Trade in Your 20s – So let’s extend that in this post and talk about Trading. In the last post, I said that we would do the same thing related to trading. There is an age in trading. It’s an important parameter. But except for age, there is one more parameter that we have to understand part-time and full-time. Not a significant role of part-time and full-time in investing. Obviously,
The more full-time you do, the more chances to be successful is more. But in Trading, there are two different things, two different concepts, and what you can do part-time, you cannot do full-time, and vice-versa. So I remember that I used to do trading when I started my trading journey. At that time, I was approximately around 26-27 years So I was that mature to handle myself. But after that, when I made my trading desk,
I recruited people so that they could do trading on my behalf. So I remember one person, who was 16 years old and probably passed class 10 exams and he didn’t love studying. So his parents sent him to me. So I kept him with me and told him to sit and do whatever I did. So he just sat with me for 1.5-2 years and used to do my penny work. I used to make him shift my keyboard or watch my computer and tell him that If this falls, tell me. So he just used to sit near me and observe, and he observed the same for 1.5-2years. at the age of 17-18, he came to me and said that he wants to become a trader, and I have learned sitting next to you,
so I understand. So he asked, ‘ should I trade too?’ So I thought, should I make him try? So at the age of 18, he passed the exam of the NCA firm, or might be he didn’t give, I might have given my ID for a trial basis, and he started trading. What trades he used to do! He was one of the youngest traders who made a lot of money. So age is not a barrier in trading for us. But your body knows your age, and our age is degenerative. We know about this too. Generally, the trading journey graph moves like this. You become a bit conservative; you work safely on strategies. And I will discuss with you the types of strategies.
what are the typical strategies a trader uses? So I am trying to map it. So when you start, you start by being conservative, softly, but as your age starts 25-30-40, you want to be aggressive. Because your risk appetite is high, and this is the only age where you can break free because your EMI expenses are less, Basically, you can take risks. And when you become 35-40, you peak, and slowly you come back to conservative mode.
So this is a typical trader journey. Now let’s add one more dimension to it, part-time and full-time. Obviously, if you are full-time like that person who used to sit with me, his peak journey came a bit more before. So the graph becomes flat. Generally, it’s like this. When you are a full-time trader, the chart starts with a steep rise and flat for some time, and then falls. So the above peak time goes on for a long time because when you are a successful full-time trader, you can do trading for a long time.
And that flat journey is usually from 30-40 where you are full time. You have given your whole body into it. You are in the market for 15-18 hours and making trades to make money. So that peak can go on for a long time if you are a successful trade Now, when I start, I start with becoming a passive trader. And let’s talk about part-timers once. Passive trader means you want to analyze the market every week and work in the cash market. And if a trade comes during the weekday, I want to trade in that.
There is software like TradingView. Over there, you can work on alerts. So weekend trading is done when you start at a young age because you are conservative. Plus, capital is even tiny. A maximum of 100,000 money can be there with an 18year old boy. The family even doesn’t give money for trading. We can provide it for studying. It is not such an occupation that is welcomed by households. So we start with small capital, and as we become 25 years, our own money starts building up, and we start our own decision-making. And experiment with derivatives. Why so? Because it has the inherent advantage of having leverage.
So, if you have your own capital, a person with 25+ might have savings of 4-5Lacs And if you want to do leveraging on that capital and generate more on that leverage, then only you can generate 50-70% return. Because if I don’t generate more on small capital, what will be the benefit? So the journey from 18-24 It’s more of learning & testing because it’s like freestyle swimming, but after 24, you become aggressive like a butterfly stroke. After 25, when we talk about 30, we completely understand the market. So we start deploying risky strategies. When you are 23-25, you are more into technicals, but as you mature, you spread strategies in options, greek based trading
So options trading, pair trading, quantitative trading, all these can be started at the age of 30 And you deploy 20-25lacs at the age of 30. If you are full-time, then you generate huge returns up to 80% And 25-35 lacs of capital at the age of 30 and, depending on the trader, at the age of 40, convert the amount into crores, some huge and some less. A trader targets revenue of 5-10crores in that 30-40year journey. Why? Because if someone is involved full-time, he obviously generates a good return.
If I am into work full-time and do not make money, then how will I get the value of the time I am giving? Plus, there should be a return for the stress that I am taking. So we have to see peace adjusted return along with a risk-adjusted return. So we target to generate a 50-60% return on the capital if we are full-time and of age 30-40 And if I’m part-time, I target a 20-22% return annually, and then my work is done. Passive trading is not a whole day of trading. It has less involvement in derivatives. Active trading means daily into derivatives.
Because it has leverage that can help you generate better returns. Now, after the age of 40, the body gives up So after that, we enter into a strategy which does not involve whole day trading like me, whose positions have been built due to huge capital. When you convert that 20-25lacs into 5-10crores, so with significant capital, you won’t trade daily. You become a passive trader, taking limited positions but in huge quantities. So now the target is not 60-80% return. Because if you have 25-30crore capital, then we have to generate 20% return which means my risk profile even decreases.
So we start to focus on the strategies. Some people adopt Algo-trading and code the whole thought process in which there is high income and less stress. After 50, you can understand that the body has given up, so you have to chill. And the new ones should even relax. The strategies after 50 are usually covered called systems, buying in the cash market, and selling in the options market. Generate additional returns means which has less risk and certainty of money-making is more.
And when you become 60-70+, you start to talk more with value. Engage with the market but with the objectivity of making no money. The objective is to give reasonable time to it. And empty brains bring illness, so watch the price. The objective at that time should not be to make money. So, start making little money and stay active in the market. Like people watch TV, you watch the market. So you might have understood the trading journey, So as a trader, this is your graph, and you have to follow this only. As an investor, the journey is different. Can people do both? Some have superpowers to do both. But my opinion would be to choose 1 path. Possible that you will have to change the path.
So you will have to do experiments. Possible you succeed in the first one. If not, then switch to the other one. By experimenting, you will know what are you best at! Investor or active/passive Trader? When you understand this, it would be the EUREKA moment for you to learn the correct way to earn money. I hope you liked it;
Thank u guys , I hope you liked this post,
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