What Millionaire Traders will not Tell You about Trading (But I will)

It's obvious that I started with one lakh. There have been many trades. At my highest, I think I have reached pretty close to 10 CR on the same demat account. Then there is also psychological limit, and I think that's my psychological upper limit right now. And I'm really struggling with it. Every time I approach that, I start getting nervous. I feel the urge to withdraw money. My heart starts beating faster. But it doesn't happen at one CR or two CR, but definitely once I'm around that 9 10 CR mark, for some reason I start feeling like maybe I'm not cut out for it. Maybe it's too soon. So I'm more comfortable with a 5 to 7 and 1/2 CR range. My entry as a trader was also by coincidence. This was in 2015. By now I have completed my MBA. I have started my career as a consultant in Deloitte. I'm married. I'm expecting a kid. And the only thing that I felt I could do alongside of full-time job was perhaps look into the stock market. Idea was very simple. I'll buy into banking stocks. My starting capital was one lakh rupee. It was pretty much the amount I would save in a month through salary. [music] I wasn't nervous. I wasn't dis- king anything. I just wanted to experience what it was like. And 2015, when I had entered the market, market was just on its way down from 9,000 highs, and eventually would create lows of 6,950. But I had come in at about 8,800 market equity levels. Then with one lakh rupee in the demat account and no action taken for a couple of days, my broker's dealer, whom they call your relationship manager, called me. And he said that you have capital lying, and the advisory is saying a few things, which he would close by saying we should buy call options or put options. And it all sounded so overwhelming. It felt like straight from the movies. I didn't think much of it. I just said no. I said I'll check this. I'll look into it, and I'll get [music] back to you. But I didn't get the time during the day to study what is a call option or what is a put option or anything. And I didn't really get back to him. But the person called back the next day, same thing. Then a third day, the same thing. The fourth day, I'm like every day this person is knocking at the door, so I just open the door. I said, "Okay, place the order." Place it. So I have one lakh rupee in the account. He places the order let's say [music] at about 10:00 a.m. And by 10:15 he has called me and said that sir I've closed the trade. We have booked a profit of 2 or 2 and 1/2 thousand rupees. And I have my mind blown. 2 and 1/2 thousand rupees in 1/2 an hour on a 1 lakh rupee capital. And in my head I'm like, you know, these guys have been brokers for 20 plus years. They definitely know what they're talking. I should have listened to him earlier. Brokers are your friends. You're either client. They want you to profit. I should take an advice coming to seriously. And so on and so forth. And I'm having this conversation in my mind and I'm like I really need to know what he just did. So the next day now I'm waiting for his call and he didn't call at 9:00 and I'm feeling it. Why is he not calling? Then he called at about 9:30 10:00 and he said that this is the trade that the advisory has planned. I'm like go ahead. And now I'm waiting for the call back in about 15 minutes 20 minutes. It just simply doesn't come. Lunch break it doesn't come. Then he calls me at 3:00 p.m. and says that close the trade. Then we have incurred a loss of 50,000 rupees. And it was like lightning from clear skies. I've never spent that kind of money ever. Like even in my marriage the most expensive thing that might have been bought for a family member would have been at that price. And that also would have gold in it. So I was shocked. I was so stunned. And now the other voice in my head is saying this guy who's giving you a call his salary must be 15,000 rupees. If he could have made money well don't you think he would have done it? Don't you know who you're talking to? I do not know how to describe this. It was not just a financial loss. It was humiliating actually [music] to have put myself in a position like that. Gave away like weeks of salary just over a phone call. I don't even know who that person is. And I had a few questions in my mind. And so this person when he calls up the next day and tells me the advisory has this so and so call. I'm like don't tell me all that. You know, if you can book 2,000 rupee profit and a 50,000 rupee loss on a single day of trading on an account of 1 lakh you don't know what you're talking about. I do not know what you have done. But I just want to know from you if I did the opposite of whatever you did would I make the 50,000? He said yes. And then I said okay keep the phone down. I'll trade myself. And in my mind I felt you know that this is the place I wanted to be. A place where you can make 50,000 in a day. That's what that that started off my journey in trading. I was hell-bent to know what actually happened. I was in love with the potential of the place. A place which can give you 50,000 rupee a day. I could not think of any other place like that. That's when my journey towards becoming a trader, in a sense, truly started. After blowing out half my capital on literally first week, I then started the process of becoming a professional trader. I want the viewers to know that 90% of all your career earnings are going to come from only 10% of your trades. If you take out stocks like Titan or Lupin from Rakesh Jhunjhunwala's portfolio, the portfolio is very average. If you take out stocks like Coca-Cola, McDonald's, Boeing from Warren Buffett's portfolio, even his portfolio is very average. Always remember that 90% of whatever you