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How to learn Day Trading as a Beginner in 2021?(ft. Nikhil Kamath) | Books to Read, Free Resources.. - YouTube
Channel: The Urban Fight
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Trading sounds like a great profession, right?
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It DOESN'T ask for any Educational Background,
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you can make some quick money by just being online
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for few hours a day,
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and it doesn't need any Human Interaction!
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So the pandemic can go to hell..
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because you can't lose your job!
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BUT... that's not the whole story.
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Nikhil Kamath has been doing it for more than 17 years now,
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which is why this video will be incomplete without Nikhil sharing with us
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his experiences and learnings of becoming a trader.
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So Ladies & Gentlemen, it doesn't matter if you
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want to be a full-time trader or a part-time trader and
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don't know anything about trading,
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today by the end of this video,
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you'll know exactly where to start
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because in today's video we are going to see..
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6 simple steps you can take as a beginner,
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to become a day trader.
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And towards the end, I'll give you a Bonus Tip
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so that like most traders..
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you don't lose all your money in the Stock Market on the first day.
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And as always, if you like the efforts we put in,
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in making our videos, then make sure you hit that 'like' button..
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Let's begin.
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First, let's start by understanding, what is trading?
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In the Stock Market, there are 2 major types of participants..
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Investors and Traders.
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Long-term Investors (like myself), identify good companies
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and hold their stocks for years, hoping that their value will increase over-time.
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But Day Traders, buy and sell securities and sell them on the same day
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with the goal of making a profit.
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You might've heard that statistically
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>95% of traders lose money.
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Because trading is risky.
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So if you are a beginner, here are the six things
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you can do so that you don't commit the same mistakes
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as those 95%.
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Step #6: Follow the News
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What's interesting is that, all types of news...
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Local, National and International have the power to affect the Stock Market prices.
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News like...
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Vaccine Production,
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Company Merger,
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Rupee vs Dollar rate,
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Union Budget,
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Elections,
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even Rain Predictions.
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So as a beginner, your job is to first follow news regularly
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and observe how it is impacting the stock market prices.
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Which companies are getting most affected and how.
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Now, the question arises...
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what kind of news resources to follow?
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So don't go by news sites where they are recommending
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you buy or sell a certain equity,
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but rather pick news sources which are
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a little bit more objective about data.
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There is a website called screener.in which is decent.
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Finshots are great. Finshots put financial articles in a
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manner that simplify.
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But I would say you can find everything for free out there.
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There is no reason for you to go pay,
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2000 or 3000 USD per month to get a Bloomberg terminal.
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If you were to look and research,
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you will find free sources which are very good.
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The most obvious free source is Google News.
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You can follow the business news in particular.
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For company specific news, check out screener.in or Ticker.Finology.in
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and Finshots newsletter for getting your simplified
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daily dose of the market.
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As a beginner, you can start with these
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and the more you read,
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the more personalised favourite resources you will find.
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Step #5: Read some Books!
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There are high chances that you are here, because..
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some Movie or TV Series
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has gotten you interested in the Stock Market.
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But if all that trading jargon has gotten you confused, then
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here are some books that can help..
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Try Jack Schwager's 'Market Wizards', he has a couple of them.
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There is 'Reminiscences of a Stock Operator' which is decent.
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In these, traders talk about what they did,
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so they are quite interesting. They are like story books.
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If you want to do something more Fundamental in nature,
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you can read Graham's 'The Intelligent Investor'.
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If you want to do something technical in nature,
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I think Candlesticks are a good place to start.
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So may be Steve Nison's books on Candlesticks.
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I've left the Amazon links of all these books in the description.
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These books will help you understand some basics,
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a little bit about fundamental analysis,
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a little bit about technical analysis,
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which in turn, you can use to build your own trading strategies,
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which brings us to Step #4..
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Learn Risk Management.
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You must've heard a lot of people referring to trading as...
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Gambling!
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But the difference between a trader and a gambler is...
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Risk Management.
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To give you an example..
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Some traders might put all of their trading capital, say..
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Rs. 20,000 on 1 stock (XYZ) hoping that it'll go up by 5 points.
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But they don't prepare for what will happen if it goes down.
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But Risk Management, allows you to protect yourself
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when things don't go according to your plan.
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Let's ask Nikhil how he manages his risks
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so that he doesn't loose as much, even on those 'not so good' days.
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Very simple rules that I think everybody needs to adhere to...
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The more you leverage, the easier and the more
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likelier the odds of you losing the money are.
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So try to shy away from leverage.
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Having a Stop Loss is a good rule.
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If you are buying something at 100,
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you might be right 5 times, wrong 5 times.
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When you are wrong, you need a stop loss.
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So if the 100 becomes 90, you kinda exit it.
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Another great rule out there, is to diversify.
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Never put all your eggs in one basket.
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If you have 100 rupees to allocate, buy 10 different things..
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Just stick to Large-Cap, diversify as much as possible is
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probably the best risk management one can do.
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So as a beginner, here are some things you can learn
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to control your risks as a trader...
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Learn some basic terms and concepts, like..
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Risk Per Trade,
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Risk to Reward ratio,
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Position Sizing, Risk Capital..
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As Nikhil mentioned, always have a Stop Loss for all your trades.
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To understand, what is Stop Loss and how to place it
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while you are trading in the Stock Market..
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watch this video, which shows in a simplified manner
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how you can enter a trade, along with a Stop Loss.
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I've left the link of this video in the description.
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Open a book and journal all of your trades.
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This will help you discover your trading style,
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what kind of companies you like trading in,
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what trading strategy works best for you and so on...
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Yeah, I think journaling your trades is a great idea. It is.
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I think the entire intention with trading has to be,
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to be able to learn from what you did wrong,
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and journalling plays a huge part in it.
