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I think I met you in the 1990s on the grounds of the old Bombay Stock Exchange, twenty years ago. There is one principle of yours that particularly stands out. You repeated it at numerous parties, in bars, and on the stock exchange. I will say it in the original language and then translate it into English.
Say, "Vadhare vadhare levano, ghatare ghatare vechvano." This means : buy when the market rises, sell when the market falls. What is the wisdom of this approach and how do you apply it? Look, I don't think I'm a good trader, even though I've been doing it for almost 20 years. I think we rarely make more than 40% of the right deals.
Let's say I'm bullish on XYZ stock. I'm buying these shares. If the price increases, it proves I'm right. And we use what I call pyramiding . I buy 100, buy another 105, buy another 110. What are markets? This is essentially impulse trading. So, you play on impulse. If the market is growing, then the momentum is upward.
So you buy during the growth. If the markets are falling, you sell during the decline. And I'm not against it. I apply this to long-term, medium-term, and short-term trends. This applies to short-term, medium-term and long-term trends. Never average a losing trade. You do this at your own risk. Of course.
I never do that. This is a huge mistake, is n't it? Unless we are sure that the stock is worth 90 and has great growth potential, then if it falls by 4-5%, I can average. But only temporarily. Temporarily, but as a rule in trading I will never average a position . But Rakesh, I keep saying that a good trader should have the largest position at the highest price.
Certainly. And why not? Do n't you want to have the highest price position? It's the company's duty, right? Most people make good profits. That's why out of a million traders, only 90 or 100 actually make money. What do you pay attention to? First of all, I look for the general direction of the market.
Don't try to be an expert in everything. Don't try to predict every move every hour, every day, okay? Be able to recognize losses. Know how much to bet. Right? I mean, I feel confident trading anywhere in the world. All you need is to have a general trend direction. Isn't that right? A very general idea.
Don't try to become an expert at this, okay? Know how much to bet and when to take a loss. I mean , most people don't know how to keep their profits from trading, right? Is n't this the main problem? Well, that's a problem, but who knows, you know? I don't know where I got these TV goals from. What are goals?
Who can predict anything? You see, when I buy stocks that are reaching a level, I also feel that the price is unreasonable. But at that moment I understand that foolishness must be combined with technical weakness. Only then do you know they are exhausted. So what is the probability? For example, lower highs, lower volumes, or lower prices.
Certainly. General trend. And you know, there is a general belief — just believe in the market. Things grow like there's no tomorrow . Things don't fly to the sky. Rakesh, you must think that all good traders always know how to take a loss. Why is this so important? Because, you see, no one can predict momentum.
He can turn around. You never know, because all big movements start with small ones. True? Therefore, the price is the first indicator of what is coming. So if I make a trade, sell a stock for 100, it goes to 120, and I buy more. We close everything by 9:30. Yeah, I mean, I can't sleep. I can't eat.
I'm such a mess. And sometimes the market is against me. I'm worried until 9:15. At 9:30 everything is closed. We are fine. I had my failures too, I lost money on trading. It's not like I made money every year. You know, I earned money sporadically. True? And then I earned money in certain periods: from 89 to 92, from 2003 to 2007.
2009, 10, 11 were successful years. So, I earned money sporadically. Let's say, from 1994 to 1999, I had income only from trading. The idea is always, as you said: strike while the iron is hot. Certainly. Don't try to earn Rs 50,000. And we don't make millions of dollars trading. My net worth involved in trading is 1 lakh.
So, if I don't say anything, even if I earn 1 crore, you can't imagine the return on equity, because everything else is borrowed money on which I pay interest. So my real capital involved in trading is only 1 lakh. Really? This is interesting. So, this is pure credit leverage. No credit leverage. No capital involved. I mortgage my assets and my wife's assets, borrow money and use it.
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