March 12, 2020

So how much money did I make in this correction?

NIFTY has corrected from 12400 to 9700 in a few weeks so how much did I make?

Mutual funds:

I invested around 10000 and exited all  investments around 12200 and started SIP yesterday (nifty 10500)... I plan to do this for another 1-2 years.

Reason for exit was very simple... PE around 28+ and markets near upper end of rising wedge on weekly charts. I also had a target of 10000 on nifty (rising wedge).

This has been mentioned in my bog posts for many weeks/ months.

NIFTY options:

I profited very well till 11500 and then the volatility kicked me out of trades. Since then I am sitting on sidelines and not trading at all.

Before you jump in say - what's the use of a system if you cannot make money... here is my answer:
- I am mostly an intraday trader and rarely take positional trades
- my systems have been giving signals every now and then in every market and every timeframe
- I take positions depending on the risk in every trade and depending on the location of the signal
- but now the very risk management rules are forcing me to do nothing
- my strategies work well when volatility is low/ medium
- the whipsaws and losses can run very high if nifty swings 50-100 points in few minutes
- today VIX jumped 30% and is now at 40+
- my min SL in any option would be 50-80 points... cannot and will not trade in this environment

- earning money is no big deal... protecting what you have earned is more important
- above takes years to understand
- see anyone who has earned a lottery or got VRS...few years and the money is gone
- eg..many traders see whole europe, asia deep in red and they jump and trade 4-6X times their regular qtty.
- when these traders get stopped out, the losses exceed what they have earned in prev sessions
- in volatile markets, you should be trading 1/4 your regular qtty or not trading at all

- this volatility will eventually drop (mean reversion)
- and opportunities will come again
- I am happy with 30-40 points (or even lower)

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