The trading way of life....

Its 9.50 am in the morning. A group of people are sitting in front of their computer screens. The atmosphere is buzzing with thrill and anticipation. 9.55 - the bell rings. Is it just another bell? Well, it is the opening bell of the Indian Stock markets. Where crores of rupees change hands within minutes. Welcome, to the big and exciting world of trading.

If asked, most of us would say, trading is speculation, betting or maybe even gambling. Some will say trading is what brokers do on NSE and BSE. But is it all that simple? Of course not. We all have heard of CNBC, Reuters, Bloomberg, etc.
All of them are billion dollar companies. And where do they all get their revenues from? By covering global financial markets. This would probably give you an idea of how big these markets actually are. And what happens in these markets? Trading.

Now when we talk of markets, let us understand the different types of markets. They can be broadly classifies into four categories. Equities, Commodities, Forex and Fixed Income markets. The product traded in these markets might be different, the liquidity available might be different, the people who trade these markets might be different, but the bottom-line remains the same. And that is to earn money. But how do we make money? Is there a formula which we can use? Obviously, there isn't because if there was a formula, we all would be millionaires today. In fact making money in these markets is tough and losing money as much easier! There is a lot of fundamental and technical analysis which goes into making a trading decision. There are research teams which take care of this work. But if someone gives you a research report, will money making be easy then? Again no. Because you need something more. It is the psychology and character of a trader. So what exactly does a trader need?


A few important qualities are:

Discipline : So that we don't end up mixing trading with gambling. 'Sometimes your best investment decisions are trades which you don't do'

Modesty : So that we can accept that we were wrong in the market. Being wrong in the markets is acceptable but staying wrong isn't.

Quick thinking : Because the opportunity of a lifetime has to be seized within the lifetime of the opportunity and here, the lifetime could be just one second long!!

Greed : In proper doses of course!!

Let me share one of my own trading experience with you. It was 3rd October, 2006 and my market was trading at new lows. I sensed an opportunity and started buying. The market moved down further and I bought more. The technical charts were suggesting an upward move, the fundamental reports were giving similar indications too. What else could I have cared for. I bought, bought and bought. And then suddenly the market spiked downwards. As the market went into a free fall, my loss started increasing. I panicked and started praying for a miracle. But the miracle never happened. In such situations, it hardly ever does.

I suffered a huge loss and the reasons were clear. I was not disciplined and hence did not cut my loss at the right time, I was not modest enough to accept that I was wrong in the market, I did not think quickly enough to react at the right time and of course I became greedy with my position.

Luckily for me, I was a new trader then and was therefore trading with very few quantities. So the total loss wasn't a very big amount. It's been more than a year since that day now and I have seen a lot of ups and downs in the markets. But the lessons I learnt that day are ones, which I can never forget.

Trading is definitely not for the faint hearted but for those who believe, 'only those who risk going too far, can know how far they can possibly go'

IMPOSSIBLE IS NOTHING

"Impossible is Nothing"- that's what I saw Sachin Tendulkar screaming out as I passed an Adidas billboard down the road. At first instance, I didn't even notice it. But then, it struck me like lightning. Could this be real? Could impossible be nothing? And I was taken straight back to 1995....

I was sitting in my history classroom, and we were doing a chapter on Napoleon Bonaparte. Napoleon was planning to invade a country and his commanding general came up to him and said, " Your highness, the enemy has an army twice our size, an infantry thrice our size and a history of being victorious in every single battle they've fought. It's impossible." Of course, the general was dead the next minute, but not before Napoleon had told him, " The word impossible does not exist in my dictionary."

A few days ago I was sitting with my colleagues and I asked them, " If given a choice, how many of you would agree to become the prime minister of India ?" A couple of hands shot up immediately, but the rest shook their heads silently. A very interesting thought came to my mind. I could figure out just two reasons for their refusal. The first, which I was hoping would be true, was that they chose not to become the prime minister. The second, of course, was that they all thought it was impossible for them....And I wished a gas station worker had thought Reliance was impossible....I wished a school drop-out had thought Microsoft was impossible....I wished man on the moon was impossible. Because impossible makes life so simple for me. Whenever I'm faced with a difficult situation, all I have to do is tell myself, "Its impossible, it just cannot be done."

But then a story came to my mind. The story of a musician who lived in the 18th century. He was born a normal boy but in his early twenties, a disease struck him which caused him to lose his hearing ability, gradually. It was almost like a death blow to him. No one was ready to believe that he could still create music. He went into a deep financial crisis and the only word he heard all around him was impossible. But he never gave up. He used a special rod attached to the soundboard on a piano that he could bite, the vibrations would then transfer from the piano to his jaw to increase his perception of sound. And he created music. There is a well-attested story that, at the end of the premiere of one of his concerts, he had to be turned around to see the tumultuous applause of the audience because hearing nothing, he had begun to weep. I'm referring to one of the greatest musicians mankind has ever seen. I'm talking about Beethoven. And I'm so thankful that Beethoven was possible.

There's so much Iv learnt from his story. The virtues of hard work, passion and most importantly belief come out so beautifully from his life. In fact these are traits which are common in all people who have made the impossible possible. Beethoven was passionate about his music, Bill gates was passionate about computers, Dhirubhai was passionate about success. They all faced obstacles from people who thought they were jerks. But they all believed in themselves and they all did the impossible. Its rightly said, "Courage does not mean the strength to go on, it is going on even when you don't have any strength left."


Its really funny actually. It is man who has created the word impossible and it is man himself who has continuously challenged and gone beyond the boundaries of impossible. As I stand in front of the Adidas billboard I ask myself, have I ever done the impossible, have I even tried doing the impossible? The answer that comes to me is NO. The no is not because I haven't worked hard enough, the no is not because I am not passionate enough, the no is not because I don't believe. The no is because I believe, Impossible is temporary, Impossible is potential, Impossible is nothing.