Margin Trading Gets To My Nerves!


Image courtesy of Niyantha’s photostream on Flickr.

Have you ever been so outrightly frustrated that you chose simply to switch off the main power switch instead of shutting down your PC by pressing the Turn Off Computer button? Yes, I did exactly that this afternoon having spent five tiring hours in trying out my luck at intraday margin trading and finding my whole day’s earnings disappear at the very last moment. It took me a while getting back into my composure, and finally deciding to pour my heart out through this blog post to make something good out of that biting experience.

I have only recently been trading on margin with a view of getting into the groove of stock business and how perplexing this whole experience has been until now. The small capital of 60K Rs that I had started with eleven trading sessions ago lies even more shrunk at 44K tonight, and that too after having deployed all my intellect on making the intraday calls least risky. Although my success to failure ratio stands at 2:1 in terms of my intraday orders, and I believe this would only get better with time, the money earned to lost ratio reversely stands at 1:2 because of a couple of hugely bad decisions I made during the first few sessions, something I’ve been able to avoid lately.

The biggest lesson I’ve learnt by trading intraday is to discard sentiments in such deals. It is much better to lose smaller sums quickly than being indecisive and finding major losses awaiting after bad calls. Sometimes share prices may turn back in your favor, say, after an hour, but this is what you should not lose your heart about and be overtly emotional at. You could easily look for other fluctuating scrips instead of having to sit out for 2-3 hours in sheer blood-pressure and depression.

But, I guess margin trading is not all about awaiting for a sudden rise or a sharp fall in share prices, and one can even place speculative calls by carrying our prior research and leaving it out for the end of the day to decide about your deal’s fate. I do not know how others trade in the intraday segment on margin, but would like to share my own experience about stock market, my brokerage firm ICICIDirect and other such matters from a layman’s perspective. Hope this would help those wannabe stock traders who might visit this weblog hoping to learn about margin trade.

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