A trader's mind

MY TRUE STORY IN A NUTSHELL

When I first started delving in the stock market some 20-25 years ago, I thought buying stocks was like buying gold. You filed away the papers (no demat then) like forever. I never checked prices until someone would tell me it was 'time' to move from this company to that company. The buy/sell orders were given with no thought to the technicals or fundamentals. The stocks were bought with idle money so I could hold the stock for as long as I wished. Hell, I didn't even know what stocks I held because many were bought for me by my father while I was out of the country. My father got his info from friends and family and some newspaper studies. All the stocks did well even as they survived through Harshad Mehta scam as I had got in cheap. After my father passed away, and I myself got ready for Vanprasthashram (the Hindu phase of life when one retires from daily business to pursue more spiritual goals), I started to read a bit and talk to 'knowledgeable' people about the stock markets. When I was ready to do serious buys, it was after 2000 when the Indian stock markets were in a strong bullish trend. That was the UNFORTUNATE part. The easy initial success when I was able to enjoy fantastic returns in a short timeframe is what lulled me into a sense of complacency.

FLIGHTS OF FANCY

Slowly I got sucked into the stock trading like a 'parwana'(flying insect) drawn to a 'shama' (flame) - a sure death! Obviously the losses mounted into lakhs. Like most people, that made me more determined to 'win' my money back from the 'unforgiving manipulative' markets. Just then, UNFORTUNATELY, I 'discovered' F&O (more like Finished & Out than Futures & Options). And more unfortunately, my first futures buy in Siemens yielded me a tidy profit of Rs. 15,000 overnight. That made me very bold, and I started carrying more lots. Luckily I reached about 8-10 contracts unlike a more unfortunate friend of mine who was carrying 28 contracts! The trading was purely on calls by my broker, friend, some news or heresy. I didn't understand the difference between trading calls and investment calls. So trading transactions got converted into investments, and vice versa. The margin pressure mounted, FDs were broken etc. until one day I was staring at a mountain of losses in lakhs. My investment capital was almost wiped out. All of a sudden it dawned on me that I was not young enough to 'earn' it back by working a job.

HARD LANDING

Socrates is said to have remarked, "if you have a nagging wife, if nothing else, she'll turn you into a philosopher". I say, "a Hard Landing in Trading will CERTAINLY turn you into a philosopher guaranteed!" That's what happened to me as I beat a hasty retreat and nursed my wounds for months. I kept wondering what went wrong, and questioned everyone and everything including my faith. Slowly, thanks to my family and my stars, positive thinking re-entered my numbed mind. I started reading, keeping notes, visiting websites in search of knowledge, information, trading/investing tactics, studied technical charts, and most importantly, understood the difference between 'noise' and 'real useable information'. And mind you, everyday I see calls from 'expert' traders lose money but they know when to put a stoploss, and save their capital.

As I write this, I understand that I have come a long way; but I still have a longer way to go towards recovering all that I've lost. In the process I have gained some sense of risk management, money management, and the confidence a trader needs in this market. I am no expert, have no certificate or diploma; but am self-taught trader from the school of hard knocks!

SHARING & GROWING

So why am I telling you all this? No, I don't want or need anyone's sympathy. But I'd like to give this benefit to wanna-be traders and open their eyes to the risks involved - in a sense provide them with the warnings that I didn't have when I started trading. That's all.

I invite people to open their hearts and share their story of success or failure. You may not even know it, but it could provide a turning point in someone's life for the better. There are many positives in it for those who share because a 'problem' once defined or shared gets reduced in size; and doesn't look so threatening anymore. Your mind gets clearer as it articulates the challenges it faced, logic gets refined, and things become clearer afterwards.

Some people may feel scared or self-concious. They may think 'the whole world' will ridicule them or some such thing. Well, let me ask you one thing: How many people will actually take the time to read this, think it over, and understand what you & I are trying to say (remember we are no professional writers after all)? Don't you think it'd be a very small group of people? Even so, they may see it through their own 'filters' such that their interpretation could be very different from what you intended to say. But that's life. I visit many sites, but write only here as somehow I feel comfortable here. Maybe one day I will fly off to another site that is more in tune with my thinking. Until then, I encourage you all to take the therapeutic plunge that such sites offer us.
Thank you www.dstreetdirect.com.
Jai Hind.