How is India thinking about investing, trading and fin-influencers?

A 🧵 based on web and Youtube based Google trends

Intraday Trading: 2 peaks made in last 2 decades
Life comes back to normal slowly with P&L screenshots reaching their peak in mid of 2021.

in case you are not sure how to read and interpret these charts, please read how to interpret google trends charts and data here:

Options Strategies: Lost its charm from 2010 to 2020 and then tremendous interest. Though minor decline, still, remains popular. Any reasons?

Quite popular in Maharastra and Gujarat ( 2 big states for capital markets)

Options Selling: Trends very similar to options strategies but has been losing interest recently down 50% from peak

More popular across south India compared to MH & GUJ. Why?

Year 2022 has been disastrous for many asset classes, the world economy is at 40 year high inflation. Are we headed for another stock market crash? Here's a detailed analysis. 🧵

Emerging markets like SriLanka is in middle of collapse, which is facing severe depression. World Bank has predicted 70 more countries might default in coming years. With so many negative news, from equity to bitcoin every asset class facing severe sell off across the globe.

Everyone is currently talking about Inflation, rise in oil prices, Russian-Ukraine war and frequent lockdowns in China which is disrupting the supply chain. These are some of the major threats which could slowdown the world economy. But will these cause a stock market crash? No!

author of The Psychology of Money was once said

"The biggest economy risk is what no one is talking about. When no one is talking about it, no one is prepared for it. When no one is prepared for it, damage is too much."

COVID-19 no one in the world expected such a pandemic in the modern world, no one thought we would get locked down, entire world would get shut. This is mother of all surprises, no one was prepared for it.

Thread About of My Trading Journey #3years
I placed my 1st intraday Trade on 12-03-2020 it was ITC trade😀 it was random trading as newbie news based, Calls based trades. I was not aware about trading system, Risk management nothing and I lost 64 K in 1st month on 1 Lac Capital.

Side by side I got to know about F&O through some Youtube channels, Started my hands their too mostly it was all about random scalping trades without system and some cash secured puts and this was the period between June 2020 to Dec 2020.

That time I did not even realise that market has crashed and recovery has started and my cash secured puts gave money but it was over trading and call based. I was trying so many thing in this period.

In November 2020 I was introduced to @SquareoffIn after reading @kirubaakaran post about systematic Trading on Quora platform and simultaneously I also started exploring thing about Trading @LearnApp_co which I came to know from @zerodhaonline Completed reading @ZerodhaVarsity

From Jan 2021 I started trading so many systematic setups (Mean Reversion, Golden Ratio Futures, BN Straddle, Strangle, Cash Secured Puts, Expiry Setups) still that holy grail search🧐 mode was on.😄

Story of this week:
Gap pe gap.. gap pe gap.. milta hai.
lekin entry nahi milti

Most risky position of option selling is ovenight straddle/strangle as we carry risk of black swan event.
Lets try to find the solution can we mitigate or reduce this risk?

[1/n]

Will try to explain with 24th Feb 22 gap down [3.2%] how the strategy wise impact looks like. assumed cap 25L

1⃣ say we deploy full capital i.e. for 1.6L 1 lot we trade. attached pic shows impact on various strategies. in straddle we lost highest 8.5% of cap,
[2/n]

in strangle lost in range of 2.4 - 2% .
in iron-fly loss of 2% &
iron condor [with 200 points hedge] 0.5%

Now, these numbers can be on much higher side if gap is bigger or say circuit. This assumes we exit at open - if we stay till close numbers are worst.

[3/n]

2⃣ now lets reduce position size take 1 lot per 2 Lac or 2.5 La... bot files attached

by doing this we reduce impact of naked position below 6% for straddle & below 1.5% for strangles
same time, ironfly & iron condor impact down to 1.15% & 0.3% respectively

[4/n]

3⃣ now lets see impact if we trade 1 lot every 5 lacs.
impact of strangles and iron condors is with in limit on overall capital [< 0.75%]

idea is to chose your battle wisely.

to sum-up:
1⃣ Prefer hedged strategies [ironfly/IC (with closer hedges)] as compared to naked

[5/n]

⚡Fixed Fractional Vs. Fixed Lot Money Management

A tried and tested approach is the concept of money management which can be the game-changer in helping you get to your trading goals.

