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manoj agrawal 23-06-2013 02:13 PM

Trading Survival with 10 Lac in 10 Month
I am not expert trader, but will try to do it ( not to compete ) to benefit myself and others.
I will put detail of my whole plan soon in one day.

manoj agrawal 28-06-2013 03:49 AM

Trading Survival With 10 Lacs in 10 Months

Just take it as personal trading survival test not as challenge. Rules are framed as simple and effective. Your Dad gave you Rs 10 Lac to fulfill your trading dream but has imposed some critical-time restriction, as he is well aware of risk involved in trading futures , commodities, currencies etc, so to save you from making major losses.

Some Commons :
  1. You have maximum time starting from 1,July 2013 to 30,April 2014.
  2. You can trade only Cash, Stocks and Index based Futures/Options listed on NSE.
  3. You can trade intraday or positional whatever your trade strategy is.
  4. Do not post chart/analysis explaining your trade strategy prior to/during/after trade.
  5. Post only Entry/Exit/Stop Detail as
    a) Entry Price , as soon as it filled ( delayed posting will not be taken as real trade.)
    b) Exit/Stop Price , as soon as it filled ( delayed posting will be taken as real trade . )
    If Limit Order is submitted , mention detail.

Dadís Rules , Restrictions and Impositions :

1) You have to obey a risk of ruin criteria that is, if any day during survival tenure your closing day mark to market equity is below 7 Lacs , you have lost your Survival.

2) You have to take Lump Sum of Rs 2000/- every month as expense due to Trading Platform Cost/ Charting Platform Cost / Internet Data Cost/ Data Feed Cost.

3) You have to draw a compulsory remuneration of Rs 8000/- every month for yourself.

4) You are allowed to take trades in slabs of 10 trades , and further trades ( In slab of 10 ) are permissible only if your mark to market equity is above 9.5 Lacs after completion of prior 10 trades.

5) You are not allowed to take a risk ( initial or during ) of more than Rs 50,000 in a trade.
Take proper Initial Stop Or Initial Hedge in a way this risk is obeyed.

6) You have to decide your Stop/Hedge at best on position initiation or before day close. Any post day action will be considered next trade.

7) You can leave overnight position unhedged, assuming a worst opening gap of 3% on IndexFuture and 8% on Cash/StockFuture against your position not go beyond Rs 50K risk per trade. For simplistic calculation consider 150 Points as 3% on NiftyFuture
and a round number near 8% on Cash/StockFuture. In case risk goes beyond Rs 50K , then either reduce position size otherwise it will be considered more than 1 trade in multiple of Rs 50K risk. If you keep on holding a losing position or unhedged position beyond Rs 50K risk limit then it will automatically increase your trade count.

8) Add,Scale-in Scale-out are allowed strictly via same instrument and maintaining max risk involved not beyond Rs 50K for single/synthetic position. Increasing the risk above Rs 50K will also increases the trade count by same manner.

9)Below are some example of possible , valid trades:

a) Buy 500 Nifty 5600 CE July @ 110 = Rs 55000
Sell 50 Nifty 5700 CE July @ 70 = Rs 3500
Premium at risk = Rs 51500 .
As the risk due to premium is greater than Rs 50K , so this will be counted as 2 trades.
It can be reconstructed to reduce trade count to 1, by reducing premium at risk, as

Buy 500 Nifty 5600 CE July @ 110 = Rs 55000
Sell 100 Nifty 5700 CE July @ 70 = Rs 7000
Premium at risk = Rs 48000 => 1 trade.

b) Buy 400 Nifty Future July @ 5600
Stop Price : 5500 ( subjected that market should have traded at that price)
this will be considered valid and 1 trade, as risk = Rs 40K.

But if this position is leaved overnight then it is subjected to opening gap risk of 150 points and risk in that case will be
400 x 150 = Rs 60,000
this will be counted as 2 trades, reduce the position size or hedge with options before leaving overnight to have it as 1 trade. Reduction/Hedge would be strictly allowed on position initiation day only.
A reconstruction of this trades as 1 trades is as below

Buy 400 Nifty Future July @ 5600
Buy 400 Nifty 5600 Put July @ 105

Risk in this case will be simply 400 x 105 = Rs 42000 and position is completely hedged against overnight gap.

c) Naked Options/Strangle/Straddle Sell, leaved overnight are subjected to opening gap risk. In case of Strangle opening gap risk will be calculated on strike which is near to CMP.
say CMP Nifty Future = 5600

Sell 400 Nifty 5400 Put July @ 40
Sell 400 Nifty 5800 Call July @ 30

On first day there is no overnight gap risk in this case as strikes are far away
5600 - 150 = 5450 > 5400 Strike.
5600 + 150 = 5750 < 5800 strike.

