1. A brief about your educational and family background and when did you first hear about the
markets.
I am the son of a government servant, belonging to a lower-middle-class Gujarati family. My
graduation is in commerce from MS University, Baroda, and post-graduation in Computer Science
from Sardar Patel University, Anand.
I first heard about the stock market when I was 15, watching my uncle dabble in the markets. But my
father’s view that the market is akin to gambling kept me away from it.
Then in 2010, I landed a job in a small IT firm in Ahmedabad. With a little saving of around Rs 3,0004000 every month I decided to study the fundamentals of companies and invest in them.
In 2012, I got a better opportunity to work for an MNC IT company and relocated to Pune. Here my
salary was better and I was able to save Rs 15,000-20,000 a month. Since my returns from investing
in those days were decent, I was making 10-15 percent a year from my investing and was happy
about it, I deployed the incremental saving in the market.
In this firm in Pune, there was a colleague who was very passionate about trading and nudged me to
give it a shot. But my father’s words used to ring in my ears every time I heard him speak about
trading and kept myself away from it. I was in any case happy with my returns from investments.
But one day, in 2013, this friend of mine asked me to attend an online trading workshop with him,
which was on options. That was the day I converted from an investor to a trader.
2. Your trials and tribulations with the market in the initial period.
I started my trading journey with a capital of Rs 4 lakhs in 2013. As luck would have it that Rs 4 lakh
grew to Rs 6 lakhs in a matter of 10 days. I thought I had found the secret to prosperity. However, in
the next 10 days, I lost Rs 4 lakh, reducing my capital to Rs 2 lakh. In a matter of 20 days, I managed
to blow up 50 percent of my capital.
Given my background and the fact that I was a salaried person, the loss was a huge setback. This 20day adventure also ended my short trading journey. In any case, I needed some money in hand as I
was getting married.
In 2014, I shifted to Vadodra, this time working for a US firm, with my office timing being from 3 p.m.
to 11:30 p.m. This gave me a lot of time during the first half of the day, thus making me think of
trading again.
The pain of the previous year’s loss was still fresh, but I decided to analyse my mistakes. I realised
that I had unhedged overnight positions and there were no rules for position sizing. For the next
three months, I engrossed myself to learn to trade by attending webinars, watching numerous
online videos, speaking to traders, reading, and the works.
I decided to give myself another chance and started again with a Rs 4 lakh capital, which was my
entire saving at that time. I gave myself a target of growing my capital to Rs 7 lakhs in two years
using proper position sizing, without any unhedged overnight position. I managed to reach my target
in 2.5 years and have grown exponentially since then, but never breaking my risk and money
management rules. Since 2014, I have been trading the market and then attending my office, in
short keeping myself gainfully employed for 15 hours a day.
3. Any guides or friends who helped you in your trading journey.
During my formative years, I talked to several traders in India, some of whom helped me on my
trading journey. I, however, never replicated anyone’s trading style as each person has their
conviction on their strategy and their comfort zone for risk.
For example, in 2019 I had a drawdown of almost 20 percent, which was the highest since I restarted
trading. I discussed this with fellow traders and concluded that I need to diversify and add more
strategies to that of selling options.
I then started exploring opportunities in option buying and trading in Index futures. Presently, 70
percent of my trades are in option selling, 20 percent are in option buying, and the remaining 10
percent is in trading index futures. This diversification has worked out well for me.
4. How did you trade in your initial years and what changes did you incorporate
In my second innings as a trader, I started with trading in stock options but gradually moved towards
index options. Index options being more liquid than stock options allowed me to scale up easily and
take a bigger position. Another advantage of trading only index options is the focus, I need not
spend time tracking stocks where I had a position. Tracking stocks was especially strenuous for me,
as I had a full-time job.
After the introduction of the weekly option, I had started taking more intraday trades than positional
ones. This meant that I was always in front of the screen, but there was an added advantage that I
could take short duration trades with higher risk. I would like to point out here that one has to be
extremely cautious while taking more risk intraday. As for me, I protect myself by keeping my stop
losses – one is on each strike and the second is on the overall profit/loss.
5. What was the most difficult aspect of trading that took time to overtake -- one which was the
defining moment.
For me the problem was psychological. I was elated every time I had a profitable trade but panicked
on every loss. It took me time to realise that profit and loss are a part of a trader’s life. It is just an
outcome of a trade. One should be emotionless in accepting their profit or loss and concentrate on
the trade in hand.
The other problem with me was that I traded a lot and was always eager to take a trade to catch
every move in the market. I realized that this only increased my volume with no productivity
improvement. It took me a lot of effort pulling myself away from taking every trade and
understanding than I should trade only when the setup is ready and I am in a sweet spot. Else, it’s
always better to wait and watch, emotionally and monetarily. I realised that not taking a trade is also
a trade.
6. How do you presently trade. (please give examples along with charts if possible)
As mentioned earlier I mostly trade in index option and future. Unlike most other traders, I do not
look at a chart to trade but use derivative data. The data points that I observe are open interest (OI),
change in open interest, and open interest in the futures market.
These data help me define three support and resistance levels for the day. I wait and watch the
market activity around these support and resistance levels.
For example, if the market is going down but there is a significant unwinding of open interest at the
immediate support, and then it suggests that the market will be trending on the downside as the
support is reducing. In such a case, I prefer to wait for the support to break and then form a bearish
view.
But, if the market is going down and I do not see any significant unwinding of open interest, I will
prefer to take a contra view and be ready to put in a bullish position.
The screenshot below indicates that there is a huge unwinding on the in-the-money call options
indicating that the probability of the market going up is high.
So, when the change in open interest is negative, it’s a clear indication to me that the market will
trend. Say, if a change in call OI is negative, then it’s a bullish market, and if the change in the put OI
is negative, then it’s a bearish market for me.
There are times when we see that the market is going up but the change in OI is reducing on the call
side, this indicates moderate bullishness in the market as positional players have not yet started
squaring of their position. Here I would take a bullish position, but with a cautious view.
I don’t prefer to buy/sell naked option and am more comfortable hedging my position. My mode of
hedging changes with the market condition and my view on it.
Let’s say, if my view is bearish then I would sell a call option but I will not hedge it by buying an outof-the-money call option but rather sell a put in the opposite side with a value which is 40-60
percent of the call option sold. At times I may convert my position into a ratio spread for hedging
purposes.
Though I prefer to sell options, I know that selling options come with unlimited risk, hence I always
have a pre-defined loss in a particular trade which also helps me in deciding my position size.
I buy options when I see there is heavy unwinding on derivative data and market trend is also
supporting. But even in buying, I do debit spread, that is buy an at-the-money option and sell an outof-the-money option.
7. Trading statistics -- win/loss ratio, average win to average loss, and drawdowns (leave it up to you)
In my option selling trades I have a 7:3 win ratio, but here reward to risk is 1:1.5. In a group of 10
trades, 7 trades are profitable, which gives me a profit of say Rs 10 each, the 3 losing trades take
away Rs 15 as a loss, resulting in a net profit of Rs 25.
Drawdown is part of every trader’s life, but if your trading strategy gives more than a 15-20 percent
drawdown, then one has to think about tweaking or changing the strategy. I have a lot of
drawdowns, but most of them are in the 15-20 percent range.
8. Your plans for the future
Presently 70 percent of my trades are on an intraday basis and the remaining are positional. Going
forward, I would like to reduce my intraday trades and gradually increase positional trades.
Apart from trading, I have a plan to start my own business, but that is after I have enough capital to
fund my venture.