Technical Analysis of Indian Equities by Nooresh

Better things to do than Trading for a Thrill !!

That is not a line you expect from someone who is trading for a decade or more Smile 

I have been in trading/advising/training/investing for the last 10 years and have interacted with thousands of traders/investors from different educational backgrounds/cities/countries etc.

There are some set of Traders for whom this line is the most applicable

“There are better things to do than Trading”

In the next post will take another type of traders and maybe going ahead peculiar type of Investors. ( These are just random Sunday Thoughts i Get Smile )

“The Thrill Seekers “

Let me start with a very nice conversation I remember with a veteran investor.

Investor : Agar main tereko 50 lakh rs dega aur terrace pe jaake udane ko bolega to haath dukh jaayega but uda nahi payega… ( If i give you 50 lakh in cash and tell you to throw it one note by one from the terrace, your hands will start paining and you will not be able to throw it away. )

( Maybe with Rs 2000 notes this would be easier Smile )

Me : Haan woh to hai

Investor : But market me tereko 10 mins lagega and pata bhi nahi chalega.

I think this discussion started on topics of Futures and Equity as a % of Networth.

This is also one of the reason why Casinos have chips instead of cash – It creates a mental separation between the gambler and his Valuable Money.

General Traits in Thrill Seeking Traders.

  • Deploy small capital in relation to their networth/earnings. ( For some thousands and for some crores.)
  • They love using leverage through futures and options.
  • Spend a lot of time during the market hours and playing fastest fingers first with lot of trades.
  • Their fingers are stuck on ALT-F6 or whatever keeps showing them their M2M.
  • Profit per trade is small but trade sizes keep getting larger.
  • Think in Absolute numbers and not percentage. ( A standard approach is like buy a derivative contract of say 5000 lot and a price of 100 and keep hoping it goes 3-4 rs in your direction of trade and try to make 20-25k. Similar thought process with higher sizes also.)
  • Does not have a clue of his net exposure in terms of total value at risk. Calculates only the margin and shortfall.
  • Emotions sway according to the M2M Smile 

This set of Traders will crib about a 600 rs cinema ticket or many petty expenses but will happily lose a few thousands/lakhs trading in futures/options or day trades without any remorse.

A mentor who had an experience of 30 years plus in investing gave me this solid advice many years back.

“ Everyone has the urge to trade   and you got to control it. So I sometimes trade with 1-5% of my full position or have a small capital deployed in a trading account so that I do not end up screwing up my investments.Everyone knows junk food and various vices are not good for health but we all tend to give in to the urge. Only difference is in markets with a screen in front of you it can become addictive. Indulge once in a while to prevent it from becoming a habbit or just dont do it.”

When you read this article you may think – Thats not ME !! But everyone of us is human and can get similar urges. Its all about how much you control it.

I have been through this phase many a times and being a trader/investor the everyday struggle is to stop urges to over trade. The solution I have found myself may not be the best but I have made peace by doing a few option / day trades once in a while to stop this urges ( Khujli is the hindi word) from becoming a habit.

To sum it up – There are better things to do than Trade for a Thrill. Some examples are

  • Going for a trip with your family. ( You may lose spend some money but will cherish those moments forever.)
  • A trip with your friends.
  • A bungee jump / sky diving / scuba diving may be much more thrilling.
  • For some big thrill seeking traders a trip to Las Vegas will be much more cheaper Smile 

Happy Trading Smile

Article by Nooresh Merani

Nooresh has written 2594 articles.

You can follow Nooresh Tech on Facebook and Twitter here.


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