Can profits be made in bear market?
This is the answer every investor is looking for today. With the COVID-19 pandemic, the blue chips have suddenly lost their sheen and stocks are highly sought after. This has triggered an influx of many new investors who opened new trading accounts. Roughly 1.2 million new accounts were opened with the Central Depository Services (India) Ltd. in March and April. While this is a positive step, investing during uncertain times requires caution, credible information, and frequent counselling. Also, a proper understanding of equity evaluation is not something that one can pick up by reading a few articles on the internet, it is always advisable to learn from domain experts who do stock analysis for a living. Moneycontrol.com partnered with a trading coach and author Vishal B Malkan who helped us understand options trading, simplified jargon, and shared his expert learnings in areas of technical analysis.
Following are the nuts and bolts of Options Trading shared by Vishal B Malkan on how they differ from simple buy and sell in a conventional scenario.• Opting for leverage
• Hedging your portfolio
• Risk management tools
• Trade high price market
• Income source
He further elaborates on 2020 being a leap year that allows for more opportunities when volatility is higher. Options trading becomes a good alternative during volatility, observing how the definition of ‘long term’ has shrunk with the intervention of technology and AI-enabled investment decisions. There are several rookie mistakes new investors can make as there is less focus on technical data, which is important in stock picking. Starting steps include having a trading framework which is made up of 6 pillars: trading goal, trading mindset, risk management, trading plan, trading journal and finally review and repeat. This framework will serve as a guide while doing your technical analysis in options trading.
The takeaway of the above webinar is that you don’t have to be an expert in trading options, but you can become if you follow some of the steps mentioned, and explained in detail, by Vishal B Malkan. His advice may help you make fewer mistakes as a beginner. There is also a secret sauce which Vishal swears by, which is the RSI (Momentum) a price-based indicator with values from 0 to 100 where he applies the 60:40 mantra.
Watch this video to take advantage of some of these valuable tips and learn the basics of options trading which have been simplified for you.
This is a partnered post.