© Kshitij Anand Traders are increasingly using tech tools to minimise risk, says Dharmaraj Janakiram
As its name suggests, the Traders Carnival is a gathering of people active in the markets, whether full-time or part-time. Ahead of its 15th edition, this time in Hyderabad, Dharmaraj Janakiram, founder and CEO of Rainbow Carnival Pvt Ltd, which organises the event, speaks about what is in store.
Q1: Tell us about what to expect at the Traders Carnival this year.
The participants are, as always, an eclectic mix of newbies and repeat offenders who span the whole spectrum of excited novice and super -successful traders, those struggling to find a consistent process, discretionary traders who fly by the seat of their pants and system traders who relax while their system trades for them, rule-based who trade every signal and rule-breakers who trade some signals and also some who come to relax, enjoy just meeting and discussing with traders.
The 15th edition will see ten new trading ideas by practitioners of the art. To my mind, these are some of the best trading talent in India who have severally traded their account from a few lakh rupees (between 10 and 30) to over Rs 5 crore in 36 months or less. These ideas will be articulated in an easy-to-consume format, would comprise tangible takeaways ready to implement from the next trading day onwards.
And the best part is, the speakers will be available on all four days to clarify any nuances you may have doubts about. Their strategies, money management rules, etc.
Link to the speakers page
These traders can truly be called Mozarts of the charts and it would be a pleasure to hear them share their secrets in exhaustive interactive sessions. Their ideas will include strategies on unidirectional option buying, option selling, paired option strategies, action-based price, Elliot wave-based futures trading and more.
There will also be crypto-related content for those who like to ‘cross the line’, so to say. Five discrete strategies for deriving passive income from crypto assets will be shared: staking, mining, yield farming, borrowing (yes, you can be rewarded dividends for borrowing crypto assets on a few platforms — strange but true) and lending crypto assets—BTC or bitcoin, ETC (Ethereum classic), USDT (Tether) or other stable coins
Q2. Markets largely have been headed one way this year, and at every step of the way investors have been surprised. What was your experience as a trader?
I have moved all my assets from equities into crypto from October 26, 2020.
As for Crypto, I do a few things. One, HODL away in perpetuity. HODL, a mis-spelling of Hold, refers to a buy-and-hold strategy in crypto. Two, trade via a third party trading engine that gave 675 winning trades of 1 percent profit each out of 680 trades during a 60-day study. This study was shared at the Goa Carnival in March. Three, enter IDOs based on research. I have had a few 5x, 22x trades on those projects, the methods of which I plan to share in detail at the Hyderabad Carnival.
Q3. From your own experience last year, what is the one big lesson you learnt?
One of the biggest lessons was the realization that we in India have been almost left out of the huge growth opportunities in the crypto market. The sheer size and diversity of this market is mind blowing. This is a definite must-add in any diversified asset portfolio. Understanding this asset class and should be the one of the key goals this year for all investors and market participants. This is the reason the Traders Carnival has made crypto such an important vertical.
There have been quite a few lessons I have learnt. To begin with, research away endlessly.
It pays well. Though 12 months is too short a period to determine definite results, it could be a good indicator of things going forward.
Surprisingly, most of the best resources are available online for free. One only has to know where to look for them. All these resources and tools will be discussed at length at the carnival.
On a side note, I made a small investment in Bitcoin and Ethereum on October 26, 2020, more as a birthday gift to myself. As of today, BTC has made 4x and ETH has made 10x on that investment.
Q4. The face of trading is changing dramatically with both data and tools becoming accessible to ordinary traders. How is this transforming the way people approach trading now?
Technology has been advancing at a rapid pace over time. Having been in technology myself for over 20 years, I can readily accept this. Traders are increasingly using tech and tech tools for their trading.
These tools and platforms should go a long way in minimising risk, execute options-based strategies and earn passive income via crypto assets. We will be showcasing some tools at the Carnival.
Q5. Are machines and algorithms making human experience and instincts less relevant?
Algo trading is here to stay. Algos remove the human element of emotions from trading and are very suitable to some traders who are prone to be swayed by the common twin emotions of greed and fear. It forces a trader to be more disciplined. Many traders run both an algo as well as a discretionary trading account. Some opportunities are better captured by one system and some by the other. At the end of the day the algo is only as good as the logic used to code it. Standard caveat: coding errors, if not monitored, can also lead to huge losses.
Q6. There are a lot of young people now interested in the stock market. New depository participant accounts, subscriptions for companies like Zomato all bear out this trend. Do you see a new breed of young traders emerging?
A lot of youngsters started trading during the pandemic and a huge number of trading accounts have been opened. Many of them are highly educated and extremely tech savvy. They are used to filtering a plethora of data and brainstorming in online groups. They are a new breed of traders.
Us old-school folk never had to juggle so much concurrent information in our formative years. I believe this is what sets them apart from us. They also communicate differently and more effectively. The new battlegrounds in trading have become Instagram, Reddit and Twitter.
Q7. Everyone is interested in tips… Give us three tips to maximise returns through trading, and three tips to never lose money. Are these mutual exclusive principles?
Oh, that’s easy. Maximising returns is the name of the game. The truth is most good traders have about a 40 percent win rate. Those who manage to keep most of what they make while giving back the least in trades that don't work are the winners. Hedging and judicious stop losses are the tickets to that ship. Keep your losses small and you will do better and better. Having a longer-term mind-set and managing position sizes is an integral part of that. Capital preservation is rule number one. You can’t be in the game if you lose all your capital. That’s the deal breaker.
As for the tips to 'never lose money', I take that as a trick question. Never losing money is impossible.
You can follow the Traders Carnival at their Twitter handle @traderscarnival for updates in real time.