The Hindu Business Line : Trading rules

Nirmal Kotecha is an equity investor who turns an investment rule on its head... like when he says, "Greed is good; I think it's a terrific factor. If I did not have greed, where would I have been today?"

But this successful day trader adheres strictly to some rules and feels that they make all the difference between success and failure in equity investing.

Take up trading as a career. "The first mistake people make is not taking it up as a fulltime job or profession."

Trading is an art and like any other profession, requires skills and training; nobody is born with trading skills.

You can choose from any number of training courses. An interesting one is `Turtle trading.' Singapore is the centre closest to home for this American course. Cost around $5,000 (www.turtletrader.com has details).

Rely on yourself — your reading, your analysis — and not tips from friends, neighbours or TV channels.

Be extremely hardworking and have a strategy in place. To be a trader you have to work not five, but seven days a week.

Trade in liquid counters with big volumes.

Go long rather than short; the present system doesn't support going short; if you're short on 1-2 lakh shares, it's not easy to cover the same day. But if you're long, brokers do give 50 per cent funding. While you can borrow money, you can't borrow shares to square up!

Have a strong stomach and discipline; and keep emotions out.

Keep trying, observing and reading about successful investors... and concentrate.

Just as you book profits, learn to book losses when a decision goes wrong.

Look out for opportunities; the Ambani settlement and Anil Ambani's resolve to buy back Reliance Capital shares, infuse more funds into it, etc were clear `buy' signals.

Be alert and track government and company announcements; FDI in media and relaxation of voting rights in private banks were good triggers for those sectors.

So is he ready to start a training course? "Of course not. Right now the market is keeping me busy and on my toes. But once this bull phase ends and I get some breathing space, I'd like to attend some training courses myself... there is so much more I have to learn," says Kotecha.

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