December 9, 2018

This options trader has a unique strategy to double money in 2 years — check it out

I went to the US and got trained with the best. I enrolled for a course with SMB Capital founded by Mike Bellafiore author of One Good Trade and The Playbook, for a structured program in trading. I also went through the course offered by the famous Dr. Van Tharp.

SMB has a very intensive and structured training program where they take you through the entire trading process. We worked from 6.00 in the morning to 9.30-10.00 pm every day. Those under training were attached to one of the 6-7 super traders who were all multi-million dollar traders.

Every morning the super traders came up with a list of what was called ‘stock in play’. These were based on analysis and certain setups which picked up stocks that the team felt was likely to see increased activity during the day. The team leader would then discuss it with his team and how they should handle it.

These were generally intraday or swing trades which the traders held for 2-3 days. I was not comfortable with this trading style. One day, during lunch Seth Freudberg who was heading the options desk asked me if I had ever traded options. Since I had not he asked me to try it out.

I took to options more easily and learned many commonly used and proprietary strategies used by traders in SMB Capital under the mentorship of Seth.

Dr. Van Tharp’s training helped me with the psychology aspect. The training session helped in analyzing myself, to understand my strength and weakness. It helped clear up the path in for me in knowing what kind of trades I can do and what I cannot. For me one of the main takeaways was I knew what not to trade. Another important thing I picked up was the importance of position sizing.

These training helped cut down my learning curve by at least 3-4 years.

I traded the US markets for nearly two years and along with it the Indian markets. However, I soon realized that trading options in Indian markets are different than that in the US markets. Strategies that worked very well in the US markets were not giving the desired returns in India.

The main reason for this is the strange margining system we have in India. In a defined risk strategy, say a spread, the margin to be paid in the US was the spread between the strikes, but in India complete margin on both the legs of the trade is needed. This makes a number of strategies like the butterfly or the Iron Condor unattractive.

As trading both the US and Indian markets was stressful I decided to hone my skills in the Indian market.

Read more at https://www.moneycontrol.com/news/business/this-options-trader-has-a-unique-strategy-to-double-money-in-2-years-check-it-out-3267041.html

For many of his trading strategies, I strongly recommend following his twitter handle at https://twitter.com/KatariyaPran

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