NEW DELHI: Sixteen years ago, Rajendra Agarwal’s, 53, accumulated losses from the stock market stood at Rs 35 lakh. “After that, I stopped trading and exited the market. Over the next few years I paid back all my loans from profits I generated from my grocery shop,” said Agarwal, who owned a store in Pune.
Before we tell you Agarwal’s comeback story, here’s what happened. Agarwal began his investment journey in 1987 by picking up his first stock: Lohia Motors (LML), the company that produced LML Vespa scooters. For a few years, he was a typical retail investor: Buy a stock, wait for weeks/months for it to rise, and then sell it to make some profit.
Then in 1991, the trading bug bit him. And by 2004, he began giving investment tips to speculators and traders. Agarwal’s foray into the world of speculation proved catastrophic for him with a total loss of Rs 35 lakh. But he didn’t lose heart.
After paying his dues, when derivatives trading was just picking up in India, Agarwal re-entered the market. He started trading in cash as well as derivatives. Derivatives trading is a mechanism in which a trader enters into an agreement to transact at a future date or at a certain price after understanding what the future value of the underlying asset of the derivative is expected to be.
He also studied technical analysis and day-trading techniques and started working on new processes. Finally, about three years ago, he began trading using a technique devised by him that he calls ‘SG’, or safeguard level — a technical-based process to cut losses if a trade goes wrong. Although Agarwal declines to share details about his trading volumes, his friends and acquaintances say his daily turnover would be in crores of rupees.
“I prefer to trade in options rather than futures,” Agarwal said. “One should trade an asset based on the amount of money one has at his disposal. And one should not over trade.” Futures and options are derivative products through which traders can use a small amount of money, called margin, to trade worth multiple times the margin.