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Tag: stock market

  • Common Options Trading Mistakes And How To Avoid Them – Part 1

    When you trade options, you can make money even if stocks go up, down, or stay the same. With options trading, you can cut losses and protect gains for only a small amount of money.

    Great, right? Here’s the deal: When you trade options, you can lose more money than you invest in a short amount of time. This isn’t the same as when you buy a stock. You can only lose what you paid for the stock in that case. With options, depending on the type of trade, it’s possible to lose all of your money.

    That’s why it’s so important to be careful. Even if you’re an expert trader, you can still make a mistake and lose money.

    When it comes to online stock trading and growing your trading account, another important aspect for you to consider is the share market brokers you trust. At Zebu, we offer the best trading platform that is packed with features that will help you make better trading decisions.

    To help you avoid making costly mistakes, we’re going over the top 10 mistakes that new option traders make.

    1. Buying OTM call options

    Buying out-of-the-money (OTM) call options is the biggest mistake you can make when trading options.
    OTM call options seem like a good place to start for new options traders because they are cheap. This may feel safe to you because it’s the same thing you do as an equity trader: buy low and try to sell high. There are many ways to make money in options trading, but they are one of the most difficult. In this case, you might lose more money than you make if you only use this method.

    The smarter way to trade

    Think about selling an OTM call option on a stock that you already own as your first move. In the business world, this strategy is called a “covered call.”

    The risk doesn’t come when you sell an option when you have a stock position that covers the option. In addition, if you’re willing to sell your stock if the price goes up, it could make you money. This strategy can help you get a sense of how OTM options contract prices change as the expiration date nears and the stock price changes.

    It’s also possible to lose a lot of money by owning the stock, but that risk can be big. Even though selling the call option doesn’t put your money at risk, it does limit your chances of making money, which is called “opportunity risk.” You could have to sell the stock if the market rises and your call is taken.

    2. Not Knowing How Leverage Works

    Most people who start trading don’t think about how much risk they’re taking when they use the leverage factor in option contracts. They like to buy short-term calls. As a result of this happening so often, it’s worth asking: Is buying calls outright a risky or safe strategy?

    3. The smarter way to trade

    A general rule for new option traders: If you usually trade 100 share lots, stick with one option at first and start with that. If you usually trade 300 shares at a time, then maybe three contracts would be a good change of pace. This is a good amount to start out with. If you don’t do well with these sizes, you’ll probably not do well with bigger size trades, too. This is a general rule.

    4. Not having an exit plan

    You may have heard it before: When you trade options, like stocks, it’s important to keep your emotions in check. The point isn’t to be able to overcome all of your fears in a superhuman way.

    Having an exit plan even when things are going your way is part of this. Take the time to figure out where you want to leave and when you want to leave.

    If you start to worry about leaving some money on the table by getting out too early, don’t worry. Remember this counterargument: What if you made more money consistently, cut down on your losses, and slept better at night?

    5. The smarter way to trade

    Make sure you know how you’ll leave a trade. Whether you are buying or selling options, having an exit plan can help you set up better trading habits and keep your fears in check.

    Determine how you want to get out of the situation on the upside and how much you can handle on the other side. In the event that you reach your upside goals, you should clear your position and take your money. Don’t be too greedy. If you hit your stop-loss on the downside, you should clear your position again and start a new one. Don’t stay in a losing trade hoping that the prices may rise again.

    A lot of times, it’ll be hard not to go against this way of thinking. Don’t. Too many traders make a plan and then, as soon as they make a trade, ditch their plan and follow their feelings instead.

    Online stock trading requires you to stick to your plan and use the right market brokers to grow your trading account. At Zebu, we offer the best trading platform that is packed with features that will help you make better trading decisions. If you would like to know more, please get in touch with us now.

  • 10 Things To Keep In Mind If You Want To Become A Successful Trader

    When you are new to trading and are Googling what it takes to be a successful trader, you’ll quickly become familiar with terms like “plan your trade; trade your plan” and “minimise your losses.”

    And the amount of information available can soon overwhelm you. So, here is a simple, 10-step Gyan about what you should do in the first year of trading.

    Each of the guidelines below is vital, but their combined impact is powerful. Remembering these can considerably boost your chances of market success. But before we get into the article, make sure to always choose an online trading platform that offers either lowest brokerage or zero brokerage intraday trading.

    Never trade without a plan.

    A trading plan details a trader’s entrance, exit, and money management criteria for each buy. With today’s technology, it is easy to test a trading strategy before risking actual money. Backtesting allows you to test your trade concept using past data to see if it works. Once a plan is devised and backtested well, it can be employed in real trading. Your job is to simply keep to the strategy. Trading outside the trading plan, even if profitable, is considered a bad strategy.

    Trading As A Business

    Trading should be treated as a full-time or part-time business, not a pastime or profession. As a hobby, there is no genuine commitment to learning. A job without a regular income might be frustrating. Trading is a business with costs, losses, taxes, stress, and risk. As a trader, you are a tiny business owner who must research and plan to optimise your profits.

    Embrace Technology

    Trading is a cutthroat sport. It’s safe to presume that the most successful traders use all available technology. Traders can use charting software to view and analyse markets in limitless ways. Using a good and trusted online trading platform with the lowest brokerage or zero brokerage for intraday trading is another important strategy. Backtesting an idea with historical data saves money. We can track trading from anywhere with our smartphones. A high-speed internet connection, for example, can considerably improve trading performance. Technology and keeping up with new products may be exciting and lucrative in trade.