#squareoffthreads🧵👇

1/10

Why money management is important?

Losses is a part and parcel of trading. The trick here is to be able to limit your losses and find the appropriate money managing strategies to suit a situation.

2/10

Money management not a guarantee of sure fire success and high profits but is an assurance against mounting losses in a difficult market. At the same time you need to keep an eye on the volatility of the stock and how much money needs to be put at risk on any one position

3/10

What Is the Fixed Fractional Model?

Fixed fractional or fixed risk is a money management strategy where the risk is restricted to a fixed percentage of the account. Only a fixed part or percentage of the account capital gets exposed to risk.

4/10

Pros Of the Fixed Fractional Model

The ability of this model to capitalize earnings is borne by the compounding effect. In winning streaks the position size begins to increase. But in losing streaks the size of the trades reduces.

5/10

Having grown my Zerodha account 5x in last 19 months since I started systematic intraday options trading, felt I am eligible enough to share my principles around below topics that helped me scale up.

A thread on my style of position sizing, compounding and handling drawdown 👇

My money management principles first:

1. Do not risk more than 1% capital per trade
2. Account for DD while sizing position
3. Do not reduce position size while on a losing streak
4. Increase position size during winning streak
5. Compound capital daily to scale up quick and big

Why cap rupee risk at 1% capital per trade?

- We can be wrong in any trade and got to cut losers short
- Intraday price action is random and can be irrational

Market can stay irrational longer than a trader can stay solvent

Risking <1% per trade⬆️odds of trader staying solvent

Why account for impending DD upfront while sizing position?

- because I do not want to reduce position size while on a losing streak, but I also want to increase position size while on winning streak

- because when DD happens I am not disappointed as I already factored that in

Why do I not want to reduce position size in a losing streak?

- Because if I do, I will need 25% gain to recover from 20% DD which is an uphill task

- If I factored in 20% DD upfront for sizing position, then I need only 20% gain (not 25%) to recover from 20% DD

A thread on ( read full)

Why practice is very important in trading.

The mind has limited power,

Can process only limited information at a given time,

Do you agree?

Example below

Find in 1 second all 3 numbers that are missing.

1 2 3 4 5 6 8 9 10 11 12 13 14 16 17 18 19 20 21 22 23 24 25 27 28 29 30.

...read on

Was easy?

Shana banta hain!

Now solve next one, i challenge you

Now find 3 numbers that are missing here

3 1 2 5 6 8 9 10 11 13 12 18 16 14 17 20 19 22 21 24 25 26 29 28 30 27, 23 ,15

Lol

Were u able to find 3 missing numbers in 1 second?

Too much information to process in one second!

BTW There are only 2 missing numbers.

😂, I did it purposefully, sorry lets move on

Here's the last 13 years of #BudgetSession Intraday chart, lets figure out what kind of Trading strategy one can use to make use of Budget movement. This is what happened with #Nifty on intraday time frame on the budget day from year 2008 to 2021.

Year 2008, 2009

2010

2011

2012

15 Learnings from Power of Stocks: 🧵

Collaborated with @niki_poojary

1. "Inside candle Strategy"

• His go-to strategy
• Great risk reward
• Identify on 15 min candles
• Trade all without fail

In every video, he talks about this strategy and trades the same too.

2. "Price ko samjane ka koshish karo."

• Everything is based on price action
• No need to check OI data
• Even the psychology of traders can be understood via price

Focusing on only one thing such as Price will shorten the learning curve to become a trader.

3. "Support & Resistance"

• Jab market sharp fall krta he to V shape me recover nahi hota.
• It will face resistance at many levels
• SImilarly when market rises it wont go down 90 degree
• It will face support at multiple levels

Just look at these levels.

4. "M & W patterns"

• Spot M pattern near the resistance
• Spot W pattern support
• Check for the W pattern for entry.
• First pullback me hum log buy nahi karenge.
• Pehle W pattern banne do, confirmation aane do.

These two are also his favourite patterns.

