When Richard Dennis discussed with his friend and fellow trader William Eckhardt in 1983 that successful trading can be taught, little did he realise that he was initiating a whole new profession. Richard Dennis trained a group of randomly picked individuals from various professions and taught them his strategy. A handful of these traders, known as Turtles, went on to become extremely profitable traders.
Today there are numerous schools and teachers that train prospective traders but very few students turn out to be successful. Professional traders who have made it say that there is more to trading than knowing technical analysis or a strategy. Trading is largely a mind game. Many traders attribute only 20 percent of their success to the strategy, the remaining 80 percent is contributed by emotions and money management.
Trading strategies can be taught, but few have the mindset to adhere to a strategy especially during bouts of successive wins and losses. Strategy jumping is one of the most common reasons for the failure of the trader.
This, however, is not the case with Tasneem Mithaiwala, the first woman trader we are interviewing in Moneycontrol. Tasneem is an example of what a strong mind can achieve.
A single mother of two daughters who are pursuing professional courses, Tasneem picked up trading because that was the only thing she could do by sitting at home and taking care of her ailing mother.
An Arts student who was uncomfortable with anything to do with numbers, Tasneem today trades options successively for a living.
More than the strategy she trades, Tasneem’s story is about mental strength and discipline and is an inspiration to all those traders who are unable to find their mojo.
In an interview with Shishir Asthana of Moneycontrol, Tasneem Mithaiwala talks about her short journey as a trader and more importantly on why she thinks women can be better traders than men.
Q: How did you start trading, can you take us through your background and journey to the market?
A: I have graduated from an Arts background and have done my post-graduation in Event Management. Though I have worked in many corporate setups but have no exposure whatsoever, in finance.
Due to some personal issues, I had to quit my job and look for work that can be done from home. As a single mother, I had to sit at home to take care of my ailing mother as my daughters – one is in her fourth-year medical and the second one is studying for her CA have their colleges to attend.
So while I was exploring opportunities to work from home one of my cousin said that I can trade in the equity markets. He would give me leads and I would buy and sell according to his recommendations.
I started my ‘trading’ journey with a capital of Rs 5 lakh and by the end of 8 months, I found that the capital had come down to Rs 1.75 lakh.
I was demoralised but then a good friend explained that trading is like any other business. Before you start a business you learn its nuances, study the environment before plunging in. You do not run a business based on someone else’s recommendations.
So, I decided to learn how to trade and gave myself a year to learn the ropes. I joined a trading course offered by FinLearn Academy.
Since I was an Arts student with no experience in finance I was overwhelmed with numbers and the initial days were difficult. I remember running away on the third day. My mentors in the institute asked me to sit through it. Since the academy permits retakes, I attended the same class thrice to get a good grasp of the basics.
Slowly I started getting a feel of what is happening in the market. I used to just sit through the entire day to look at how the market was behaving.
Q: How was your initial experience in trading?
A: I traded what was taught to me and stuck to the rules. Till date, I stick to the rules. I started by trading only one share. I practiced it every day and would make Rs 30-40 from it.
It was frustrating given the kind of money I was making, but my instructors told me that the rules of the game are the same even if you trade one share or a thousand.
I then focused on learning the basics, technical analysis, market structures, and other stuff rather than on money. I learned that you cannot become a trader based on judgment or gut feel, it is all about practice and following your strategy. There is no end to tweaking a strategy with the changing market condition.
Gradually I moved from trading shares to options. Initially, I started trading Nifty options, but I am aggressive by nature and so moved to trading the more volatile Bank Nifty.
I am mainly an intraday trader but also take short duration swing trades and longer positional trades in futures.
Q: How do you trade?
A: As far as my intraday trades are concerned I trade on the 1-minute chart as well as on the 15-minute chart. I basically am a price action trader and trade mainly around my support and resistance.
In case of a side market, I trade the 1-min chart but when it is a trending market I move to the higher timeframe and give the trade room to workout.
I always do my homework the previous day and have my support and resistances in place. I wait for the market to come to these zones before taking a trade. But I do not buy at the first instance, I wait for a retest to get in the trade.
There are days when I get an opportunity to take 5-6 trades, but in case of trending days, I sit throughout the day with one single trade. I look for a trade which gives a risk-reward of 1:3 but these trades are rare and have to mostly settle for a 1:2 trade.
In the case of a trending market, I take my signals from the Exponential Moving Average (EMA) and the Average Directional Index (ADX). At times I also use the FIB ATR (Fibonacci bands with Average True Range) which gives a much clearer signal.
Here I take trades with a 1:3 risk reward opportunity. I rarely carry my trades home unless it is a very strong trend and the closing is strong. I have averaged around six winners for every four losses in my intraday trades.
But my biggest gainers come from trading on the expiry days. Sometimes I think why to bother trading on other days when most money can be made on expiry day trading.
Here too the strategy more or less remains the same. Since I am always an option buyer I pick up a slightly out-of-the-money (OTM) option which is closer to a support or resistance which is where I feel the market can go. These trades are always taken in the post-lunch session when the market gives a sharp burst.
As for the positional trades, I trade only in the futures and that too only in stocks. Here I look at the monthly and quarterly charts for market structure and the candle and trend study for entries.
Q: Your views on women traders
A: I think women can be better traders than men. Though trading is dominated by men, women have a natural advantage. By default most women are tightfisted. The way women are brought up in most Indian households makes them natural for trading.
We are told from our childhood what to do and how to do it. We are taught discipline and learn to follow rules more naturally. Boys, generally do not have to go through the same set of rules and rarely follow what they are told.
Women are good at managing things including money and multi-tasking, managing trades and money management comes easily to them. Trading has a lot to do with discipline which is why women can pick up trading faster. (Tasneem is a consistently profitable trader within the first year of trading).
Increasingly women are taking to trading. After I completed my course with FinLearn I was privileged to be called to take introductory sessions at the course. I have seen more women coming forward to learn to trade. In fact, one of the batches was an all-women batch.
From housewives to retired professional women all come to learn to trade. There are doctors who want to learn to trade. The reasons may vary, some may come to earn additional income. But many come to be independent, to be self-sufficient to get a feeling that you are doing something in life. This is very important for many women.
Another important point I would like to mention is that in trading your level of intellect does not matter. Even if you don’t know English or Maths you can still make money in the markets. Trading has more to do with logic, emotional stability and how to manage money.
Here I would like to mention that at FinLearn we also have psychiatrists helping us in developing our mental strength, which as I have mentioned earlier is more important to success than your trading strategy.
Discipline, dedication and approaching the subject with an open mind is all that is needed to pick-up trading.