Option Buying by Vijay Thakare 🧵 Capital, Skill and Time is all you need to become a successful, profitable trader RT Appreciated
Watch his Twitter Spaces with @PaytmMoney. Key takeaways from his spaces is what I have compiled here in the interest of everyone.
@PaytmMoney Journey ⚪ Investing journey began in 2012 with mutual funds. ⚪ Received a call from a broker who advised him to open up a demat account. Broker used to give buy sell recommendations. ⚪ Didn't know anything about fundamentals/technicals back then.
@PaytmMoney ⚪ Experienced beginner's luck in the start which eventually vanished when he started trading the FnO segment. ⚪ Lost Rs. 8-10L in the initial year itself.
@PaytmMoney ⚪ Losses continued for another 3 yrs. Was able to sustain himself and also digest such huge losses primarily because of a well run BPO business. ⚪ He was doing well in his business, but was suffering heavy losses trading the markets.
@PaytmMoney ⚪ He wanted to succeed in trading as well. ⚪ He had been operating the BPO business for the past 7-10 yrs. Took a toll on his health because of the irregular schedule. ⚪ Decided to do something apart from his business.
@PaytmMoney ⚪ His looses in trading continued until 2019. Lost 40L cumulatively ⚪ By Sep 2019, was almost in depression.
@PaytmMoney His turning point 🔵 Met 2 mentors who helped him a lot and have been instrumental in shaping his journey. Jitendra SIngh : understanding risk Siva : execution, psychology and following a process
@PaytmMoney 🔵 Their guidance helped him a lot and by the 2nd half of 2020, he became net profitable. 🔵 In 2020, he became a FT trader. Closed his BPO business to focus all his time and energies on trading.
@PaytmMoney Buying : Momentum, Momentum, Momentum ⚪ He trades in 2 ways: 1. Momentum trading for over 100 points 2. Scalping for 20-30 points ⚪ Limited capital requirement. You don't need to have a lot of money. ⚪ Develop Skill overtime.
@PaytmMoney ⚪ Have a risk management and position sizing plan
@PaytmMoney How he trades? 🔵 Only trades BNF. Believes one instrument is enough to make a living. 🔵 Be a Bruce Lee. Practice 1 kick a thousand times.
@PaytmMoney 🔵 3 things he looks at: Size of candles, indicators and patterns Size of the candle is very important. Find out if it is a bearish, bullish or a doji candle. Indicators used are EMA, Stochastic and MACD. Uses 5 min TF to trade. Also, checks higher time frames(15m, 1hr)
@PaytmMoney Patterns: W Pattern, M Pattern, Hammers etc
@PaytmMoney 🔵 Some ways of using the setup: If MA's are converging, indicates markets is sideways. If the market has to trend, a full body candle should cross the MA(20) with decent volumes. Low of that full body candle is the SL for the trade.
@PaytmMoney 🔵 Mondays, Tuesdays, Wednesdays, Fridays: trades ATM options with premiums of 250-300) 🔵 On Expiry, he tries to capture gamma explosions.
@PaytmMoney 🔵 Never Averages onto loosing trades. Does averaging only in winning trades. 🔵 Focuses on Future Volumes rather than Option Chart volumes. 🔵 His Max DD has been 15% on his total capital.
@PaytmMoney Managing Risk in Option Buying âš« If someone has 1Cr, he should only put 10L in the demat account and trade with it. âš« This helps in controlling greed and keeps fear in control. âš« Keeps a daily target of 1%.So, for a person with 1Cr, he should target 1L from 10L.
@PaytmMoney âš« Revenge trading and Overtrading kills. Curb these two. âš« Trading is a life skill. First practice swimming and then increase stamina. âš« Trade good RR setups. Always prepare on how much you are ready to loose in a specific trade.
@PaytmMoney Scaling Up(His though process) 🟤 Don't scale up until you have made 3X of the margin you have in your demat account. 🟤 For instance, you have 1Cr.Put 10L in demat account. Once you have made 30L in profits.
@PaytmMoney 🟤 Increase capital in demat account by 1L. Now total capital = 11L. Use the 29L profit to build other alternative sources of income. Try creating supplementary incomes.
@PaytmMoney Advice to new traders 🟢 Don't chase returns in the first year. 🟢 Focus on observing the markets. Understand price behaviour and make it your friend. 🟢 Capital, Time and Skill are the constants. You need all three. 🟢 Focus on what you don't have.
@PaytmMoney Please RT the first tweet for the benefit of others.
