Zerodha Founder Nithin Kamath Warns Active Trading is Toughest Path to Easy Money

Nithin Kamath, the co-founder and CEO of Zerodha, India's largest stock brokerage firm, has once again cautioned that active trading is the most challenging way to make easy money in life. In a recent post, Kamath emphasized that the key to being a successful trader is to survive the bad days and have strategies in place to manage risk.

Over the past 12 months, traders have been caught off guard by sudden spikes in option prices on expiry days. Kamath suggested that one way to avoid losing money due to such volatility is to trade fully hedged options strategies, such as spreads. He specifically mentioned strategies like Bull Call Spread, Bear Put Spread, and Iron Condors, which offer less trading trouble and limit losses regardless of market movements.

Kamath's post generated a lot of discussion, with users sharing their experiences and perspectives on the challenges faced by options traders, particularly in the face of sudden market movements and the activities of algorithmic traders. Many agreed with Kamath's assessment that chasing quick money through active trading is a risky approach.

Why this matters: Kamath's advice comes amid a court case in the US between algo-trading firms Jane Street and Millennium Capital, which brought the focus on Indian retail investors and the profits made by experienced traders off the losses of inexperienced retail investors. SEBI data shows that 90% of active stock traders were in a loss worth an average of Rs 1.25 lakh, while only 10% of successful traders made profits.

This is not the first time Kamath has spoken about the challenges of making money through trading. He had previously shared how bear markets can be "ferocious" for the majority of traders living in the social media bubble. Kamath's success story, with a net worth of Rs 39,000 crore, is no less than a Bollywood script, but he continues to emphasize the importance of risk management and survival in the world of trading.

Kamath reiterated his message, stating, "Trading actively is the toughest way to make easy money in life." His advice aims to assist traders in understanding the concept of spreads and adopting strategies that can provide protection against significant fluctuations and potential financial disasters in the fast-paced and often unpredictable world of

Key Takeaways

• Zerodha CEO Nithin Kamath warns active trading is a tough way to make easy money.
• Kamath suggests using hedged options strategies like spreads to limit losses.
• SEBI data shows 90% of active traders lose money, while 10% make profits.
• Kamath emphasizes the importance of risk management and survival in trading.
• Kamath's advice aims to help traders understand and adopt protective trading strategies.