Wednesday, May 15, 2013

Biggest trading mistake - USD/INR

USD/INR has been money making bet for most of the times. Last time I lost Rs.45000 was before 3 months. Rs.45K is definitely a big loss and recouped that with the help of trades that was made in equities. I use to lose money in trading stocks. So I simply stopped trading stocks and instead trade futures and hedge options when the trade goes against me. I had that Rs.45K loss and vow not to make it in my trading. For the last 3 months I didn't had too much losses (had minor one of Rs.5k-10K) and was making consistent money in my trading. And there is not much difference between an amateur trader and a drinker since both of them don't keep their promises. I made ( I still consider me as an amateur after having experience of 7 yrs) my mistake in USD/INR in a big manner. Initially during the month of April I've been short USD/INR around 54.60 and when it touched 54, I was sitting in huge profits which I didn't booked and was planned to doubling it on the expectation that USD could go down further despite noticing its strength against all the currencies in the world. I thought INR is different and trend made me to believe that it could notch down further. I was writing call options and also have been writing out of money put options. After a particular point USD simply stopped going lower and it was trading above 54 levels. This was the crucial sign which I completely missed and this sign has been warned by my partner and I was simply over confident of my trades since we booked lots of profits in USD trade. I was simply sitting in the profits and I didn't booked my profits. We made couple of right things and due to over confidence and arrogance ( definitely in my part) I stayed short in USD. My only problem was not the short trade I had, but the magnitude of the trade that has made me to face such a precarious manner which I faced today and closed all my positions. I was having too many lots of USD which was completely huge and was trying to console myself that I would get it eventually right (what a fucking asshole I'm). Well last time when we had loss of 45k, I was completely patient because mistake was done by my partner and he become completely bull on USD whereas I was level headed and reiterate him that USD was a range bound trade. Finally we succumbed to his pressure and covered the position and we had a loss of 45k. This time he was simply remembering about the loss and was constantly asking me to book partial profits and I become too greedy to post huge profits. Short squeeze happened, we did too many things and we infact did right things, but eventually got confused and simply lost our way and end up making huge losses. This loss happened simply because of me and he warned me lot of times and despite that I simply discredited his warning due to my over confidence. 

Only reason why we didn't end up in huge loss is because luckily I caught the trend in futures and made huge profits. When I made calculations, I end up giving almost 60%-65% of my profits in this USD/INR trade. 


1. You're good only up to your next trade, which means you are an ordinary joe and you have to prove you are worth in every trade.
2. Position sizing is important for any trade. Don't have too many positions which is beyond your manageable capacity.
3.  Never and ever be arrogant or over confident. These two qualities would make you bankrupt. Luckily my losses got compensated due to the fact that I've made decent profits in index futures.
4. If some one warns you make sure to listen to it ( not gyans that have been given in TV like European problem or US problem rather genuine trading positions and booking profits) and verify the credibility and truth in that warning. My partner insists me to book the profits and have been continuously asking me to prune my positions. I never listened to him and eventually lost lot of money in a trade.
5. Due to huge size of my position I reacted for 15-25 pip move on daily basis(both the sides).
6. Over all this is really a biggest sucker trade in my life. My previous one was Unitech, but this USD/INR has beaten it since Unitech was made in my first year of my trading whereas this USD/INR has been made on my 7th year of my trading after managing more than $25Million in assets and supporting more than $600Million. This is ridiculous. 

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