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How to become a Full Time Trader - Nooresh Merani

This is what I presented at Traders Carnival 2015 at Mumbai.

A lot more was discussed in the two hour presentation with a lot of fun.

The video will be shared as soon as DJ from Traders Carnival does it.

You can send me your feedback or queries on nooreshtech@analyseindia.com

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How to become a Full Time Trader - Nooresh Merani

  1. 1. www.nooreshtech.co.in How to Become a Full Time Trader Nooresh Merani www.nooreshtech.co.in
  2. 2. www.nooreshtech.co.in Introduction • IT Engineer ( many here) • Quit an IT Job ( who doesn’t want to) • Blog, Tweet, Chat • Full time for 8 years. • I am not a CMT • I am not a MBA , CFA , CA I am a “Trader”, “Advisor”, “Educator” • 100-200 training sessions on Technical Analysis • Pakoed 2000 people in Technical Seminars ( U are not the only unlucky audience) • 2300 posts nooreshtech.co.in •
  3. 3. www.nooreshtech.co.in Technology - Trader/Advisor and Trainer Remember Communities Remember Communities Free Blog – Google bought it Free Blog – Google bought it Group MessagingGroup Messaging Video Analysis.Video Analysis. Met the Best of Investors/traders Met the Best of Investors/traders Tweetups, ReachTweetups, Reach Google SearchGoogle Search Friends, Learning, Awareness Friends, Learning, Awareness Marketing /Ease on Advisory Marketing /Ease on Advisory Personal Chat, Groups Personal Chat, Groups
  4. 4. www.nooreshtech.co.in Technical Analysis
  5. 5. www.nooreshtech.co.in More Advisors than Traders • Number of Demat Accounts in India = 3 cr • Number of them traders( 5 % ) = 15 lakhs • Number of Advisors in India = ??? I am one of them 
  6. 6. www.nooreshtech.co.in Algorithmic Trading and Options
  7. 7. www.nooreshtech.co.in A Full Time Trader is the best Career You can trade from anywhere with a laptop and a steady net connection.
  8. 8. www.nooreshtech.co.in The Wow Factor • Market timings 9.00 to 3.30. ( Wow a 6 1/2 hour working day. ) • Work from home. ( Who doesn’t love to work in their boxers ? ) • No Boss, No Appraisal ( I am the Boss ) • Total Mobility. Work from anywhere with a net connection ( Did you not see that picture of a trader with a laptop in Goa ? ) • Tons of Money ( If you are full time trader you make more money with the keyboard in your hands ) • More time with Family. ( What would i do if i get done at 3.30) • I can take vacations whenever i want to ( and pray its not the big up or down day – for a discretionary trader. Traders are more weekenders ) • I just need to keep executing the system and chill. ( The backtest results are just too good to think of position sizing)
  9. 9. www.nooreshtech.co.in If you are Salaried • A Monthly Pay Package – ( It always small but it comes. Traders have bad months) • 20 days of Paid Leave ( Create a Clone or Black Box System or try trading on a vacation) • Salary – Appraisals, Job Switch ( Traders have drawdowns ) • Job Security or Alternative Opportunity. ( A trader can only become an advisor with all the tensions ) • Experience increases value in job market and even bonuses . Look at your boss he is older mostly not smarter. ( Return depends on Market Trends not your Age )
  10. 10. www.nooreshtech.co.in What you need to Learn • Everyone has a different methodology and belief. • Technical Analysis, Derivative Strategy, Options Strategy, Day Trading, Delta Hedging, Automated Trading Systems, Trend Following,Gut Feel, Insider Trading, Tips, Advise etc. • There is no point on debating which is the right way. • Understand yourself before you understand the system. • Every Trend creates a few Geniuses.
  11. 11. www.nooreshtech.co.in Simple Rule Whatever Works and Makes Money Consistently. What works for me May not work for You. Whatever Works and Makes Money Consistently. What works for me May not work for You.
  12. 12. www.nooreshtech.co.in A standard Trader Problem
  13. 13. www.nooreshtech.co.in Find What Works for You • Technical Analysis the Classical Way. • Price, Volumes, Moving Averages, Patterns and Individual Discretion. • Techno Fundamental Analysis. • Value Investing. • Risk Management ,Common Sense & Luck. Above Works for Me • No Elliot, No Gann, No Time Cycles, No System Trading.
