Why did Zerodha stopped publishing 60 day Winner list Winners - 60 day challenge Archives – Z-Connect by Zerodha Z-Connect by Zerodha ?
Because most of them started blowing up their accounts
There was a SEBI circular around not creating a competition of sorts that can induce customers to trade more. This was after one of the brokers had started a trading league with a large prize reward.
But that said, you are right, less than 1% of traders make money consistently in the long run. We have been talking about it quite often. But that was not the reason for us to remove the winner’s list.
Countless people have been lured to the markets by mis-sold dreams of getting rich quickly and achieving financial freedom. The ease of getting started adds to this allure. Here is the thing though: less than 1% of active traders earn more money than a bank fixed deposit over a 3-year period. While this percentage seems abysmally small, it is, in fact, similar to the success ratio of ordinary businesses; just that the ease of entry entices a large number of people to give it a shot.
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Is profiling a success story illegal ? That’s not similar to running a trading championship.
Ah my bad, I didn’t realize the link was to the profiling section. We used to run a winners page where we used to list all the winners with the number of wins as badges, etc. The profiling section was a little challenging to generate new differentiated content. There were other folks like Moneycontrol, Stockedge, etc doing something similar. Also, there were some second-order effects, folks whom we profiled became popular and soon started to get into stock advisory etc which didn’t work out well for them.
But that said, it has been on our list of things to do for a while. @Bhuvan maybe we should give it a shot and see how it goes.
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Yep, figuring out the good ones is a big challenge. Will give this a shot and see.
I don’t want to put you on the spot. But its okay and I understand why you have to be diplomatic about it.
“But that said, you are right, less than 1% of traders make money consistently in the long run. We have been talking about it quite often. But that was not the reason for us to remove the winner’s list.”
^This actually means the same thing and to be running a business which applauds winners, who lose in long run does not entice many more to participate.
Again, I am not putting anyone on the spot. Infact, its not about any broking firm. But this got me thinking how many people don’t even understand probability is directly proportional to stop loss in trading and in long term there is no edge as such in positional option trading.
Coming back to the main topic:
- leo (pawan) almost blew up his account once upto 1.6 crores while he was in opentrade I guess. He has tweeted about this. Now runs a side business which is not related to financial markets. (Wonder why ? If someone is making so much money from stock market)
- Madan is doing fine. But also sells courses. (Wonder why ? If someone is making so much money from stock market)
- Rajesh not sure what he is upto but also sells systems for retail customers to make money. (Wonder why ? If someone is making so much money from stock market)
The point being in long run doing positional option trading has zero edge. Which everybody from the above list did. I am not here to throw malaise on someone. But just an eye opener. Everybody from the initially list have had hit a rock bottom to a point they had to converge to something else.
Did anyone notice
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One of the surest ways to increase your odds of winning when trading is to not depend on trading as a primary income. Unless of course you are working as a trader for someone with a salary + Incentive structure or managing a large AUM where there is a fixed management fee. Trading itself is quite tough, and if someone is relying on trading alone for putting food on the table makes it much tougher. So traders finding ways to have a secondary income shouldn’t be looked at the way most look at it, why would he do it if he makes money trading stocks.
Trader - a person who buys and sells things. Stocks is just only one thing. 
I think a good trader looks at wherever there is an opportunity where the risk to reward is favorable to make maximum return on the time/resources. I keep telling the guys in the office, I didn’t stop trading the markets when we started. Zerodha is the biggest trade of my life!
But coming back to the point. If I remember right, all of them profiled were different types of traders. I know many folks who don’t like the attention, making a killing using options. So can’t rely jump to a conclusion just based on these 3. Of course they are like a tiny minority of the option trading population.
But this entire conversation just prioritized one of the things which was on my to do list. We will probably revive these conversations once again. This time we will do with those who have auditable track records of atleast 5 years and maybe conversations on camera vs blogposts. Will keep you posted.
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Thanks for your prompt response. I’ll be looking forward to it.
P.S. BlackScholes option pricing is unbreakable. Google and IBM secretively tried doing it but failed. I am yet to see any positional option trader making more than mere 12-15% over a 10 to 15 years period.