gain or lose is only going to come from 10% of your trades. The remaining 90% of your trades are going to square off with one another. And then question is, why don't we just take the winning trades? Because we do not know. So, the remaining 90% of the trades are to get into a position such that something could win. And each year, I definitely caught some trades which took the account to another level, year after year. Maybe one, maybe two. There were certain years where there were 10. And every time that happened, the account just kept jumping. Because the equation was very clear. The downside was defined and limited. [music] The upside was undefined and left to market. And once in a while, the market rewarded that system and that behavior. You see, market is a chaotic place. It's a chaos system. There are too many variables affecting the price. The whole purpose of technical analysis is to create a filter such that we are repeatedly seeing same types of charts. If I start including every stock which gets oversold, regardless of its preceding trend, then I am going to be trading every stock that is there in the market. But if I create a filter that I'm only going to trade trending stocks which get oversold, then naturally Titan will come, PC Jewellers will not. Naturally SBI will come, Yes Bank will not. Naturally perhaps ICICI Bank will come, but perhaps Punjab Bank will not. These are natural consequences of that decision. And by having a superior watch list, I have already created an edge over an uninformed retail participant who might be seeking a value in a structurally trending market. So, therefore, the first filter is always going to be on trend. So, here in the Groww app, I've just set up SBI chart. And to demonstrate the process of trend trading, what I have done is I've selected the time frame for month. And when an untrained eye is looking at the chart, they tend to get overwhelmed by looking at random places on the chart. But what I would like the students of technical analysis to sort of focus on is purely the pivotal point, the last pivotal point that was created in the chart. So, for example, here, if you look at this push, chances are there that individuals who are watching this will without an ambiguity say that at 12:35, SBI had created a higher top, which was also its life high. Now, this is my hypothesis that a security which is creating a life high is necessarily in an uptrend because you cannot create a life high by fluke. New investors, new money, new bullish views were created at a value, and therefore a life high was created. And on a stock like SBI, where billions of contracts change hands every day, it cannot be a fluke. So, since SBI's previous pivotal value is a life high, I am going to say SBI is in an uptrend. Therefore, SBI will be shortlisted in my watch list. And the comparison is fairly simple and very obvious. If I replace it with another banking stock. Now, let's have a look at YES Bank. Once again, I have marked the cursor here, and those people who are watching this video will agree that 404, without ambiguity, was a life high of YES, which was created in August of 2018. If a security is in an uptrend, and if it has printed a value in 2018, we would expect it to be higher today in 2025, 2026. So, the security which was valued at 400 rupees in the year 2018, and in India we have this tendency that security prices double every 8 years. Bare minimum, we would be expecting YES Bank to be trading at 800 rupees to match natural inflation. But what are we seeing? Currently, YES Bank is at 23 rupees. So, a security which was at 400 currently trading at 23 is definitely not in an uptrend and therefore it doesn't qualify for me. Neither am I making the claim that a security which is trading at 20 can never reach 400. It can, but this trade is not for me to take. I will start trading Yes Bank only and only if Yes Bank starts closing above 400. Whether it happens tomorrow or whether it happens 10 years from now. The minute Yes Bank prints a new life high, I know it it can only do it if there has been a management change. If there has been a fundamental change. If they have revised the corporate governance methods. There has to be structural changes, otherwise there is no chance. Because I as a trend trader only trade trending stocks. And if a security which was at 400 comes to 20 and then goes back to 400, it is a range. This is not a trend. Let me give some more examples. Of this is a clear example of a non-trending We can see the collapse of the stock. Now, you will note that even Yes Bank in the year 2024 did create a new 52-week high, but it's still not an uptrend. So, this is the case of Yes Bank versus let's say SBI. So, the question is which bank would I encourage my clients, my students, my family members, my friends to buy? I would tell them if you had to buy a bank, please buy SBI instead of Yes Bank for now. It's just safer. Let's take a few more examples. I referred to Titan earlier as one of the winning stocks in Rakesh Jhunjhunwala's portfolio. I also gave a reference of how I traded Titan when it was at 600 to 900. Look at Titan's value today. Last month Titan created a life high of 4600. This was the highest Titan has ever been. For the purpose of clarity, I'm just marking it once again on the chart. And the current value is 4000. Of course, it is lower than 4600, but it is not like Yes Bank lower. It's not trading at 300. It is a few percentage points, 10 percentage points lower. It's reasonable. Since the last pivotal value is a life high, I'm putting Titan as an uptrend. So, if I had to pick up a stock from the gems and jewelry industry, it would be Titan. Let's compare this to another company, let's say PC Jewellers. PC Jewellers was value