A new Life, A new Career, A new Dream - I am a Trader
- Thread starter Taiki
- Start date
Dear Jagan bro,
Regarding the exits,
yeah, i will admit my mistake that last two days i exited my position early, when i was in profit. I am still learning this art "Let the profit run, and cut you loss". Now i am analysing my system's TSL with pivot high's and low's. But I consider the biggest mistake is not entering into the market when the trend resumes after TSL is hit.
Thanks a lot Jagan bro for sharing your ideas, it will surely help me in this path, and others who are visiting this thread.
Reagrds
Taiki
Taiki,
Again I am reluctantly sharing my experience.
Because I don't want to clutter your thought process.
But writing since you have left your job to become a full time trader.So the urge to share my mistakes are more than my reluctance.
No more writings from me reg the psychology part.Bear with me this time alone.
Do not think that your thoughts and words are cluttering my mind, When ever experienced player like you, and others are sharing their experiences and knowledge, interested newbie like me will be there to listen. So no question of reluctance here
Wanted to add few more things so that one don't repeat the same mistakes as i did before.
I always tried to be a perfectionist believing that I could create a best system.Not happy with any thing,just wanted to have system which will do wonders in all kind of market conditions.
I have blown couple of time my accounts.
Because of this egoistic nature.
I have already done this mistake, and blown my account only by switching from system to system, and discarding them on the first taste of failure. Luckily this happened in the 1st 3 months of my trading career, I lost all my money, and learned the lesson out of that.
Learning:
Be a specialist than a perfectionist.
At least to start with - Try to be a master of one than to be jack of all trades.
Never try to be a perfectionist and try to keep on fine tuning your system and rules.Remember just one good trade setup is enough for living and let it be little imperfect.
Fixed risk:reward system imo is the most simplest and best thing to start
with since one wont't have any ambiguity.
Risk and Reward are clear.
"Deciding a simple system and sticking to that" will be the greatest challenge in the beginning.Stop searching it is now and here.
Once the trade setup - entry exit rules are clear.
Just follow that rigidly.
Just move to stops to break evens if price moves 50% of the target.so that if at all reversal happens.So that one doesn't make loss in a winning trade.
Or enter with 2 lots and exit one when 50% target is reached and leave the next lot on the table.
Practice practice practice your system in your free time in demo trading systems till this becomes your nature.
Practice strictly only with one or two favorite instruments and trade.
Each instrument exhibits its own characteristics.
I often find you blaming yourself on patience but I see it the other way - it is a lack of clear cut exit rules. You always mention a target but also have a trailing stop loss.Again you don't re enter a trade.
So it cannot be the both ie fixed target as well as trailing stops - just my opinion.
Your MM and trade entries are robust.But ..........................
Both the days you exited early less than 50% of your target with your trailing stops and markets reached your targets.
Patience and Impatience equally are important in trading.
Patience while in profits .
Impatience while in loss.
Once a trader is successful and consistent in making money with the trade setup,it has become his second nature.No doubt and no stress - only then he can think of adding the next trade setup or system to his trading arsenal.
Markets - It is only about survival in the beginning.Live today to kill another day.
TA and reading books may be detrimental to one's trading in the initial stages.
Be like Arjuna.
Be focused and practice only one setup.
Close your eyes and ears to every thing else.
Again I am reluctantly sharing my experience.
Because I don't want to clutter your thought process.
But writing since you have left your job to become a full time trader
.So the urge to share my mistakes are more than my reluctance.No more writings from me reg the psychology part.Bear with me this time alone
.Do not think that your thoughts and words are cluttering my mind, When ever experienced player like you, and others are sharing their experiences and knowledge, interested newbie like me will be there to listen. So no question of reluctance here
Wanted to add few more things so that one don't repeat the same mistakes as i did before.
I always tried to be a perfectionist believing that I could create a best system.Not happy with any thing,just wanted to have system which will do wonders in all kind of market conditions.
I have blown couple of time my accounts.
Because of this egoistic nature.
I have already done this mistake, and blown my account only by switching from system to system, and discarding them on the first taste of failure. Luckily this happened in the 1st 3 months of my trading career, I lost all my money, and learned the lesson out of that.
