“Knowing is not enough; we must apply. Willing is not enough; we must do.”
- Johann Wolfgang von Goethe
This beautiful quote perfectly explains how only gaining knowledge is never enough. Practical application is the key to all things in life. Trading is a noteworthy example that if you’ve applied what you’ve learnt, put it into practice and moved with proper guidance, you’ll only get better.
We bring forth this success story of Mahesh Sangade, who has applied this in his life - both personal and professional - and carved out his own identity as an Algorithmic Trader. Graduating from well-known institutes with degrees like Engineering from IIT, MBA from IIM-A, and CFA, although his journey might have been challenging, his positive attitude, discipline, consistency, confidence and patience have helped him grow and achieve.
Here’s our conversation with Mahesh.
Hi Mahesh! Could you tell us about yourself?
Hi! I’m Mahesh Sangade. I completed my Engineering and MBA and then started my journey towards the conventional corporate ladder.
Even though I was doing a job in a bank, my passion was trading and so I used to always trade actively for 4 years after 2015. I had never thought of getting into it full time at that time though. I was scared if I’d be able to perform consistently or if I had the right strategy.
I always wondered:
Should I go for a full-time career in the stock markets?
Should I continue with my routine banking job?
I kept saving money and never stopped testing my strategies with very small capital. So I was doing that for almost 4 years. Yet, here I am!
During market hours I trade actively. So, yes, now I’m pursuing my passion for trading full-time. I’m also managing one more business of ours about Handlooms and handicrafts (do check www.ivariti.com).
I love reading books in financial literacy and business space. I like the works of Robert Kiyosaki, Tony Robbins, Napoleon Hill and many entrepreneurship-related books. Reading to me is more of developing myself as a business person.
What has your experience of learning about Trading been like?
I always wanted to get into finance, not specifically markets though. So, as a typical finance aspirant, I did an MBA, CFA and also did CMT Level 1. I got a bit of confidence that I can do this. I was also investing actively in mutual funds – almost 60-70% of my salary was going in it every month.
So I saved up some capital for me. During my college life, I was not very sure of doing something on my own or going on a path less travelled but I read a lot of business books, mostly related to financial literacy and entrepreneurship. So, I think that changed a lot of things for me.
My mindset changed to “I should be doing what I want to do, irrespective of how much income is being generated at the end of the day”. The definition of success has changed for me. I believe that you will definitely do well in any field which is in line with your interest.
From Chemical Engineering to Algorithmic Trading? How did this happen?
It was not planned; I was not too sure and the goals kept changing during academic life as I got more and more exposure. Till 12th, I aimed to get into IIT, and I got into IIT Guwahati and did my Engineering from there and a similar case for MBA.
I have a banking background; my parents and a lot of relatives are from the banking sector. So typically, from the beginning, I was interested in the same. But when I joined a bank, I felt that this is not it.However, I still worked for four years to pay off my education loan and save money for my trading career.
For trading, you definitely need a good amount of capital to survive full time. Over time I realised that if you want to do something different in life, self-education is the key and doing what you love should be the direction.
Could you tell us about your journey of Trading?
I started trading in 2015, after completing my MBA. There was a 2-3-month gap period before I joined my first job. There was a friend of mine - Ekansh and he used to trade regularly full time. So, I used to spend time at his place, look at charts and wonder how he trades.
That was my introduction to the trading world. From then on I've been constantly learning, trying out different strategies, of course, I’ve burnt a lot of capital but I consider that as a market learning fee and take it that way.
I also worked on the mindset of my family to ensure that they are with me on this journey. It is critical to have your family on the same page while taking risks.
I joined QuantInsti course where I was introduced to the proper systematic approach of trading wherein there are certain strategies that we need to follow - proper entry exit stop loss. EPAT was a stepping stone for me towards a full-time career in stock markets.
There were a lot of mistakes and eventually I learnt that - there needs a change of approach. I used to follow a lot of tech analysis, trade on patterns and trends and all, but over the period of time, I realised that it’s better to combine statistics with your ability to make predictions. There’ll be times when your prediction might be wrong, but if you manage your trades properly, you will survive.
That was a paradigm shift in my thinking in trading. So, I reduced taking directional trade and I started trading more on a statistical basis. Eg. Currently, most of my strategies are now basis options selling - I do a lot of iron condors, butterfly or single side vertical spreads. I check the probability of a particular spread expiring at specific levels in the next few days. Less judgmental or directional based calls, but more statistical-based.
So, after joining this course, I quit my job in two months and since then I’ve been trading on my own. The journey is going great right now.
How did algorithmic trading come into your career?
There is a lot of market data that comes in at the end of the day on the NSE website eg. Bhavcopy data, OI data, delivery volume, etc. A huge amount of data is generated every day.
Whenever I used to trade while working, I realised that a lot of times I used to miss entries and exits and stop losses because I was not active during that particular time. I would do an alt+tab and do trades.
For eg., if I’m in a meeting or caught up in some activity, I would miss some entries, and even when I would want to enter at a particular level, the market would pick momentum so quickly that even before I enter, the market would have moved by a huge margin.
So, I thought about doing this algorithmically. I was not sure if this was legal in India and there are a lot of rules and regulations and there is not much clarity. I was not even sure if retail traders had access to such robust trading systems. That is when I connected with QuantInsti.
