How I would learn to trade! (If I could start over)

Summary

In this video, the speaker reflects on their trading journey starting in 2007 and shares a structured approach for beginners in 2023. They recommend investing a portion in an index fund and mastering equity trading through learning basics, technical analysis, and developing a trading system. The speaker emphasizes the importance of backtesting and mindset, suggesting that trading should be viewed as a long-term business. They also highlight the value of free resources like screener.n, TradingView, and their own YouTube channel for educational content, urging viewers to subscribe for quality stock market education.

Takeaways

• 😌 **Structured Learning:** Start with a structured learning approach on platforms like YouTube to avoid getting lost in scattered information.
• 💼 **Investment First:** Consider investing a portion of your capital in an index fund like Nifty for a stable base before trading.
• 📈 **Master Equity:** Begin with mastering equity trading before moving on to more complex financial instruments like Futures and Options.
• 📊 **Technical Analysis:** Learn the basics of technical analysis and focus on understanding a few key indicators.
• 🛠 **Trading Systems:** Develop a systematic approach to trading with a set of rules that dictate entry and exit points.
• 🔍 **Backtesting:** Before trading, backtest your strategies to understand their historical performance and potential risks.
• 💡 **Free Resources:** Utilize free resources like screener.n, TradingView, and reliable YouTube channels for education and analysis tools.
• 🧠 **Mindset Matters:** Adopt a long-term mindset similar to running a business, focusing on consistent growth over years rather than quick gains.
• 💰 **Risk Management:** Implement strict risk management rules to avoid risking too much on a single trade and protect your capital.
• 🌐 **Long-Term Perspective:** Recognize that success in trading and investing is a long-term game, and patience is key to sustainable growth.

Q & A

What is the first thing the speaker suggests doing with an initial investment of 50,000 rupees?

The speaker suggests taking out 30,000 rupees and investing it in an index fund in Nifty.

Why does the speaker recommend not trading Futures and options initially?

The speaker recommends not trading Futures and options initially because new traders should first master equity trading.

What is the sequence the speaker suggests for learning to trade equities?

The speaker suggests learning the basics of the stock market, then moving on to technical analysis, and finally learning how a trading system works.

What is the importance of having a trading system, according to the speaker?

Having a trading system is important because it provides a methodical and mathematical approach to trading, reducing the reliance on guesswork.

Why did the speaker's account double and triple in 2008, and what lesson does he draw from this experience?

The speaker's account doubled and tripled in 2008 because the market crashed and he was on Futures, but he cautions that this was due to luck and not a reliable strategy, emphasizing the importance of having a backtested system.

What is backtesting and why is it crucial before starting to trade?

Backtesting is the process of evaluating the performance of a trading strategy using historical data. It is crucial because it helps to quantify the strategy's effectiveness and potential risks before real trading begins.

What are the two types of free resources the speaker mentions for learning to trade?

The speaker mentions tools for analysis and educational content from blogs, websites, or YouTube channels as the two types of free resources.

Why does the speaker emphasize not following someone else's trading strategy without backtesting it?

The speaker emphasizes not following someone else's trading strategy without backtesting it because each trader should understand and validate the strategy for themselves to ensure it aligns with their risk tolerance and trading goals.

How does the speaker compare trading to running a business?

The speaker compares trading to running a business by highlighting the need for a structured plan, consistent execution, and a long-term perspective on growth and profitability.

What is the speaker's advice for someone who doesn't have the time to learn trading?

For someone who doesn't have the time to learn trading, the speaker advises investing in an index fund and focusing on long-term investing.

What demographic advantage does the speaker mention for India in terms of economic growth?

The speaker mentions that India's demographic advantage is its young population, most of whom have not yet entered the workforce, which implies a potential influx of cash into the economy over the next two decades.