had created a life high of 60 rupees in the year 2018. Same time when Yes Bank had created a life high of 404 rupees. Today PC Jewellers is at 9 rupees. Something which created 60 in 2018, 8 years hence I would expect it to trade at at least 120 to beat and match inflation. Well, instead it is trading at 10 bucks. So now both Titan and PC Jewellers will get oversold time to time. My question to the viewer is which one are they going to buy? Titan or PC Jewellers? I can guarantee you that I am going to buy Titan and I'm simply going to ignore PC Jewellers. And I'm never going to make a claim that PC Jewellers cannot recover. That those investors are gone. No, I have seen stocks collapse. Flipkart Pharma is an example. Collapse and recover. Now PC Jewellers, if I shift from the weekly to monthly and I change the time frame to weekly and I use an oscillator, my preference in oscillators will be RSI. Here I have created a vertical line at the point when PC Jewellers was highly oversold at rupees 8. So PC Jewellers which is ranging has become highly oversold in the month of March at 8 rupees. Did I buy it? No. I would never buy it. Why? Because PC Jewellers is not trending. Whereas if I bring Titan on the same list, here you will see that as Titan moves from 4600 to 4000 as of today, it is oversold. Which means that I'm waiting now for a final bounce on Titan on the daily charts. I'm waiting for all my stocks to become oversold. But which are those stocks? Only structurally trending stocks. There are two students. Student A generally gets 40% in their maths exams after a lot of struggle. Student B has a history of scoring 90% in their maths exams since inception, since their schooling. Both the children are going for their board exams tomorrow. My question is whom would you bet on will score higher? Or whom will you bet on will score 90 plus? I would bet on student B. But can we make the claim that student A cannot score 90? No. So we are using past price action or past performance not as a means to predict the future. We are simply extrapolating the previous trend. That of the two students, student B in this case is more likely to score 90%. The easiest one is a flag and pole. A flag pattern is perhaps one of my favorite. It's almost a bread and butter pattern to trade. It is fast-paced. The stop losses are very close by and the stock has less than three to four candles within which if it performs, it's good. A cup and handle takes maybe 50 candles to form and move. A flag pattern can has to be done within 20 candles. It has to reach the target. And in Nifty generally, I have observed that W and M patterns really hold ground. So, what happens is that you will see that certain stocks repeatedly form certain types of patterns. A stock which forms cup and handle once is very likely to form a cup and handle again and again and again. Because the kind of investors are similar in that stock. Similarly, a stock which forms flag or W pattern are likely to form the same thing again and again. And even this gives us a huge edge in identifying what we want to do. What I have learned is I have learned that I will trade the flag pattern. Let's say the flag pattern is happening on the daily or on the weekly. But I will trade it only if it is structurally trending up on the monthly. Which means that it is possible that Yes Bank might form a flag pattern on the daily. That Vodafone Idea might form a flag pattern on the daily. That Suzlon might do it. But they will never qualify in my watch list. Vodafone Idea with its high of nearly 150 to 200 currently trading in double digits is never going to be a part of my watch list. Whereas Bharti Airtel which was trading at 500 to 600 rupees just a few years ago making highs of nearly 1800 to 2000 is definitely a part of my watch list. And I'm excited to see it over sold. I'm excited to see it form cup and handle or perhaps even preferably flag pattern. That one I'm going to take, but I'll ignore the one that is happening on Bank of Suzlon. Point being a lot of work is done on the first filter itself when I'm assigning a stock a trend. And in this video, what I've tried to do is just try to make it simple. Assign it. Is it trending bullish or not? There are other aspects to it. If it is bullish trending, how strong is it trending? What is the strength of a trend? How do we assess that? That happens through pullbacks, which are the best tools to assess that. That's usually a Fibonacci or a moving average. Visualize this. If a stock is oversold on the weekly RSI, it means it is getting hammered on the daily charts. What does a base formation look like? There must be a pin bar candle. There must be a hammer. There must be a bullish harami. Must be a bullish engulfing, which holds for at least five to six candles. That is a new low is no longer getting created on the daily, at least for a week. And then once a base is formed, the first break in I'm in. So, the entry and exit is done on the daily, but the assessment is being done on the monthly. And it follows a process to ensure that I'm not buying into stocks like Suzlon. If I have to buy stocks in the energy sector, it might as well as be something like maybe NTPC, Coal India, Power Grid, not Suzlon. The whole purpose of technical analysis is to create a filter on which stocks we act on, which stocks we ignore. So, if gold is creating life highs, I will trade gold. Silver's creating life highs, I will look at silver. If platinum is doing it, if we were allowed, I would do it. If copper is doing it, I will do it. Can you imagine a scenario in which gold is creating life high, silver is creating life high, copper is creating life high, platinum is creating life high. Other precious metals which are getting traded are