I have being a trader in the stock market for the last 9 months and facing difficulties to go to the next level that is OPTIONS
I have made consistant profit in stocks but struggle when the market is down as only intrading shorting is allowed but I am having a fear for option although I have done the following:
Learnt Option strategies
Know the risk involved
I am wanting to start with purely buying Call and Put options in the Nifty and Bank Nifty space with a sum of Rs. 50,000. Although the exposure to the market is great but I understand in worst case scenrio It will become 0 as I am only buying Call and Put and not Selling so how can I gain confidence to take the first step
Practice in the nets first, I.e start trading tightly hedged nifty and bank nifty or currency strategies that have next to nothing upside and downside. Just be content with the fact that you made the right call on the market movement. Don’t even look at the money you made or lost.
It’s all pennies for now. If you’re making wrong calls, ask yourself what did I forgot to look at, what did I do wrong, after some reflection come back and repeat. Once you start getting more right calls than wrong, remove the practice wheels from your tricycle. Slowly but surely start taking less protected calls and increase Lot size. You will never get every call right in your career, but you just have to keep hitting boundaries once in a while to make up for a couple of lost trades.
Sure. I started out rather young, 16-17ish. I had saved up about 30k from random hustling and the baksheesh you get from relatives you get when you go to visit their house. I was looking for a new sport to play, Trading looked exciting and cool. So I asked my mother to open a Demat account for me. Read everything I could get my hands on, pirated every course I could find on Piratebay. And was hooked.
30k was a good amount to start a learning account from back then. But in 2021 if you ask if, especially since the Peak Margin rules, 1L would be the proper account size to learn from. But hey you have half of that already, learn intensely, journal your learnings, and once you are feeling confident in your abilities slowly grow your account. But for the first 2 years in the markets. Never ever trade naked. Always stay covered at all times. If you blow up your account, what will you even learn?
There are a lot of people who would try to detract you from trading, calling it names, try to fearmonger you. But Trading is a very rewarding mental and financial activity if done right and not overdone. Enjoy it, make it a craft, like Music, Drawing, or Singing. And you will learn a lot about the world, the economy, and humans. And if some money came along with it. That’s a Bonus or shall I say Baksheesh
Unless you don’t bet, you can’t win. But at the same time if you lose all you have, you can’t bet .
In addition to @MarginCaller suggesion : give yourself a time frame - like 6 months to a year. Develop rules for entry and exit and also rules for selecting a strike price. Check with paper trading whether your rules are giving you profits over loss. Then start trading with real money. Index Option buying, if done wrong can wipe out your capital ( unlike being drawdown couple of months in case of stock)
This is so beautifully written, just by reading it I feel confident and excited to work more and more on it,
Thankyou for the amazing points, I will make sure I stay covered in my trades and not trade naked
The last para is so on point, at times I have self doubted and thought of rather go for something safer as people keep telling me trading is risky, no future etc
But I will always remember this
Thank you once again
@Anikethan Thankyou for the suggestions, Till now I have paper traded for close to 2 months and just starting to find the touch.
I will make sure I really manage my risk and don’t take naked trades- My intial goal was to start index option buying with a sum of 50K as in the worst case the risk is it will go to zero while in selling there is unlimited risk
But I understand your point and I will make sure I practice more and more and take covered trades when I start it with real money
it is very short duration in my opinion. Market structures change, and so should you also. This takes time. I am not discouraging anything here, only sounding caution. Luck also plays a role and cannot be ruled out.
starting with one lot is a good start in real market with strict SL, then slowly scale up to more lots. Option buying is a fairly short term trade, i would not recommend carrying overnight position also.
Understood your point @Anikethan, will definetely make a note of it.
I will see to it I practice more before diving in and yes, I understand the risk of taking overnight position as well.
I also read the bio on your profile, its really interesting. You might have amazing experience through the best and worst of the market. Has there been any experience that you would like to share which really intrigued you or was a lesson you always keep in mind.
