Thursday, October 25, 2012

How I lose 90000 bucks in Unitech

Unitech is one of the biggest losses in my life that really devastated me in 2006. I believe I lost almost 90000 (89500 is the exact amount) in that trade. My broker was Kotak Securities. I still remember that day. I was at Chennai. I bought 500 shares while Unitech traded after split and bonuses and was around 350 bucks. On that day it went to upper freeze, got released and was trading down a percentage point. I bought 500 shares at that time and at lower freeze I bought 300 shares (Don’t show a fucking urge to average your losers-Important lesson). I owned almost 800 shares. From that day Unitech continuously opened at lower freeze and it continued for almost a week and Unitech was trading around 180 bucks while I returned back to my home town to pay my margin of more than lakh and half to my broker. They thought I ran after that day (I remember a guy who got abscond after losing 5 lakhs in 2006 crash). Luckily for them, I’m a decent guy who really wants to pay the dues and continue to pay tuition fees to the market to make a career in stock markets. Despite paying one and half lakhs I was in debit and pressure was made to cut the portion of the shares to pay for them. If you are real loser you would blame Kotak securities, but I still remember of not making any complaints against them for their pressure (Even today I couldn’t believe that I showed that kind of maturity despite doing sucking trade) to pay their margins. I asked their permission for 3 more days and they gave me that and eventually booked my losses at 215(215-220). A week after booking my losses Unitech was added in futures and from there it started to rally and it eventually crossed than my buying price of 350. What an irony? I lost 90000 bucks in that trade.

1.    Have an idea on stock which you want to buy. Idea doesn’t necessarily mean knowing all the fundamental stuff and technical stuff. Idea means atleast a price movement of the stock.
2.    Don’t rush to catch the so called momentum stock. You know what was in my mind. I thought Unitech would continue to put more upper freezes and I planned to sell after 3-4 upper freezes by making a leveraged bet. Even now I can’t stop laughing about my idea of entering into that trade.
3.    Don’t make leveraged bets without knowing stuff (Even now I make leveraged bets).
4.    Don’t blame your broker or dealer for your sucking trade (Candidly speaking this is one of the thing that I’ve never done  in my entire career). I have seen people doing this and I really feel sorry for those dealers.
5.    Don’t bet on your own imagination. This is one of the worst things you could do in stock markets.
6.    Don’t predict on direction of the stock. If someone says that they are making predictions on stocks, be wary to work with them.
7.    If you are operating in Indian markets, try to put stop losses on momentum stocks that are having price limits (stocks that are not in futures) in trading.

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