Introduction

In the years 2007 & 2008, I was a premium video subscriber of John Carter’s (Author of ‘Mastering the trade’ book) website. I had seen him taking a $10,000 account to $100,000 in 1 year and that was the first time I ever saw someone do compounding in a trading account live. It had a major impact on me as it acted as a great inspiration for me to think beyond what I thought was possible. Many of us think that compounding word does not apply to trading and it is an ‘investing’ term. Far from the truth, ? Any financial account should be exposed to compounding !! » More »

Synthetic Futures episode – 26th May 2019 to 19th June 2020

1. Went from 26L to 33 in 1 month,
Winrate = 50%,
RR = 2.52,
Option points made = 369 » More »

Options Selling Episode – 17th Jan 2020 to 21st May 2020

1. Went from 15.5L to 26L in 4 months,
     Winrate = 51%,
     RR = 2.13 ,
     Option points made = 626 » More »

Options buying episode – March 2019 to Jan 16th 2020

1. Went from 3L to 15.5L in 10.5 months,
Winrate = 43%,
Reward:Risk(RR) = 2.25 ,
Option points made = 836 » More »

Thought process before the start of the experiment

1. Nobody has done this kind of experiment in India before and started with a 3 lacs account, as the average trading account size in India is 3 lacs.

2. Taking 3 lacs to 30lacs (Why 30?—it is a decent minimum size to start thinking about trading as a serious profession, and a trader can build upon it if he is adept enough in other areas of trading the markets) was the goal by then.

3. My assumption was that my psychological resilience should be strong (it is not measurable, unfortunately), as I had done compounding in my positional account in the past. This might not be easy, but there is a big point we need to be aware of. Both this 3L (starting capital) and 30L (goal) are a very small part of my positional trading account size and a minuscule part of my net worth. This eases out any internal performance pressure, as I don’t need this money at all.

Only real pressure left is the public display of trades, and the ‘need to be right’ can kick in anytime. I was aware of it but still made some blunders like exiting randomly, jumping the gun (and taking options based on futures manually was not helping either) in the first 3-5 months.

4. If I reach 30L (whenever that happens), there is a possibility of new traders thinking that this is possible from day 1 or Year1 of trading. Possible, but highly improbable. Remember, I started intraday trading after trading positional account successfully for 10 years in a row. On top of that, it is not going to bite me if I lose this experimental account. The same cannot be said for everyone and hence, I had the fear that it might send a wrong message.

5. I am a big believer of backtesting and I backtested my system for 9+ years intraday (5 mins timeframe). I created the MM plan aggressively, as the idea is to see how compounding works. Battlecry is to get atleast 75% of the points we got in backtesting. If we can do that, the job is well done.

6. As I had never done intraday trading in the past and positional trading has made me lazy, i was doubtful about handling multiple intraday trades in a day. So, put some filters in place to bring the trade down to 1 trade/day average. I have also seen ‘burning out’ of people who trade multiple times in a day.

7. One of my good trader friend told me that big players (I guess he is referring to retail options sellers ?) will not be happy if this ever happens (intraday + options buying + compounding) and my answer was like ‘ Nobody cares about me or my trading account – everybody is fighting their own demons’

8. Trading is all about ‘handling drawdowns’ and I believe I am very good at it. Am neither prescient in knowing where the market is going to go next nor adroit in drawing lines in the charts, but very good in handling drawdowns.

9. Belief in law of large numbers – focus on 100/500 trades and the edge will play out. It is easy to shift our focus from the ‘outcome’ of a few trades to the process if we believe in the law of large numbers.

10. I am a firm believer that ‘implementing an idea’ is much more valuable/powerful than ‘idea’ itself and hence took a plunge. Nothing to lose, anyways.

Miscellaneous details before the start

1. As you all know, structural pivots is the underlying concept i trade with

2. Two ATM options will be traded for every 1 lot of futures.

3. Manual entry was a worrying factor – I was doing conditional orders in IB for my positional account and was so comfortable with it. I did not want to do intraday and positional trading in the same account, as it would create confusion in the long term.

4. Zerodha account was still active and hence Z was the obvious broker

5. Goal is to make 50% of the futures points (after cost) as I trade 2 ATM options for 1 lot of futures

6. According to my money management plan, I was willing to lose 50% of the account from the peak.