On second day say CMP = 5740. Then overnight gap risk will be based on 5800 Call strike as
(5740 + 150 - 5800 ) x 400 - ( 40 + 30 ) x 400 = Rs 8000.

On third day say CMP = 5820 , then overnight gap risk on trade
(5820 + 150 - 5800 ) x 400 - (40 + 30) x 400 = Rs 40,000.

10) Risk calculation on complex synthetic position might not be easy at once, so avoid taking complex synthetic and multi-security pair trade are not allowed. If taken , they will be counted as different trades with their separate risk.

11) Post a easy and simple monthly performance report mentioning just
a) Number of trades taken.
b) M2M equity with effect after compulsory deductions imposed.

manoj agrawal 28-06-2013 03:54 AM

FAQ to Dad

1. Me : Its ok to have charting/trading/feed cost but why should i withdraw remuneration every month, this is simply a dragger to equity ?
1. Dad : It is designed to keep in mind that you are not dependent on me for those expenses. Do you think that i am going to feed you forever. When you start your any business , you are suppose to bear all necessary expenses of life. Without that remuneration how it could be feeling of real money.

2. Me : Ok, but why to put risk of ruin limit, number of trades limitation in slabs of 10 etc.
After all you gave me to play with 10 lac, these limits hinders my capability of trading ?
2. Dad : Look this is not your money, i am in trading before you born and i want to make you understand that preserving capital is a big challenge in this trading survival. I am risking money worth Rs 3 lac, so in return i need that you atleast develop proper skills to manage and trade funds seriously without losing beyond a certain limit. In the long run this will pay you my son.

3. Me : But, finally that Rs 50K Risk limit on 1 trade , auto-increasing of number of trades with risk and above all section point 9 is very hard to follow and properly understand ?That might be simply unrealistic to think in this way ? I can't understand why you imposed this when you have ruin risk limit in place.
3. Dad : This is designed to restrict that you do not overtrade, overleveraged in 1 trade or instrument and plan fully before entering the trade. Take some time to understand , without them in place you might lose more than expected, once understood they will only going to help you to have smooth equity. You can think this as i have imposed a simplistic Money Management Plan for my own money in your risk endeavour.

4. Me : Ok i will try my best, btw what are goals for me ?
4 Dad : First, Survive for full 10 Month and come with equity greater than 10 Lac.
and Second Survive for full 10 Month and come with equity of 11 Lac.
Happy Trading.

JaiDon 28-06-2013 09:37 PM

All the best Manoj...........
I wish if you can beat 10% FD returns.

TrendCatcher123 29-06-2013 12:58 AM

wow finally sumthing worth reading after witnessing all gas and no substance in worthless paper challenges with bogus claims and fragile egos :clap2:

nice way to cover (atleast the basics) how a fund shud RUN and how to survive..the so called mentors shud learn frm it even before playing with the virtual money!

all d BEST :thumb:

manoj agrawal 01-07-2013 10:57 AM

Sold 150 Nifty Future July @ 5859
Bought 150 Nifty Call 5900 July @ 79

Trade 1.

manoj agrawal 01-07-2013 11:03 AM

Risk in Trade 1

150 x (5900 - 5859) + 150 x 79 = 18000.

addicted 01-07-2013 11:18 PM


Originally Posted by manoj agrawal (Post 191448)
Risk in Trade 1

150 x (5900 - 5859) + 150 x 79 = 18000.

Manoj Ji,

Here is my analysis on your trade 1,

delta from futures = -3
delta from calls = +1.5 (approx)
Net delta is to the downside (-1.5 approx.)

So when market is roaring to the upside, you are taking bearish bet. Am i right? As market will move to the upside you would be accumulating more losses. Current EoD drawdown is = 150*[ (5859-5894) + (97.15-79) ] = -2527.

Is this type of contra-call, against the TREND, a part of your fund management strategy? Suppose this probable query come from your dad side.

manoj agrawal 02-07-2013 12:47 AM


Originally Posted by addicted (Post 191486)
[B]Manoj Ji,

Is this type of contra-call, against the TREND, a part of your fund management strategy? Suppose this probable query come from your dad side.

This is trading survival. I am refraining myself to discuss why and how behind actions. Sorry.

addicted 02-07-2013 07:47 AM


Originally Posted by manoj agrawal (Post 191498)
This is trading survival. I am refraining myself to discuss why and how behind actions. Sorry.

That was anticipated answer.:hehe:

By The way what do you mean by Trading Survival.
Kindly elaborate. Is it preserving initial capital or minimizing losses or making some profits also or something else??

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