Zerodha co-founder Nithin Kamath on Tuesday had a solution for traders who keep feeling the urge to go on trading eventually letting it get the better of them.
In a post on X, Kamath flagged the ills of over-trading and revenge trading and called it a mistake.
“The other common trading mistake I have seen over and over again in all my years of being a trader and running a brokerage is over-trading and revenge trading,” he said.
“Sometimes, the best trade is the one you don’t take,” Nithin Kamath added.
That is where the ‘Kill Switch’ launched by Zerodha comes in, and keeps one from stopping trading.
“This is why we launched Kill Switch. If you get the urge to keep trading, you can enable it, and you won’t be able to place trades for the rest of the day,” Nithin Kamath said.
He shared the screenshot of an X post of a Zerodha user, who claimed that the ‘Kill Switch’ came in extremely useful for them.
“Booked profit in 15 minutes. Tuned on Zerodha’s kill switch after that. Because my biggest enemy after a winning trade is me with overconfidence a buy button. Thank you Zerodha for protecting me… from myself,” the user wrote.
What is Zerodha’s ‘Kill Switch’ feature?
Zerodha added a new Nudge to its platform called Kill Switch in 2021, which can help traders keep away from overtrading and revenge trading.
“If you’re making losses, this new feature helps with your trading discipline and risk management by allowing you to instantly disable trading in one or more segments on Kite, forcing you to take a break from trading. Once a segment is disabled, you can only re-enable it after 12 hours,” as per its website.
Overtrading is the excessive buying and selling of stocks and other financial instruments, often based on emotions like fear of missing out a rally or booking profits rather than a logical reason.
On the other hand, revenge trading is when a trader tries to compensate for the losses they have incurred and make emotional, irrational decisions while buying stocks. They often do not follow a logic and see the markets as an opponent that they need to beat, leading them to making mistakes and incurring more losses.
“Taking a break from trading or reducing trading size significantly when you are in a drawdown is an important risk management rule,” Zerodha says on its website.
