How to do TRADING when you have SMALL CAPITAL BASE? –MUST READ FOR EACH INVESTOR.

Wednesday, February 22, 17

How to do TRADING when you have SMALL CAPITAL BASE? –MUST READ FOR EACH INVESTOR.

Greetings from Hitesh! Readers have appreciated our last post on BITCOIN investments. If you have missed, I suggest – you can read on our blog. Many times I come across a small investor – who is in two minds regarding TRADING, as he has very small capital base. He does not have the holding capacity for a long term and he wants INSTANT MONEY. Today I am going to deal with this most important aspect touching at least 70% of the trades who has approached me so far.

If you look at the Indian History – we had seen these kind of situations in the life of CHANDRA GUPTA MAURYA / MAHARANA PRATAP and CHHATRAPATI SHIVAJI MAHARAJ. They all had very strong enemies and they did not have the enough resources. So, they followed the WAR STRATEGY known as GUERILLA WAR STRATEGY.         

In guerilla war – small group of soldiers attacks the established army, mostly when the other guys are unaware. Let us see how we can apply into the TRADING.

How to win Guerilla Trading War?

This should be the first question in your mind before you put a single trade. Unless you ask this question – you are shooting in the DARK and you will die poor for sure. When you ask this question – it will lead to following questions and you will be required to answer them in as much details as possible before you can even put your first TRADE.

1.    What is my EXPERTISE in trading?  Most guys are MBA / CA / ENGINEERS and having PHDs also. I see that these guys are not able to see TRADING as a 180 degree different ball game than having any of the DEGREE from any of the reputed institutions. Have you seen – AMBANIS and BIRLA putting their HARWARD trained son or daughter for training before he/she becomes the head of the company. What they are doing is – they are developing specific business running EXPERTISE for 3 – 5 years before they are given any major project. Remember they have DEGREES from the most reputed institutions of the WORLD.

My experience with the NORMAL trader shows that he is not READY in INVEST time and money in developing and learning TRADING as a different subject all together.

So, first FOCUS on developing your TRADING EXPERTISE.

2.   What is your plan? Once you develop expertise – you need to have a WRITTEN TRADING PLAN and TRADING POLICY. This should act as your action manual as you go ahead in your TRADING.

My observation tells me that most guys are not ready to WRITE their plan and policy manual. They want to rely on their MIND and their FEELIGS or IMPULSE.  They simply see this as an insult to their skill sets when I ask them to write.

I have been fortunate to work with the LEADING investors of India and they always have their SECRET PLAN neatly written in their own handwriting with them. They may use computer but a small diary is always with them.

3.   Time of TRADE:-  This is the most CRUCIAL aspect in GUERILLA trading system. You can’t make profit if your timings are wrong. You must know the right time to apply all your EPXERTISE / PLAN and POLICY.

Guerilla trading can’t be done as a full time trader as you have limited resources and limited holding capacities. So, you must TIME the market.

4.   Compatible TRADING STYLE and METHODS:- This requires that you judge the market mood at the time of trading. Depending on the market mood – you need to approach the suitable trading style and methods. Should you buy or sell or should you sell and buy / should you buy and sell in cash segments / futures segments or options segments. There are N number of other strategies and style you can adopt provided you have developed the EXPERTISE in the first step.

It is 100% normal for most traders to get confused after making the TRADE. They get confused because they have not thought about TIMINGS / TRADING STYLE and suitable trading strategies. So, when market MOOD changes suddenly – they are in SOUP.

5.   What are other PLAYERS doing? You are not alone in the market. Many times SMALL investors has been told that this is SURE SHOT BUY and they just blindly buy tons of those shares only to see that the so called sure shot has brought them the biggest loss of their life and they get out of the market for life blaming their LUCK.

If you ever find that any trading idea is too much appealing and your broker or consultant promises you MOON out of that – BEWARE. Other players must have spotted that opportunity before you. You may be taken for a RIDE.

If you are our regular reader – we always talk about any idea or strategy at least 3 months  to 3 years ahead of the market experts. This gives us the time and peace of mind while we are accumulating our stock. When MEDIA guys talk about it, that is the time to SELL for us.

In the times of HARSHAD MEHTA – we did not have FIIs and MUTUAL FUND guys. In the times of KETAN PAREKH – he focused on 10 stocks rather than overall market. From 2004 – we have seen combinations of players, which include FOREIGN GOVERNMENT INVESTORS along with FIIs and MUTUAL FUND Guys.  This makes it more important to study their behaviours before you trade.