Outlines

00:00

📈 Starting Over: Trading and Learning

The speaker reflects on their trading journey, starting in 2007, and shares how they would approach learning to trade if they could start anew in 2023. They outline a three-part strategy for beginners: 1) Scattered learning through various resources like YouTube and structured learning through a defined curriculum. 2) Utilizing free resources to accelerate learning, such as subscribing to educational YouTube channels. 3) Understanding the importance of mindset, which is crucial for success in trading. The speaker emphasizes the importance of not rushing into trading and suggests starting with a small investment in an index fund for stability, while using the remaining funds to learn and practice trading. They also stress the sequence of learning: starting with the basics of the stock market, moving to technical analysis, mastering a few indicators, and then understanding how a trading system works. The speaker shares a personal anecdote about a simple trendline bounce system they used, which led to initial success but was ultimately based on luck rather than a robust strategy. They conclude by advising viewers to learn about backtesting to avoid costly mistakes and to not trade without a well-thought-out system.

05:00

💼 Trading Mindset and Resources

In the second paragraph, the speaker emphasizes the importance of having the right mindset for trading, comparing it to running a business. They explain that trading should be approached with a long-term perspective, similar to how a business operates with plans and strategies over years. The speaker advises against risking too much on a single trade and highlights the importance of risk management, patience, and consistency. They also discuss the value of backtesting a trading system over a significant period to ensure its viability. The speaker introduces free resources for both investors and traders, such as screener.n for fundamental analysis and tradingview.com for charting tools. They recommend their own YouTube channel as a trustworthy source for educational content. The speaker warns against blindly following others' strategies and encourages viewers to backtest any strategy before implementation. They conclude by discussing the potential for growth in the Indian economy and the opportunities it presents for both investing and trading, urging viewers to learn and apply these skills wisely.

Keywords

💡Structured Learning

Structured learning refers to a methodical and organized approach to acquiring knowledge, often through a curriculum or a series of lessons. In the context of the video, structured learning is contrasted with scattered learning, which might be less organized and more piecemeal. The video suggests that for effective trading education, one should follow a structured learning path, possibly on platforms like YouTube, to avoid getting lost in the vast amount of information available.

💡Free Resources

Free resources are materials or tools that are available at no cost and can be used to enhance one's knowledge or skills. The video emphasizes the importance of utilizing free resources to speed up the learning curve in trading. Examples given include the YouTube channel, which offers educational content, and other platforms like screener.n for investors and tradingview for traders, which provide tools for analysis and backtesting.

💡Mindset

Mindset in the video refers to the mental attitude or approach one has towards trading. It is crucial because it influences how a trader perceives risks, makes decisions, and handles the psychological aspects of trading. The video stresses that without the right mindset, a trader is likely to fail, highlighting the importance of viewing trading as a long-term endeavor similar to running a business.

💡Index Fund

An index fund is a type of investment fund with a portfolio constructed to match or track the components of a financial market index, such as the S&P 500. In the video, the speaker suggests that starting with an investment in an index fund is a prudent strategy, as it provides a stable base for trading while minimizing risk, as illustrated by the speaker's hypothetical investment in the Nifty index fund.

💡Technical Analysis

Technical analysis is a method used by traders to analyze and predict the direction of market prices through the study of past market data, primarily price movements and trading volume. The video recommends learning the basics of technical analysis and becoming proficient in a few indicators as part of the structured learning process for trading.

💡System Trading

System trading involves using a predefined set of rules to make trading decisions. The video explains that a system can guide when to enter and exit trades, which helps in removing the guesswork and making trading more methodical. An example given is a moving average crossover system, which provides clear buy and sell signals based on the crossover of moving averages.

💡Backtesting

Backtesting is the process of evaluating the performance of a trading strategy by applying it to historical data. The video emphasizes the importance of backtesting to understand the effectiveness of a trading strategy over time. It is a critical step before actually trading with real money, as it helps in quantifying the strategy's potential outcomes.

💡Risk Management

Risk management in trading refers to the practice of identifying potential risks and taking steps to mitigate or avoid them. The video underscores that risk management is more important than patience and consistency in a backtested system. It suggests not risking more than a small percentage on each trade to prevent the loss of the entire capital.

💡Equity

Equity in trading refers to shares or stocks of a company that are bought and sold on the stock market. The video advises new traders to master equity trading before moving on to more complex financial instruments like futures and options. It positions equity as a foundational aspect of understanding the stock market.