    Preserve your trading capital.
    Saving money for a trading account requires time and effort. It’s considerably harder when you have to do it again. Notably, safeguarding your trading capital does not imply never losing a trade. Every trader loses. Protecting capital means not taking needless risks and protecting your trading enterprise.

    Become a Student Of The Market

    Consider your career in trading as lifelong learning. Traders must keep learning every day. Remember that learning about markets and their nuances is a lifetime endeavour. Studying hard helps traders grasp economic information and help them develop an edge over the others. The ability to focus and observe allows traders to refine their skills. Politics, news, economics, and even the weather affect the markets. The market is fluid. Traders are better prepared for the future if they understand the past and current markets.

    Don’t Trade More Than You Can Afford to Lose

    First, be sure that all of the funds in your trading account are genuinely expendable. If it isn’t, you should save. Money in a trading account should not be used to pay for college or the mortgage. It is dangerous to use the money for trading that is earmarked for critical expenses. Money loss is bad enough. It’s even worse if it’s capital that should never have been risked.

    Develop a Fact-Based Methodology

    Developing a strong trading strategy takes time. It’s easy to fall for the online trading scams that promise trading strategies “so easy it’s like printing money.” Facts, not emotions or hope, should guide the creation of a trading strategy. In general, traders who are not in a hurry to learn can sort through the internet’s vast amount of data more easily. Suppose you wanted to change careers, but you needed to spend a year or two in college to be qualified to apply for a job in the new field. Learning to trade takes at least the same amount of effort and research.

    Use a Stop Loss

    As a trader, you set your own stop loss. The stop loss might be in rupees or percentages, but it restricts the trader’s risk. Using a stop-loss reduces tension when trading since we know we will only lose a certain amount. Even if a trade is profitable, not having a stop loss is undesirable. The trading plan’s guidelines allow for lost trades to be exited with a stop loss. The aim is to profit from every trade, but that is unrealistic. Using a precautionary stop-loss reduces losses.

    Know When to Sell

    Inefficient trading plans and ineffective traders are the worst combinations for a trading career. If you feel like your trading strategy is not responding well over a period of time, then take the time out to re-assess and develop your strategy again. An unsuccessful trading plan is an issue that has to be solved. It is not the end of a trading career.

    An ineffective trader is one who sets a trading plan but is unable to follow it. External stress, bad habits, and inactivity all contribute to this issue. Traders who are not in top trading condition may consider resting. After resolving any issues, the trader can resume operations.

    Remain Focused on Trading

    Trade with a big picture in mind. It’s normal to lose trades; it’s part of trading. A winning deal is only one step towards a successful business. And the cumulative profits matter.

    A trader’s performance improves once they accept wins and losses as part of the business. That is not to imply we cannot be happy about a successful deal, but we must also be aware of the possibility of a loss. Setting realistic goals is important for a trading career. Your company should make a reasonable profit in a reasonable time. Expecting to be a multi-millionaire by Tuesday is a recipe for disaster.

    Conclusion

    Understanding the value of each trading rule and how they interact can help a trader build a profitable trading firm. Traders who follow these criteria with discipline and patience might boost their chances of success in a highly competitive market.

  • Steps To Increase Your Trading Productivity

    Full-time traders who treat their work as a business are the ones who succeed. But the trading business can get very lonely very quickly. This might psychologically hinder your productivity but there are a few steps you can take to drastically improve your trading productivity.

    Here are a few of them. But Before we get started on your journey to increase your trading productivity, we believe that you deserve one of the best trading accounts from one of the top brokers in share market.With Zebu, you get access to an extensive online trading platformwith which you can create the right trading system.

    The first step is to create alerts.

    Set price notifications based on what you’re looking for. Alerts allow you to be informed about price changes or other changes at a specific time of day without having to sit in front of your computer all day long. To make the most of the rest of the day, you can take a break from the computer and take in the latest market news. An investor’s ability to react quickly to market changes is helped by the timely distribution of alerts. Alerts have the potential to significantly boost output.

    Create a system for your job and keep to it.

    A person’s productivity is directly related to the amount of time spent working. As you trade the market, come up with a plan for yourself. You’ll be more motivated to work on improving your trading performance if you establish a system. Keeping to a routine you’ve established for yourself is the cherry on top. Instead of waiting for the market to shift in your favour, traders who focus on ethics and stick to a process are more likely to become more profitable in the long run.

    Examine your area of expertise

    Re-examine recent trades in your trading journal. It will assist you in refining your approach. You can get a sense of how successful your trades have been by going over your previous transactions and determining whether or not they were profitable. Is it better to hang on to the traded stock for a longer period of time or not? Will you make money or lose money? And there are many more questions you can answer by going over your previous trades. The present market trends might also be better understood by looking back at your trades. It’s essential to review your work to determine where you’re doing well and where you need to improve, as well as where you should focus your efforts in the future. Every great trader keeps a journal of their accomplishments.

    Fresh air is good for you.

    Taking a breath of fresh air might help you relax and improve your physical and emotional health. You’ll feel better about yourself, your lungs will be clearer, your immune system will be stronger, and you’ll have a calmer mindset, which is especially important for trading. Trading on the stock market puts traders under constant stress, therefore it’s critical that they take a break and get some fresh air to de-stress. Taking a break has been shown to enhance output.

    Take some time to unwind and do something you enjoy.

    Make an effort to engage in activities other than trading, such as listening to music, binge-watching your favourite television show, or even taking a walk by the ocean alone. Pre-market, market-time, and post-market analysis can take up to eight hours of a trader’s day, which can sometimes get boring. With such a demanding schedule, mental equilibrium is essential. It is important to take a break from work in order to maintain a healthy work-life balance. When traders relax, their energy system is rejuvenated and they are able to start fresh with their trading strategies, which increases their productivity.

