players are loading up heavily on that. That apart (god knows how true that news is), I think it might appreciate in value once they're fully functional. I think they may reach full capacity by 2013 and I think the stock might go up to 250 - 300. So, I guess it's a good buy now as it's close to 150 now. What's your opinion on this ?

Ha Ha, I too tried to ride a horse when I was young and nearly fractured a hand.

 

[kingpin]

Oops, accidentally I posted half of the story,

In the end President Kennedy ignored all ideas of controlled Nuclear War and warned the Russians that even if they launched 1 Missile against the U.S.A from Cuba, U.S.A would retaliate with it's entire arsenal of nuclear weapons. In the end the so-called irrational decision made by President Kennedy saved the world from Nuclear exchange which could have turned into WW 3.

In extension to what I said, there are some people who are foolish enough to say that People like Warren Buffet are there just because of chance, 1 out of a few hundreds of millions can easily happen just out of chance. I like any other trader out there do not believe one little bit of this.

So, yes it's very true the human intuition along with accumulated experience that can take us toward success in the markets irrespective of how complicated out trading strategy is -- whether it is based on technical analysis or CAPM or anything else.

Oh yes, I do know about scalpers also but I think such people are few and far between. If I may rephrase what you're trying to say Experience + good intuition is the most essential thing needed for success and I am no different, I too believe that these are vital for success. Perhaps it is fair to say that the way we look at the markets differ but the formula for success doesn't.

What do you reckon about RPOWER, I think it's a good buy. I've heard through some of my colleagues in the trading business that some of the big players are loading up heavily on that. That apart (god knows how true that news is), I think it might appreciate in value once they're fully functional. I think they may reach full capacity by 2013 and I think the stock might go up to 250 - 300. So, I guess it's a good buy now as it's close to 150 now. What's your opinion on this ?

Ha Ha, I too tried to ride a horse when I was young and nearly fractured a hand.

"Heard from colleagues" ... "I think the stock will go up"...dangerous words. But this is how markets are formed. Hundreds buy with a dream and then prices go up to a point till the king is declared naked. The bubble bursts at that point. If you are taking a fundamental analysis route to investing be sure to do your homework. Refer Buffet's method. They are very good and tested for decades.

There are now too many power projects with grand promises but little on ground. Shares with no past rising on future promises is in the biggest danger of qualifying a bubble. So again, my friend : BEWARE

 

[jolly007]

hey remember you lost your money because of ignorance and greed.
so please firstly remove these two things and then decide go in for
fixed deposit or some MIP with a good mutual fund house yes the returns
would be less but nevertheless will be there and in the meanwhile study and
learn trading yourself. if you have this much patience and determination then probabily you will make it and bro please shun the easy way. start trading
yourself once your capital is replenished and you have learned to trade with
proper money management.

 

[pattathils]

Hello friend,
Suggestions are in tons always.
But if you have so much money ONLY to invest in Shares, then you surely have plenty of wealth to play around elsewhere.
Share market is not a place to mint money. But a hard tough often frustrating arena.
It is NOT a gambling den.
So trying to make up yr losses back in share is stupid when you dont know trading.
So I suggest you invest in Real estate which is sure Gold (buy & sell properlty etc).
Only 10% on investors make MONEY in share market MIND YOU.
Those are the ones like you have lost a lot over the years but kept learning.
This is the only arena wher ther is no COURSE to teach you maketting. ONLY EXPERIENCE TEACHES YOU MY FRIENS AND LOTS OF LOSSES !
There is no body who haven't lost in share marklet in the beginning.
So try else where to invest and multiply your big wealth.

P.S.