💡Futures and Options

Futures and options are financial derivatives that allow traders to speculate on the future price movements of an underlying asset. The video suggests that new traders should not start with futures and options trading, as it is more complex and risky. Instead, it recommends mastering equity trading and having a solid understanding of trading systems before venturing into these areas.

Highlights

Starting trading in 2007, a lot has changed by 2023.

Structured learning on YouTube can prevent getting lost in scattered learning.

Free resources like this YouTube channel can speed up the learning curve.

Mindset is crucial for trading success.

Investing 30,000 rupees in an index fund would have been a wise initial move.

For new traders, mastering equity trading is essential before moving to Futures and options.

Learning the basics of the stock market is the first step in trading education.

Technical analysis is fundamental, but not all indicators are necessary.

Understanding how a trading system works is crucial before actual trading.

Having a systematic approach to trading reduces reliance on guesswork.

Backtesting is essential to validate a trading strategy before live trading.

Risk management is more important than patience and consistency.

Trading should be viewed as a long-term endeavor, similar to running a business.

Screener.n is a great resource for investors for fundamental analysis.

TradingView and charting apps are useful for technical analysis.

Always backtest strategies found online before implementing them.

A trading mindset involves treating trading like a business with plans and risk management.

Long-term perspective is key in trading and investing.

India's demographic advantage can be leveraged for long-term investment strategies.

The channel offers honest advice and educational content for trading and investing.