  14. 14. www.nooreshtech.co.in Some Questions • Are you wanting to be a Full Time Trader because you don’t like your Job/Business ? • Are you in love or addicted with Markets ? • There is no better thrill then a Winning Trade? • I want more time for Family Life? • How Long will I work for Someone? • I want to be my own Boss? • I want to make a lot of Money?
  15. 15. www.nooreshtech.co.in Yes for Any Questions ? Don’t think of Full Time Trading !!! Yes for Any Questions ? Don’t think of Full Time Trading !!!
  16. 16. www.nooreshtech.co.in Trading Income Capital ( Yours or Others or a Prop Book ) Trade Markets ( Use whatever Works ) CAPITAL + RETURNS Remove Money (Expenses, Luxury, Savings) Add Other Income (Salary/Consulting/Business etc ) Did you even think You Will Lose Money ?? Did we Miss Something ??
  17. 17. www.nooreshtech.co.in Assumptions • A lot of people have discussed strategies and will discuss ahead. • I leave it to you to find what fits your temperament. • Always remember – Every trend creates New Geniuses. Check anything over multi year cycles. • You will not use Crazy Leverage and lose 40-50-100- 150% of your portfolio. • You will make returns more than the FD rate
  18. 18. www.nooreshtech.co.in Simples Business Raw Material Buy Lemons, Sugar Salt and Ice Make Nimbu Paani ( learn recipe) SELL at a CRICKET GROUND PROFIT Raw Material is a big criteria. Capital = Raw Material of Trading Business
  19. 19. www.nooreshtech.co.in How Much Capital Do You Need to Become a Full Time Trader How Much Capital Do You Need to Become a Full Time Trader
  20. 20. www.nooreshtech.co.in What do you Need to Become a Trader •Bank Account with lots of Money •PAN Card •Trading Account with 45 signs. •Computer/Laptop. •Software. •That’s so F$^$^$in easy. •You need 45-50 certifications to open a Hotel . •In Bull markets people want to become full time investors/traders
  21. 21. www.nooreshtech.co.in How much time it takes for others Engineering – 4 years+ Work Experience Doctors, CA , MBAs – 5-8 years. Business – Few Years to Learn and Money. Why do we Think We can Become Profitable Traders in few days/months Why do we Think We can Become Profitable Traders in few days/months
  22. 22. www.nooreshtech.co.in Lets Say you found a Strategy Which works with bearable risks. Go to Next step of Capital Needed. Lets Say you found a Strategy Which works with bearable risks. Go to Next step of Capital Needed.
  23. 23. www.nooreshtech.co.in How much do you need to Survive • Assuming you will have all your income only from markets for ease of calculation. • Start with your Annual Expenses ( Include monthly expenses + contingency fund + more ) • How much do you make in your Salary, Business.
  24. 24. www.nooreshtech.co.in Sample Example Annual Package = 12 Lakhs Annual Expense = 8 lakhs
  25. 25. www.nooreshtech.co.in Returns in a Year ? Consistently YOY 10% 20% 30% 40% 50% Stop ThereStop There Is there anyone who can make more then that consistently. Is there anyone who can make more then that consistently. I plead you to take my money and all I can borrow and give me half of profits. I retire peacefully from trading I plead you to take my money and all I can borrow and give me half of profits. I retire peacefully from trading
  26. 26. www.nooreshtech.co.in The Capital Matrix
  27. 27. www.nooreshtech.co.in WHOA – We know the capital needed.WHOA – We know the capital needed.
  28. 28. www.nooreshtech.co.in You forgot Inflation. Also you are used to growth in Salary/Business. You forgot Inflation. Also you are used to growth in Salary/Business.
  29. 29. www.nooreshtech.co.in Considering 5% inflation
  30. 30. www.nooreshtech.co.in The Big Bad Questions • Will Returns be Linear at 30% • When do you decide you cannot be a Trader. ( 30% capital loss or how many years) • Do you have an Emergency/Contigency Fund? • How will you pay up your expenses in times of drawdowns. You may essentially need at least 1 – 2 years salary in addition to your trading capital. • Will you be able to add capital with increasing inflation or do you believe that a couple of years as a fulltime trader your expected returns should increase ?
