FnO vs Equity

The beginning
I started my investing journey in the market with equity investing. Initially I used to invest in penny stocks thinking these low value stocks will give multibagger returns based on operator stories like land bank, turnaround stories, etc

The 2008 mortagage crisis shock
After 2008 learnt the value of quality and fundamentals in investing. Hereafter my main strategy was to track big investors like Rakesh Jhunjhunwala, Ramdeo Agrawal, Vijay Kedia, Ramesh Damani, Porinju, Dolly Khanna, Monish Pabrai and copy their investments on a small scale. I built a large portfolio of high quality midcap stocks like Heritage foods, Piramal Ent, HIL, Tasty Bites kind of stocks. I did my quality checks based on promoter shareholding, quaterly results, dividend history, corporate events, exchange announcements, etc. This helped me make good money for few years. Few stocks also turned multi-baggers and helped me grow my capital substantially

The 2018 tax and corporate default shock
But after 2018 this stopped working. Triggered by unfavourable tax policies like LTCG, dividend tax, super rich surcharge, and ILFS default, foreign investors started dumping Indian market and many many midcaps started crashing irrespective of whether they were earlier considered as high quality or low quality. Many stocks like DHFL, Yes Bank, Indiabulls group, Zee group went totally bust. Situation one level lower quality was even dire. Stocks like Talwalkars, Sintex, Manapasand, Vakrangee defaulted and turned into penny stocks as scams after scams broke out. Collateral damage spilled over to even stocks like Indusind bank. Nothing was spared. Things were crashing right left and center.

The 2019 covid shock
Then came covid crisis and stock markets kept crashing further. Indexes and large stocks started hitting lower circuits on a regular basis. Even the best stocks like HDFC group, Bajaj Finanace, Mahindra crashed 40-70%. Just before covid started, I had quit my job to get into full time trading after having thought about it for years. Lacking a steady source of income I could not hold on to the investments as my portfolio was bleeding everyday in lakhs. I didn't exit at bottom in panic, but I started exiting the market as it started recovering from it's bottom in March. In the next 3 months I completely exited my entire investment portfolio by June.

The 2020 Trillions of dollars market stimulus shock
Now the market fully pumped by trillions of dollars of covid stimulus by US and EU govt kept on rising. I was expecting the market to correct at some point of time since on the ground situation was still bad as waves of covid surge kept hitting the world with different variants and mutants. Several economic fallouts like labor migration, job loss, business downturn was being reported regularly. However US was in the middle of presidential election and was determined to not let the market fall as it could effect the election outcomes. Both democrats and republicans kept on talking about pumping the economy with more and more stimulus. Also just after US elections came the news of covid vaccines and global markets went bezerk. The market was no longer in recovery mode. Market shot up fast and furious into bubble territory and kept going up. Stocks started trading at never seen before crazy valuations for example at one point of time Tesla was trading at 1500 PE ratio. All this while I had exited the market completely at a huge loss and was still sitting out waiting for a correction.

FnO Begining
There was no way I could re-enter the market now. Either I could accept my loss and quit markets completely as a total failure or I would have to come up with a new approach to market. This is when I started looking into Futures and Options. My goal was to make money from trading instead of investing which required me to again put whatever money was left in the market and hope that market keeps going up. But many things could go wrong and investing into a bubble because of FOMO (Fear Of Missing Out) was surely a recipie of disaster immediately after having faced a really big disaster just in the immediate past. There was no scope to go wrong again as recovery would be impossible on any further big loss of capital.

Why FnO?
FnO allowed me a trading style that suited my mindset.
Positional Short trading: FnO is the best way to play positional shorts in the market and make money on both sides rise and fall in the market. Options is the best way to earn from a stagnant, rangebond market in which every other investment strategy will fail.
Index Trading: FnO allows you to trade in indices like Nifty and BankNifty instead of individual stocks. This provides protection from stock specific news based risks.
Leverage: FnO provides margin based leverage which helped me take larger positions considering my trading capital had reduced considerably because of the heavy losses in the previous couple of years.
Systematic Rule based trading: FnO has allowed me to develop systematic data driven trading methodology instead of relying of news and feeling based investments. After the bitter experience of past few years, I had completely lost trust in the market, individual companies, corporates, research reports, news, etc. I wanted a mechanical rule based system and I wanted to completely eleiminate dependency on anyone else for my investment decisions.
Continuous compounding: FnO gives continuous compunding. You can earn daily, weekly, monthly and immediately deploy the profits next day with 4x leverage. This offers infinite scalability of earnings for retail size traders.

The path to success and learning
This is how I started my trading journey in FnO and left behind equity investments completely. Since then there has been a lot of learning in the FnO domain too. It has not been an easy journey but a fairly rewarding one. In about one year time, I am once again back on track and now all the tools are in place to achieve my goals and income expectations from the market. This blog is dedicated to documenting all the learnings from my FnO trading journey. It has been a success for me and if anyone is going through similar struggles with stock market, I am hoping that this blog will shorten their struggle, reduce risk exposure and help folks in achieving success much faster. Let the journey begin !