    As one of the top brokers in share market, we believe that you deserve one of the best trading accounts that we have to offer, where you get access to an extensive online trading platform with which you can create the right trading system. Get in touch with us to know more.

  • Currency Trading In India – Why You Should Get In Now

    International corporate heavyweights have set up shop in India because of the country’s size, the scope for innovation, and the soundness of its financial sector. From a highly regulated environment to a more liberalised one, India’s robust and stable financial sector has gradually evolved.

    It has been ranked as the third most attractive investment location in the world by UNCTAD’s World Investment Prospects Survey. Due to the country’s liberal rules, the Indian market offers enormous potential for profit.

    Furthermore, currency trading in India is becoming the go-to place for traders from around the world to transact day and night, thanks to this dynamic environment. In India, the foreign exchange market, also known as the currency trading market, serves as a marketplace for the exchange of foreign currencies.


    Market information in a nutshell

    The NSE, BSE, MCX-SX, and United Stock Exchange all offer trading platforms for currency futures. With Zebu’s lowest brokerage fees, and our credibility as one of India’s best share market brokers, we guarantee that you will have access to the best trading accounts in the country.

    The currency market is open from 9:00 a.m. to 5:00 p.m. on weekdays. For currency trading, there is no cash or equity form, like we use in the Indian stock market. To begin trading, you will need a broker, but you will not require a DEMAT account in order to do so. In the foreign exchange market, we can only deal in the futures and options segments.

    Forex trading in India has shown an upward trend with the introduction of futures derivatives. Individuals and investors were previously only able to trade with banks and major corporations before this change. Both banks and enterprises were given greater freedom to store and trade foreign currencies as a result of India’s currency liberalisation. Derivative products were necessary as trading laws were loosened to facilitate the integration of global and local economies.

    What is the rationale for using derivatives to manage risk?

    As with other financial instruments, the value of a currency fluctuates widely in response to changes in the broader economy and politics. Inflation, foreign commerce, and interest rates are all critical, but the most critical is political stability. Governments can influence the value of their currencies by intervening in the foreign exchange market through the actions of their central banks. They either flood the market with their own currency to reduce the price or buy to raise the price in order to make a statement. The currency trading market in India can also become unstable due to large orders by large firms. Foreign exchange supply is increased when a country’s exports rise. Additionally, market participants’ expectations of national economic performance and their faith in the economy of their respective countries also play a role.

    Currency trading in India could be severely disrupted as a result of these operations. For a long time, any one entity can’t control India’s currency trading market because of its enormous size and volume.

    Because of their enhanced transparency, liquidity, counter-party assurance, and accessibility, exchange-traded currency futures are an ideal hedging instrument.

    Due to its size, volume, and frequency of trade, currency trading in India is a substantial contributor to the national economy. As businesses of all sizes make up the majority of the economy, everything that helps them grows the national economy. Currency trading can be a rewarding endeavour if you keep abreast of global market developments.

    You can explore these options and more with Zebu. Our lowest brokerage fees allow you to purchase the index fund of your choice effortlessly, making yours one of the best trading accounts for currency trading.

  • The Basic Rules Of Position Sizing

    The Basic Rules Of Position Sizing
    Most successful traders, whether they trade the forex, index, equity, or commodities markets, vouch for the relevance of position sizing in their performance.

    And why shouldn’t they? Without proper position sizing strategies, you could be putting a large portion of your trading capital in danger. Finally, the higher the risk you incur in each trade, the more likely it is that your trading account will be closed.

    While it is true that the trade might sometimes provide the much-desired large win, most skilled traders will tell you that it is advisable to limit your position size rather than raise your risk needlessly.

    Before you secure your trades with position sizing rules, ensure that you use the best broker for trading with the lowest brokerage on offer. Zebu empowers your online stock trading journey with a state-of-the-art trading platform as well.

    Let’s take a look at what position sizing is and why it’s so important, as well as the best position sizing tactics you’ll need to learn in order to enhance your trading.

    What exactly is position sizing?

    Setting the correct transaction size to buy or sell a certain instrument, or determining the Rupees amount that a trader will use to start a new trade, is the most basic definition of position sizing.

    It may appear easy, but it can be rather complex. Before you enter a trade, you should understand how much risk you are incurring and how it will affect your trading account.

    Furthermore, traders must regularly review their positions to ensure that everything is under control. Keep in mind that markets move swiftly! Furthermore, traders must keep margin requirements and margin stop out levels in mind.

    What is the significance of position sizing?

    As you can expect, opening positions with arbitrary position sizes or based on gut instinct will result in disaster. Position sizing is concerned with avoiding excessive losses. If you have a good risk management strategy and stick to it, you are unlikely to lose a large amount of your cash on a single trade. It will also provide you with an opportunity to retain your focus on your account as a whole and all your open positions. It is especially common for short-term traders who must react rapidly to new developments to lose oversight and forget how much risk they already have running before opening fresh positions. This is why it is so important: a successful trader is also a good risk manager.

    However, position sizing is about more than just avoiding excessive losses. It also provides you with the opportunity to improve your performance. A risk-averse trader who is only ready to risk a small fraction of his capital must realise that he will never generate significant returns. As you can see, position sizing is all about striking the appropriate balance – allowing yourself to maximise profits while avoiding excessive losses.

    Proper position sizing along with profit-taking tactics can assist traders in developing the optimal strategy for entering and leaving all trades.

    How do you calculate the size of your position?
    Let’s have a look at a handful of popular position sizing approaches you can use to improve your trading and make better use of position size.

