I Am a Software Developer and a Passionate Trader
Over the past five years, I have explored nearly every aspect of trading—technical analysis, intraday trading, MTF, pre-IPO investments, options selling, F&O, hedging, swing trading, long-term investing, and even commodities like gold and crude oil.
Through this journey, I realized that **technical analysis is only about 20% of the equation**. The real game is **psychology and mindset**.
I have distilled my learnings into concise points below—insights that have shaped my approach and will continue to guide me in my version 2.0 of trading. I hope they prove valuable to you as well.
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### **Position Sizing**
One of the most important aspects of trading is choosing the right position size. Your trade should never be so large that it causes stress or worry. Keep it at a level where you can stay calm, no matter how the market moves.
### **Set Stop-Loss and Target Before Placing a Trade**
Decide in advance when you will exit a trade—both at a loss (**stop-loss**) and at a profit (**target**). This helps maintain emotional balance, preventing extreme excitement or frustration.
### **How to Calculate Position Size**
- Use **technical analysis** to identify your **stop-loss** and **target**.
- Example: If CMP is ₹100 and your stop-loss is at ₹94 (₹6 risk per share), determine your risk tolerance:
- ₹3,000 risk ➝ **500 shares** (₹3,000 ÷ ₹6)
- ₹1,200 risk ➝ **200 shares** (₹1,200 ÷ ₹6)
- Adjust quantity based on how much you're willing to risk.
### **Setting Target Price & Risk-Reward Ratio**
The most important factor in setting a target is the **risk-reward ratio**. If your stop-loss is ₹6, your target should be at least **₹6, ₹9, or ₹12**.
### **Why Is Risk-Reward Important?**
Let’s say you take **10 trades**—5 go in your favor, and 5 go against you. If your risk-reward ratio isn’t favorable, you could end up in a loss.
Example:
- You **lose ₹6** in two trades → ₹12 total loss
- You **gain ₹3** in three trades → ₹9 total profit
- **Net result: -₹3 loss**
To ensure profitability, your **reward should be equal to or greater than your risk**. A **1.5x or 2x risk-reward ratio** is ideal.
### **Flexibility in Targets**
Even when the price reaches **Target 1**, you can **book partial profits** and let the rest run with a **trailing stop-loss**.
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### **Managing Multiple Trades**
This is **very important**. If you're a beginner, **limit yourself to 2 trades**, and even if you're a pro, **avoid more than 3-5 positions**.
**Example:** If you have **₹2 lakh**, make sure you have **only 2 trades open at a time**. Add a third stock **only when you close another position**.
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### **How to Deploy Capital**
Patience is key. If you have **₹1 lakh**, **divide it into 4-5 parts** and buy **in small chunks over time**.
**Why?**
The **nature of stocks** is to move in waves—rising, facing profit booking, then breaking previous highs. Instead of investing everything at once, **buy in staggered amounts** to ensure your **average price stays close to CMP**.
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### **Avoid Market Noise**
When trading, **stay in your zone**.
Social media posts can make you feel **slow compared to others**, but they don't show the full picture. Avoid distractions like:
- Direct stock tips from **news channels**
- P&L snapshots from traders
- Following too many **analysts on social media**
Instead, **listen to expert views**, but stay disciplined with **your own strategy**.
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### **Stock Selection**
Stock selection has **two elements—technical and fundamental** (I'll write a separate post on this).
Always **buy a stock that you can hold even in your darkest times**.
**Example:**
- Choose **blue-chip stocks** with **high market caps & strong promoter holdings**
- Never **buy a stock just because it’s in momentum**
- If a stock **turns into a forced SIP**, it’s not a good buy
Pick stocks with **a long-term story**—even if you fail to exit at the right time, you should be comfortable holding them.
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### **Accept That It’s the Market, Not You**
Many traders fail because they **don’t admit that the market is unpredictable**.
Losses happen because of volatility, not necessarily poor strategy. **Example:**
- You lose a trade and **try improving your method** but face another hit
- Some losses **are simply beyond your control**
Most of what happens in the market is **not in your hands**—including stop-loss triggers. **Accept this reality,** and focus on **risk management** instead of revenge trading.
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### **Keep Separate Trading & Investment Accounts**
Trading and investing **are different**. If you keep them **in the same account**, you’ll:
- **Book small profits** on investments
- **Hold short-term trades in losses**
Having **separate accounts** keeps **your goals clear**.
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### **Don’t Let the Market Dominate You**
Even full-time traders **shouldn’t obsess over the market**.
Limit your **screen time to 2-3 hours during market hours**.
**Why?**
- You can’t **act on global markets until 9:15 AM IST**
- Even if a **war or tariff issue** arises, **you can’t do anything until market open**
- Overthinking leads to **over-trading**, which drains money
Instead, **invest time in developing new skills**.
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### **Do What Suits You, Not Others**
If you're good at **swings, stick to swings**. If you're good at **intraday, do intraday**.
Don't follow **what works for a friend—trade based on what suits you**.
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### **Avoid FOMO**
Don't **stress** if a stock jumps **20% in a day**.
Stock **accumulation zones, demand/supply areas, profit booking**, and **retests** happen **regularly**—opportunities will always come.
Even traders who claim they made **20% in a day** **don’t share how often they got trapped chasing stocks**.
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### **Stop-Loss Is Your Best Friend**
No, stop-loss is your **best friend for life**.
**Example:**
- Suppose you **enter 10 trades in a month**.
- **6 do well** and you book profits.
- **4 go against you**, but instead of exiting, **you hold** because you believe they’ll recover.
- Next month, you **repeat this cycle**—adding more positions.
Over time, **this builds a portfolio of lagging stocks**, and suddenly, **your losses dominate your portfolio**.
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Even Experts Face Losses
Even professionals with **advanced research teams lose money**.
Retail traders often **believe they can avoid losses by analyzing a few ratios**, but **losses are part of trading**.
A stop-loss ensures **you stay in the game long-term**—instead of holding onto losing trades indefinitely.
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Take a Break & Restart
Taking breaks is **crucial**. If everything is going wrong, **don’t hesitate to press the reset button**—step back, analyze, and refine your approach. A fresh mindset leads to better trading decisions. (I’ll write a detailed post on this soon.)
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.