Learning:
Be a specialist than a perfectionist.
At least to start with - Try to be a master of one than to be jack of all trades.
Never try to be a perfectionist and try to keep on fine tuning your system and rules.Remember just one good trade setup is enough for living and let it be little imperfect
.Fixed risk:reward system imo is the most simplest and best thing to start
with since one wont't have any ambiguity.
Risk and Reward are clear.
"Deciding a simple system and sticking to that" will be the greatest challenge in the beginning.Stop searching it is now and here.
Once the trade setup - entry exit rules are clear.
Just follow that rigidly.
Just move to stops to break evens if price moves 50% of the target.so that if at all reversal happens.So that one doesn't make loss in a winning trade.
Or enter with 2 lots and exit one when 50% target is reached and leave the next lot on the table.
Practice practice practice your system in your free time in demo trading systems till this becomes your nature.
Practice strictly only with one or two favorite instruments and trade.
Each instrument exhibits its own characteristics.
I often find you blaming yourself on patience but I see it the other way - it is a lack of clear cut exit rules. You always mention a target but also have a trailing stop loss.Again you don't re enter a trade.
So it cannot be the both ie fixed target as well as trailing stops - just my opinion.
Your MM and trade entries are robust.But ..........................
Both the days you exited early less than 50% of your target with your trailing stops and markets reached your targets
.Patience and Impatience equally are important in trading.
Patience while in profits .
Impatience while in loss.
Once a trader is successful and consistent in making money with the trade setup,it has become his second nature.No doubt and no stress - only then he can think of adding the next trade setup or system to his trading arsenal.
Markets - It is only about survival in the beginning.Live today to kill another day.
TA and reading books may be detrimental to one's trading in the initial stages.
Be like Arjuna.
Be focused and practice only one setup.
Close your eyes and ears to every thing else.
yeah, i will admit my mistake that last two days i exited my position early, when i was in profit. I am still learning this art "Let the profit run, and cut you loss". Now i am analysing my system's TSL with pivot high's and low's. But I consider the biggest mistake is not entering into the market when the trend resumes after TSL is hit.
Thanks a lot Jagan bro for sharing your ideas, it will surely help me in this path, and others who are visiting this thread.
Reagrds
Taiki
EOD Summary
A good day, I had a buy signal in 5815-5825 range with a target of 5870-5880. I was prepared in mind to wait patiently for exit setup to form on my chart or the target to be achieved.
I entered long, bought at 5820, with stop loss at 5810, and target of 5880, Nifty faced some resistance around 5840 but fell back below 5820. So exited my first trade at 5815. (Here I should have exited at break even, but could not).
Re-entered when Nifty resumed its up-move. This time my mind was urging me to take profit at 5835, when nifty was facing resistance. But I was prepared to exit at break-even if nifty falls again. But got rewarded for the patient. Exited at 5864.
Trades
1. Bought NF @5820, Stop loss = 5810, Target = 5880, Exited @ 5815.
2. Bought NF @5820, Stop loss = 5815, Target = 5880, Exited @5864.
Net gain = +39 points
Thoughts and Lessons
1. Quite satisfied as I sticked to my plan irrespective of profit/loss. I was not looking at the amount made, rather than looking at my setups and plans.
2. Still failed to exit the 1st trade in time, and lost 5-7 points there. Need to be careful for that in future.
A good day, I had a buy signal in 5815-5825 range with a target of 5870-5880. I was prepared in mind to wait patiently for exit setup to form on my chart or the target to be achieved.
I entered long, bought at 5820, with stop loss at 5810, and target of 5880, Nifty faced some resistance around 5840 but fell back below 5820. So exited my first trade at 5815. (Here I should have exited at break even, but could not).
Re-entered when Nifty resumed its up-move. This time my mind was urging me to take profit at 5835, when nifty was facing resistance. But I was prepared to exit at break-even if nifty falls again. But got rewarded for the patient. Exited at 5864.
Trades
1. Bought NF @5820, Stop loss = 5810, Target = 5880, Exited @ 5815.
2. Bought NF @5820, Stop loss = 5815, Target = 5880, Exited @5864.
Net gain = +39 points
Thoughts and Lessons
1. Quite satisfied as I sticked to my plan irrespective of profit/loss. I was not looking at the amount made, rather than looking at my setups and plans.
