Friday, January 22, 2010

Trading is a business also a hobby

A young reader has sent me this:

I am a student of  XXXXXX Pursuing MBA(Finance) to be completed in Feb-2010. I have a loan of 5,00,000 oustanding to be paid starting in the next 6 months and wanted to learn technical analysis. I am trading the stock markets for the last 4.5 years and am deeply interested in pursuing trading as a career.

I am thinking about joining XXXXXX for the course of XXXXXX at the cost of 75000 + 10.3% tax. with live market training at the cost of loss to be borne by the company. after which they assure of a job is the performance is satisfactory.

what should i do ?

My Notes:
With some regret, I can give advice which is likely to make the reader unhappy. But here goes: The most sensible course of action after completing your MBA is to get a job. Now, if you are lucky, you can get a job in a brokerage / trading firm where you will be closer to the market, but that is not important. At this stage in your career, you need to have a stable income so that you can repay your loan. The loan comes first.

You should NOT pay for any course to learn trading. There is no assurance on a stable career path once you have completed this course.

It seems that Technical  Analysis is your favorite activity, and, I can understand this. Same here. At some point in my life, I was lucky enough to have a career in my favorite activity. But, life is what it is. There are people who love golf yet work in different areas. They devote a considerable part of their time to golf although they do not earn their living from it. And...... cricket ??

Take one step at a time. Your first step is to have stability and take care of your dues. A career in trading will not give you stability.


pucchhu said...

very true Sir
You have commented rightly, first bread and butter , then everything else.

I am regular reader of your blog, and i deeply appericiate the way, you always guide the readers.

I have one specific query
I regularly observe the markets, when they are open, and i was noticing that for last 2-3 weeks that nifty futures was more often at a discount than in premium.

Was that a precursor of what happened during last two days(including today)

Can we deduce from this, that players in futures markets are having some prior knowledge or better skill.

pranav said...

Dear sir,

in this blog ,you often discusses about market setups, indicators, world markets etc. Request you to provide some information on your personal life. I mean when did you started, how and why you turn towards technical analysis, when did u took trading as full time activity etc etc.

men said...

Mr. Sudarshan, could you please explain how your trade went out today. On CNBC you gave a buy with a sl around 4982 which would have got triggered, you may have gone long at a lower level, would you have exited around 4980 level if you went long? Now that we have closed > 5027.5 which is around the 20 week sma, what should be the direction of the trade? and should this be breached on a closing basis what levels should we keep an eye on? For the cash segment which sectors to buy if any on a sip basis. Please also help me with your model portfolio.
Thanks and Regards,

Nirav said...

Dear Sir,

My question on this post is that can't we pursue a trading as a profession? because your last line of this post says A career in trading will not give you stability. Is that mean that one must have some source of stable income other than trading?

Manish said...

it was a little bit disheartning to hear from u that career in trading will not give u stability. many people including me who r full time traders are trying to earn a living out of trading by learning technical analysis. r u suggesting that we take up a job with stable income & take up trading as a side activity altogether.

technicaladviser said...

its always to gud to read ur comments .they are more rational in nature and less impulsive .i have a query too.i m a gazetted officer in the central govt and have stability ,which you just talked about .i have been a trader from past 4 years now and now ino the verge of breakeven.i m planning to take up a loan and with technical analysis and discipline ,want to increase my trading portfolio.i have set a target for my goals,which are pretty reasonable and i m planning to quit my job as soon as i achive them.will this be justified as whenevr i discuss abt this with neone,they discourage me saying why do you want to leave such a respectable and stable job,whch confuses me and hurts my ambition.
plz guide me

mok said...

i think mr sudarsan means trading as the sole income is liable to risk, and with a stable income to standby the risk profile will be better than as 100% trader.
i think his advice is also focussed at the young person at the start of his career with a liability of loan to repay.
his advice is a well meant, frank, straight spoken reality.
thanks to you , mr sudarsan.

Danish Kapur said...

I also wrote something similar, which I think is interesting in this context and can we read here:


Danish Kapur

mynac said...

I am 100% agree with you.Every day trading converts in to gambling.Even a trader could not understand the fact.It becomes addiction.If someone has gone through all good bad ugly facts and phases of the market and should have a courage N capital to survive here can just think of it.But hard to decide.I my self trade in only Nifty Future since 2002.And as a rule (which decided by me only) since 2002 have neither bought/took delivery nor traded a single stock than Nifty,Though I am trading since 1998.So,it is just like that many people know How to talk,What to talk,When to talk but very few people know when NOT TO talk.