»Fast Profits Daily by Equitymaster

On This Day - 19 MARCH 2021
My Vertical Profits Trading System

Vijay Bhambwani, Editor, Fast Profits Daily

In this video, I want to show you just how I use my vertical profits trading system.

Many of you joined me online at the Vertical Profits Summit where I explained my system in detail.

Some of you have asked me to clarify certain points and elaborate on others.

As your editor, I'm here to handhold you through any trading challenges you may face.

I hope this video, will set your mind at ease about my trading system.

Watch the video and let me know your thoughts in the comments. I'll do my best to answer them.

Hello friends. How are you doing out there? This is Vijay Bhambwani and I'm a trader with 35 years of experience in the markets, 28 of which are as a founder and promoter of incorporated company that trades for a living.

Now, in this video, I want to explain to you very interesting concept in trading, which I call vertical trading.

Now, as the dictionary meaning of the world vertical goes, you're basically starting from ground up and going skywards, which is upwards. Horizontal, on the other hand, is linear or sideways. Vertical is upwards.


Now, the basic tenet of vertical trading is that you trade as many times as possible. Maybe it would be even once a day if there is no clear set up warranting a second trade. Then what you do is you trade as many times as you can, taking small, small profits and building a small set of profits on top of each other so as to arrive at a respectable figure at the end of the day.

Why do we take smaller profits? The reason being that statistically speaking, because I deploy statistical trading systems, my in house of statistical trading model which I have affectionately called Barracuda, what we have done is that we've seen the longer you keep the trade open, the more is the possibility of volatility adverse news, manmade or acts of God coming in and going against the direction, the prices being sent against the direction of where we would ideally want them to be.

What I mean is that there are some spanners in the works. Something comes to upset our apple cart, and the result is a loss. So the shorter is a time frame, the higher is the probability that you will succeed because a constant flow of news cannot really interfere with the price. Of course, there are times when sudden, unexpected news of an earthquake or a war or whatever can occur but those probabilities, statistically speaking, are very small.

So when you take small, small trades and build profits on top of each other, going up vertically, that is what I call the vertical trading system. There is another aspect to the vertical trading system, though it is on its final legs.

Now, this is a concept which I call stacking. Currently, SEBI has implemented the second stage of peak margin norms, which came into effect last year. They capped the number of times intraday limits would be given to traders in the first phase to 4x, which means four times. You gave one lot margin money to the broker. He would allow you a maximum of four lots, provided you would square of your transaction at the end of the day.

In the second phase, which commenced from first of March, that leverage or intraday limit, has come down to 2x, which is twice. So you give money for one lot, you will be able to take positions of 2 lots. Here again, you will have to square up compulsorily at the end of the day before the trading session ends.

As on first of June, this leverage will be further cut down to 1.33 times. Which means you give margin money for 10 lots you will be able to take only 13 lots.

And from first of September it will become one is to one. Which means you will be able to trade only as much as you can pay for. So which is why I said the second leg of the vertical trade is actually a dying phase because, SEBI will not allow this space to last beyond first of September 2021.

So here, what professional traders would do is since they are anyway going to take positions intraday and I many times take micro trends trains or micro scalp trades, where the outer limit is 59 minutes and 59 seconds. Even if the price has not hit a stop loss or has not yet reached the price target, I would exit because the discipline of the clock, which is maximum of 60 minutes, will have to be respected.

So you get out of such trades irrespective of the amount of profit. So you could take small, small profits and do this multiple times a day and you could for an intraday basis use the intraday margin provided by the broker to stack your trades even though you have not paid for all the lots that you're trading, which is why we call this the vertical trading system.

Now, I have also received a few queries from fairly excited, curious, and interested people who watched the summit and I am going to endeavour to answer these queries as far as possible.

The first concern that many viewers have had and I am completely with you. I can completely understand why, as to why the transactions that I have shown have such narrow profit margin. Sometimes it is in a few paise and in many a cases it could be less than a rupee per share. There is a reason.

As I mentioned in the video itself, these are proprietary trades or prop trades. These are trades that I have entered in the computer on my own and the kill switch, which means the ability to reverse the transaction of close the transaction lives solely with me, and I can exercise it in the snap of a nanosecond.

Such a trade cannot be recommended because by the time the recommendation goes out either via email or SMS alert or any other mobile app of whatever is the system of delivery, it is too late. So obviously these are trades that are real world trades they were executed.

These are trades where I am demonstrating that this system can be implemented. In the real world slower trades will be given where you will get ample time to initiate a trade and then also exit, which means ingress and egress, entry and exit, both will be possible.

Secondly, the reason why the profit seen small is like I said, you take small, small amounts of money and build on top of it. Now since these were prop trades, we trade on small, small margins, and not all trades are profitable in nature.

So at the end of the day, it might appear from the P&L account that I have traded say, 10,000 shares or 20,000 shares. In some shares 1,000, 2,000, 3,000 shares, I might have even lost money. So in the remaining shares, the average purchase price and the average selling price will look like wafer thin because not all trades will go in a profit.

Which is why the quantity will appear large, say, 15, 20, 25,000 shares traded and a naturally 15, 20, 25,000 brought. 15, 20, 25,000 sold and out of which say 3 to 5 or maybe when 8,000 sold at a loss. The profit per share will look like it's small, but believe, me these are vertical trades packing on top of each other.