Earlier many traders were trading based on discretionary without any rules based approach. Now a lot of traders are ready to move to algo trading but confused with a lot of options. When you are bombarded with tons of different trading systems, how do you choose the best one?

Many traders still think winning accuracy is the most important parameter in a trading system. But is it really true? Let's check this example. Consider, we have three different trading systems.
System A,
System B and
System C.

System A has 90% winning accuracy,
System B has 10% winning accuracy and
System C has 50% accuracy.
When given a choice, most traders will opt for System A as it has the highest winning accuracy of all with 90%.

But System A is not the right choice. The average profit in a winning trade is Rs.1000, that is 90% of the time System A is capable of making Rs.1000 profit. But remaining 10% of the time when the system is making a loss, it loses a lot. So after 100 trades, net result is -10,000

System B, The average profit in a winning trade is Rs.10,000, that is 10% of the time System B is capable of making Rs.10K profit, which is ten times higher than its losing trade. The average loss in a losing trade is Rs.1,000 but 90% of the time the system will continue to lose.

Few weeks ago @Ronak_Unadkat Sir conducted an exclusive session for me & @adityatodmal to explain how he trades.

He was kind enough to share all his trade strategies and was patient enough to answer our doubts.

Thought of making a 🧵for the benefit of the larger audience here.

Sir's Option Selling Logic 🧵:
• Reversals in Intraday Option selling
• Strike Selection & SL
• Hedging for any Black Swan Event
• Positional Option selling
• Ratio Spreads
• How to manage the positions
• Capital mgmt

In collaboration with @AdityaTodmal

How to play reversals
• Always look at the chart as a starting point
• Spot the Swing low
• Sell Strikes 300-400 points below that swing low
• Buy a proper hedge

• Example on how to play reversals on Intraday
• Instead of the selling the support strike sell a bit far

• As the strike is far from the support you get enough cushion

• As soon as the SL is hit, you can exit the positions

• without your strike coming into ITM

Sep 23, 2021 - Weekly expiry, preceded by the FOMC meet and not to mention the gap up which then turned out to be a trending day

Here’s how the strangles were converted into straddles & how the positions were managed!

Time for a Thread 🧵

• Wednesday night (IST) there was an event, FOMC meet
• Markets were jittery, as they say, when US sneezes the world catches cold
• Both Dow & Nifty were weak
• All eyes were fixed on the Fed Reserve Chair Jerome Powell’s take on interest rate and the pace of asset purchases

• So didn’t wanted to get caught on the wrong side, hence on Wednesday noon Shorted a strangle
• ~700-800 points away from where the BNF was about to close i.e. 37k levels
• 37800 CE @ 43 & 37700 CE @ 34 & 36200 PE 28 & 36300 PE at 34

• On Wednesday 37K strike witnessed heavy CE & PE Open interest 2.5mn & 2mn of CE & PE writing respectively

• On Wed night, the cat was out of the bag and Mr. Powell kept interest rates at zero & continued the current pace of asset purchases
• Dow celebrated the news and on Thursday morning (weekly expiry) i.e. Sep 23, 2021 BNF opened with a gap up of ~300 points and opened at 37241

Sep 1, 2021, fresh month starts with a challenge i.e. introduction of Peak Margin rules by SEBI

Time for a 🧵

Lets demystify the Peak Margin rules and try to find solutions for the option sellers!

Peak Margin by SEBI:
• 100% upfront margin for intraday trades in the derivative segment
• Effectively MIS orders = NRML orders, as both will attract same margin in the derivative segment
• Minimum margin for equity intraday trades will be 20% of trade value i.e. 5X leverage

How things used to operate erstwhile?
• Until last year there were no standardization of leverage
• Brokerage firms used to offer their clients intraday leverage of 5x, 10, 15x, 20x etc. as margin reporting was done on EoD basis

• Brokerage firms were allowing customers to take intraday positions with margins far lesser than required via products like MIS, BO, CO, etc. as the positions used to get squared off before the trading hours

• Eg: If 1 lot of Nifty futures require (SPAN + exposure of) Rs. 1.1L, brokerage houses would allow to trade with just 20-30% of this amount i.e Rs. 33k