Let’s talk money. This is new to my blogspot and so is this experience. Variety spices up life and no harm in spicing up mine with a little risk and speculation. If you haven’t yet guessed what this post is leading to, its stock market. Unfortunately, I don’t find much company among lady folks in matters of finance and trading, who by far have made histories with their shopping sprees. Hold on lassies, trading is shopping too, a different kind but interesting nevertheless. Addressing to ladies doesn’t make all guys financial gurus either. I was talking in terms of relativity and with the excitement of a newbie. As an occasional player with ICICIDirect since I started working, I cannot really call myself a newbie. But intraday trading and margin trading is definitely new to me and I’m drawn towards it more for the strategy than the money involved. At any day, I might do it even with mock money. Let me see if I can succeed luring some more into the Indian stock market which after recovery from recession is progressively shooting up. Its game time! Let’s learn to make some pocket money!
Stock market is gambling, I’ve heard many say. I was under similar belief until I started looking into it closely myself. Now, I understand that stock market is gambling to those who trade without knowing the know-how, who trade without a game plan, who trade with greed. For the others, it is 80% strategy and 20% luck. If you had loved Mathematics in your childhood, trading is surely your cup of tea.
As a fresher while at Infosys, a senior introduced me to trading world. Since then, I bought and sold stocks based on suggestions given by experienced friends and colleagues. I was never able to cross my fingers on any stock on my own and make decisions. I always found that no matter what, I kept making more losses than profit while the suggestion makers weren’t suffering my fate. As quoted by a friend, I made tea-money and lost petrol-money. The whole market cannot definitely be watching me to make sure I book loses, can it? With recent recession and scandals, I almost gave up and went dormant on trading for a year until last week when I finally found the fundae of margin trading.
Margin trading is risky, very risky and that is what makes it all the more interesting. One can become a millionaire or a pauper in a day but that happens only when we play with huge money. In lesser volumes, you can make some side money for a Friday evening date, if you are at the same time ready to tolerate taking the bus instead of an auto on losing days. Got the idea? I was doing such small trading, gaining Rs.252 on one day and losing Rs. 60 the next, gaining another Rs.115 and losing Rs. 104, happy and contented. It was only last Friday that I experienced the gush of adrenaline by trading big time which was what that drove me to write this post before the ebb subsides.
I checked my portfolio on Friday morning as usual and went on to see the top gainers and losers. There was this company ‘X’ (no revelling names) that was under 22% loss in a single day. The open price was Rs. 219 and the stock was currently traded at Rs. 180. Surely, a company cannot lose quarter of its fortune in a single day without scandals or announcement of quarterly results or stock splits. I believed that a bubble was broken because of speculation and that the stock would rise at least by a few rupees by the end of day. With margin trading, I would be able to buy ten times more stock than the money that I put in. I placed a buy order for 50 shares of X @ Rs. 181, hoping that even if the stock hits Rs.190, I’d make Rs.450 profit, excluding brokerage. What I did not know was that SEBI had banned that stock from trading and the price fall was a result of that.
As the day progressed, X continued to keep falling down. I was slightly worried and to neutralize the loss, I bought another 50 shares of X @ Rs. 173. I was under the impression that the opening of the European market at mid-day would change the fate of that stock positively. The European market opened at 1:30 PM and contrary to my expectation, the stock started falling further down, making a loss of almost Rs.1,500 for me certain. I am a common man, okie, a common woman and Rs.1,500 in a day is big. I had two options. I could either book losses and exit or convert the stock to delivery and hold it for long term to recover losses. Though I felt forced, I wasn’t inclined on doing either. That’s when this great risky devilish idea popped up into my head.
The X stock was then trading @Rs. 160 levels which was close to the day low. If I bought a bulk of it now and sold it at a strategic point, I can still cover my losses. The stock was very volatile and every second made a huge difference. With some guts, I bought 1000 shares of X instantly. Since I was doing margin trading, I had to have Rs.16,000 in my account and I could actually buy Rs.1,60,000 worth of stocks. If the stock price increases by Re.1, I make a profit of Rs.1,000. On the other hand, if it goes down by 1, I lose Rs.1000, increasing my net loss. Converting the stocks to delivery was ruled out now, come on, I didn’t have Rs.1,60,000 to buy it all.
This happened at 2 PM. Since then, my adrenaline levels were so high and my fingers got cold. My eyes were glued to ICICIDirect, refreshing the page twice every second and willing the stock to rise by Rs.2 to save my neck. The stock was so so volatile that every wink caused a difference. If I were wired up to a cardiac monitor, you could have seen a curve more drastic than the market curve itself. I got lucky at 2:30 PM, that the stock slowly rose from Rs.160 to Rs.164. With no delay, I sold it all off and exited from the market, making a profit of Rs. 4,000. Covering previous losses of the day and brokerage, I still came out alive with a net profit of Rs. 1,600 and I was like YIPPEEEEEEE!!!!
Phew! That was one hell of an experience, risking Rs. 1 lakh and 60 thousand, when I realised how people freak out about the market or yell a cry of joy. I experienced it for real. The excitement didn’t leave me till the end of day that I went on endlessly narrating the details to my husband who got scared and excited as well. Infact, the excitement hasn’t worn out at all. Why else am I saying the same story here again?
We celebrated our profit with a superb luncheon at ‘Barbeque Nation’ on Saturday. For people who do trading, I’m sure you can understand what I am talking about and for others, the last couple of paragraphs would have been jargons. Don’t worry, stock market is not rocket science or complex formulae. All you need is a little money to play and lots of logical mind to analyse practically. Want to learn more, come to me for tuition and as a typical trader, I’ll give you gyans for a commission (Just kidding)!!! Try it folks! If not for monetary gains, you’ll experience an excitement equal to waiting for Sachin’s century in the last few overs. What’s life without a little excitement?