An investing veteran who moves 3 million shares a day breaks down his 6-part strategy for navigating a coronavirus-stricken market - and warns stocks could lose another 31%

• Nishant Porbanderwalla, a 16-year day-trading veteran, is battening down the hatches amid extreme volatility in today's coronavirus-afflicted market.
• He leans on a variety of disciplines and rules to navigate the wild point swings and rapid shifts in sentiment.
• Porbanderwalla thinks the S&P 500 will ultimately fall 50% from all-time highs reached in February.
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"People have been caught with their pants down."

That's what Nishant Porbanderwalla, a proprietary equities trader at Kershner Trading Group, said on the "Chat with Traders" podcast in reference to how swiftly the coronavirus upended markets.

"When s--- hits the fan like this, everything just goes in disarray," he said. "People will just sell everything and stay in cash."

But Porbanderwalla - a 16-year day-trading veteran who moves upwards of 3 million shares a day - has seen this type of panic before. He's traded through 2008, flash crashes, and multiple hair-raising geopolitical events. And he knows exactly how to keep his head amongst the vicious gyrations.

"Experience in this market is everything," he said. "I was down 60 [thousand] yesterday, and I finished the day up 20 [thousand]."

Porbanderwalla's innate ability to keep his cool and think logically under pressure is something that he garnered from years of trial and error. Today, he's applying those same skills to reap big profits. But that doesn't mean he's acting recklessly.

"We're still in a state of fear right now," he said. "It's still early, I don't know when all of this is going to unwind."

Porbanderwalla lays out the following six rules he thinks are key to navigating today's volatile market:

(1) Eschew preconceived notions

"One thing to do in this environment is to be flexible; I think that's very important," he said. "Don't come with prenotions that you're going to buy the market because we're down 2,500 points - it doesn't mean anything now."

(2) Cut your losses

"In this market, there's going to be so many opportunities that if you're wrong you can always come back from it," he said. "If the opportunity is there, you got to take the risk. You might be wrong, but there are other places where you can be right and come back."

"You have to cut your losses," he said. "If it doesn't work out the way it is, you cut your losses and move on."

Porbanderwalla continued: "The way I do it is I just arrange my P&L from winners to losers, so I'm just managing my losers most of the time."

(3) Take profits

"These things move 3, 4 points so quickly," he said. "Now the retracement is much faster and short-lived. I need to take profits ... I'm in, I'm out."

(4) Patience

"When s--- hits the fan, we always go into an extreme downturn," Porbanderwalla said. "Wait for the ultimate panic. Now it's a different level of panic."

He added: "You have to be super precise ... It's like a once in a lifetime kind of situation."

(5) Manage your risk efficiently

"Unbelievable situations are happening around you," Porbanderwalla said. "If you make one wrong move in this market you can get hit pretty badly, so I double take on everything."

"It's just risk management right now," he added. "Just be quick."

(6) Think about the other side

"Don't think about just one side of the market, always think that when someone is buying, someone is selling," he said. "Someone thinks they're right, and someone thinks they're wrong."

With all of that under consideration, Porbanderwalla still thinks we're quite a ways away from a bottom in stocks. In fact, according to his calculations, stocks have about 31% more to fall from current levels before he thinks a trough will be put in place.

"I still don't think we are at the bottom right now," he said. "I feel like there's one big move left. Once we finish all this, I think the bottom will be about 50% down from the top."

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