New Delhi (India), April 17: Options trader Sourabh Sisodiya shares his insights and experiences in the stock market in a recent interview. Sisodiya is a Bachelor of Engineering in Information Technology from the University of Mumbai and a CFA charter holder. He has trained and consulted multi-million dollar trading desks on system-driven trading and has also traded his own capital. Here are some highlights from the interview:
When asked about the qualities that make a good trader, Sisodiya emphasized the importance of emotional discipline, strong risk management, and the ability to ride big trends. He believes that trading is more about emotional discipline than trading strategy. He mentioned that he continuously backtests, researches, and optimizes his strategies with changing market regimes. Currently, he is working on machine learning models using CNN to find non-linear patterns from multi-dependent or independent variables such as moving averages, RSI, and VWAP.
Sisodiya shared his best trade in August 2016 when he heavily shorted Just Dial. He had been tracking the company for a while and noticed a decline in its Alexa rank, declining interest in JustDial, and technical weakness. The stock dropped by 40% in a couple of months, and he made a whopping 300% return on his capital in just two months.
On the other hand, Sisodiya also shared his riskiest trading decision when he suffered his highest intraday loss of 18 lacs (1.8 million) due to illiquidity risk. Since then, he has never traded in any illiquid counter and only prefers to trade in Nifty & Banknifty, which have sufficient liquidity.
When asked about his golden rules of trading, Sisodiya mentioned being with the trend, winning more when right and losing less when wrong, and managing risk at all times. He deploys various options strategies such as iron condors, ratio spreads, and trend-following to capture big trends and profit from theta decay for consistent income.
For aspiring traders, Sisodiya advised starting small and sticking to a selected list of stocks and strategies. He also recommended developing their own edge, not looking for a holy grail, and not getting influenced by fat mark-to-market screenshots that are shared these days on social media. He encouraged reading 'The Market Wizards' and seeing which trader they can most relate to or like.
In the next five years, Sisodiya plans to give back to the trading community, particularly to aspiring traders. He has started an initiative called “Finsense” to spread financial literacy across the country. The initiative provides practical self-paced courses with real examples and case studies on financial markets that will enable people to be their own advisors and make independent investment decisions backed by data.
Overall, Sisodiya's insights and experiences provide valuable lessons for traders and aspiring traders alike. Emotional discipline, risk management, and trend-following are critical qualities for success in the stock market. Developing one's own edge, sticking to a selected list of stocks and strategies, and managing risk at all times is essential for aspiring traders. Lastly, giving back to the community and spreading financial literacy can help more people make informed investment decisions backed by data.
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