    Position sizing strategies that work well

    1. Fixed rupee value

    The simplest method to include position sizing into your trading strategy is to use a fixed Rupees amount. This may be especially useful for those who are new to trading or have a little quantity of capital. All you have to do is set aside a certain amount of money for each trade you make.

    For example, if you have Rs 10,000 in trading capital, you could want to set aside Rs 1,000 for each trade. That is, instead of investing the entire cash into one deal, you can divide it into ten.

    This instantly reduces the amount of risk you take with each trade. It will also aid in the preservation of your capital if the first few deals you make turn out to be losses.

    2. Fixed percentage

    The most often utilised position sizing approach by traders is a fixed percentage risk each trade. On each trade, you put a small portion of your total cash at risk.

    Depending on the financial asset you’re trading — for example, equity, metals, oil, or indices – most successful traders would agree that a 1 – 2 percent per trade risk is a decent starting point.

    If you employ the set % risk per trade strategy with a Rs 10,000 trading capital, you should only risk Rs 100 – Rs 200 per trade.

    The beautiful thing about this method is that it forces you to focus on the percentage risk rather than the monetary value. Then, as your capital rises from Rs 10,000 to Rs 20,000, your 1% risk every trade rises from Rs 100 to Rs 200. Similarly, if your capital falls, you still risk 1%, but it will be a smaller Rupees amount.

    If you don’t, you’ll quickly discover that the large risks you incur in each trade will quickly deplete your trading cash.

    3. Use of leverage

    While leverage is one of the primary draws for traders to the equity, index, and commodities markets, we all know that leverage can be a double-edged sword. It has the ability to amplify both successes and defeats.

    Many trading platforms give leverage ranging from 3:1, 5:1, 10:1, or even 20:1.

    However, when it comes to leverage, keep in mind that you do not have to employ the utmost level of leverage. Just because it’s on sale doesn’t mean you have to take advantage of it.

    It is preferable to utilise less leverage to ensure that you are limiting your risk exposure.

    If you use too much leverage, you increase your chances of experiencing a capital loss or a margin call if a trade goes against you.

    4. Kelly’s Criterion

    Let’s have a look at the Kelly Criterion formula:


    W − [(1-W)/R] = Kelly %


    It computes the percentage of your account you should put at risk (K per cent). It is equal to your trading strategy’s historical win % minus the inverse of the strategy win ratio divided by your profit/loss ratio.

    The proportion you receive from that equation represents the stance you should take. For example, if you get 0.05, you should risk 5% of your capital per trade.

    These are 4 of the very basic position sizing rules and points to keep in mind while trading. In a world where trading is one of the riskiest businesses to be in, following the rules of position sizing can drastically improve your risk management.

    As we mentioned before, we at Zebu offer the lowest brokeragefor trading and, as a result, have emerged at as one of the best brokers for trading. Take your online stock trading to the next level with us – please get in touch with us to know more.

  • The Art Of Trading With A Small Capital

    Every trader would love to trade a well-funded trading account – with a minimum balance of INR 10,00,000 – but only a small percentage of us are able to do so. Most traders, especially those who are starting their trading careers, start with a small account.

    Trading with a limited account requires tight risk management and money management due to the lack of a cushion for mistakes or unexpected losses. For example, if a trading account only covers its minimum margin by Rs 20,000 and suffers a Rs 30,000 loss, the account will become untradeable until more funds are deposited.

    When it comes to online stock trading with a smaller capital, you need the best trading platform to back up your trading decisions. As one of the best share market brokers, we have created an online platform that is fully loaded with indicators, scanners and other tools to make trading easy.

    Here are some pointers for people with a modest trading account.

    The Constraints of a Small Account

    Trading with a small account is far more difficult than trading with a large account. Large accounts are protected against mistakes, unexpected losing streaks, and even bad traders, but small accounts do not have this protection.

    Even if you can afford losing streaks, trading with a small account has psychological concerns that make it difficult to trade well. For example, if a trader knows that they can only afford one loss in their trades, their account can be untradeable (due to a lack of needed margin), and the pressure to make a profitable trade is great.

    There are also differences in what a small-account trader is legally permitted to do. Large accounts can trade every available market, however, small accounts may only be allowed to trade specific markets in specific ways.

    Large accounts permit more flexible trading, such as several contracts and short positions, whereas small accounts may be restricted to long positions that can be covered with cash.

    Here’s our advice

    With all of the difficulties, it might appear that trading a small account profitably is impossible. However, this is not the case, and many traders, including experienced traders, trade small accounts profitably.

    Using Leverage in Trading
    Trading with leverage gives traders the opportunity to make upto 4X in profits for the trades they are right about. When day trading individual stocks, for example, you can normally trade up to four times the amount of funds in your account.

    Trading the same underlying stock in the options requires only about 15% of the trade’s value in cash.

    Trade with Caution

    Traders with well-funded accounts can afford to take high-risk bets, such as those with substantial stop losses in relation to their targets. Small-account traders must be extra cautious, ensuring that their risk-to-reward and win-to-loss ratios are calculated and used effectively.

    Follow the 1 per cent risk rule

    Trading with the 1% risk rule gives a small account the same cushion (against mistakes and unexpected losses) as a large account. Because it is a very successful risk management approach, many expert traders adhere to the 1% risk rule regardless of the size of their trading accounts.

    In conclusion

    Some traders are sure that trading accounts with insufficient capital cannot be profitable. This assertion is false. Small trading accounts may be more difficult to trade successfully, but if done right, there is no reason why they cannot be profitable.

