Yesterday I got into a losing trade which I held till today morning. I got in because I was blindly following my friend who I gave the benefit of the doubt. And then we realized we're on the opposite side of a long bullish run. Fortunately, I got out early and didn't end up getting overrun by bulls and losing all my cash. So here are three solid lessons that I learned:
Never give any professional trader, friend, relative or anybody the benefit of the doubt and follow his/her trades blindly.
I lost money because I jumped in the trades my friend was making. But I failed to realize he had the capital to hold his future calls and I didn't. He was also carried away by unnecessary indicators like Stochastics MTM & RSI without looking at the main indicator which was EMA. The reason he made the trades was that the secondary indicators were way too high to sustain but he failed to see EMA was clearly indicating an uptrend in spite of it.You need to look at the big picture (Fundamentals) and figure out the general direction of the market
Nifty50 & BankNifty corrected the past two days and went down to 300 points. But that was just a temporary correction and it ended up going up by almost 400 points in a day. The reason for this was good results by large-cap stocks and Diwali is around the corner. I would've covered all my losses had I followed the direction of the market.Learn to develop your own strategy of trading and use a simulator in parallel to your trades.
I feel that only when you have developed your own strategy of trading, should you trade your own money in the markets. So learn as much as you can by watching youtube videos, reading books on your Kindle, and practicing what you learn.
So my total losses after starting trading in Zerodha is Rs.17,303.31/- (267.51 dollars). That may not sound a lot to you but it is definitely a lot for me considering my financial situation. I have quit my job and I've decided to become a full-time trader so that I can make enough money to support my parents and finally get to travel the world.
I'm glad that I cut my losses today which shows that I'm not greedy and I can make it in this field. Let's do this.
Here are my trades
Sold BankNifty at 24454 and bought back at 24737.9 with a loss of Rs.5966
Been watching "How to make a million" Dvd series by Timothy Sykes. Reading a book called "How to day trade for a Living" by Andrew Azis.
Otherwise, it was a dull day. Pretty much at home and learning stuff. One day after all this hard work pays off I hope to travel the world and truly live life. I'm obviously not going to miss out on life just by focusing all my time on trading but that's the big picture. I also can get back to my old life which is being an architect in case things go south. And if I really get good at trading and learn to balance stuff. I can do both trading and architecture in parallel. More about me and my life soon.
Cheers
Cobi