And yes your initial list of traders where diversified in there methods but most of them were positional option players: Pawan doing SAR and detnet/delta netural on wednesday before expriy, Madan doing inverted volatility smiles etc.
Nithin, its not only Zerodha. If you look at TastyTrade, they use to and still post about their trading superstars for the quarter/year etc. But mostly all of them blew their accounts. i.e. Karen the super trader etc.
Its just me trying to put some light to the retail audience here, that anybody making 12-15% over a 10-15 years doing positional options will be phenomenal to look into(they do not exist). Rather than following/reading about someone making infinity in a year.
Even Zerodha’s prop trading firm use to manage gamma netural option positions instead of delta managed intraday position which most of the retail algo traders do. That’s my best guess.
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Very interesting conversation. @BigFerry @nithin @t7support
My two cents :
If a trader broadly decides and gains certain level of mastery on these aspects of trading, he shall make more than above average returns (15% p.a and above) by taking minimal risk. The following are the factors which I believe will determine how successful a trader is over the longer period of time :
-
Using appropriate trading instrument depending on the capital size : It makes little sense to trade naked options when capital is above 50 lacs. I believe, after certain point, both in trading and in life, we should let money make money. Hedging instruments if used appropriately depending on what type of market.
-
Overlooking Cash market
: It is surprising to see how many big traders overlook this wealth creating medium 
Hedging instruments combined with buying quality stocks will definitely lead to much better returns -
Position sizing and psychology : The obvious reason why even good traders fail in trading after having sufficient capital. There are folks who are much more profitable with 40% success rate but proper risk and money mgmt than guys who are having 70% success rate but with bad position sizing.
I know saying this is easy and implementation is pretty tough I believe there are two issues. 1. Knowledge and 2. Scaling up
Anyone who is able to do both will be huge winners in my opinion. I’m personally focusing on improving first aspect so that I wont make the mistakes in the 2nd part which I previously did.
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People come to the market to make money. Good examples vetted by the stock broker would inspire more people to come in to the market. I think its a good thing. It will probably clarify to a lot of people what it takes to succeed in the market. More importantly give them a belief that its possible to succeed in the market. It could help to set aside the genuine guys from the scamsters. Help people to make better choices - to be a Jesse Livermore or be a Richard Dennis, Paul Tudor Jones or Jim Simmons.
This country didn’t have fast bowlers until kapil dev came about. Just across the border Imran Khan inspired a whole bunch of fast bowlers. That’s what good examples can do. Not just giving a belief but also a clear road to success.
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@BigFerry I sense lots of disbelieve in you. Can I assume it’s rather an accumulation nasty experiences trying your hand in trading, that come to all this conclusions.
Indian stock market is an infant. I suggest if you look in the US, there are wizards who has been in this industry from the pit to retail, or plain retailers.
Yes, the probability is hard and it’s madness. But there are people who caught nirvana in this madness. So, let it be. Don’t scare away people.
Let people participate. People smoke, get cancer and die anyway. What’s the hatred against stock market/day traders who are a rare breed. If you cannot be one, let them be.
@t7support I know what you felt. We have been called gamblers. At one point, I would be angry. Now, it doesn’t matter. We have come to a point, where we don’t try to reason with someone and try to clarify things.
Even if 99 % fail. The stats never matters. We know our numbers.
So, can we say, what will happen to us 5 years from now. I don’t know. I don’t even know what will be the dinner for tonight.
It’s all perspectives.
Someone likes the thrill of breaking bones in MMA. They say it’s a short career. Well yeah, Conner.
Everything is okay. But do not spread fear on something you don’t do yourself.
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First, there ain’t any nasty experience. Second, I am a successful trader(hope that answer your questions). Third, show your 10 years P&L before talking anything about me and I will do the same. At last, there ain’t any hatred towards anybody, I don’t know where you coming from ?
You really don’t know anything about trading. Probability go hand in hand to risk/reward in hedged strategies over a 10 year period, you will hardly make any money after paying taxes and charges. That’s what wrong with newbies like you that if someone tries to explain you some sane thing and not plot dreamy ambitions then you term it hatred. That’s why broker houses and the entire echo system will always flourish.
