Blog

My Diary

Second chance, some are not worthy?

I have a trading strategy, a simple trend-following strategy, nothing fancy. I wanted to test if this works or not in real markets. The test markets were India. Being in the UK, I get the benefit 1 GBP to >91 Rs.

I funded my cousin’s account with circa £200, and he tries my strategy, follows the rules to the T. Result is a 60% success rate, which is decent. However, being a civil engineer, lockdown all helps him stay at home and focus on the markets; this is not sustainable. Disruptions are many during the lockdown as well. Many telecons to attend and his primary job is the focus.

With limited data, the results are positive. Next step is to see whether I can find someone that can trade full time? I got lucky; I know my brother in law, let’s call him BILL. He’s never managed to earn a decent living, has never held a decent job – maybe he does not like to work under/for anyone, I don’t know. He’s tried trading commodities in the past, circa 2008. He’s lost a lot of money. I do not know which strategy he was using.

Based on all the points mentioned above, I pitch the idea to Bill. He’s excited. He understands his record may not fill me with confidence,e but he’s determined to start from scratch.

I believe in people, I feel everyone deserved a second chance.

To start live trading the following needs to happen

  1. Open a trading account with my preferred broker
  2. Paper trade in the background for 30 days
  3. Keep a record of all the trades made with profit and loss statement along with a short explanation to open and close the trades

I think the plan is simple and does not ask too much. If everything goes to plan, I invest Rs. 50,000 over three months, whatever the profit, is split 50-50.

After four weeks

  1. The trading account is opened with Bill’s friend’s recommendation of a completely different provider
  2. Paper trading is complete
  3. Records are kept of trades only but the explanation is given for opening and closing of these trades. The result are Rs.48,000 gross profit trading 1 lot of Bank Nifty futures.

I am not happy that out of the three points, only 1.5 are achieved. The results, however, are promising, Rs. 24,000 share (50% of Rs. 48,000). Could can assume, maybe greed got the better of me? I do not know. I convince myself that it is OK to proceed even with 50% achievement of agreed goals!

I send the first lot of Rs 20,000. Bill is thankful and promises to uphold my confidence in him. He aims to be a professional trader. After a couple of days, Bill confirms, for him to access futures and options markets, he needs to make 1 equity trade worth Rs.5,000. I ask him to buy and hold shares of ITC, the price of ITC was Rs.195 and with Rs.5,000 he could buy around 25-26 shares. This goal is agreed.

A couple of days pass, Bill reports saying the platform of this new broker is something he’s not familiar with, but he’s asked his friend to make the equity trade. I assume its OK, but I confirm his friend is going to buy ITC. The answer is NO! His friend has bought some other low-risk stock!

I think this is the final nail in the coffin. I pull out of the project.

As a novice trader, I know one has to cut their losses short, and this venture was just that. My objective was to lend a hand to Bill and get him started on a journey which would generate a source of primary income for himself, and I would passively save for my expenses for my trips to India. This was not to be.

As they say, you live, and you learn. The search for a partner to trade in Indian markets continues.

The process remains the same. The outcome however will still be unknown. If the outcome is what I desire then we have hit the jackpot, or else we pick ourselves up again, dust ourselves off and keep on trying!

 

 

Leave a Comment

This site uses Akismet to reduce spam. Learn how your comment data is processed.