Trading in volatile markets? Zerodha's Nithin Kamath has some advice for you

Zerodha CEO Nithin Kamath on Wednesday cautioned traders to focus on risk control and discipline as global markets remain volatile and driven by geopolitical developments.

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He said recent market movements reflect how quickly sentiment can shift, adding that "It's crazy that we live in a time when the entire global financial market seems to be at the whim and fancy of what one person decides to do - and he can, and does, do whatever he wants depending on which side of the bed he wakes up on."

He was likely referring to US President Donald Trump, whose announcements during the West Asia crisis have influenced global stock and oil markets in recent weeks.

In this environment, Kamath said traders need to shift their priorities. "The only way to survive as a trader in this market is to make survival the first goal, not making money."

He pointed to the risks of trading in what he described as a headline-driven market. "When you're getting whipsawed out of positions on both sides, and there's very little you can do in a headline-driven market, the most logical thing is to trade with smaller amounts of capital, reduce the risk in your account significantly, and wait for opportunities where you can actually make money - rather than taking undue risk in a highly uncertain, highly volatile environment."

Kamath also flagged near-term triggers that could keep markets volatile. "There are also 3 holidays in the next 7 days, which almost guarantees a news cycle that can swing markets either way. Even smaller overnight positions."

He added that trading carries psychological strain, especially during periods of volatility. "Trading is also inherently a lonely activity. And when you're constantly getting feedback in the form of profit and loss, it takes a mental toll."

With an extended weekend ahead, he suggested stepping back from markets. "So with a long weekend coming up, I can't think of a better time to take a break, recharge, and come back to the blinking red and green lights with a fresh mind."

His comments came on a day when Indian markets moved higher. Benchmark indices Sensex and Nifty rose over 2 per cent, supported by a decline in crude oil prices and gains across Asian markets, including South Korea’s Kospi, Japan’s Nikkei 225, Shanghai’s SSE Composite and Hong Kong’s Hang Seng. US markets had ended lower on Tuesday.

"Hope is returning to the market with indications of de-escalation in the conflict. Remarks from President Trump and from the Iranian regime indicate that the conflict might end soon. Particularly, the reiteration from Iran that 'non-hostile ships can transit the Strait of Hormuz' is good news that will mitigate India's energy concerns. These positive geopolitical developments have reflected in a sharp decline in Brent crude to around USD 98," said V K Vijayakumar, Chief Investment Strategist at Geojit Investments Ltd.