Last month, I called my friend to check what he was doing during lock-down… other than eating, sleeping, and eating again after waking up. He was sounding sad, so I asked what happened. He said that his employer was forcing him to take unpaid leaves. He was already getting 30% less salary since the lock-down started, and he was living in a fear of losing his job. My friend is the only earning member in his family, and he was on the verge of getting laid off and losing his monthly earnings.
Until May 2020, more than 12 crore people had lost their jobs in India during COVID-19. Losing a job is disheartening and devastating. But it’s certainly not the end of the world. Remember,
When one door closes, another one opens with bigger and better opportunities
Because of lock-down, many businesses took huge losses, reduced salaries of their employees or forced them to take unpaid leaves. However, there is one job that kept on thriving.
No prize for guessing it right! It’s Stock Market Trading. Stock Markets worldwide kept on running, millions of trades were placed every day, and many professional traders globally made a lot of money in-spite of crisis, in-spite of lock-down and in-spite of huge market crash.
I don’t like to brag about myself, but I would like to share the trading performance of one of the strategies that we developed here at ExpressWealth. Here are the trades that we and our students took since January 2020, when this pandemic really started to affect our daily lives.
|Date||Trade Result||Total Points Earned|
|02 Jan 2020||Loss||-92|
|13 Jan 2020||Profit||+14|
|27 Jan 2020||Loss||-10|
|30 Jan 2020||Profit||+100|
|12 Feb 2020||Loss||-57|
|25 Mar 2020||Profit||+124|
|01 Apr 2020||Profit||+100|
|22 Apr 2020||Profit||+100|
|20 May 2020||Profit||+100|
|22 May 2020||Loss||-43|
|27 May 2020||Profit||+100|
|06 Jun 2020||Profit||+100|
|11 Jun 2020||Profit||+357|
|Total Points Earned||+893|
*These are actual results of our trading. However, past performance does not guarantee future returns.
What Does This Mean?
These trades were taken in NIFTY Futures (For those who don’t know what NIFTY Futures are… NIFTY is the market index of National Stock Exchange and Futures is one of the trading instruments in the Stock Market).
To trade in one lot of NIFTY Futures, you need a little more than ₹1,38,000. Please see the following screenshot of Zerodha F&O Margin Calculator. This amount keeps on changing as the value of NIFTY changes. However, for simplicity we will assume that our initial capital required for trading in one lot of NIFTY Futures was ₹1,38,000.
As you can see from the screenshot above, the lot size of NIFTY Futures is 75. So, if it goes up by 1 point, we make ₹75. We made a total of 893 points combining profits and losses of all the trades above. That means, if you would have traded with just one lot and taken all the trades that we took, you could have made,
893 x 75 = ₹66,975
₹66,975 profit on the investment of ₹1,38,000. That’s around 48% profit in just over 5 months. And that is just with one lot of NIFTY. Multiply that with the number of lots you can trade. For simplicity, I have not considered the brokerage and taxes. That may reduce this percentage a little bit. But the point is, I want to show you the potential of the Stock Market even in these times when the world is talking about recession and depression, what we all can achieve no matter what others are saying.
Even in this unprecedented times, we have managed to earn handsome returns, and the duration that we have considered includes one of the biggest stock market crashes in the history.
So, What Did We Learn From This?
1. Do Not Over-trade: You don’t need to trade every day to make money in the Stock Market. Do it only when you get the right signal based on your strategy. Virat Kohli doen’t hit boundary on every ball, right? Notice, we took only 13 trades in 5 months.
2. Consistency is the Key: If you have trading and risk management strategies in place, and if you follow those diligently, you can survive market crashes and unforeseen crisis situations like COVID-19.
3. Losses are Inevitable: You will not get profits all the time. Our trade accuracy is this example was around 69%. That means if you take 10 trades, 7 will be profitable. Let’s be practical. We don’t get such a high accuracy all the time. But if you combine low accuracy with right risk management, it can earn decent returns for you.
4. Focus on Big Wins: Just one trade in MANY can give you HUGE profits and can recover all your losses. But you don’t know exactly WHICH one will be the hit, so you need to keep on trading consistently, on each signal.
If you notice, in our last trade above we grabbed more points than those made from the first 9 trades combined.
Getting actual results is the ultimate achievement. We are happy that we are able to help our students move closer to the financial freedom by each passing day.
So, when are you going to take your financial freedom seriously and take steps to achieve it? Let me know your thoughts in the comments section below. I read every comment.
Author: Netrey Powdwal (Co-Founder & Partner, ExpressWealth®)
Image Credits: Header photo by engin akyurt on Unsplash