Is stock market really profitable?
Most of us have been raised by our family telling us that stock market is ‘gambling’, stock market is ‘sin’ and, numerous other negative adjectives attached to it which you can think of. They also share various stories about people who’ve lost their belongings and their entire accumulated life savings including property, cars etc. In the story, they’ll also have tons of debts piled up, and, often at the end, the hero commits suicide, or else gets into depression.
Actually, there are multiple reasons due to which our hero has ended up with such a disastrous fate. We can’t ignore the reality behind this story, however, what we can do is to analyse this state or the origin behind this. So, let’s examine where does all of this begin from? At what stage does he chose to over-leverage? At which moment did he start thinking: ‘Risk hai toh Ishq hai’?
If you ask me to describe the reason in only one word, it’s ‘Greed’. The hero in our story ran behind the riches that the stock market offers, supported by greed, probably after witnessing or hearing stories about humongous gains by another person.
This is why emotional intelligence is even more important than fancy strategies. There are few people who are consistently earning money from the stock market, however, one shouldn’t just follow the gurus for the sole reason that they’re earning bucks. They are earning because of extraordinary trade management, and hours and years of learning the trade through constant practice. Remember, they were also a beginner once. One should educate themselves before getting their feet wet unlike the hero in our story.
The story continues. The hero would borrow money to trade, or over-leverage his positions than what he can manage.
There are certain things you should understand to avoid over leveraging. F&O is exceptional. However, one should be well aware about what they’re doing. Naked positions in options without any strategies isn’t gonna make you money in the long term. Intraday is a wealth destroyer. (I’ll talk about this in the next article).
A trader or an investor should be well aware of the risks attached to the trade in monetary terms, even before he enters the trade.
If I cannot lose ₹5000 in one trade, then I should manage my trade in such a way that even in the worst case scenario, I’m not gonna lose even a ₹ more than what I can handle.
The hero in our story then goes on to execute the trade. However, this time around he does numerous mistakes again, as usual. He’ll choose fundamentally weak shares. For instance; Vodafone Idea, Yes Bank, or any other penny shares in the hope that this might become a multibagger some day. But, that day never comes!
Those who’ve invested in the market in an Index fund, or in an SIP route have managed to do far ahead of majority investors. If one prefers to buy individual shares, then make sure you’re diversifying risk by buying multiple stocks. If one wants to deal in F&O, then it’s all together a different ball game. You should be well aware of the rules and should only enter once you’ve got a good experience in the market.
Another factor in our hero’s story is about ‘Risk hai toh ishq hai’ mentality and FOMO that binds him with any trade. The hero wants to get rich quick and sees the glorious side of the market during the bull run. With FOMO and the ishq mentality, he bids with his entire savings. The ultimate outcome is a disaster.
“And if they insist on trying to time their participation in equities, they should try to be fearful when others are greedy and greedy only when others are fearful.”
— Warren Buffett
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You can follow ‘The Green Arrow Trading’ on Instagram as well. I’m a professional swing trader and a long term investor. I also conduct 1-on-1 sessions on A to Z of stock market with a focus on technical analysis and swing trading.