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As a beginner, you need to understand that
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trading is not about the money you make,
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it's about the money you protect.
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And the more money of yours you protect,
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the longer you can stay in the game.
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Step #3: Learn Fundamental Analysis
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Before I tell you why, let's first
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hear from Nikhil how his trading strategies
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have evolved overtime.
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When I started, Fundamental Analysis
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was what ruled my trading mechanism for the first few years,
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this was followed by technical analysis,
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beyond that I got into a little bit more
quantitative stuff.
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Correlation and Mean Regression when things
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kinda become volatile very quickly, how you benefit from that.
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That was followed by Sentimental Analysis.
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Kinda trying to gauge sentiment.
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At the end of the day, the price of a company either goes up or goes down
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not based on all of the other metrics we just discussed
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but based on people and sentiment.
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So I went through these 4 phases largely,
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each lasting a couple of years.
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Now, I feel like a combination of the 4 works for me.
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So yes, Technical Analysis is at the core of trading
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but if you are new, it's good to start by understanding
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how to evaluate the true worth of a company.
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And what helps you do that?
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Ding ding ding... Fundamental Analysis.
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So as a beginner, here is what you can do..
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Pick a large-cap company,
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especially from the sector you are familiar with.
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Let's suppose you are from I.T.
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Then may be pick TCS or Infosys
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and add them to your watchlist.
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On one hand, perform fundamental analysis of this company, like..
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read their balance sheets, read about their management..
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And on the other hand, observe how current news
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is fluctuating its market value.
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Yup, combine it with Step #6.
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Now, how to do this?
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Again, for that.. watch this video, which will help you understand
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how to add companies to your watchlist.
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People might say that Fundamental Analysis is not important for trading..
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But this will help you understand the personality of those stocks better..
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which inturn will help you make better trading decisions.
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Infact, I want you to comment below and commit to making a start..
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by telling me, which company you are going to start with first.
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For example...
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Step #2: Avoid Trader Bad Habits
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Even before you enter the market, remember to avoid these
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common trader bad habits that make them lose too much too soon.
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Some of those mistakes are..
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Trading based on 'tips' or 'alerts' from random chat rooms
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instead of doing their own research.
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Not following a trading plan and instead,
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making random trades when the market opens
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that are driven by emotions like fear, greed or worse..
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boredom.
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Failing to plan for failure a.k.a
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not doing any Risk Management.
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And this is a big one...
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Trading with their Living Expenses, instead of their disposable income.
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Let's ask Nikhil what bad habits he has observed among traders...
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I think all of what you said is a bad habit. But..
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none more so than leverage.
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I think that is the biggest killer in the stock market.
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Don't try and mimic what someone else is doing or recommending.
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Generally, if somebody is recommending you 'BUY' something,
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if their trading system was working
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they would be out there trading and not recommending.
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You could flip a coin, pick a large-cap equity
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and you would do reasonably okay.
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The rules behind it...
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I think what you do after you buy
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become significantly more important.
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Don't let emotions weigh you into thinking..
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you made the right decision or the wrong decision, but...
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buy something, put a Stop Loss,
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retain the ability to delay gratification,
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follow your rules and I think you'll do okay trading.
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Step #1: Learn how to use a trading platform.
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Obviously, the first step to trade is to open a trading account and
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learn how to use the platform.
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And the reason why I showed you the watchlist today on the Zerodha platform
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is NOT because I interviewed Nikhil Kamath
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but because I use Zerodha for investing
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both in Stocks and Mutual Funds.
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Especially because it is India's #1 discount broker in terms of active clients.
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And this one video, will take you through the entire process
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of how to open an account,
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how to execute your first trade
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and how to make your first investment using Zerodha.
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I am overwhelmed with all the love this video has received,
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inspite of being so technical.
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So incase you haven't watched it already,
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then I've left it's link in the description.
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Do check it out.
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Now, before I give you the Bonus Tip,
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if you've liked today's video..
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then tell it to the Youtube algorithm
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by hitting that 'like' button
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so that Youtube recommends you more of my videos in future too.
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And don't forget to 'Subscribe' to this channel and hit that 'bell' icon
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because we make Career and Finance videos that are crisp and to the point.
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I promise, I don't make unnecessary videos.
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I only make them after proper research and analysis.
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Sitting on a beach with your laptop,
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working for just 2 hrs everyday,
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driving Lamborghinis and
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sipping Pina Coladas on a beach!
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Trading is nothing like that!
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And that's unfortunately why most people lose money.
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So today's Bonus Tip is this...
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With trading, have realistic expectations.
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Nikhil says, if you expect you'll make 15%, then
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you'll be more likely to achieve that
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rather than thinking that you'll make 40-50%
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which will make you take unnecessary risks
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that'll make you lose money.
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Don't get me wrong, I'm not discouraging you from trading.
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I just want to set your expectations right.
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So read books, apply what you have read,
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build your own strategies,
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invest little amounts first
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and find out if trading sparks joy.
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May be you'll enjoy being a trader,
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may be you'll discover that trading is not for you..
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and instead you want to become a
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long-term investor in the stock market.
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Either way, watch these 2 videos next..
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to learn what is Stock Market and how to invest in it.
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And at the end of these 2 videos, I assure you
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you will have a better clarity about
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which direction you'd like to take.
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You can access these 2 videos, by clicking right here.
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I thank Nikhil for taking out the time to interview with us,
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even when he was feeling a little under weather.
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Thank you team Urban Fight, this has been great.
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This has been a lot of fun and
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hope to chat with you guys in the future as well.
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And thank you for watching this video.
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I am Taskeen. This is The Urban Fight
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and I'll see you in the next video.
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