2. Still failed to exit the 1st trade in time, and lost 5-7 points there. Need to be careful for that in future.
There is a saying in Japan -
"The teacher comes when the student is ready"
I recalled the same, when I read Jagan's bro message about being disciplined and patient. I believe to some extent I acted accordingly. I wil try my best to be more patient when in profit and exiting the loosing trades ruthlessly.
"The teacher comes when the student is ready"
I recalled the same, when I read Jagan's bro message about being disciplined and patient. I believe to some extent I acted accordingly. I wil try my best to be more patient when in profit and exiting the loosing trades ruthlessly.
Taiki,
Treat trading as a business.
When I mean business be ruthless in calculating the risks in all fronts.
Today your net profit is 39 points while your gross profit is 49 points.
A straight 20% reduction in profits - just for brokerage and transaction charges.
A simple calculation will give us better insight.
Say you have a 70% winning system with 1:4 Risk : Reward system.
Risk being 10 and Reward 40 points.
After 100 trades(Double side)
i.e a trader always consider opening a trade and squaring off as one single trade but the broker charges both legs :annoyed:.
1.Profit - 70 * 40 * 50 = 140,000 rs.
2.Loss - 30 * 10 * 50 = 15,000 Rs.
3.As per your current Brokerage Plan + Instrument (Nifty) - 25,000 rs.
4.Short term capital gains tax 15% on - 140,000 - 15000 - 25000 = 15000 rs.
So a net profit of 85000 rs.
Nothing can be done on Capital gains tax.
Actually your business transaction costs are higher than your risk ratio.
If we take in to the Internet charges,EB bill,Your salary,Interest for the trading capital.
Say with a flat broker - Prokhan - 1000 rs + Taxes,RKSV - 1947 + Taxes.
A straight reduction on brokerage + service tax on brokerage.
So now comes choosing the trading instrument.
As a trader I don't believe in the notional value of the index.
Or in other words I don't know the valuation front - whether it is fundamentally cheap or costly.Simply I don't believe fundamentals and value buying concept.For I don't believe that is not working for Nifty and it is not my worry for I am a short term trader.
All I know is NIFTY is ridiculously trading in the 4000 - 6000 price band for the past 8 years while every thing else would have given a better yield.
Even bank interest would have given better,safer profits than Nifty.(More than 100%).
Considering rollover costs and other things an Investor in Nifty would be bankrupt.
Thanks to various govt policies and other corporate corrupt practices.
OK I am deviating.
Now why would I pay transaction costs,taxes and other things for I can get the same returns with much cheaper transaction costs and also with a lower risk. - Nifty Options.
Say with the same system - you trade with Deep ITM or ITM options - more or less it captures the Nifty movement.
The transaction costs,stamp duty,Service tax etc are greatly reduced.
So 140000 - 15000 - 5000 = 125,000 rs.
So net profit after CG TAX is 106250.
A straight gain of approximately 21000 rs on the profits.
Risks with Option trading - Time value Decay.This has to be countered.
But ITM options will have less time value premium so should not be a problem.But this should also be countered.
When I say better results at a lower risk. - Just a scenario which I remember.
Last year Nifty was falling from 5347 levels.
The trend was down.
Monthly Pivot point 5300.
Just when NIfty breached 5300 it fell down like any thing jumping and in the next 5 minutes it was almost 100 points down but actually the low punched for that day in NSE was 5000.Most of the stops wouldn't be triggered.
The reason being algo shorts crashed Nifty.
But the same day Nifty recovered back to 5308.And Next day resumed its down trend that's a different story.But Imagine the plight of a poor trader who had purchased Nifty at Monthly pivot point assuming that to be a strong support.
Treat trading as a business.
When I mean business be ruthless in calculating the risks in all fronts.
Today your net profit is 39 points while your gross profit is 49 points.
A straight 20% reduction in profits - just for brokerage and transaction charges
.A simple calculation will give us better insight.
Say you have a 70% winning system with 1:4 Risk : Reward system.
Risk being 10 and Reward 40 points.
