It was August 2007 and I had been trading for 2 years by then, working hard, learning everything I found on the markets, but I had still had no rewards. In fact, I had just Rs 70,000 left in my trading account. I could do all kinds of technical analysis, build trading systems, etc., but it was not leading me to profits and success in trading.
I had sacrificed my college education, so that I could be successful trading, but here I was, down to my last few thousands. I decided that if I lost this Rs 70,000, I would try and make a living selling trading systems and by giving tips to other traders.
However, come August 2007, everything changed. I suddenly started to make money. The Rs 70,000 I was down to, now started growing exponentially, until it reached what is now Rs 55 lakh – yes Rs 55 lakh!
So, what had changed suddenly?
I have no precise answer. I even wondered how a 21-year old like me, without college education, and who was perhaps in the middle of the trading curve, was able to make so much money, while there were so many more people with much more knowledge, still struggling in the market? My young mind was suddenly filled with many questions?
Was trading a game of technicals? What separates a winning trader from a losing trader? Was my journey from Rs 70,000 to Rs 55 lakh merely a product of luck? There are many questions to which I need to find the answers, but I decided to share the few reasons that I think lead to my success in trading in last one year:
1. I cannot deny the fact that I was lucky. Life is unfair – this is a fact. When I had Rs 70,000 at the beginning of August 2007, a few losing trades could have wiped out all my money. So at that time I was lucky enough to survive despite being undercapitalized. However, I think later on, after these 1-2 months it was not just pure luck that brought me to Rs 55 lakh.
2. I am believer of the Van Tharpe trading model trading, which says: Trading is 10 percent technicals, 40 percent psychology and 50 percent risk management. I concentrated on the last two things and it paid off. To manage risk, I was trading only intraday, and I never traded overnight positions. This may sound contradictory to the many sermons one receives on how it is so terrible to being an intraday trader.
3. My sole policy was to survive first and then make money. If you are surviving in markets and losing small, you will have time when you are favored by luck and you will make it big.
4. A trader without risk management is like a lonely girl got struck in a boy's hostel. If you are using leverage, you should either be hedging your positions or you should not carry overnight positions. Otherwise it is just a matter of time when a big gapup or gapdown will wipe you out.
5. The old classical things we need to fight are fear, greed, hope and bias. Bias is ignored by many but it can cause serious problems.
6. Becoming successful trader is a process. It is like any sport, which you learn the basic rules but then develop your own style. Let us say cricket – each batsman (or bowler) has his own style, which is unique to him. You cannot fully copy anyone, but you can learn from others and develop your own technique of playing in markets, based on your strengths.
7. There are unlimited number of ways you can make money in the markets and unlimited number of ways you can lose.
8. Supports and resistances are for making bulls and bears hope. If you use technicals and want to become a sound technical trader, then I would advise to go for automatic system trading. For others always remember not to use supports and resistances for hoping in the markets.
9. Trading is very simple but it is not easy.
10. Keep your losses small and let your profits run. You have read that in many places but this holds true, so implement it practically.
11. Remember the worst mistakes are made at the best times and best of the trades are made at the worst times.
11. Feel free to short sell. Short selling is a great way to make fast money.
12. Always be prepared for the worst, and and when you are feeling stuck, remember these lines: "The further you run from your sins, the more exhausted you are when they catch up to you. And they do".
13. There are no shortcuts. You have to go through learning the process of trading.
14. If you did well paper trading, it is not necessary you will do well in real-time trading. It has the same difference as in batting at Net practice and batting under pressure on the field.
Extact : Bhoomitrader