Professional Traders and Losses: A Journey Through Wins and Losses

Professional traders can and do lose money. Despite their expertise and access to tools and resources, financial markets come with inherent risks. Factors contributing to losses include market volatility, poor decision-making, the use of leverage, changing market conditions, and strategy failures. However, these setbacks are not deterring successful traders like myself. I have faced both wins and losses in my pursuit of financial stability and growth.

Experiencing Both Wins and Losses

I am currently in a stable job, yet my interest in trading stocks and options has been a vital part of my financial life. Over the past two years, I have been deeply involved in options trading. Although I have earned impressive returns at some points, my losses have sometimes been substantial. These losses are seen not as a failure but rather as a part of the learning process.

The Learning Journey

During the ebbs and tides of my trading journey, I have invested considerable time and resources into learning. I have experimented with various methods, from following leads to studying indicators and candlestick patterns. Here is a detailed look at my experiences:

Finding the Right Strategy

I have tried two different vendors who provided lead-based trading strategies. However, I found that I was not comfortable following their approaches, as it required constant vigilance and quick decision-making. This led me to seek more focused learning.

I then enlisted the help of three tutors, participating in online sessions on various trading strategies, candlestick patterns, and indicators like RSI (Relative Strength Index) and various moving averages. YouTube became a vast resource for exploring different indicators such as RSI, moving averages, candlesticks, and ADX (Average Directional Movement Index).

Realizing the importance of consistency, I began to focus on the trading platform I use for my trades. Rather than using TradingView for every calculation, I decided to develop a strategy that worked seamlessly on my preferred platform, Groww! This led me to experiment with specific indicators and market technicalities.

The Winning Strategy

After extensive testing and refinement, I found a strategy that uses 44 EMAs (Exponential Moving Averages) and the RSI indicator, which provides consistent results on Groww. Here is a brief description of the strategy:

Plot two EMAs; one high and one low, both set to 44. Color the high EMA green and the low EMA red. Set the RSI to 14, with high and low thresholds at 60 and 40, respectively. When the candle crosses both EMAs on the higher side and RSI crosses 60, buy call options (CE). The stop-loss (SL) should be the lower price of the previous candle. When the candle breaks below both EMAs and RSI falls below 40, sell put options (PE) with the high of the previous candle as the stop loss.

This strategy has proven effective after extensive backtesting, providing consistent profits.

Dealing with Losses

When faced with losses, many traders might consider exiting the market. However, I believe that taking a loss as a business expense and using it as a learning opportunity is crucial. After periods of losses, I take a break, devote time to learning, and then re-enter the market with renewed vigor.

Taking Out Profits and Minimizing Risk

One important lesson I have learned is to always take out profits and keep the capital in low-risk trades. Once a trader begins to make consistent profits, they can make more informed and calculated decisions. This approach ensures that even in times of losses, the capital is managed prudently.

Key Takeaways

Despite the risks involved in trading, I have discovered that there is no single 'right' way to make consistent profits. It is a journey of learning, experimentation, and adaptation. Following time-tested strategies and remaining vigilant can help mitigate losses and increase the chances of success.