I gained confidence that this was doable for a retail trader. I gave it a go, EPAT provided me with a good knowledge of coding, statistics, trade management and gave me the exposure to Python. I have written a lot of codes in Python which helped me find a lot of trading opportunities by scanning through this data. That way, things have changed for me.
There was a lecture by Nitesh Khandelwal (Co-founder and CEO, QuantInsti) about setting up your own Algo Trading firm. It was just so good, that it gave me the confidence that I could do this and work towards that in the future. I have plans to do something big in trading for sure, but I would love to settle our newly started business first.
I thank QuantInsti for all the support. Laxmi, my relationship manager has been extremely helpful. It is also nice of Nitesh to call students and consider their feedback. It has been great interacting with the QuantInsti Team, and faculty members for guidance, support, quick resolution to my queries.
What are your thoughts on the following?
Coding and its importance as a skill:
There was a statement in the media that: ‘Traders who are not learning to code will be very irrelevant in the very near future’. The way things are moving and with Algos taking over, the number of trades being executed by algos and humans, and this number is going to go up, it is better to stay relevant than just rely on traditional tools. That was one of the trigger points for me to get into coding.
I had a very basic knowledge of coding. I studied C / C++ during my Engineering, that time also, coding was interesting for me, but I had lost touch. Coding can only be mastered by practice.
When I started EPAT, I started as a fresher as I didn’t remember anything but since joining the course, I learn Python here for the first time and I have been practising Python regularly. I can say that I’ve built decent level knowledge of Python and that has helped me A LOT and proved to be very useful to me for trading and data analysis.
Trading has become more of a systematic approach than an emotional approach. Of course, I enter the trade based on my judgement but the trade management is entirely managed by the algos. There is absolutely no space for human emotions.
One of the most important parts of trading I felt is 'Discipline' as I have seen that a lot of my trades are as per plan, but when the market starts behaving unexpectedly, you tend to stretch your stop losses by getting emotional and then the positive trade turns red. There are so many instances. Thus, discipline is the most important when it comes to trading. And now thanks to the algos of course!
I think 'Confidence' is one of the key parameters like I said about discipline. Confidence would be #2 in taking trades. That data crunching and systematic approach have helped me in getting the confidence.
These 2 qualities a trader must-have.
Technical analysis as a skill:
I’ve been studying it for more than 4 years now. I started with a basic technical analysis course learning how to construct a candle. It has been a journey to explore Technical analysis. I’ve worked with a lot of technical indicators, I used to rely a lot on Bollinger Bands or RSI or VWAP.
In time, I’ve explored the indicators that worked the best for me. From the past few months, I have been using only Pivot Points and CPR. Of course, different indicators work for different people, their strategies, their time frame, etc. It was a journey to explore what works for me.
In Technical analysis, we always say that the chart reflects everything. I look at a chart, do some basic charting, plot trend lines etc. This gives me a head start that what can be the possible trade on this script. I think it’s a good starting point for me, and it also gives you a bigger picture and idea of the key levels which gives you a bit of comfort to have patience.
I can wait for my trade to work out correctly, because, in options selling, even if the market doesn’t move anywhere you would make money. So, it helps me in having the patience to hold my trade out during the week.
'Patience' is the third quality a trader must-have.
Mahesh, could you tell us about your own business? What comes next for you?
The handloom business is in partnership with Anupama and we are a great team. She is skilled in that space and knows 200 draping patterns for sarees. She is also writing a book about draping. We are selling handloom and handicraft products on our website and through draping workshops. She is taking the lead to handle the company and I’m managing finance and backend operations.
When you are working in a corporate job, you have predefined roles and responsibilities. But when you’re doing your own business, I felt it was a different ball game altogether.
So here I am, managing accounts, marketing, operations, etc. I have also learnt website designing for this. You learn so many things in the process - I’m loving it! This is all self-learning.
You learn by doing things.
My focus is on trading. Currently, things have changed a lot like both of us quit our jobs to pursue our passion. Because earlier I used to casually trade - making big or small losses, big or small gains - which was not a consistent performance. Consistency has become extremely critical now as I am trading for a living.
What would be your message to the aspiring traders out there?
Discipline, Consistency, Confidence and Patience are extremely important when you are trading.
Trade more on data, not just on your prediction. Management of all the trades should be done by Algos and not be governed by human emotion. Of course, you can enter your trade basis your conviction but trade management is done better with algos.
Thank you for your time, Mahesh. It was great talking to you. It has been quite a challenging and learning curve for you. We wish you lots of success in your trading ventures and wish you the best for your handloom business.
Equip yourself with lifelong skills which will always help you in upgrading your trading strategies. With topics such as Statistics & Econometrics, Financial Computing & Technology, Machine Learning, EPAT ensures that you are familiarized with every domain and skill required to excel in the field of trading.
Disclaimer: In order to assist individuals who are considering pursuing a career in algorithmic and quantitative trading, this case study has been collated based on the personal experiences of a student or alumni from QuantInsti’s EPAT® programme. Case studies are for illustrative purposes only and are not meant to be used for investment purposes. The results achieved post completion of the EPAT® programme may not be uniform for all individuals.