creating life high. Crude oil is threatening to create life high. We have a scenario in which the commodity markets are bullish. I don't remember the last time when bull when gold was in a bull trend. Gold has come into a bull trend after decades. I don't think that is ending right now. I think it will last decades, I think. If you flip a coin with a fair coin, it is very rare that you're going to land full 50 heads and 50 tails after 100 trades. Which means that there could be a scenario where there are 40 heads, >> [music] >> there could be a scenario where there are 60 heads. The question is how do I know decisively if the coin is fair or not? And the answer is that a 50% system can never streak 20 consecutive heads. The point basically mean that traders or people who are aspiring to be professional traders think that a 50% accuracy system means that at the end of 100 trades they have 50 winners and 50 losers. No. It only means at the end of a million trades you will never have 20 consecutive losers. Which means that if at any point in time you have 20 consecutive losers, you can guarantee you are not trading a 50% system. So, my point being everything that is probabilistic in nature has a profile. It is not a point in space, but a range like a cloud in which we have to guess what point are we following. It is a tough concept to explain. It is perhaps a little technical for a casual user, but I can assure you that a lot of hours of work goes into assessing what is happening when there are consecutive streaks in the market. A lot of planning happens around it. All the work is on how much position sizing has to be done. And it is truly one of the essence of professional trading. ATR. ATR is average trading range. It is the most under appreciated indicator in the world. It is an indicator which I use for defining entry and exits. I'm shocked that enough is not spoken about this particular indicator. Average trading range is perhaps the number one measure of volatility of any security and it is my go-to indicator for any trading system. That is if there is one indicator that has remained constant for almost the 10 years that I have traded, regardless of the system, it has always been ATR. If you Google something like Chandler's exit. What is Chandler's exit? A current price minus three times the ATR. When you spoke earlier about parabolic SAR, it factors ATR. All everything factors ATR. It's precisely for this reason we can calculate the stop loss specifically of Nifty. Versus let's say for example ITC. These two are different stocks. They will have different stocks, but how much? That is determined through its trading range. Also, typically whatever was the reference pivotal low that was created, one ATR below it is where my SL is. For example, Nifty has a daily trading range of approximately 250 points. If I assess Nifty trend as up on the monthly, oversold on the weekly, then when I enter it, 250 points below the previous low is going to be my SL. It typically works out to be roughly 400 to 600 points on a Nifty chart. Or maybe I'll say 500 points on an average on a Nifty chart. From 2015 to 2020, I think I would have spent at least 5 to 10 hours a day screening or charting. And if despite all those efforts, if I miss out on something, I feel terrible. Not because I missed out on something, but because I could not create a system that could catch it. I don't miss anything. My system failed to catch it. So, when I miss something, that FOMO forces me to rethink on the system that how is it that a stock kept creating new highs and you were nowhere in the picture. Shame on you. That is the thought that I go through. And that contributes towards creating a different system. So, FOMO, I would say, like I told earlier, a professional boxer takes a beating as a feedback. So, similarly, if I miss out on a trade which is to be exceptionally profitable, I'll take it as a feedback. I feel terrible. How I feel is I feel terrible. But how I act is then I start asking myself, how could I miss that? And what in my system, what in my watch list, what in my parameters do I need to change so that it never happens again? And my advice to beginner traders would simply be this. No matter what you're doing, trading is a meta skill. It's the greatest enabler in the world. You don't have to quit anything to trade. You could be a doctor and trade. You could be a cricketer and trade. You could be a teacher and trade. Don't quit anything that is getting you money, that is bringing you joy and happiness just to trade. That's the biggest utility of trading. If you balance that with this, then trading is a great enabler. All of a sudden, the world news matters. What's happening in the world actually matters. Thing to talk about with friends and peers. It's exciting. Something to look forward to. You're never really bored. So much of joy the market can give you. And at the same time some money if it works in your favor. I would want every participant of the market [music] who looks at trading as a long-term career to get an NFE registration, to get a SEBI research analyst registration, to give those NISM exams, to take a broker affiliation. If you are in this as a business, I want them to think of it like a business. [music] And I want them to train themselves like an athlete. You're an athlete. You dedicate 10 10 hours, work damn hard, look at charts. And anyone who tells you otherwise is guaranteed lying to you. There is not a trader in the world, there is not a investor in the world who's not spent hundreds of hours pondering over that decision. >> Investment in securities market are subject to market risks. Read all the related documents carefully before investing. 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