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Jackpot Trading - Case Study

 

Today’s blog is a continuation of the previous blog and throws light on investment strategies related to Event-based trading also known as Jackpot Trading. If we predict in advance the occurrence of any such events or situations that will take place in the country and which will significantly impact the share market, then we can get good returns by investing during such times.

 

The question here is how can we get good returns? So, if we invest well before such an event takes place, by consciously predicting and analyzing the risks and returns and then trade using limited risks; we can gain a good profit.

 

In this article, Event-based Trading Strategy is explained by Mr. Bhuushan with the help of two examples.

 

Let us see the first example:

On the 12th of May, 2014 we had published an article in the famous Maharashtra daily newspaper ‘Pudhaari’. The article was titled ‘Jackpot’.

The article stated that one should trade in the share market for short-term using limited risks on the 15th of May, 2014 to earn great profits on the 16th of May, 2014.

What was it about the 16th of May, 2014? It was the day of the Results of Lok-Sabha Elections held in 2014 across the country.

 

As we all know, the slogan ‘Ab Ki Baar, Modi Sarkar’ was trending all over the country at that point in time. It was being predicted that the market will witness a bullish opening.

So those people who traded in the share market accordingly, on the 15th of May, 2014 as per the guidelines mentioned in the article; gained good returns on their investment on the 16th of May, 2014; in just One Day.

 

Similarly, we had too invested using limited risk in the market on the 15th of May and gained around 40% returns on it the next day i.e. 16th of May.

In this way, if there seems a bullish view of the market before the occurring of an event, one can earn good returns by trading for short-term i.e. for a period of 1 to 90 days making limited risk investments.

 

In the case before the occurrence of an event if the market seems to be bearish, can we still earn good returns by investing? Let us understand this using our second example:

On the 9th of December, 2018; we had uploaded a video on YouTube. The video talked about the Chhattisgarh and Madhya Pradesh State Election Results.

The State elections provide a comparatively smaller but significant opportunity to earn returns by doing Event-based trading.

 

Before the State Elections Result, the share market was predicted to be bearish. So we had advised in the video that if one trades bearish using limited risk in the market, then he can earn a good return on his investment the next day in case the market goes bearish.

The day before Chhattisgarh and Madhya Pradesh Election Results, we traded bearish in the market. There, we bought Nifty 10,400 PUT. In the market, if one buys PUT, it means you are trading bearish in the market.

 

It is similar to buying a lottery ticket. That is to say, if I am buying a lottery ticket for a jackpot of Rs. 1 crore by paying Rs. 1000/-, then on the next day even if I miss the jackpot; my loss would be limited to Rs. 1000/-. But in case, I win, I may get Rs. 1 crore.

 

Similarly, at that point in time, the price of Nifty 10,400 PUT was Rs. 120/- in the market and its lot size in the Options market was 75 units. So, Rs. 120 multiplied by lot size i.e. 75, we bought the PUT at Rs. 9000/-.

Now, the next day market opened bearish and the Nifty 10,400 PUT price went up to Rs. 200/-. We seized the opportunity by booking a profit and gained more than 50% returns on our investment.

 

In this way, before the event occurs, by predicting the bearish view of the share market, if one trades bearish with limited risk and then if on the next day the market goes bearish as predicted, one can plan and act accordingly to gain good returns.

 

So while carrying out Event-based Trading, if we have earned similar returns in the past, or planned well regarding the future, only then can one make good returns on investment using limited risk.

 

Thus, in this manner, if you carry out Event-based trading using proper planning and appropriate risk analysis, then you can earn good profit in less time using less investment.

 

Happy Trading, Happy Investing!!!

 

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