Stock market trading is usually associated with a significant loss when a crash happens as most people are dealing with stocks and stocks are going to make a loss with the price going down. The solution – learn bidirectional products called derivatives – futures and options.

Our stock market currently is very expensive with PE value around 24. Every time it goes above 22 it makes a lot of sense to book profit in the stocks and look for shorting opportunities in derivatives. That’s what we did in our trading room on 9 Sep 16.

I run an online trading room in which I live trade with my students every day. On 9 Sep 16, after a detailed fundamental and technical analysis of the markets,we decided to sell all our stocks and sit on cash. You have to learn how to sell greed and buy fear. It has paid off, and the same stocks are now available at a lower price.

The other opportunity that comes in an overbought market is shorting the fundamentally weak stocks that have gone up in the bull run and will correct sharply in the bear run. Out of 8000 stocks in our market, about 180 are allowed in the F&O segment. Most of these are large caps and blue chips, but not all are fundamentally strong. Great shorting opportunities are available in this segment, and this is what we have been doing for last one month.

On 29 Sep 16, we were trading the way we trade every day with our rules and strategies and that day the market moved three times more than usual, and I made 59,600 profit by using an average capital of 1,50,000 only. How is that possible – in derivatives you can do big turnovers by utilizing less money. My average capital was 150k, but I could do turnover more than 1cr. More than 20 of my trades made more than 20k that day. One of them made more than 2 lakh rupees in a single day.

It’s possible to make money with the market going down – you have to develop the skill of trading derivatives.

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