Why Trading is the Most Difficult Job in the World by Indrazith - Author of Trade & Grow Rich

Why 90% traders lose money in stock market trading?

The bitter truth is around 90% of the traders lose money in the stock market. This is very difficult to believe if you are new to the stock market or if you have less experience in the stock market. Because many traders show some graphs or indicators and explain how easy to make money in the stock market, trust me it’s not that easy! I am sure we hear many get-rich-quick schemes around us. Barring lottery tickets and casinos do you know any such thing in which one can become overnight crorepati? In real life, it’s hard to find any such person who becomes rich in an overnight without a consistent work. Similarly, one has to work hard with complete focus and discipline to get success in trading.

Challenges in trading

1. Many people consider Trading is another form of gambling and takes trades without any logical reasoning. A famous trader Ed Seykota said ‘Everybody gets what they want out of the market’. So if you come here with gambling mindset, it gives an enormous thrill, but at the cost of your money!
2. Many people follow the news and derive their trades based on the information given in the news. Please note, institutional traders and FIIs will get this information first and for a retail trader, it’s always difficult to make money using the news.
3. Another great way of losing your money by buying 52-week low stocks. Many people look at this info, and they think that the price will not fall from here. But practically no one knows when this fall will stop and hence buying the 52-week low stock is a terrible idea to lose money. I am sure everyone agrees that Usain Bolt is one of the great and the fittest athletes in the world. Even he needs a few days of rest to run again if he falls from 2-3 floor building (assuming he will be alive after the fall). Similarly, any good stock needs time and great energy to trade again at higher levels after making a 52-week low. Even if it doesn’t fall further, it might take some time (usually 1-2 years) to trade higher. So even in this case, your fund will be locked for 1-2 years without much profit!!
4. Many people think it is very easy to make money with penny stocks or operator stocks, because if the price of a share is Rs.1, then if it goes to Rs.3 or Rs.4, then easily our investment gives 3 or 4 times returns. Then assume the price will not go below Rs.1, but in reality, the probability of price going up is very less (unless an operator pushes with price with his buying) and the price can go below Rs.1 easily and most horrible thing is it can stay at Rs.1 for many years!!
5. The logic of Averaging down strategy is very simple. It is all about buying more shares when the price of a stock trades at a lower value. For ex, assume you have bought 10 shares at Rs.100, if the price comes down to Rs.50, then buying 20 shares at Rs. 50 will make total buying average to Rs.50. Similarly, if the price falls to Rs.25, then buying 40 shares at Rs.25 will make average buying price is Rs.25. Similarly, this kind of buying should be made whenever the price goes below. When the price bounces up, you will make a profit.

Theoretically, it looks very simple and attractive. But practically very difficult to make money with this strategy, because what will you do if your entire savings has been invested in a stock on Averaging down strategy and the price still goes further? In addition, what will you do if the price stays below your buying average price for years? What is your action if you need money for any emergency purpose?

Then why should anyone think about trading considering all the above-mentioned risks in the trading? Why Trading is the most difficult job in the world? 

Because, if you overcome these limitations and if you learn the proper way of trading, there is no limitation for your growth and you don’t have to depend on somebody to grow in your career. I have personally experienced the trauma and difficulties while learning all the tricks of trading and included all those lessons in my book “Trade and Grow Rich” which helps to become a successful trader.

This blog post is contributed by Indrazith Shantharaj, the author of "Trade and Grow Rich"

Indrazith Shantharaj is a full-time trader and Author of “Trade and Grow Rich” book which won Amazon Best Read 2018 award and Editor’s picks 2018 award at Notion Press book store. He is a former IT professional with over 10 years of experience. He has decided to pursue a full-time career in the stock market, which is his subject of passion and expertise. His articles can be found at www.profiletraders.in  . Apart from trading, he spends his free time travelling to new places, reading books and practicing spiritual sadhana.

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