Transcripts

here's how I would have learned to trade

if I could start all over again for

context I started trading in 2007 and

it's 2023 now A lot's changed and in

this video we'll cover this in three

parts one we'll talk about how to

actually get started there is scattered

learning that's on YouTube Etc and then

there's structured learning I'll give

you an actual structured learning you

can do on YouTube itself so you don't

get lost two we'll actually learn free

resources that you can use right away to

speed up that learning curve including

this YouTube channel so you should hit

that subscribe button right now and

three will talk about mindset if you

don't understand mindset you are bound

to fail so watch this video till the end

in 2007 I was given 50 000 rupees the

first thing I should have done was take

out 30 000 of those rupees and invest it

in an index fund in Nifty Nifty back

then was here and today it's here

but anyway now that we know that is a

mistake that's what I should have done I

would have made this much extra money

even without a sip just that 30 000

rupees now the reason why you actually

do an investment in the index fund is so

that you know you have money in the

account to trade but you can't use it

and you know you have better chances in

earning there now with the bakika 20 000

rupees you can't trade fno you can't

trade Futures and options

if you are new you should first Master

equity and to master Equity you need to

learn this sequence and I've written it

down here learn the basics first what is

the stock market why is the stock market

what's the history get into it watch a

few videos too I think we have a bunch

of nice movies on scam Etc watch them

it'll give you context on the world of

trading then move on to technical

analysis actually there's a lot of

information on the internet on the

basics of technical analysis why does it

work when does it work when does it not

don't spend too much time on technical

indicate does just learn technical

analysis and maybe say three indicators

at most so after learning technical

analysis you should learn how a system

works a system is just a bunch of rules

put together telling you when to buy

what to buy and when to exit even if

it's a loss or a profit this is called a

system for example one of my earliest

systems that I tried was basically

called the trendline bounce system

okay I made that word up it was

basically I draw a trend line if the

market comes near the trend line I would

just buy it and I did this for a long

period of time and then I did the

opposite when I wanted to learn Futures

the trend line broke and I shot it Nifty

and this was in 2008

when the market crashed

and I was on Futures my account doubled

and tripled and I was celebrated as a

stock market genius but I was just lucky

I could have blown my entire account

because this is based on a weird line I

drew on a trading software so you should

not trade Futures but you should have a

system in place so one example of a

system is a moving average crossover

where if there's a crossover over a long

term chart

like a weekly or monthly chart you're

buying and when there's a cross under

you're actually exiting this may not be

the best way to trade but at least you

should understand how System trading

works it's methodical it's mathematical

it is not a guess and I think that's

what you should spend the next few

months on what System trading is one of

the biggest traps you'll fall for is

actually trading once you've found a

system and I'll tell you exactly what

will go wrong so you don't have to make

the mistakes I made look at this simple

system don't worry about the entry and

exit just imagine a line going up and a

second line going up as well whenever

this cross happens we buy and whenever

the opposite happens there's a line

going down and another line Crossing

below it we sell

simple don't get into the details but

let's look at some actual trades here

here you will place a buy order Market

went down and you lose money here you

will try to short the market or buy the

market and the market went sideways lose

money again so on and so forth all these

confusing lines you see over here will

result in you losing money now the

problem is not the strategy the problem

is you you looked at a chart and

believed it never do this you are

supposed to actually quantify this and

that my friends is called back testing

when you take all of these strategies

put it in an actual Excel sheet or any

broker or trading Viewpoint script or

python or some way

to actually know number of Trades number

of wins number of losses how much did

you lose when your stop-loss was hit how

much did you make when you're when your

profit Target was hit and see over the

last five years did you actually make

money which is why I'm saying after

you've learned strategy move towards

learning how back testing works and

please don't trade before that and if

you do maybe trade one share just to

understand how it works but learn that

testing

so in summary learn the basics first

move towards technical analysis then

learn some kind of strategy then comes

the hardest part learn how back testing

works then think about actually trading

it and this brings us to part two which

is free resources you can find on the

internet that you can trust if you're an

investor then screener.n is a great

place for you to actually run screens

find companies based on fundamental

analysis Criterion so you can search

companies with the highest market cap

with the highest profit margins sales

that have been growing over the last

five five years etc etc if you're a

Trader which I'm sure you are use

trading you for charts it works really

really well there's also chart Inc and a

bunch of other websites there's also

learn apps YouTube channel if you want

to go to trustworthy places you're in

the right place right

right so subscribe and watch the videos

that we push out because we try our best

to give you the best quality education

in stock markets right here so there are

two types of resources you'll find on

the internet one is a tool where you

input a bunch of metrics and you'll get

an output and you do the analysis

yourself the second kind of resource

could be a Blog website telegram group

or even a YouTube channel where they

tell you what stock to buy and sell now

that may be working for them you have to

make sure at the end you are back

testing and deciding for yourself what

to do with your own money in any case no

one should decide for you so if you find

a strategy that you really well for

someone else don't follow it do it

yourself back test it yourself and that

final decision should be your analysis

not someone else's the third part is

trading mindset now this is the hardest

part because we come to the market to

put in energy to actually say I'm gonna

earn x amount in the next X years and

that will get me my vacation my home Etc

but here is the reality trading is just

like a business now I want you to

imagine a business does a business post

a profit or a growth every single year

no neither will your trading do you

think a business has professional

managers a plan an annual operating plan

quarterly plans weekly plans and then

people have to follow that plan to

achieve a goal well that's exactly what

your trading has to be there has to be a

back tested trading system that is

followed every single day without fail

in a business things sometimes go wrong

and sometimes go magnificently right but

over a five year period it will be

growth but you can't look at business

over a three months two week one week

period right so the same thing you can't

look at trading as a short-term thing

you may do it very often but results

happen over years possibly even decades

the basic thing over here is you can't

risk ruin which means you can't risk

everything you can risk half a percent

on each trade and lose a maximum of five

six ten percent on your Capital but if

you lose too much you won't be able to

play so risk management is actually more

important than patients consistency and

a back tested system in the end I'm

sorry to burst your bubble but as you

age time will actually become really

really fast so 10 years is really not

that a long time if you balance trading

and investing properly you can actually

make money over the long term just make

sure you understand what you're doing

and if you don't just put all your money

in an index fund and just sleep we are

very lucky we live in India most of the

demographic graphic is Young most of the

demographic has not really entered the

workforce yet and there's a lot of cash

coming into the economy over the next

two decades

use this basic information if you don't

have the time just learn investing if

you do then learn the magic of trading

and how you can earn that extra Alpha

over Nifty by just doing a bunch of few

things and of course don't forget to

subscribe to this channel because we're

super honest and we'll help you out and

say something nice in the comments if

you found these useful check out the

other videos we have see you in the next

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