For my current nifty naked option buying strategy I started with 1.9 Lakhs in 2017. Reinvested the profits back and moved to 17.1 Lakhs capital till Nov, 2021. Now added some extra capital and moved to 28.5 lakhs capital. Am in the 30% tax bracket and 30% of my trading profits go as taxes. So extra capital is added to boost my trading income. From 1 lot in 2017 to 15 lots now the journey has been nothing but a persistant discplined execution of my trading system.
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I only buy nifty weekly options by paying the full premium. This means I trade with the liquid cash I have. So no leverage.
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Wow. Congrats.
How much do you risk per day/per trade?
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I have a postional system so I hold my position for an average of 4 days. At a time around Rs.7k - 14k per lot is in the market depending on option premium. I wonāt loose more than this amount no matter what market does and so this is my worst case risk per trade per lot. The largest win recorded thus far is Rs.64950 per lot per trade. But the avg lose is around Rs.6K per lot per trade and avg win per trade is around 13K per lot per trade.
The advantage of a naked option buying is limited risk and unlimited profit with lower transaction cost. This sits well with my trend following strategy on Nifty Index. The conventional wisdom is to avoid such option buying. I say it is all about knowing what you are doing that matters.
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Isnāt it the options itself intrinsically leveraged? In my strong opinion for someone who enters the market they should consider trading only in equity market (without any leverage) till they become profitable (atleast not losing much) in bull, bear and sideways cycle. The equity is the only instrument that will help you last longer in the market so that you will able to learn and become consistent trader.
Yes there is intrinsic leverage. But if you want to make a Rs.50 rupee profit everytime Nifty goes up by 1 point, the risk one is taking via equity route is way way more than the risk an option buyer is taking. Also an option buyer pays the full amount from his capital. You canāt even pledge your holdings and hope to buy an option.
With equity there is always some one who knows more than you do and can play with the stock.
With equity liquidity can be an issue unless you are pretty selective.
With equity if you are technical trader like me believing backtested data, it is far more difficult to backtest equity because of split/bonus events and consequent data adjustment issues.
There is a reason why index derivatives (near 80%) contribute significantly more volume than equities in exchanges.
Having said these, if you feel comfortable with equity that is where you should start. Try out different things. Never loose a big sum in any of the trials. Persist and you are likely to find what works for you.
Bro you are asking what everyone want to ask 
. you might have read nithinās tweet and everyone knows that its not the new thing to know. we knew that very less people make money and people with more capital, knowledge, a healthy mindset and more important experience make profits. I always have this doubt, if institutions are trading then they can not loose money because its others money ( Institutions like MF) so they always (most of the times) win is it like market is controlled as per their positions? ( we dont see institutions making big loss in FnO )
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I assume that mutual funds cannot take positions in Futures and options except as hedge to their portfolio.
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Trading is tough as you need to be better than your counterparty. Not just that, trading is an exhausting job and also depends on the psychology of the person who is trading.
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Frankly it just boils down to psychology and money management.
If you look around there are quite a lot of people that earn way above 5 LPA (BPL now is 3LPA). There are lot of people who earn 10+ lpa into higher slabs but yet they feel middle class and lot are broke. They canāt even buy a scooty or a two wheeler without loan. yet keep complaining. They have no idea where their money is going , how much useless debt they took via direct and indirect and how much lifestyle inflation has really destroyed them.
That same carries over in the retail investors. No risk management , revenge trading, chasing loses, deviating from their own systems, impulsive risky trades using news events (may work first 3 times but definitely wipes out at some stage) are all what they do. Frankly the sign trading system is not going well or MM is wrong is when having -20% DD. Itās better take away entire money off table after losing 20% and referring trading journal or just cross check with forward testing results to see where things went wrong.
See psychology is what makes us run. At the end of the day emotions and money are a nasty mix.
I read something like thisā¦
The bigger the edge, the less psychology matters.
The smaller the edge, the more psychology matters.
And I agree with thatā¦
Is trading all that simpleā¦Just wondering!!!
Yes it is simple for me.
Buy low, sell high.
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Simple but not easy. Managing your emotions is the hard part.
Yes, thatās right! It might seem easy but when you start doing it, you get to know how hard it is with your emotions being the biggest obstacle.
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Controlling emotions is very important for making trades rationally based on figures.