Somebody even asked me in the query as to whether these are currency trades or equity trades. These are definitely equity trades, although they look like they are very small in terms of percentage profit per share, I repeat again, these were prop trades. For me, this is how I trade. These are not the kind of wafer thin trades that I would be putting out.

The third thing is the element of time. You can take these vertical trades and trade multiple times a day when you are firm in the back of your mind that majority of your trades will be squared up by the end of the trading session. There is no greater comfort for an intraday trader. Please understand I'm deliberately using the word intraday traders.

There are swing traders. There are delivery based investors. I am not addressing those are purely talking of intraday traders. They would like to go flat out. Going flat out means flat lining just an ECG in a hospital when it goes flat it tells you that the patient has expired. So you're trading book has to go flat out at the end of the day. They must be neither a short sell nor a long purchase order pending. At the end of the day, everything must be squared up.

So what we are doing is we are leveraging on the fact that we as it is know we are going to square up the transaction at the end of the day. So why not take multiple transactions in the trading session?

Even though the share might move a rupee, two rupees or three rupees only, we could try and get as much juice out of it as we can by vertically trading on it a few times and thereby getting a higher return as compared to simply buying, say, 1,000 shares and waiting for only a rupee by the end of the day to get only 1,000.

If the same thing is repeated a couple of times, chances are and here we are playing with probabilities, not guarantees, chances are that you might wind up with higher profit, than simply a vanilla system of buying, holding, and squaring up by 3:30. I am open to the idea of answering any questions that you might have, and please do contact the customer support team. I'll have been more than happy to address your issues.

On this cheerful note, I bid goodbye to you in this video not before reminding you to click like on this video if you agree with what you saw. Subscribe to by YouTube channel if you haven't already done so. Click on the bell icon and receive alerts about fresh videos being put up here.

In the comments section, keep the lines of communication open. Positive. Negative. Love. Hate. Any feedback is welcome and if you like what you saw in this video, help me reach out to fellow like-minded investors and traders by referring my video to your family and friends.

I wish you have a very profitable day ahead my friends. Thank you for watching my video. Take care. Bye.

Warm regards,

Vijay L Bhambwani
Vijay L Bhambwani
Editor, Fast Profits Daily
Equitymaster Agora Research Private Limited (Research Analyst

Copyright © Equitymaster Agora Research Private Limited. All rights reserved.

Any act of copying, reproducing or distributing this newsletter whether wholly or in part, for any purpose without the permission of Equitymaster is strictly prohibited and shall be deemed to be copyright infringement

Disclosure & Disclaimer: Equitymaster Agora Research Private Limited (Research Analyst) bearing Registration No. INH000000537 (hereinafter referred as 'Equitymaster') is an independent equity research Company. The Author does not hold any shares in the company/ies discussed in this document. Equitymaster may hold shares in the company/ies discussed in this document under any of its other services.

This document is confidential and is supplied to you for information purposes only. It should not (directly or indirectly) be reproduced, further distributed to any person or published, in whole or in part, for any purpose whatsoever, without the consent of Equitymaster.

This document is not directed to, or intended for display, downloading, printing, reproducing or for distribution to or use by, any person or entity, who is a citizen or resident or located in any locality, state, country or other jurisdiction, where such distribution, publication, reproduction, availability or use would be contrary to law or regulation or what would subject Equitymaster or its affiliates to any registration or licensing requirement within such jurisdiction. If this document is sent or has reached any individual in such country, especially, USA, Canada or the European Union countries, the same may be ignored.

This document does not constitute a personal recommendation or take into account the particular investment objectives, financial situations, or needs of individual subscribers. Our research recommendations are general in nature and available electronically to all kind of subscribers irrespective of subscribers' investment objectives and financial situation/risk profile. Before acting on any recommendation in this document, subscribers should consider whether it is suitable for their particular circumstances and, if necessary, seek professional advice. The price and value of the securities referred to in this material and the income from them may go down as well as up, and subscribers may realize losses on any investments. Past performance is not a guide for future performance, future returns are not guaranteed and a loss of original capital may occur. Information herein is believed to be reliable but Equitymaster and its affiliates do not warrant its completeness or accuracy. The views/opinions expressed are our current opinions as of the date appearing in the material and may be subject to change from time to time without notice. This document should not be construed as an offer to sell or solicitation of an offer to buy any security or asset in any jurisdiction. Equitymaster and its affiliates, its directors, analyst and employees will not be responsible for any loss or liability incurred to any person as a consequence of his or any other person on his behalf taking any decisions based on this document.

As a condition to accessing Equitymaster content and website, you agree to our Terms and Conditions of Use, available here. The performance data quoted represents past performance and does not guarantee future results.

SEBI (Research Analysts) Regulations 2014, Registration No. INH000000537.

Equitymaster Agora Research Private Limited (Research Analyst) 103, Regent Chambers, Above Status Restaurant, Nariman Point, Mumbai - 400 021. India.
Telephone: +91-22-61434055. Fax: +91-22-22028550. Email: info@equitymaster.com. Website: www.equitymaster.com. CIN:U74999MH2007PTC175407