After 100 trades(Double side)
i.e a trader always consider opening a trade and squaring off as one single trade but the broker charges both legs :annoyed:.
1.Profit - 70 * 40 * 50 = 140,000 rs.
2.Loss - 30 * 10 * 50 = 15,000 Rs.
3.As per your current Brokerage Plan + Instrument (Nifty) - 25,000 rs.
4.Short term capital gains tax 15% on - 140,000 - 15000 - 25000 = 15000 rs.
So a net profit of 85000 rs.
Nothing can be done on Capital gains tax.
Actually your business transaction costs are higher than your risk ratio.
If we take in to the Internet charges,EB bill,Your salary,Interest for the trading capital
.Say with a flat broker - Prokhan - 1000 rs + Taxes,RKSV - 1947 + Taxes.
A straight reduction on brokerage + service tax on brokerage.
So now comes choosing the trading instrument.
As a trader I don't believe in the notional value of the index.
Or in other words I don't know the valuation front - whether it is fundamentally cheap or costly.Simply I don't believe fundamentals and value buying concept.For I don't believe that is not working for Nifty and it is not my worry for I am a short term trader.
All I know is NIFTY is ridiculously trading in the 4000 - 6000 price band for the past 8 years while every thing else would have given a better yield.
Even bank interest would have given better,safer profits than Nifty.(More than 100%).
Considering rollover costs and other things an Investor in Nifty would be bankrupt.
Thanks to various govt policies and other corporate corrupt practices.
OK I am deviating.
Now why would I pay transaction costs,taxes and other things for I can get the same returns with much cheaper transaction costs and also with a lower risk. - Nifty Options.
Say with the same system - you trade with Deep ITM or ITM options - more or less it captures the Nifty movement.
The transaction costs,stamp duty,Service tax etc are greatly reduced.
So 140000 - 15000 - 5000 = 125,000 rs.
So net profit after CG TAX is 106250.
A straight gain of approximately 21000 rs on the profits
.Risks with Option trading - Time value Decay.This has to be countered.
But ITM options will have less time value premium so should not be a problem.But this should also be countered.
When I say better results at a lower risk. - Just a scenario which I remember.
Last year Nifty was falling from 5347 levels.
The trend was down.
Monthly Pivot point 5300.
Just when NIfty breached 5300 it fell down like any thing jumping and in the next 5 minutes it was almost 100 points down but actually the low punched for that day in NSE was 5000.Most of the stops wouldn't be triggered.
The reason being algo shorts crashed Nifty.
But the same day Nifty recovered back to 5308.And Next day resumed its down trend that's a different story.But Imagine the plight of a poor trader who had purchased Nifty at Monthly pivot point assuming that to be a strong support
.
Taiki,
Treat trading as a business.
When I mean business be ruthless in calculating the risks in all fronts.
Today your net profit is 39 points while your gross profit is 49 points.
A straight 20% reduction in profits - just for brokerage and transaction charges.
A simple calculation will give us better insight.
Say you have a 70% winning system with 1:4 Risk : Reward system.
Risk being 10 and Reward 40 points.
After 100 trades(Double side)
i.e a trader always consider opening a trade and squaring off as one single trade but the broker charges both legs :annoyed:.
1.Profit - 70 * 40 * 50 = 140,000 rs.
2.Loss - 30 * 10 * 50 = 15,000 Rs.
3.As per your current Brokerage Plan + Instrument (Nifty) - 25,000 rs.
4.Short term capital gains tax 15% on - 140,000 - 15000 - 25000 = 15000 rs.
So a net profit of 85000 rs.
Nothing can be done on Capital gains tax.
Actually your business transaction costs are higher than your risk ratio.
If we take in to the Internet charges,EB bill,Your salary,Interest for the trading capital.
Say with a flat broker - Prokhan - 1000 rs + Taxes,RKSV - 1947 + Taxes.
A straight reduction on brokerage + service tax on brokerage.
So now comes choosing the trading instrument.
As a trader I don't believe in the notional value of the index.
Or in other words I don't know the valuation front - whether it is fundamentally cheap or costly.Simply I don't believe fundamentals and value buying concept.For I don't believe that is not working for Nifty and it is not my worry for I am a short term trader.