From 2008 onwards  - most of the developed countries of the world are facing CRISIS. This is additional factor, which you must keep in mind while you TRADE.

6.   Flexibility:- You may have done detailed planning and timings – but you need to be 100% flexible in changing your STRATEGY with the change in any of the above factors. If you are not ready to do that – you will get killed in the market. An open mind is the biggest asset when you trade. An opportunity, which is a buy, can become a SELL in next minute also. We have seen SATYAM Scam and many other such events in the past.  This requires 100% flexibility. I remember when GLOBAL TRUST BANK was taken over by ORIENTAL BANK – a guy from CALCUTTA bought some 2 crs shares at Rs.1.  He lost 100% of the same. So, you need OPEN mind.

7.   Market MOOD:- You have prepared your MOOD / you have understood the other participants also – but the last is overall market MOOD. Whether it wants to go up or go down?  Unless you see the market in totality – you will fail. Time and again we have proved right when we had given a BUY call in the market because we understand market mood.

Just to share our recent success – in last week of DECEMBER 2016 – we boldly gave a call to buy at 7900 NIFTY levels. Yesterday it crossed 8900. This happened in just 50 working days or 36 trading sessions to be precise. Unless you understand the market mood   - you and all your calculations will go for a TOSS.

Who will not win in TRADING?

In India, it is believed that if you are TRUTHFUL / HONEST / If you mind is PURE / If you are HARD WORKING  - You will win or become successful in any venture. Most RELIGIOUS PANDITS talks about this. This is the BIGGEST HARM to INDIAN guy according to me.

Let me give you good news – Market does not KNOW you. You are nobody for market. All market cares is your GUTS / VISION and your TIMINGS. If you are HONEST and have a pure mind – you will be able to enjoy your money or success with peace of mind and it will be long lasting. But by just being honest and pure mind – you will get killed in the market. No GOD will SAVE you.

If you fail to anticipate the behaviour of market participants or market – then you will fail irrespective of your other qualities. Your trade plan must have possible action steps – in case behaviour of market participant’s change or mood of the market change.

In the recent past we have seen Mr.Modi declaring  DEMONETISATION out of the blue. Same way we are seeing TRUMP in action now. We have to be prepared for such events. Our success depends on expecting such events and having a proper plan to act at that time. This is a PART of VISION.

The LEARNING from the THREE GREAT PERSONALITIES:-

In the beginning of the post I talked about the TRHEE great personalities - CHANDRA GUPTA MAURYA / MAHARANA PRATAP and CHHATRAPATI SHIVAJI MAHARAJ.

They all had their fair shares of STRUGGLE / SUCCESS and FAILURES. They are IDOLS for us. But if you look with open mind – CHANDRA GUPT MAURYA went onto become the SMARAT - KING of the KING and his DYNASTY ruled in India for a LONGER PERIOD of time that the rest of the two.

The difference was – his GURU CHANKYA nurtured CHANDRA GUPT from the young age to beat DHANANNAND and become the King of the King. He has been TRAINED in all aspects of war and his GURU was doing the thinking for him while he was focusing on executing the plan. Chankya was so shroud that he gave small drop of poison to Chandra Gupt from young age so that he can be saved from cheating at the later stage. This is a holistic thinking for failure proof success.

If you study the story of CHANKYA and CHANDRA GUPT, it is a story of CLARITY of PURPUSE and SMART execution. While Mahrana Pratap and SIVAJI MAHARAJ is a story of personal bravery and fighting spirit to save their kingdom, Chandra Gupt is a story of personal BRAVERY with PROPER SYSTEM and GOAL to become the SAMRAT.  If you study CHANDRA GUPT- he followed all the above steps while fighting DHANANAD.

I am not a CHANKYA and I am not saying that you are CHANDRA GUPT. All I am hinting is that you need to have a MENTOR at all stages of your life.  You need - The guy who knows you very well without you telling him, the guy who knows the market and who brings down the common approach between you and the market for your success in trading and life.

I have consciously developed myself in all possible areas related to trading and investments. I am ready to do thinking for you so that you can focus on earning money.

If you like my track record of staying ahead of the MARKET EXPERTS and if you have a GOAL of making tons of money, please approach us.

Have a HAPPY INVESTING.

Follow me on Twitter @hiteshmparikh / WhatsApp - +91-9869425399 / www.hiteshmparikh.com

Live With Passion…Invest With Passion.

Hitesh Parikh.

www.hiteshmparikh.com