    Small account traders can make a solid livelihood from trading, but they must manage the stress that is often associated with undercapitalization. The biggest focus should be on risk management and its strategies, especially the 1 per cent risk rule. With these considerations in mind, you may be able to grow your capital considerably.

    Profitable trading is one approach to grow a modest account, but if you’re conservative and follow the 1 per cent risk limit, the growth may be slower than you’d want. You could pursue higher risk/higher return transactions, but this exposes you to the chance of losing your entire account. Many traders with a small account may discover that they require additional sources of income, such as a day job, in order to substantially increase capital.

    When it comes to online stock trading and growing your trading account, another important aspect for you to consider is the shar market brokers you trust. At Zebu, we offer the best trading platform that is packed with features that you will help you make better trading decisions. If you would like to know more, please get in touch with us now.

  • How To Backtest Your Strategy Manually

    How To Backtest Your Strategy Manually
    There are numerous applications and trading platforms available now that allow you to backtest your strategy. However, you may not always have these tools available, or you may want to see the complexities of your strategy in action. The good thing is that you can independently backtest your strategy. All you need is your trading strategy and historical data to accomplish this.

    Even if you do it manually, backtesting a plan is not difficult. However, employing a programme or a platform makes things much easier.

    What exactly is backtesting?

    Backtesting is the foundation of developing trading techniques and edges. During a backtest, a new approach is tested against historical data to determine its effectiveness. This has a lot of advantages, such as being able to watch the plan in action and evaluating whether or not any of the parameters need to be changed in order for it to function.

    If a trader’s backtesting provides positive outcomes, he or she may have faith in the approach. If a backtest does not produce acceptable results, adjustments will most likely be required. You might also find out that the strategy you devised isn’t worth pursuing.

    While backtesting is a terrific idea, it must be done with extreme caution. As we’ll see later, it’s entirely feasible that a method that performed admirably in the backtest may fail miserably on real-time data. There are, however, solutions to this difficulty.

    How to Backtest Your Strategy Manually

    Backtesting is typically performed by those who are familiar with coding. Those who are unable to code must rely on a backtesting platform.

    If you decide to manually test your approach, you can simply choose any chart that provides access to the indicators required for your plan. TradingView and MT4/MT5 now offer the finest free options. Let’s look at how to manually backtest your plan now.

    Or, you can use your trading platform’s in-build charts as well. For example, Zebu comes with an impeccable trading platform that you can use to manually backtest your strategy. You can view charts in multiple time frames and use a host of indicators and screeners to backtest your strategy.

    1. Develop the Strategy

    Before you can backtest a strategy, you need to develop one in the first place. It is critical that you do not test half-heartedly since this would be a waste of your time.

    Create a trading plan based on your understanding of the market. When you’re done, take a good, long look at it and try to examine each individual parameter. If something does not appear to be correct, make the necessary changes before proceeding to backtest. Your entry/exit signals, conditions, timeframe, and risk per trade are all important considerations.

    After you’ve finished developing your plan, you may begin backtesting it.

    2. Choose your charts

    Choose the market in which you want to backtest your data. Once you’ve found the market, open the chart you’re using and choose a timeframe from the past.

    Traders typically backtest their method for at least a few years. While some traders believe that scrolling back to the beginning of the chart is necessary, this is not the case. You should be alright as long as you can backtest your technique over a prolonged period of time. A sample size of around ten years gives enough history to build a reasonable sample size.

    Then, using the tools on your chart, pull up all of the indicators you’ll need for your trades. Ascertain that your chart is properly configured with all of the trading tools that will be required during the backtest. You are now ready to begin your backtest.

    When you choose a share broker for backtesting and trading, ensure that you choose the best online trading platform like Zebu. Our charts, along with the wide range of indicators we have can help you formulate the most complex as well as easy trading strategies and backtest them manually. In addition to this, we also support your trading with the lowest brokerage for intraday trading.

    3. Perform Manual Backtesting on Your Strategy

    You might have already figured out what to do next! Backtest your method by moving the chart ahead bar by bar. This entails recording trades anytime your trading method suggests it.

    Recording your trades is actually pretty simple, and it can be done using either a physical journal or software like Microsoft Excel.

    It is not difficult to keep track of your trades, but it can be time-consuming. When a trade signal is generated, all you need to do is record the entry point, stop-loss, date and time, and any other information that may be relevant to the trade. Many traders like to mention other nuggets that their trading method is informing them, such as the risk to reward ratio, and so on.

    When you’re ready to exit the trade, make a note of your return as well as the exit point. After that, you simply repeat the procedure. Backtesting, as you may have guessed, can be tedious and time-consuming. Remember that backtesting a decade of data will most likely take at least a few hours. As a result, when you sit down to backtest a technique, make sure you have the time.

    The Drawbacks of Manual Backtesting

    The issue with manual backtesting is that you can make mistakes when tracking the data. In addition, when backtesting your technique, there is a psychological component involved. Because you can see the data ahead of you, you may not wind up executing the trades that your method suggests.

    People usually try to excuse this by saying, “I wouldn’t have made that trade in real life.”

    Simply do not do this! If a trade fulfills your criteria, make a note of it!

    If you are able to authentically and honestly note down your trades while backtesting manually, then you do not have to sprint for expensive programs and data plans to backtest. Your journal or excel sheet would suffice.

    As we have mentioned before, when you choose to start with manual backtesting, you need an online trading platform that accommodates every complexity of your trading system. As a leading share broker, we at Zeu have created an online trading platform that comes with a host of indicators to help you formulate and backtest a strategy. In addition to this, we also support your trading efforts by giving the lowest brokerage for intraday trading.


  • Are You A System or Discretionary Trader?

