I’m of the same age and been in the market for last 4 years (not very active in initial years). Though, I never touched F&O and the reason is the same you mentioned but I have the exposure and experience to talk about it. I’ll tell you my approach.
F&O is the by product of equity where equity is meant for wealth creation while F&O has been meant for trading. Since I knew equities are what generate money, I only focused there. And data also suggests that 9 out of 10 traders incur losses in F&O and those who generate profits, their magin shrinks thanks to the charges. Also those who make profit have had booked losses in the past (this is my experience too).
Since you have dealt with the toughest segment, don’t leave the market. Just switch the segment. Take swing trades in equity and if you are able to crack 10% gain a month you are done. And if you can arrange a huge capital like 1 cr then even 10% gain a year would make you one of the richest person of the country (according to a survey). There are more than 6000 stocks in the market, you will easily find one stock that will give the 10%.
I suggest you need to keep the focus on for quite some more time as well. In case you do not wish to operate with real money, use the forward testing plan from Algo providers.
I trade only options, so unable to comment on swing trading on stocks. Options Trading has the power to generate money in both trending and non-directional markets.
The operator (we) need(s) to be smart to gauge what type of market it is and deploy those strategies.
Also, the markets were a bit rough. Never in my history of trading, I have lost 3 consecutive months. This Jan to Mar has been pretty mean to me. So, I am taking it up as a wake-up call to innovate & improvise my strategies.
I have been very invested in the process as well and money serves as a motivation for partaking in the process. Your timeframe of becoming profitable would give me an idea about where I stand. I keep my stop loss at 8-10 points in nifty and my target is 30-40 points, gaining momentum(decay) in options which imbalances my risk-reward, I try to keep a proper sl, but sometimes my accuracy slips of due to volatility and I hit my sl more often than i should. I analyse my trades and try to improvise but it has been tough figuring out the stats in stocks as compared to options (which do with a fellow trader). I would be greatful if you could share your perspective for analysing charts.
Different people find different ways of making it work, so its hard to say what you need.
In my own case, while the struggling years created a foundation, testing the market data was the biggest jump i made.
Its something else to be able to ask a question to the market data and get a black and white answer back. Its no holy grail and mistakes can be made there too, but that’s what helped me most in the end.
No more ambiguity of discretion, which had suffered from lack of exhaustive testing (very hard to do manually) and endless tweaking based on what happened recently.
It appears you’re in a situation where you’ve attempted various strategies over the last three years, and now you’re feeling somewhat stuck, seeking guidance in a forum. This suggests a sense of helplessness. Moving forward, if you do achieve profitability, there’s a concern that you might experience heightened anxiety and possibly exit trades prematurely due to a lack of familiarity with success. Prioritizing mental health is crucial, as no amount of money is worth sacrificing it for.
I may not be the one to make such judgments, but it seems evident that you are a very hard working person and have the potential to excel in a different field.
And what makes you feel that way?
Trading, much like the entertainment industry, can appear glamorous from the outside, but the reality is known only to those immersed in it. So, if you’re influenced by financial influencers on social media, it’s important to recognize that it’s not as straightforward as they may portray it to be.
I’m not aware of the disadvantages and strategies involved in options selling, it would be great if you could offer insights/ link me with someone who can offer insights (can be paid as long they know their stuff). Also, is options selling better than stock swing trading in your opinion?
Thanks for your insights. Could you please direct me to any sources which would help me understand more about options greeks? It would be of immense help.
There is no holy grail in the market. No trader knows what can happen next in the market. The profitable traders have either good risk reward ratio or a high win percentage or both. Lot of traders attained success after many years of struggle. It is good that you started trading with 1 lot to learn the intricacies of stock market.
You need to identify your strength. It could be identifying a trend, trend reversal, breakout/breakdowns etc. Then choose an appropriate instrument to trade that edge. It could be stocks in cash market, options or futures.
Beyond all the points listed above, a trader needs a consistent, reliable alternate source of income, be it from a full time job or a business to sustain themselves in the financial market through ups and downs.
As you are young and at the beginning stage of your career, you could consider building a strong foundation in your professional domain. Keep trading with less capital and you will find a way that suits your temperament .
Trading is simple but not easy (Buffet said the same about investing, I know…)
At any point in time - for trading to be very profitable, and to be worthy of the risks involved, there have to be a large subset of losers. There will have to be atleast 75% losers (we may have some leeway as currently as many as 89% of active F&O traders lose money). As traders get more efficient, overall avg profit per trader will go down.
And remember, the Indian market is undergoing an explosion in activity and a sea change in trader approach, and the cream (good traders) is constantly added (we have to hope for the reckless staying around too, its a zero-sum game after all).
With the influx of algo systems and democratization of backtesting and ‘systematic trading’, markets are getting ‘more efficient’ - if this keeps happening profitable active traders will keep getting ‘less efficient’, because systems lose edge (evident in backtests) and/or because of slippage (which is worse as it wouldn’t be so apparent in backtests) .
The way things seem to be progressing, the edge will slowly be weaned out of individual systems and it will all be about ‘set of strategies’ working together to squeeze out some edge.
I may have digressed a little from OPs questions - but hope its obvious as to
Why trading is tough.
Why when every one is digging for gold, most money is made by the shovel sellers.
Markets are self-correcting, there is no world where more than 25% of F&O traders will make money imo.
I think a certain breed of F&O traders are prospering - the ones who are more into positional F&O whilst hedging/switching holdings to create a “lucrative” balance.
I am also a option buyer & loosing trader. After maintain journal of every single trade of last 6 month I have realised that to make money in option buying One has to limiti loss per day (EX 10k per day) and holding winning trade & add quantity in winning trade to maximise profit is the only way.
Bet more on PUT buy than Call buy. add after pullback when buy call. add on signal or breakdown while PUT buy.
by doing that many winning trade can turn into small loss or breakeven. but when you will be right you can make huge money to cover all the loss and make handsome money.
9 to 10 days out of 22 trading session Bank nifty move significantly to make good money. but 2 3 days is the day when you able to make huge money.
The main think is to wait patiently for that trade is huge challange psychologically. and you dont know when that will happen, so every day you have to follow a single rule and execute it without any hesitation or emotion.
Fear of loss by taking SL is less than fear of profit turn into loss. so 90% people not able to hold & add to winning position.
Measure the average profit per trade you earned. (Only profits and not losses. )Then set profit target when placing orders at that average profit percentage. This is the practical profit range you can expect. If you are a day trader, quit as soon as you earn your average profit for the day. Not suggesting Stop Loss and fractiion of capital to be used etc.