Mind Over Money: Playing Sudoku helps this veteran trader evaluate profit & loss strategies

In an interview with ETMarkets,
Sunil Nyati, Managing Director, ,
who has over 30 years of experience in the financial services industry, said: “The problem with new traders is that they look at markets like a jackpot machine. But very unlikely, markets are for slow and steady players” Edited excerpts:

Sudoku helps in evaluating risks and calculating all possible circumstances: Sunil Nyati

“Sudoku is a game that helps one to analyze all the permutations and combinations. If in the capital markets, you evaluate the possibility of profit/loss that you are going to make in case of uncertain situations, you will exponentially decrease the risk of emotional disbalance during a trade,” says Sunil Nyati, Managing Director, Swastika Investmart Ltd.

With decades of experience in capital markets, how are you keeping yourself mentally fit?
I wake up early in the morning at 5 AM and perform exercise and meditation to stay fit and mentally composed. Profits, loss, and breakeven are all part of the business.

With this mindset, it is easier to not associate with monetary benefits much and to keep a balanced outlook every day, irrespective of what happened in the last trade or trading session.

In the end, the edge is in psychology, and fundamentals/technical parameters are tools to clarify the outlook.

The thumb rule is to appear in front of a trading terminal with a fresh mind; to achieve that, meditation and yoga are the best methodologies.

Like the balance sheet, P&L, and peer comparison are fundamentals of stock scrip, Yoga and meditation are fundamentals of life; stock and life cannot move ahead without fundamentals.

In a nutshell, to have an unbiased view, one must come up with a fresh mind, and to do that one has to disassociate with the outcomes of recent squared-off positions.

What is the kind of discipline you follow on a daily basis? Why do you think it is a crucial practice, especially for a trader?

It is often said, “Spend money wisely”. In my opinion, this is the half adage (saying). I advise “spend time and money wisely”.

Monetary losses are materialistic and can be recovered with time and effort, but time once gone cannot be retrieved ever.

Therefore, to maintain discipline, I plan and manage my time & day in advance and avoid wasting it. There is a fixed time for office workings from 10 AM to 7:30 PM, and personal and family time between 7:30 pm to 10:30 pm, to keep all aspects of life balanced and organized.

Now that the time is managed, the next challenge is to spend money wisely, and as a trader, the only way to spend wisely is by choosing a stop loss.

A logical and strict system of stop loss acts as killing two birds with one stone. It improvises your trading and trading mindset both at once.

Sudoku is very interesting, but you mentioned that it helps you to evaluate the risks. Could you help us understand?

In the capital markets, the biggest fear of a trader/investor is uncertainty. With all the analysis of history, it is very difficult to nullify the uncertainty of what will happen in the future.

Sudoku is a game that helps one to analyze all the permutations and combinations. If in the capital markets, you evaluate the possibility of profit/loss that you are going to make in case of uncertain situations, you will exponentially decrease the risk of emotional disbalance during a trade.

Remember that the only way to make money in markets is through big profit, small profit, or small loss and prevent big loss.

If you have calculated all the permutations and combinations, you will subconsciously reduce the chances of entering a trade that might result in a big loss.

Therefore, sudoku helps in evaluating risks and calculating all possible circumstances.

What would you advise the new trader who joined the equity club post the pandemic?

The problem with new traders is that they look at markets like a jackpot machine. But very unlikely, markets are for slow and steady players.

The idea here is to go slow. For the novice, I would suggest investing a part of savings in equity markets and that too using fundamental analysis because that is where the intrinsic values lie.

And the beginner should be very clear about the outcomes. If one is expecting 20-25% returns in a period of, say six months, then I would say those are unrealistic returns, especially with the current market situation.

One should be very clear about what returns they expect in what time frame otherwise, one could get stuck in a loop of losing money.

To simplify things, novices can simply buy and forget because the true returns are realized in a long-term time frame of years.

Any books which you think are a must-read for traders?

New trader, Rich trader by Holly Burns and Steve Burns is a short read which I would suggest every trader should read biannually. That book acts like a checklist of the modus operandi of this lifestyle.

There are many other books by very good Indian authors like Ashwani Gujral and International authors like Mark Douglas which will help you enormously grow. My special inclination is towards books that are more inclined toward psychology.