Better yet show me any back-tested result for positional option trading making more than 15% over a 10 year period. Then please talk to me or else ignore.
There goes the monkey brain behind the screen.
You let yourself so personally offended.
Let it go herb 
.
Let it go
This too shall pass.
Much appreciated @nithin.
It will be a blessing to hear from someone having atleast 5 years or more than 5 years of positional trading experience coming to the podcast to share their experience.
Will be looking forward to it. Thank you!!
But this got me thinking how many people don’t even understand probability is directly proportional to stop loss in trading and in long term there is no edge as such in positional option trading, you say.
I think the problem lies with the notion, promoted by renowned experts including Mark Douglas, that you can make money over the long term even if your win% is bad, as long as you have psychology and money management sorted out. It’s based on the assumption that if you cut your losses early and let your winners run, the bad win% will somehow be taken care of.
The fact is you must have a high probability winning method, ideally with much better than 50% win rate, to begin with. Discipline, psychology, money management and trade management are all fine, but a high win% winning method is ESSENTIAL. Without it, you are just riding your luck, and sooner or later, it is going to run out.
You do known that high probability has to be Co related with risk to reward ratio? Otherwise it means nothing.
Someone who wins 8 times out 10. He wins 1 point when he wins and loses 5 points when he loses. So when he trades 10 times, he wins 81 and loses 25. So he’s a loss making trader with a win rate of 80%.
Another trader wins 4 times out of 10. He wins 2 points when he wins and loses 1 point when he loses. So he wins 42 and loses 61. And despite having 40% win rate, he’s a peoftable trader.
So before shitting on Mark Douglas, educate yourself. It looks very bad when you sing about high win rate without any mention of risk to reward ratio. The option sellers who go bankrupt have 70-80% wine rate. But they lose too much in the remaining 20% and go bankrupt.
Win rate and risk to reward must always be considered together. They mean nothing in isolation.
Sorry if I touched a raw nerve somewhere in you. My apology.
I have myself learnt a lot from Mark Douglas, but fail to understand how that prohibits me from expressing opinion about his theoretical framework.
Your assumption that I don’t know what I am talking about may be off the mark. In a game where, as per Betfair data, less than 500 out of 3.8 million were long term winners (net plus over a period of 5 years), I have, in a transparent public test, when writing an expert column on India’s premier turf club website, given proof of generating 108 units profit, betting a single unit flat bet. This column was audited, and the announcement was made BEFORE the column began, so my experiment was constantly under the public gaze.
My comment, which you appear to have taken personally, was meant to convey that psychology, money management, etc, have their place, but they cannot replace a high probability winning method, they are aids to enhance your performance.
Peace.
It looks very bad when you sing about high win rate without any mention of risk to reward ratio. The option sellers who go bankrupt have 70-80% wine rate. But they lose too much in the remaining 20% and go bankrupt.
Win rate and risk to reward must always be considered together. They mean nothing in isolation.
:::::::::::::::::::::
When you trim the winning edge (or risk-reward) formula to the bare bones, it can written as follows:
Edge = (WP * AoW) - (1 - WP)
where
Edge is your winning edge
AoW is average of odds on winners
WP is winning percentage
(1-WP) is losing percentage
As is clear, WP & AoW decide your risk-reward scene.
If the Edge is positive (>0), you are a net winner, if that number is negative (<0), you just cannot be a long term winner, period.
What most people don’t realise is that they have no direct control over AoW, the market sets those odds.
The only thing in their hands is to improve their win rate, keep data, analyze it to check if there is a subset among their winners where the market has often miscalculated probabilities, and stick to only those setups, situations and strategies to enhance your Edge. Because that’s the ONLY way you control AoW for your own account.
The option sellers who go bankrupt despite high win percentage have clearly failed to understand this point.
That’s the reason I had used the words “to begin with” when I wrote the post you objected to.
The fact is you must have a high probability winning method, ideally with much better than 50% win rate, to begin with.
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