I am a trader who trades in fno regularily.
I do sell and buy index option daily…
I have created lot of strategies which I am personally using…
As I feel I am confident about this strategies, I want to sell advisory service on fno…
Like giving buy and sell signals on index options…
and I want to make it a profession and earn income from that side also…
Is it legal in india??
or How can I do it legally?
Please note that I want to buy and sell index options daily while giving buying selling advices to clients…
Which will be the best profession where I can utilize this knowledge without leaving self trading…
because I need profession for long term growth…
But I cant leave my personal trading profits too…
Please advice me
Getting an RIA license should formalise/legalise this most bit. Maybe you need to ensure that all the advisory receivers have enough risk appetite according to what is required by your strategy/signals.
Given that you are confident about your strategies, I believe you would have done back testing and forward testing. If I were to avail your services, I would like to see atleast 2.5-3% return per month with max drawdown under 1%.
This I’m saying from a naked/hedges option selling perspective and from a buying perspective an accuracy of 60-65% with RR or 1:2.5 - 1:3.
But I heard RIA can’t trade on same security he gave advice for certain period…
Also He can’t trade against his advisory view…
You see , I do buying and selling daily…
So I have to trade against my own advisory view na??
That is why I want to know how this works in practical…
Two things:
I don’t understand why you have to trade against your advisory view
If your actually strategy works and generates decent/good alpha, you would be better off focusing on doubling down and build/grow your own capital instead of giving out the triggers as advisory, unless you are front running and enough money is deployed by your advisory clients which can move the price if your favour sizably
hes not sure otherwise why would someone give out golden eggs
I Won’t sell strategies bro… I will sell signals only…
Strategy selling will not give me continues life long clients…
This is what I meant when I said I may have to trade against my advisory view
Example
I suggested client to buy nifty 26000 call on 9.30am
But as I run several strategy for my self…
I bought nifty call at 10am,
Bought again at 11am
Exited at 12pm
Initiated pe postion at 1pm
Shorted call at 2pm
Bought call 2.30pm
Shorted future at 3pm
You see here I am taking positions against my own advised view several times… right?
This is is what I meant…
You said it is better to earn money by trading only…
But that was not my question…
I want to know on which profession/job I can utilise my all these knowlede without exit from my daily personal trading… I want to do it legally.
I heard most equity dealer/brokerage house/advisory jobs will have restrictions on personal trading because of sebi restrictions…
I want a job where I can utilise this knowledge…
But legally…
I have to continue my personal trading too
I want both… It is not only about cash…
If one has developed a strategy that has a real and sustainable edge, then the best use of it is to keep it confidential and focus on continuous compounding till the strategy’s capital saturation is reached.
The time and efforts involved in giving out the trade calls legally and the return that you could make in terms of subscription fees for your trade calls is miniscule when compared to doubling down on continuous compounding.
Though you won’t share the actual strategy with your trade call receivers, but there is a good chance of reverse engineering it with 30-40 previously given trade calls.
If someone with a decent amount of capital and brains figures out about your calls having a good edge, then the immediate urge would be to decode it. It won’t be straightforward nor easy, but not too impossible also.
2% of 1 minute volume in Nifty options summed across 5-6 active strikes is usually about 800-1000 lots. This translates to a capital intake of 16-20 crores (2 lakh per lot).
Now your question would be ‘who has 20 crores to start with and reaching to 20 crores with say 10 lakh is starting capital will take about 7-8 years if you double your capital every year’. To this my answer would be that if you have a proven edge option selling strategy, this can be converted to option buying strategy with more optimisations and tweaks, or if u already have a good consistent buying strategy then perfect.
The aim then should be to get to that 800-1000 lots level in option buying and then keeping pouring the excess capital generated to option selling which can take in about 10x the capital vs option buying for the same 800-1000 lots.
All this might sound like a fairytale and a far fetched daydream, unless one has a real edge and ability to fully automate the trading operations