Swing Trading mindset

It started with luck before it became a passion personal project. Before coming to NZ, I put 5 lakhs rupees in my mum’s demat account to trade Indian markets. It was never my idea to trade Indian markets full-time or even part-time. But I somehow lost 10% of my mum’s capital in February and March. The idea of losing Mum's money is disappointing. I just didn’t know how to cope with that. I have faced a lot of losses before, so I am kind of numb and unreactive when my portfolio is at a loss. I don’t do anything when my portfolio is tossed into a loss.

I took 1% of the remaining capital and started derivatives trading from the capital. The reason I started with derivatives trading was because I knew this is how I will make money quickly. I end up losing more. And then I decided to quit everything and wait for a clear-cut market direction. In March markets were directionless and making money buying options was difficult or not possible for a retail trader. So, the best decision was to quit trading for a while. Understand what I am doing before reentering. The decision to quit trading when the time is right or not right is as important as the decision to take a trade.


In March end markets gave a clear-cut signal of reversal. As usual, there was a government policy update. I make it a point to enter trade whenever there is a government policy change for Indian markets. As expected, markets started to recover. But the recovery was not violent. It was majorly short covering. I must go heavy if I have to make money. Going heavy was not an option because I had already lost 10% of my capital trading. So that option is not there.


The next option was swing trading. I do swing trading whenever I lose capital. Buying stocks when the chart patterns are already shattered downside and are communicating some clear-cut action in the near term. Swing trading is an easy option than derivatives trading because if it doesn’t work out in the short term, it will work out in the long term if the price is right. 


I do ultra-short swing trading. I make a return between 5% to 10% depending on the potential of the stock and chart patterns and sell the stock, encash the profit and move on to the next trade and repeat the entire process again. This is how I end up making a 27% return in a quarter. I recovered 10% portfolio and made an additional 27% on it. A lot of portfolio churning happened in this game.


This type of trading is not for everyone. You need to understand capital allocation if you want to do ultra-short swing trading. You need to satisfy with little gains if there is no opportunity. You need to play heavily when you see an opportunity and exit as soon you make a return. You should always have money for the next opportunity. You should know how to combine all the trading instruments to hit an average daily profit target. 





Here are the results for one quarter. I have to learn a lot of things yet. I have to learn about proper capital allocation and to take more profits in a trade. It's a work in progress.

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