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People get into day trading to do it yourself. Is it feasible? Should you?

Point 1….

If you feel the need for a service then your journey in day trading has ended before it started. Imagine a day trade for a few rupees from a firm that is SEBI registered and has 2000 clients. Well rest assured you will move the price itself to the target and it is a first mover advantage. It is impossible to win. As a service it is not scalable from a customer perspective. The service provider will use SMS Whatsapp or other tool to push the trade to you but not everyone can execute, unless you are sitting on the screen at that moment. That is why most big funds run day trading as scalping operations that are executed by algorithms run by computers. No humans involved. So you want to beat these computers?

Point 2….

The time frame you trade is an acquired taste. And by that I do not mean you can chose what you like. You cannot. The time frame must be chosen based on your physical and metal make up. Your EQ, stress taking level, meaning you ability to watch a screen for hours without moving. If you are slow in decision making and need to mull over booking a loss, you want to think about whether the logic for the trade still exists before the exit hold decision, then you need to chose a time frame that allows you that luxury. Positional trading or investment trading for 1–2–3–6 months are choices. Short term trading for 4–5 days is also possible with lesser stress. You get time after market hours to go over your open positions and portfolio and risk management actions. Day trading requires quick reflexes and execution on rules and is often akin to scalping like a jobber. What is suitable to you your body and mind is a very important decision. If you do not know the answer, indulge and find out sure. But be sure to figure it out quickly and move on.

Point 3….

Many come to day trading as a daily income source. There are very few, less than 1%, skilled traders who will ever achieve this. Jobbers that had such a record have recently given up with the advent of computers trading and front running trades with Direct access platforms.

Most individual traders using Technical analysis will not make money everyday but will still show a profit at the end of the month. After a point of time you will realise that you can achieve the same results with positional trading or investing for a few months as well. In most cases 60% of trades make money >=0 in profit, and 40% close in negative. Success is then a function of making more on the winning trades, and the discipline to execute your strategy as thought out. The time frame does not matter in the end results. We overthink this.

Point 4….

In fact you can achieve the same results with fewer trades, meaning that you pay less on brokerage, and exchange fees for the same results. High frequency trading only makes brokers and exchanges rich in the long term. Think of energy put in v/s Output and it will open your eyes. Day trading is not energy efficient.

Point 5….

To become a self expert at day trading, take training or mentorship from a successful day trader, you do not need a service

For positional trading or investing for the long term it is easier to identify a good research service or market analysis to follow. This is harder to fake.

In any service measure their analytical ability by their ability to trade the most liquid stocks and not illiquid junk that they can control. It takes a good analyst to be right on Maruti or RIL.

Baki Sab Satta Hai! Good Luck!

The Truth about the Markets!

Rohit Srivastava