    Large Cap vs Mid Cap vs Small Cap: Key Differences That Actually Matter

    One of the decisions that new traders must make is whether to be a discretionary or a system trader. Discretionary trading is trading that is based on a decision. Based on current market conditions, the trader determines which deals to execute. System trading, on the other hand, is based on rules. The trading system determines which deals to execute; current market conditions are irrelevant. Discretionary and system trading can both be profitable. That is, the decision should be made based on the trader’s personality. Some traders may immediately determine which kind of trading is best for them; others may need to try both sorts before deciding. Whether you are a system trader or a discretionary trader, we provide you with the best trading accounts to choose from. As one of the top brokers in share market, we provide one of the lowest brokerage fees to help you make as many trades as you would like for the day.

    The Benefits and Drawbacks of Discretionary Trading The trader picks the transactions to make based on the information available at the moment in discretionary trading. A discretionary trader can (and should) nonetheless stick to a trading plan with well-defined trading guidelines. They will use their discretion in accepting the trade and managing it. A discretionary trader, for example, may study their charts and discover that all of their requirements for a long trade have been met. Nonetheless, they may decline to make the trade since the volatility for the day is too low, and so the price is unlikely to reach the profit target for the trade. The benefit of discretionary trading is that it is responsive to market situations. You may have an excellent trading system, but if you are aware that it performs poorly in particular market conditions, you can avoid those trades. Alternatively, if you see your strategy performs well in other conditions, you might increase your position size somewhat during such times to optimise gains. The disadvantage of a discretionary method is that many traders are prone to second-guessing themselves. They may be inept at determining when to trade and when not to trade; consequently, a more methodical approach would be preferable. Discretionary systems are vulnerable to trader psychology; being overly greedy or scared can quickly erode the profitability of a discretionary trading system.

    System Trading Benefits and Drawbacks The choice to make a trade in system trading is totally dependent on the trading system. System trading choices are final. They do not allow the dealer to decline a trade at his or her discretion. If the criteria are met, the trade is executed. A system trader may study their charts and discover that their trading system’s requirements for a short trade have been met. They will complete the transaction without any further deliberation. This is true even if their “gut” tells them it isn’t a good trade. System trading techniques can frequently be automated since the rules are so well defined that a program can carry them out on the trader’s behalf. Once a program has been built to determine when the requirements of a trading system have been completed, the program can make the trade without the trader’s involvement. This involves entry, management, and exit. The system trading approach has the advantage of being immune to the trader’s psychological whims. The system accepts all trades regardless of how the trader feels. The disadvantage is that systematic trading is not very adaptable. Trades are always accepted as long as the terms are met, even in less advantageous conditions. More rules can be introduced to the system to help overcome this problem, however, this often results in the loss of some winning trades.

    Discovering Your Personal Style Discretionary trading and system trading both aim to make money, but in slightly different ways. The two systems may even make many of the identical trades. Each will most likely be better suited to different types of traders. Discretionary trading is ideal for traders who desire complete control over their trading decisions, including entry, stop loss, and exit. Discretionary traders frequently feel uneasy about handing over total management of their trading to software. Discretionary trading is also for folks who just want to adjust their transactions to current market conditions. System trading, on the other hand, is ideal for traders that value speed, precision, and accuracy in their trading. System traders have no reservations about using a computer program to make trading choices for them. They may cherish the sense of diminished responsibility that this provides.

    Can You Use Both Methods? It is feasible to be a discretionary trader who employs system trading. However, it is not viable to be a system trader who also employs discretionary trading. A discretionary trader, for example, may use a trading system for their entries and take every deal that the system identifies. They can then manage and exit their deals at their leisure. A system trader does not have this option because they must adhere to their trading method exactly. If a system trader makes a decision without following the rules of their strategy, then he/she becomes a discretionary trader. All of your trades, whether you are a discretionary trader or a system trader, need to be complemented by the lowest brokerage and the best trading accounts you can find. As one of the top brokers in share market, we at Zebu offer low brokerage trading accounts and a high-end trading platform to execute your strategies. To know more, please get in touch with us now.

  • Key Takeaways From Budget 2022

    From Rs 5.54 lakh crore to Rs 7.50 lakh crore, the target for capital expenditure (capex) grew by 35.4%. The FM said that India’s GDP growth in FY23 is the highest of all major economies, and we are now in a strong position to deal with any challenges that come our way. According to her, the goal is to complement macro-growth with micro-all-inclusive welfare, digital economy and fintech, tech-enabled development, energy transition, and climate action. She also mentioned that ECLGS cover has grown by Rs 50,000 to Rs 5 lakh crore. In this year’s budget, the top priorities are: PM Gati Shakti; inclusive development; productivity enhancement; sunrise opportunities; energy transition; climate action;

    She added that productivity-linked incentive schemes in 14 sectors have been very well-received. Investment intentions worth Rs 30 lakh crore have been made. Economic growth is getting a boost from public investment and capital spending.

    Taxes

    Income from digital assets is to be taxed at 30% and except for the cost of buying a digital asset, no other deductions will be made.
    The loss from transactions of digital assets cannot be set off from any other income.
    Digital asset gifts like cryptocurrency gifts will be taxed at the receiver’s end.

    If taxpayers have made an error while filing their returns, they can not file an updated return within two years from the year of assessment.
    The alternate minimum tax for cooperative societies has been cut down to 15% with surcharges being reduced to 7% for those with incomes between INR 1 crore to INR 10 crores.

    Tax deduction on employers contribution to NPS has been increased to 14%.

