January 21 and 22 must have been dark days for you whether you’re a day trader in the stock market. They were for Get Ahead reader Anish Pillai — In this account of his own day-trading adventures, he narrates how he lost his whole capital within just a matter of seconds.
I am a software professional with dreams and ambitions to make it big in what ever I do, be it my own job or any other actions that I undertake.
I’m a semi-active player in the stock exchange, too; my important field of activity was margin calls (for those who don’t know it means to commit some money with the agent or and trade for an amount which is n times that the deposited sum) and delivery.
For example, If I pay Rs 10,000 as margin to my broker, he lets me trade for an amount, say four times the money I have deposited, that is Rs 40,000.
I never utilized to encash the gains in margin calls, but could retain the gain in terms of stocks (purchased 500 shares of company X @ Rs 100 = Rs 50,000; on off the square day if the speed is state 125, I would sell of just 400 shares so as to cover the agent and would happily keep the remaining 100 shares as profit).
I did well on my job initially; I began with a capital of Rs 30,000 and following couple of months I included Rs 20,000 to that; this was the last time I moved amount to my broker.
One of my wise choices was to purchase RNRL at Rs 40 keeping it for long; when it was at Rs 159 I bought another pair of 200 shares.
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RNRL went up to Rs 245 in the regular market and was happy to see my investment tripled in only 8 months. I was only amazed by the performance of both RNRL and the gains I made from it.
Some companies gave me good returns and some gave me huge blows. The bottom line: finish of the season after trading for a value of nearly Rs 17,00,000 and also paying a broker of nearly Rs 14,000-17,000 I made gains of just Rs 10,000.
In the next week of January, I had a much major capital loss.
I believed in my buddy’s tip for investing in shares of a bank. I got the shares as it had been at the Rs 175-185 range along with also the trick was it will hit a price target of Rs 230-240 in a period of 30 days.
I never traded in bank stocks, but my homework indicated that of the banks were doing well for quite some time then. So I invested in it. With In a week’s time that the share prices dropped by Rs 12-14 along with my kitty was dropped by another Rs 15,000.
To, mitigate this loss; I depended upon my most reliable stock (I trust it and feel that it will do nicely). I purchased another 2,000 stocks of RNRL at Rs 215 on last trading day of the second week of January with the hope that an increase of Rs 10- 15 per share will help me pay my short-term losses. I’d just 25 percent of that sum in my broker’s account, and so I owed him about Rs 4.3 lakhs.
For a couple of times it was doing great but when the international market fall started I was helpless; just followed the wait and watch principle. On one single day (January 21 to be precise) I saw that the gains that I had earned in the past six months evaporating fast; the following day it was the turn of my capital and from noon that afternoon my funds was completely gone. I had been in debit balance of roughly Rs 20,000.
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At the very first minutes of trading, the stock price of RNRL had fallen from another Rs 30-35. Oh my great, I lost one lakh rupees in one moment. Gone in sixty minutes! I had been in tears. I couldn’t console myself.
After discussing the issue with my friends and parents I eventually decided that taking the delivery of these stocks and retaining them for 3-6 months has been the best alternative. I may be able to cover the losses, I believed if the markets recover in a few months.
I had to count in my reliable friends and well wishers, who helped organize the capital in a notice of just four hours. Thanks guys, I owe you big time!
Having said all that, I wish to say something to dealers like me, who can neither time the market nor have trusted contacts in the marketplace to direct them.
- ~ Always keep your portfolio diversified Concerning sectors/companies
- ~ Don’t let any stock to make more than 15-20 percent of your portfolio
- ~ Don’t enter margin iq option trading if you cannot forecast the market behavior. It’s a really rewarding opportunity. But it is a really dangerous game. No one can predict when it will rip you off your holdings.
- ~ The funds that you invest in markets should be a portion of the residual amount of your income once you meet all of your expenses. So that you can hold on patiently at times such as this if the market conditions aren’t good.