All I know is NIFTY is ridiculously trading in the 4000 - 6000 price band for the past 8 years while every thing else would have given a better yield.
Even bank interest would have given better,safer profits than Nifty.(More than 100%).
Considering rollover costs and other things an Investor in Nifty would be bankrupt.
Thanks to various govt policies and other corporate corrupt practices.
OK I am deviating.
Now why would I pay transaction costs,taxes and other things for I can get the same returns with much cheaper transaction costs and also with a lower risk. - Nifty Options.
Say with the same system - you trade with Deep ITM or ITM options - more or less it captures the Nifty movement.
The transaction costs,stamp duty,Service tax etc are greatly reduced.
So 140000 - 15000 - 5000 = 125,000 rs.
So net profit after CG TAX is 106250.
A straight gain of approximately 21000 rs on the profits.
Risks with Option trading - Time value Decay.This has to be countered.
But ITM options will have less time value premium so should not be a problem.But this should also be countered.
When I say better results at a lower risk. - Just a scenario which I remember.
Last year Nifty was falling from 5347 levels.
The trend was down.
Monthly Pivot point 5300.
Just when NIfty breached 5300 it fell down like any thing jumping and in the next 5 minutes it was almost 100 points down but actually the low punched for that day in NSE was 5000.Most of the stops wouldn't be triggered.
The reason being algo shorts crashed Nifty.
But the same day Nifty recovered back to 5308.And Next day resumed its down trend that's a different story.But Imagine the plight of a poor trader who had purchased Nifty at Monthly pivot point assuming that to be a strong support.
Treat trading as a business.
When I mean business be ruthless in calculating the risks in all fronts.
Today your net profit is 39 points while your gross profit is 49 points.
A straight 20% reduction in profits - just for brokerage and transaction charges
.A simple calculation will give us better insight.
Say you have a 70% winning system with 1:4 Risk : Reward system.
Risk being 10 and Reward 40 points.
After 100 trades(Double side)
i.e a trader always consider opening a trade and squaring off as one single trade but the broker charges both legs :annoyed:.
1.Profit - 70 * 40 * 50 = 140,000 rs.
2.Loss - 30 * 10 * 50 = 15,000 Rs.
3.As per your current Brokerage Plan + Instrument (Nifty) - 25,000 rs.
4.Short term capital gains tax 15% on - 140,000 - 15000 - 25000 = 15000 rs.
So a net profit of 85000 rs.
Nothing can be done on Capital gains tax.
Actually your business transaction costs are higher than your risk ratio.
If we take in to the Internet charges,EB bill,Your salary,Interest for the trading capital
.Say with a flat broker - Prokhan - 1000 rs + Taxes,RKSV - 1947 + Taxes.
A straight reduction on brokerage + service tax on brokerage.
So now comes choosing the trading instrument.
As a trader I don't believe in the notional value of the index.
Or in other words I don't know the valuation front - whether it is fundamentally cheap or costly.Simply I don't believe fundamentals and value buying concept.For I don't believe that is not working for Nifty and it is not my worry for I am a short term trader.
All I know is NIFTY is ridiculously trading in the 4000 - 6000 price band for the past 8 years while every thing else would have given a better yield.
Even bank interest would have given better,safer profits than Nifty.(More than 100%).
Considering rollover costs and other things an Investor in Nifty would be bankrupt.
Thanks to various govt policies and other corporate corrupt practices.
OK I am deviating.
Now why would I pay transaction costs,taxes and other things for I can get the same returns with much cheaper transaction costs and also with a lower risk. - Nifty Options.
Say with the same system - you trade with Deep ITM or ITM options - more or less it captures the Nifty movement.
The transaction costs,stamp duty,Service tax etc are greatly reduced.
So 140000 - 15000 - 5000 = 125,000 rs.
So net profit after CG TAX is 106250.
A straight gain of approximately 21000 rs on the profits
.Risks with Option trading - Time value Decay.This has to be countered.
But ITM options will have less time value premium so should not be a problem.But this should also be countered.
When I say better results at a lower risk. - Just a scenario which I remember.
Last year Nifty was falling from 5347 levels.
The trend was down.
Monthly Pivot point 5300.
