The Journey of a Trader with Mr. Sourabh Sisodiya
This article is an interview of a full time-trader Mr. Sourabh Sisodiya with Wall Street Club Bits Goa which covers his very inspiring story and gives readers a path which they can traverse if they are aspiring traders.
Wall Street Club BITS Goa recently Invited Mr. Sourabh Sisodiya, Co-Founder of Quantify Capital who is a full-time trader. The main objective of this was to share his inspiring journey with the readers who are aspiring traders. This Article also covers resources through which one can learn and get one step closer towards their journey of becoming a full-time trader.
Let’s start by talking about your background. Can you tell us a bit about yourself?
Sourabh: I did my Bachelor’s in Information Technology from Mumbai University and then after that, I pursued Family M.B.A from S.P Jain Institute of Management and Research. I’m the Co-Founder of Quantify Capital which is Quantitative research and Trading Firm and also started The Trade room which is a co-working facility for stock market participants with the motive to create a community of Traders who are disciplined and system-driven. Before starting my company I worked as an intern in a few companies to gain knowledge about the markets.
How did you start your trading journey? What was your motivation behind becoming a full-time trader?
Sourabh: There is a very interesting story behind how I became a full-time trader. It goes like this- So one day I was at home and my Dad’s friend had come to our home and he was working for Edelweiss at that time and I heard him saying that he makes around 100 crores each year for his company through trading. After hearing this I was Awestruck and wondered that how can someone make so much money just by sitting in front of the screen. At that time I never used to trade in the markets. I just followed them and was aware only about the basics. After that incident, I was curious and started researching the core of Trading and learned about derivatives and started observing the markets keenly and this is how I slowly entered into the field of Trading. At first, I learned Fundamental Analysis and interned at a company to learn the basic valuation of companies only to realize that Fundamental Analysis was definitely not my cup of tea. So after this, as fundamentals did not work for me I entered into technical analysis and started to observe and analyze stocks. I thought I could predict the market but I began to over-analyze stocks & took random trades but wasn’t making any consistent income.
Then After that, there was a life-changing moment in my life. In August 2016, I did extensive research on Justdial and found the stock to be extremely bearish and I made a whopping 300% in a span of 2 months. This was the point in my life where I had finally decided that I would become a full-time trader.
How Important is the background of maths in Options Trading?
Sourabh: Statistics and analytical skills are the two most important topics in maths which are very important to become an Options Trader. Since the pay-off is not linear and rather dynamic it is very important for a person to know statistics and the maths behind the Option Greeks.
What skills should a college student inculcate who is aspiring to become a full-time trader?
Sourabh: My Suggestion to all the students who are aspiring to become full-time traders is that they should first start by observing the markets and generate hypotheses. Once done, they should backtest them and arrive at conclusions and accept or reject the hypotheses accordingly. One should not stop there, they should try to tweak and optimize their strategy and try to make the strategy better.
Also, since we know that price is the only leading indicator and one should start learning about how Price Action works. The market is full of patterns and one should keep observing it and find them to use it in their favor.
Can you suggest some of the books and resources which helped you become a successful trader?
Sourabh: To become a trader it also very important that you know what other traders are thinking so I would suggest this book called Market Wizards by Jack D. Schwager which has interviews of some traders and it’ll you a rough Idea behind the thinking process of traders. Apart from this as I mentioned Price is the only leading indicator so knowing Price Action is very important for a trader and hence I would suggest watching videos and read books on Price Action by a guy called Rayner Teo. If one is looking to become a full-time trader then one should be very proficient with the knowledge of Options. So for that, I would surely recommend reading Zerodha varsity-Module 5 and 6 which covers the basics of Options in a very simple and elegant language. After one acquires basic knowledge in options then they can start reading about various options strategies and for that, I would recommend the book ‘The Bible of Options Strategies’ by Guy Cohen. According to me, this would be sufficient, and after this one starts developing their own strategies according to their observations and trade using them.
“ Every trader has strengths and weaknesses. Some are good holders of winners but may hold their losers a little too long. Others may cut their winners a little short but are quick to take their losses. As long as you stick to your own style, you get the good and bad in your own approach.”
-Michael Marcus
He is primarily known for turning $700 into $80 million and was featured in the Market Wizards book.
How are Artificial Intelligence and Machine Learning helping the traders?
Sourabh: AI and ML have really played a very big role in the field of trading but It is not really necessary that people use AI/ML for trading. I would suggest that every trader should at least do some Data Analysis of their strategy and backtest them and only then trade on that strategy. This will surely give them an edge over the other traders and give them the confidence to trade. I always backtest my strategy and only then trade on them and this surely gives me the confidence to trade on them.
I have seen that you have completed all three levels of CFA so does this give you an edge in the field of Trading?
Sourabh: Not really, It won’t directly help in the field of Trading but it helps you develop a macro view and definitely helps you build credibility. It's not really a Pre-Requisite but for the people who are aspiring traders and are from an engineering background who has no knowledge about accounting or Economics, It’ll surely help them as CFA curriculum is quite extensive and it covers all those topics which will surely help you understand the Macro-Economic conditions.
Whenever I speak to any trader and ask him for some suggestions about developing skills there is always one common answer from all of them which is Discipline. So what is your take on Discipline in Trading and how should one inculcate it?
Sourabh: I cannot stress enough on the importance of discipline in Trading. This is what differentiates from the people who left this profession and successful Traders. I have seen people who entered the field of trading with their savings and everything was wiped out and they exited the field for the only reason that they were not disciplined. Losses in Trading is not a problem given that you lose money in chunks and learn something out of every trade. Even though a person who is good at Analysis and Risk Management but is lacking Discipline cannot surely become a successful trader. And by Discipline, I do not just mean in trading but even in our routine discipline is very important. This helps in inculcating Discipline in oneself.
While you’re Trading in the Markets you should never panic whatever be the given circumstances. You should have a stop loss and have confidence in your backtested systems.
Can you share some of your learnings as a Trader?
Sourabh: So there is this one really interesting thing that I learned in all these years as a trader that 80% of your profits come from 20% of your trades. There is something known as an 80–20 Rule which was developed by a person known as Pareto which says that 80% of your results come from just 20% of your efforts and this applies in the field of Trading as well.
Apart from that, I would suggest that a trader should have a proper system according to which they take trades. To give you an example, Most of the time people try to predict reversals for the stocks which have hit new highs or new lows but according to my system, I always buy the stock which hit new highs and sell stocks the stocks which hit new lows. Always try to be with the trend. This is the result of my systems and I completely believe it and it has always worked in my favor.
Always try to cap your losses by either hedging or by having stop losses. Never trade without having a pre-defined stop loss. These are all simple things but these are some of the key ingredients to become a successful Trader.
Each and every person has some mentors in their life who they always look up to. So do you have any such mentor who you looked up to before entering the trading field or even after?
Sourabh: So there is one person from whom I have learned a lot during my trading Journey and that would be Mitesh Patel. The thing which I like about him the most is the ability to take the risk and hold onto your profits. Initially, when I just started trading I usually exited early and I never used to bet big even on the trades on which I was confident. So I tried to learn these things from him and that has surely help me in my trading journey.