    Jobs

    ECLGS has been extended till March 2023 and the Government hopes to add 60 lakh jobs in the next 5 years.
    A digital ecosystem for skilling and making money will be launched soon. This will help people learn new skills, re-skill, and up-skill through online training. API-based skill credentials, payment layers, and other tools will help people find jobs and opportunities.

    Infrastructure

    National highways will be expanded by 25,000 kms in the upcoming financial year. The Desh stack e-portal will be launched to promote digital infrastructure.

    Air India’s strategic ownership transfer has been completed. Four multi-modal national parks will be built in the next two years.

    One product, one railway station will be promoted with 400 new Vande Bharat trains being introduced.

    There will be a PM Gatishakti master plan for expressways next year. There will be 100 PM Gati Shakti terminals built in the next three years. Over the medium term, the government will invest in infrastructure and use the Gati Shakti tech platform to modernise it. This will help the economy move forward, and it will lead to more jobs and opportunities for the youth.

    Housing And Urban Planning

    In 2022-23, 80 million houses will be finished for PM Awas Yojana beneficiaries; 60,000 homes in rural and urban areas will be chosen as beneficiaries of the PM Awas Yojana.

    60,000 crore has been set aside to make sure that 3.8 million households had access to tap water.

    A high-level committee of urban planners and economists will be set up to make recommendations on urban city building. Five of the existing academic institutions for urban planning are to be declared as Centre for Excellence with an endowment fund of INR 250 crores.

    New modern building by-laws are to be introduced.
    The government is also going to push for public transport usage in urban areas.

    MSMEs and Startups

    A five-year, Rs 6,000-crore scheme to rate MSMEs will be implemented. The reach of MSMEs such as Udyam, e-shram, NCS, and Aseem portals would be widened and they’ll now act as portals with live organic databases, offering G-C, B-C, and B-B services including credit facilitation and expanding entrepreneurial opportunities.

    A fund with blended capital has been raised under NABARD’s co-investment approach to finance agriculture and rural enterprise startups for the farm product value chain

    An expert group will be formed to recommend steps to help attract investment after PE/VC invested Rs 5.5 lakh crore in a startup.

    Agriculture

    The government would spend Rs 2.37 lakh crore on wheat and paddy procurement under the MSP programme
    The International Year of Millets has been declared for 2022-23
    Small farmers and MSMEs will benefit from new rail products. To reduce imports, a more rationalised plan to boost domestic oilseed production will be implemented.
    Kisan Drones will be used for crop assessment, land records, and insecticide spraying and are expected to drive a wave of technology in the agricultural sector.

    INR 44,605 crores have been allocated for the linking of Ken Betwa river. Five river linkages have had their draught DPRs has also been finalised.

    Along the Ganga river corridor, natural farming will be promoted. Ministries for procurement will create an entirely paperless, e-billing system and farmers will be given financial assistance to start agroforestry operations.

    Electric Vehicles

    A battery swapping policy will be developed to allow EV charging stations for automobiles. The private sector will be encouraged to develop sustainable and innovative business models for battery and energy as a service, thereby improving EV ecosystem efficiency.

    Education

    States will be encouraged to revise agricultural university curricula to meet the needs of natural, zero-budget, and organic farming, as well as modern-day agriculture.

    The PM eVIDYA’s ‘one class, one TV channel’ programme will be expanded from 12 to 200 TV channels, allowing all states to provide supplementary education in regional languages for classes 1 to 12.

    A digital university will be established to provide education; it will be built on a hub-and-spoke model. A 1-Class-1-TV Channel will be implemented to provide supplementary education to children in order to compensate for the loss of formal education due to Covid.

    Finance and inclusion

    Rs 1 lakh crore in financial assistance will be provided to states to catalyse investments in 2022-23.

    RBI proposes to introduce Digital Rupee using blockchain technology in 2022-23.

    The core banking system will be implemented in all 1.5 lakh post offices, enabling financial inclusion and account access via net banking, mobile banking, and ATMs, as well as providing online transfer of funds between post office accounts and bank accounts. This will be especially beneficial to farmers and senior citizens in rural areas, allowing for interoperability and financial inclusion.

    Amendments to the IBC to improve the efficiency of the resolution process. The government will also facilitate the resolution of cross-border insolvencies and expedite the voluntary closure of businesses.

    To encourage digital payments, scheduled commercial banks will establish 75 digital banks in 75 districts. An international arbitration centre will be established to facilitate faster dispute resolution. According to FM, a world-class university will be permitted in the GIFT IFSC, free of domestic regulation.

    Healthcare

    An open platform for the national digital health ecosystem will be launched, which will include digital registries of health providers and facilities, a unique health identity, and universal access to health facilities.

    A National Tele Mental Health Program will be launched to provide mental health counselling.

    Telecom

    A spectrum auction will be held in 2022 to prepare for the 5G rollout. A design-led manufacturing scheme will be launched as part of the PLI scheme to enable affordable broadband and mobile communication in rural and remote areas.

    A portion of the USO Fund will be used for R&D and technology advancement and contracts for laying optical fibre in villages will be awarded under the BharatNet PPP project in 2022-23. A data centre and an energy storage system will also be designated as infrastructure, allowing for easy financing.

    Women and Children

    Recognizing the significance of ‘Nari Shakti,’ three schemes will be launched to provide integrated development for women and children, including the upgrade of 2 lakh Anganwadis to improve child health.

    Ease of Businesses

    75,000 compliances have been eliminated, and 1,486 union laws have been repealed to make doing business easier. Corporate voluntary exit will be reduced from two years to six months.

    Defence

    The government has committed to reducing imports and promoting self-reliance in the defence sector; 68% of capital for the defence sector will be earmarked for local industry and 25% of the defence R&D budget will be made available to industry, startups, and academia.

