We don't want to get into broking as that would hinder our research. Our business would then depend on the frequency of trades put in by our clients. Research has to be unbiased and we want to play to our core strength. — Mr Rohit Gadia, CEO, CapitalVia Global Research
Day-trading is a very serious proposition, says Mr Rohit Gadia, CEO, CapitalVia Global Research. In an interview with Business Line, he chats up how organised trading can help bring about a radical change in the way Indians day trade. Excerpts:
What is your business model?
More often than not, traders in the Indian markets base their trades on speculation. It is, therefore, irrational, as there isn't much discipline and risk-management behind it. But trading is a very serious proposition. It's a full-time business and requires a lot of commitment. Our business is to create an organised industry of day-traders by educating our clients in trading nuances.
We give trading recommendations to day-traders, and not to investors. We give the day-traders inputs on markets, trading tips with entry and exit points, stop-losses and do their complete handholding. Our recommendations are completely based on technical analysis of the market. Apart from the standard tools available, we use our own algorithms also.
Our business is based on subscription basis. We charge our customers on a subscription basis — monthly, quarterly and annually.
What is the subscription base now? And typically what's the profile of your clients?
We have more than 2,500 subscribers now. When we started we had only five (2008). We closed last year with 1,400 subscribers and are hoping to close next year with close to 6,000.
Our clients are all professional day-traders, and not someone who is a lawyer, doctor or a business man, looking to trade part-time. We do an initial risk-profiling of our customers. On an average, our subscribers are in the 28-36 years age bracket and are spread across India.
Typically what are the subscription charges? And what is your success ratio?
Our subscriptions start from Rs 4,000 a month and goes up to Rs 25,000 a month. It depends on product-to-product.
Our trading recommendations are live. We have over 50 people doing technical analyses. When we give a ‘Buy' we have specific reasons that back our recommendations. While our recommendations are based purely on technical analysis, we also check on the fundamentals. Our hit ratio is about 75 per cent on an average.
What are your expansion plans?
We are a standalone, pure-play research company, that's not into broking, PMS, MF, insurance or even demat and trading accounts. And we plan to keep it like that. We don't want to get into broking as that would hinder our research, as our business would then depend on the frequency of trades put in by our clients. Research has to be unbiased and we want to play to our core strength.
As for expansion, we are now planning to set up physical presence across country, as lot of our customers have started demanding local support.
We plan to open up 13-15 branches in the next 15 months. Local presence will help us manage our customers better. We are currently talking to a couple of VCs for funding these.
At a time when a lot of market advice is given for free across media, do you see people willing to shell out money for trading tips?
If you ask a 15-year old kid in India what he/she would like to become when they grow up, you would typically get a doctor or an engineer as the answer. But ask a 15-year old in US or Europe, and you are sure to get, say a bond trader or equity trader as one of the replies. That's the seriousness with which the profession is seen in developed financial markets. This kind of seriousness is only now emerging in our markets.
So when people truly understand the product, they are more than willing to pay for it. Besides, they could lose a lot more in a casual trade!