There Are Only A Handful Of Traders Who Succeed In The Business. Navy Ramavat And His Team Contradict Conventional Wisdom Of Exploiting Mispricing For Profitable Trading.
Trading is said to be a lonely profession where individuals overcome their limitations and discover strengths to achieve success. There are, however, few success stories in the world where a group of traders has come together to create magic.
Sitting in the heart of India in Indore, Madhya Pradesh, a group of 17 young traders has carved a success story rarely seen in the trading world. Normally, proprietary traders in India are either arbitragers or delta hedgers using derivative tools to exploit mis-pricing. But these boys from Indore are directional traders whoare continuously exploiting opportunities in the market.
Navy Ramavat (@navyramavat), the team leader, started the journey alone and developed his own trading strategy. A screen reader who trades discretionary strategies using correlations in the market, Ramavat found technical analysis three years after successfully trading the markets. Later he graduated into system trading and presently trades over 10 strategies.
Along the way, Ramavat’s friends and acquaintances joined him leaving well-paying jobs to be trained by him as traders. Today, the team trades all markets in the country using all available instruments.
As for Navy Ramavat, he likes to spend his free time with family and friends if he is not trading. Besides reading books on psychology, technical analysis, health, and spirituality, Ramavat looks for the first excuse to go to the beaches in what he calls is a trip to assess his performance.
In an interview with Moneycontrol, Navy Ramavat talks about his trading and the building of his band of traders.
Q: How did you, an engineer, end up being a trader?
A: I am an Electronics and Telecommunication Engineer and was planning to go for an MBA course abroad but the untimely death of my father completely changed my plans. My father along with his partners ran a stockbroking firm, Indira Securities from Indore. After his demise, though my elder brother was handling the business very well, our family situation was such that I had to join the business.
I was always fascinated by numbers, markets just gave me the opportunity to exploit it. My brother, Vijit Ramavat, introduced me to trading. He is a self-trained accomplished trader. He started trading when he was in Class X and by the time he completed Class XII, he bought himself a house and a car from his trading income.
My trading journey started with a stock named Educomp. My brother had given me Rs 1 lakh to try out trading. This Educomp trade was also identified by him. He pointed out that the stock has broken out from a range on very good volume. Though I did not understand a word of what he said, I bought the shares and earned around Rs 7,000-8,000 on the same day itself. I was hooked.
Q: How were your early trading days?
A: I started as a screen trader, a large part of my individual trading is still discretionary based on screen reading. I developed a good knack of reading the price movement on the screen without looking at the charts.
I, like any screen trader, am looking for a correlation in the market. If the market is going down but there are stocks that are showing strength or if the market is strong and some stocks are showing weakness, then these are my target areas.
Suppose if there is a fall of 300 points on the Nifty but the stock you own is up by 1 percent, this shows the strength of your stock which is not displaying the negative behaviour of the market. The same logic can be zoomed in on an intraday basis.
Say if Nifty is down by 25 points but a few stocks in a sector are moving up, we would like to look at these stocks as now they exhibit sector support.
Correlation in the market is possible between two stocks. Like a pair that we track is Jai Corp and RIIL (Reliance Industrial Infrastructure). Generally, these two move in tandem where Jai Corp leads the way. However, there may be some days when RIIL takes the leading position. Our job as screen traders is to constantly look for such correlations.
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