Just when NIfty breached 5300 it fell down like any thing jumping and in the next 5 minutes it was almost 100 points down but actually the low punched for that day in NSE was 5000.Most of the stops wouldn't be triggered.
The reason being algo shorts crashed Nifty.
But the same day Nifty recovered back to 5308.And Next day resumed its down trend that's a different story.But Imagine the plight of a poor trader who had purchased Nifty at Monthly pivot point assuming that to be a strong support
.
One can Deduct Income Tax from the STT that actually included in Each Transaction while submiting IT Return. am I right ?
Taiki,
Treat trading as a business.
When I mean business be ruthless in calculating the risks in all fronts.
Today your net profit is 39 points while your gross profit is 49 points.
A straight 20% reduction in profits - just for brokerage and transaction charges.
A simple calculation will give us better insight.
Say you have a 70% winning system with 1:4 Risk : Reward system.
Risk being 10 and Reward 40 points.
After 100 trades(Double side)
i.e a trader always consider opening a trade and squaring off as one single trade but the broker charges both legs :annoyed:.
1.Profit - 70 * 40 * 50 = 140,000 rs.
2.Loss - 30 * 10 * 50 = 15,000 Rs.
3.As per your current Brokerage Plan + Instrument (Nifty) - 25,000 rs.
4.Short term capital gains tax 15% on - 140,000 - 15000 - 25000 = 15000 rs.
So a net profit of 85000 rs.
Nothing can be done on Capital gains tax.
Actually your business transaction costs are higher than your risk ratio.
If we take in to the Internet charges,EB bill,Your salary,Interest for the trading capital.
Say with a flat broker - Prokhan - 1000 rs + Taxes,RKSV - 1947 + Taxes.
A straight reduction on brokerage + service tax on brokerage.
So now comes choosing the trading instrument.
As a trader I don't believe in the notional value of the index.
Or in other words I don't know the valuation front - whether it is fundamentally cheap or costly.Simply I don't believe fundamentals and value buying concept.For I don't believe that is not working for Nifty and it is not my worry for I am a short term trader.
All I know is NIFTY is ridiculously trading in the 4000 - 6000 price band for the past 8 years while every thing else would have given a better yield.
Even bank interest would have given better,safer profits than Nifty.(More than 100%).
Considering rollover costs and other things an Investor in Nifty would be bankrupt.
Thanks to various govt policies and other corporate corrupt practices.
OK I am deviating.
Now why would I pay transaction costs,taxes and other things for I can get the same returns with much cheaper transaction costs and also with a lower risk. - Nifty Options.
Say with the same system - you trade with Deep ITM or ITM options - more or less it captures the Nifty movement.
The transaction costs,stamp duty,Service tax etc are greatly reduced.
So 140000 - 15000 - 5000 = 125,000 rs.
So net profit after CG TAX is 106250.
A straight gain of approximately 21000 rs on the profits.
Risks with Option trading - Time value Decay.This has to be countered.
But ITM options will have less time value premium so should not be a problem.But this should also be countered.
When I say better results at a lower risk. - Just a scenario which I remember.
Last year Nifty was falling from 5347 levels.
The trend was down.
Monthly Pivot point 5300.
Just when NIfty breached 5300 it fell down like any thing jumping and in the next 5 minutes it was almost 100 points down but actually the low punched for that day in NSE was 5000.Most of the stops wouldn't be triggered.
The reason being algo shorts crashed Nifty.
But the same day Nifty recovered back to 5308.And Next day resumed its down trend that's a different story.But Imagine the plight of a poor trader who had purchased Nifty at Monthly pivot point assuming that to be a strong support.
Treat trading as a business.
When I mean business be ruthless in calculating the risks in all fronts.
Today your net profit is 39 points while your gross profit is 49 points.
A straight 20% reduction in profits - just for brokerage and transaction charges
.A simple calculation will give us better insight.
Say you have a 70% winning system with 1:4 Risk : Reward system.
Risk being 10 and Reward 40 points.
After 100 trades(Double side)
i.e a trader always consider opening a trade and squaring off as one single trade but the broker charges both legs :annoyed:.
1.Profit - 70 * 40 * 50 = 140,000 rs.
2.Loss - 30 * 10 * 50 = 15,000 Rs.