  31. 31. www.nooreshtech.co.in In Minimum case you need 5x your Annual Income. A logical case you need 10 times your Annual Income Its Advisable to add other forms of income to give comfort. In Minimum case you need 5x your Annual Income. A logical case you need 10 times your Annual Income Its Advisable to add other forms of income to give comfort.
  32. 32. www.nooreshtech.co.in How much Capital to be a Full Time Investor Considering a 2-3% dividend yield portfolio as the only income. Capital requirement = 30-50 x the Annual Income. Considering a 2-3% dividend yield portfolio as the only income. Capital requirement = 30-50 x the Annual Income.
  33. 33. www.nooreshtech.co.in Questions !!!Questions !!!
  34. 34. www.nooreshtech.co.in My Evolution 2004-2006 2007 2008 •Doing trial and error with indicators/systems etc. •Lost a lot and in debts. •Learnt what not to do. •Path to Recovery of Loss. •Doing trial and error with indicators/systems etc. •Lost a lot and in debts. •Learnt what not to do. •Path to Recovery of Loss. •Paid Debts. Got Some Capital from work. •Made lot of Money for Clients. So high Advisory Income. •Started Training. •A fresh tryst with Derivatives. • 6x in 6 mths •Paid Debts. Got Some Capital from work. •Made lot of Money for Clients. So high Advisory Income. •Started Training. •A fresh tryst with Derivatives. • 6x in 6 mths •Royally screwed – 6x to 0.5. •Sit on Cash. •Advisory/Training slows down. Clients make their own mistakes. • Capital reduced from peak. •Royally screwed – 6x to 0.5. •Sit on Cash. •Advisory/Training slows down. Clients make their own mistakes. • Capital reduced from peak.
  35. 35. www.nooreshtech.co.in My Evolution Mid 2009 2009-2010 2011-2013 •Nothing to do. No trades. •Played Cricket/Football. •Learning through smart people. •Nothing to do. No trades. •Played Cricket/Football. •Learning through smart people. •Picked the Turnaround. •Growth in Advisory/Training/Trading. •Picked the Turnaround. •Growth in Advisory/Training/Trading. •Consolidating time. •Lots of ups and Downs but nothing major apart from one big trading drawdown. •Tried a few things and luckily closed quicker before the things changed. ( Broking, tie-ups, Sales Team) •Consolidating time. •Lots of ups and Downs but nothing major apart from one big trading drawdown. •Tried a few things and luckily closed quicker before the things changed. ( Broking, tie-ups, Sales Team)
  36. 36. www.nooreshtech.co.in End 2013-2014 2015-2018 •. •Focused Effort on Trading with Higher Capital. •Strong growth in Advisory/Training also continuing the Consulting. •More Reading/Meeting People. •The Best Year – Due to Bull Market. •Trading Income – Much more important than every other revenue stream. •. •Focused Effort on Trading with Higher Capital. •Strong growth in Advisory/Training also continuing the Consulting. •More Reading/Meeting People. •The Best Year – Due to Bull Market. •Trading Income – Much more important than every other revenue stream. •Believe there is a big opportunity in next 3 years. •Major Focus on Investing for Long term and Trading on Techno Funda. •Create Wealth for Clients and Self. •Write and Train More ! •Believe there is a big opportunity in next 3 years. •Major Focus on Investing for Long term and Trading on Techno Funda. •Create Wealth for Clients and Self. •Write and Train More ! Major Aim – Be able to do what you like !!
  37. 37. www.nooreshtech.co.in Nooresh Merani Cell: +91-9819225396 nooreshtech@analyseindia.com twitter.com/nooreshtech www.facebook.com/nooreshtech
  38. 38. www.nooreshtech.co.in Cup and Handle 100100 120120 8080 140140 160160 Target 1 Target2
  39. 39. www.nooreshtech.co.in
  40. 40. www.nooreshtech.co.in Silver posted on 15 September
  41. 41. www.nooreshtech.co.in Biocon – Cup and Handle
  42. 42. www.nooreshtech.co.in Biocon – Overshoots
  43. 43. www.nooreshtech.co.in Tech Mahindra – Cup and Handle
  44. 44. www.nooreshtech.co.in Atul Limited – Entry on Breakout