Also, do you recommend any book a must read for “Options”
If you have 50k then why don’t you go for hedged option selling strategies instead of buying options? I’m also in same position as yours and started with 50k capital from last week. I’m personally doing Iron condor only. As of now my target is not to make huge return but to make trading rules and stick to plan. I’m doing weekly options and if I make even 100 rs profit after all brokerage that is fine for me. Any suggestions from the experienced traders are welcome.
Its actually really good to see that you started off condors right off the bat. Wise choice.
You’re onto something
Only suggestion would be to keep learning these strategies diligently. Spend atleast 5-6 months with each, before adding new ones into your playlist.
One important thing we learn overtime, is that markets have a tendency to move against one of the wings of your condors.The Market doesn’t care about our strategies, it does what it wants to. Initially its best to book small losses and not defend. But know that the next phase whenever that happens 1 year-2 year should be to learn to defend your strategies.
@MarginCaller Thanks for the suggestion will surely try to implement your suggestion.
Someone from here asked me about my strike selection strategy in my inbox. So I’m copy pasting that message here. Let me know if I’m doing something wrong or I need any modifications.
first I try to create a broader view of the market.
Then I try to draw support and resistance level in chart.
Based on those levels I sell call at the resistance level and buy 100 points above that to hedge that position. And sell put at the support level and buy 100 points below that to hedge that position.
I make sure my selling levels are at least 450-500 points away from current market level so that I can exit in case of any one sided move.
As of now I’m not doing any adjustments in my positions as it will eat more brokerage. If extremely necessary will think of it. (P.S.- I’m making adjustments in my paper trading app)
Sound framework. What resources are you using to learn from ? Do share.
Yes, with your account size, anything more right now would be overcomplicating it. Keep at it, until you feel, any one of these points in not working out and also try to identify the exact reasons.
Although 2 is very important to do, it is also the single most difficult thing to do. So you have to ensure you are not not choosing these levels half-baked. Only decide the support and resistance, once you feel you have factored in everything. The FII/DII Data, Moving Averages, the OI and at what levels they are sitting, if the market moves against this first line of OI where will the new positions would want to go and sit.
All that factored in you should finally ask yourself, if the bulls did their absolute worst, where will the strongest resistance be for the week. And likewise, if the shorters won, how low they can reasonably take it down to in a week. And setup your trade accepting the worst case outcome.
Nobody asked for my opinion but felt like i should writ smthin
option sellers eat like pigeon shit like pigs, option buyers wins once in a blue moon, bonds & other boring instruments provide less ROi, Investing is for long run
I don’t care
I do anythin which is opportunistic whether it’s crypto, f/o, NFT anything, ofcourse I never trade naked, why does towel even exist, lame humour aside
everything is simple, it’s just the unneccessary info that counters us from being profitable
why should you spend 4 hours for the analysis that’s as impactful as my tweet about US fed!
remember complexity sells
No problem at all, public forums are for sharing opinions anyway.
Its just that this might not be ideal the advise on a topic with the title " How to gain confidence to start Bank Nifty and Nifty Options " but would be perfect for a topic like " How to trade Stonks"
See ? there is still a method to the madness. Why stay covered if you are so sure about your opportunity.
Good habits integrated early, with less money, stay with you until you start managing decent money or more difficult and complex endeavours. It would be myopic to see everything one does in life with a cash outcome.
Fair, but is it because “Do Anything” would not make for good advise, when you are put in a spot to advise and have fiduciary responsibility placed on you ?
I’d love & dance out of joy, if i ever become a standup comedian, it’s an art so respect it, let it alone to Rahul Subramanian.
in contradiction, now I’ve one more reason to sus you
you seem like a person who knows bunch of basic stuff & ranking high of himself
I’m seasoned player that’s why i know . It’s very common stage in traders life where they try to achieve gratification via social means.
Now I no longer intend to stretch this thread as it’s naive of you to endlessly blather. May 2022 bring witt to you!