    Through the SPV model, private companies will be encouraged to design and develop military platforms and equipment in collaboration with DRDO and other organisations.

    In 2022-23, the domestic industry will receive 68 per cent of the defence capital procurement budget (up from the 58 per cent last fiscal).

    Railways

    400 new-generation Vande Bharat trains will be manufactured over the next three years, and a 2,000-kilometer rail network will be brought under KAWACH for safety and capacity augmentation.

    Climate Change and Net Zero Energy

    Sovereign green bonds will be included in the government’s borrowing programme in this fiscal year and the proceeds will be used for public-sector projects
    Four coal gasification pilot projects will be established and PLI will receive an additional allocation of Rs 19,500 crore for the production of high-efficiency solar modules.

    Travel

    E-Passports with embedded chips will be issued in 2022-23 for ease of overseas travel.


  • Let’s Make Sense Of Option Greeks – Part 2

    In the last article, we got to understand the basics of what moves an option’s premium. There are several factors like implied volatility, moneyness and time to decay that affect its price. In this article, we take a detailed look at each of the options Greeks and how they work.

    Before we begin…
    As we have mentioned in part 1, Zebu is fast emerging as the top broker in share market and provides the lowest brokerage for intraday trading. As an options trader, we will complement your strategies with Zebull, the best Indian trading platform. It comes with a variety of features that will help you analyse option greeks effortlessly.

    For every 1 Re change in the price of the underlying securities or index, Delta estimates how much an option’s price can be expected to vary. A Delta of 0.40, for example, suggests that the option’s price will move 40 paisa for every 1 Re movement in the price of the underlying stock or index. As you may expect, the higher the Delta, the greater the price variation.

    Traders frequently utilise Delta to determine whether an option will expire in the money. A Delta of 0.40 is taken to signify that the option has a 40% chance of being ITM at expiration at that point in time. This isn’t to say that higher-Delta options aren’t profitable. After all, you might not make any money if you paid a high premium for an option that expires ITM.

    Delta can alternatively be thought of as the number of shares of the underlying stock that the option mimics. A Delta of 0.40 indicates that if the underlying stock moves 1 Re, the option will likely gain or lose the same amount as 40 shares of the stock.

    Call Options

    The positive Delta of call options can range from 0.00 to 1.00.
    The Delta of at-the-money options is usually around 0.50.
    As the option’s price goes deeper into the money, the Delta will rise till it eventually reaches 1.
    As expiration approaches, the Delta of ITM call options will approach 1.00.
    As expiration approaches, the Delta of out-of-the-money call options will almost go down to 0.00.

    Put Options

    The negative Delta of put options can range from 0.00 to –1.00.
    The Delta of at-the-money options is usually around –0.50.
    As the option goes deeper ITM, the Delta will fall (and approach –1.00).
    As expiration approaches, the Delta of ITM put options will reach –1.00.
    As expiration approaches, the Delta of out-of-the-money put options will almost go down to 0.00.

    Gamma

    Gamma represents the rate of change in an option’s Delta over time, whereas Delta is a snapshot in time. You can think of Delta as speed and Gamma as acceleration if you remember your high school physics lesson. Gamma is the rate of change in an option’s Delta per 1 Re change in the underlying stock price in practice.

    We imagined a Delta of.40 choice in the previous case. The option’s Delta is no longer 0.40 if the underlying stock moves 1 Re and the option moves 40 paise with it. Why? The call option is now considerably deeper ITM, and its Delta should move even closer to 1.00 as a result of this 1 Re move. Assume that the Delta is now 0.55 as a result of this. The Gamma of the choice is 0.15, which is the difference in Delta from 0.40 to 0.55.

    Gamma falls when an option acquires further ITM and Delta approaches 1.00 since Delta can’t reach 1.00. After all, when you near top speed, there’s less room for acceleration.

    Theta

    If all other factors remain constant, theta informs you how much the price of an option should decline each day as it approaches expiration. Time decay is the term for this type of price depreciation over time.

    Time-value erosion is not linear, which means that as expiry approaches, the price erosion of at-the-money (ATM), just slightly out-of-the-money, and ITM options generally increases, whereas the price erosion of far out-of-the-money (OOTM) options generally drops.

    Vega

    Vega is the rate of change in an option’s price per one percentage point change in the underlying stock’s implied volatility. Vega is used to estimate how much the price of an option would vary with respect to the volatility of the underlying.

    More information on Vega:

    One of the most important elements impacting the value of options is volatility.
    Both calls and puts will likely lose value if Vega falls.
    A rise in Vega will normally raise the value of both calls and puts.

    If you ignore Vega, you may end up paying too much for your options. When all other conditions are equal, consider purchasing options when Vega is below “normal” levels and selling options when Vega is above “normal” levels when choosing a strategy for options trading. Analysing the implied volatility with respect to the historical volatility is one approach to analyse this.

    Implied volatility

    Despite the fact that implied volatility is not a Greek, it is still important. Implied volatility is a prediction of how volatile an underlying stock will be in the future, but it’s only an estimate. While it is possible to predict a stock’s future movements by looking at its historical volatility, among other things, the implied volatility reflected in an option’s price is an inference based on a variety of other factors, including upcoming earnings reports, merger and acquisition rumours, pending product launches, and so on.

    These are the different option greeks that you need to use in conjunction with other bullish and bearish strategies and mathematical models that you might use to determine market moves.

    As the top broker in the share market, we have created Zebull. the best Indian trading platform with the lowest brokerage for intraday trading. With Zebull, you can easily analyse option Greeks and filter out stocks that work for you.