  45. 45. www.nooreshtech.co.in Atul Limited – Doubled in 4-5 months Techno Funda Entry Before breakout at 440-470 and 480-500.
  46. 46. www.nooreshtech.co.in Trend Following – Technical Analysis • We as Technical Analysts consider ourselves as simple people who are just trying to follow the smart money actions on price/volumes. • We believe market is supreme and our job is to smell the news. • Buy Low Sell High Works but Supernormal Returns come with Buy High Sell Higher. • “ A smart mind takes a decade to learn that buying the highs is better than buying the lows.An average one takes longer.#Thethoughtfulinvestor “ – Basant Maheshwari ( A fundamental Investor )
  47. 47. www.nooreshtech.co.in Multi Year Trend Breakouts • You just need to get one bull cycle or a bear cycle right in a lifetime to create some serious money. • Lets look at an example of 2005-2008 how it could be seen on Technical Charts. • Will look into our older presentation ( Post 8000 boom or Doom in Sept 2005 ) in next session. • In 2005-2008 it did not matter what you bought. • In a bull market its about allocation more than selection !!
  48. 48. www.nooreshtech.co.in Nifty 2005-2008 Multi Year Breakout Signal.
  49. 49. www.nooreshtech.co.in Technical Breakout at 6400. Political Breakout at 7200/7600!! • While everyone was trying to look at how many seats does Modi get , the market had already presumed and participated. • We came out with a highly bullish report ( kept it paid ) in March end 2014. ( in next presentation ) • So the trend was clear and just see how one does not need to be smart in a multi-year trend.
  50. 50. www.nooreshtech.co.in Nifty Breakout in 2014-2018 ?!! Multi Year Breakout Signal.
  51. 51. www.nooreshtech.co.in Dow Jones and Sensex Long Term Technical Targets at 40k/77k
  52. 52. www.nooreshtech.co.in DOW JONES !! Pole-: 1932 1966 ( 34 yrs) Channel : 1942-1966 ( 24 yrs 10.8 times) Flag: 1966-1983 ( 17 yrs of no growth) First Phase: 1984-1987 ( 2 times in 3 yrs) New High: in 22 mths Top : in 17 years DOW JONES !! Pole-: 1932 1966 ( 34 yrs) Channel : 1942-1966 ( 24 yrs 10.8 times) Flag: 1966-1983 ( 17 yrs of no growth) First Phase: 1984-1987 ( 2 times in 3 yrs) New High: in 22 mths Top : in 17 years SENSEX • Pole-: 1979-1992 ( 13 yrs) • Channel : 1988-1992 ( 4 yrs 10 times) • Flag: 1992-2005( 13 yrs of no growth) • First Phase: 2005- 2008( 3 times in 3 yrs) • NEW HIGH : Same high in 24 months . • 3 years of sideways move. • TOP : ( Ideally by 2018 Minimum 27k-32k or 77k.) SENSEX • Pole-: 1979-1992 ( 13 yrs) • Channel : 1988-1992 ( 4 yrs 10 times) • Flag: 1992-2005( 13 yrs of no growth) • First Phase: 2005- 2008( 3 times in 3 yrs) • NEW HIGH : Same high in 24 months . • 3 years of sideways move. • TOP : ( Ideally by 2018 Minimum 27k-32k or 77k.)
  53. 53. www.nooreshtech.co.in A terminal breakdown below the trendline before the big rally A terminal breakdown below the trendline before the big rally A terminal breakdown below the trendline before the big rally A terminal breakdown below the trendline before the big rally A long parallel channel A long parallel channel A long parallel channel A long parallel channel Almost Double Bottom close to trendline Almost Double Bottom close to trendline
  54. 54. www.nooreshtech.co.in A terminal breakdown below the trendline before the big rally A terminal breakdown below the trendline before the big rally A long parallel channel A long parallel channel A terminal breakdown below the trendline before the big rally A terminal breakdown below the trendline before the big rally A long parallel channel A long parallel channel Almost Double Bottom close to trendline Almost Double Bottom close to trendline
  55. 55. www.nooreshtech.co.in Sensex/Nifty have started a Bull Market. What about Corrections ?
  56. 56. www.nooreshtech.co.in Corrections in 2005-2007 Bull Market If only Sensex would go up one way it would be so easy. Stocks do more 12% Dip 13.2% Dip 30% Dip 16 % Dip 13 % Dip
  57. 57. www.nooreshtech.co.in Nooresh Merani Cell: +91-9819225396 nooreshtech@analyseindia.com twitter.com/nooreshtech www.facebook.com/nooreshtech

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