3.As per your current Brokerage Plan + Instrument (Nifty) - 25,000 rs.
4.Short term capital gains tax 15% on - 140,000 - 15000 - 25000 = 15000 rs.
So a net profit of 85000 rs.
Nothing can be done on Capital gains tax.
Actually your business transaction costs are higher than your risk ratio.
If we take in to the Internet charges,EB bill,Your salary,Interest for the trading capital
.Say with a flat broker - Prokhan - 1000 rs + Taxes,RKSV - 1947 + Taxes.
A straight reduction on brokerage + service tax on brokerage.
So now comes choosing the trading instrument.
As a trader I don't believe in the notional value of the index.
Or in other words I don't know the valuation front - whether it is fundamentally cheap or costly.Simply I don't believe fundamentals and value buying concept.For I don't believe that is not working for Nifty and it is not my worry for I am a short term trader.
All I know is NIFTY is ridiculously trading in the 4000 - 6000 price band for the past 8 years while every thing else would have given a better yield.
Even bank interest would have given better,safer profits than Nifty.(More than 100%).
Considering rollover costs and other things an Investor in Nifty would be bankrupt.
Thanks to various govt policies and other corporate corrupt practices.
OK I am deviating.
Now why would I pay transaction costs,taxes and other things for I can get the same returns with much cheaper transaction costs and also with a lower risk. - Nifty Options.
Say with the same system - you trade with Deep ITM or ITM options - more or less it captures the Nifty movement.
The transaction costs,stamp duty,Service tax etc are greatly reduced.
So 140000 - 15000 - 5000 = 125,000 rs.
So net profit after CG TAX is 106250.
A straight gain of approximately 21000 rs on the profits
.Risks with Option trading - Time value Decay.This has to be countered.
But ITM options will have less time value premium so should not be a problem.But this should also be countered.
When I say better results at a lower risk. - Just a scenario which I remember.
Last year Nifty was falling from 5347 levels.
The trend was down.
Monthly Pivot point 5300.
Just when NIfty breached 5300 it fell down like any thing jumping and in the next 5 minutes it was almost 100 points down but actually the low punched for that day in NSE was 5000.Most of the stops wouldn't be triggered.
The reason being algo shorts crashed Nifty.
But the same day Nifty recovered back to 5308.And Next day resumed its down trend that's a different story.But Imagine the plight of a poor trader who had purchased Nifty at Monthly pivot point assuming that to be a strong support
.
Hi Jagan bro,
Let me summarize the entire post to see if i got all the points right. Please correct me if i am missing something.
1. STT is applied on both the legs for a trade and is unavoidable. And when we take trading as a business we should consider of reducing our cost to minimum. And there selecting the right instrument comes into picture.
2. STT applied over option trades are way too cheaper that FUT. and ITM/Deep ITM option almost gives similar returns as FUT but at a lower STT rate.
3. Some stock specific trade can give much more return than NIFTY index.
My thoughts
- I completely agree with you on these points. Currently I am with Ventura Securities, where I am also paying more brokerage too along with STT. and I need to switch to some discount broker for reducing the brokerage. In a month I will switch to a discount broker. (RKSV/TradeSmartOnline).
- I have also noticed the movement of deep in the money options and they almost move for the same points as with Nifty index. And that's why I had chosen option in the initial days. But I found is options were being too volatile sometimes. And then i changed to FUT keeping my system and strategy same. But I need to look back and analyse my option trades from last 2 weeks and to check where I went wrong.
- On Nifty vs Stock specific trades, As this is my first step in trading as a career, I had decided to start only with Nifty atleast for first quarter. After first three successful months this will give me confidence to add some stocks(Nifty movers/draggers).
And regarding annual Tax returns, STT I have few other questions too, and i had not thought about this. But let me search more on them first, and let me go through the TJ Taxation section. I will come with my question after that.
Thanks again
Taiki
A short signal had come yesterday at 5810-5815 level during the closing hour, with a target of 5770, but since I had not carried it yesterday, I tried to enter at those levels today. I had put my buy order at 5810, but today NF did not make that high. So could not take this opportunity.
Now will act as per the next signal.
Now will act as per the next signal.
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