Stock markets offer two types of roles to be adopted by the market participants. Both are good at their own end but the rules of each game needs to be grasped in the minds so well that the noise around the stock market doesnot disturb you.
As I mentioned, there are three market participants,
Investor is a person who comes to the market with a view of 5 years & more & expect to take a compounding effect on money invested, which means (for simpler understanding of a layman), Re1 invested becomes 2, then thereafter compunding makes Rs 2 into 4, & then Rs 4 into Rs 8.
A investor is a person who is always benefitted from the market as he doesnot have to sit in front of the screen & abuse his brokers, shouting at them. Investment is a game which has made people rich & that will in the future also. To give you a simple example, I myself is a Tata Consultancy Services (TCS) investor for 6 long years since IPO & I am able to make my money 6 times. I bought 21 shares, on first bonus, my 21 shares becomes 42, on second bonus, my 42 shares becomes 84 & the price has almost doubled
Trader is a another market participant who looks for short term gains, book profits & run away from the markets. But strange enough for many readers, he is not able to do so. There is a typical reason behind this. You must have heard of this "Half of the battle is fought in the mind". Bit in stock market trading 80% of the battle is played in the mind. Example- When to open position, when to book profits, when to book losses, which nobody does & in the end the loss becomes so big, that he says to himself that "Stock Market is not my game"
Trader Cum Investor is a participant which we will find in every househiold, in every galli-mohalla. Ha Ha Ha!!! Yes. Let me explain. This person gets a trading tip from his broker, say "Buy Unitech at 97, target 102, Stoploss 95. Broker also says, sir "Jalde karoo, Unitech bhaag raha hai, 98 ho gaya, jaldi karoo, stock looo kya...........???? .Person with a greed in his mind agrees & becomes happy by looking at his position running in profits. He becomes more greedy by seeing the prices above 102 & doesnt book profits. And when after touching 102, he goes back to 93 odd levels, where he feels that he should have booked profits at 102. Then, he deciede to wait for his price to come but taht never come & a trader becomes a investor & ultimately make a loss in thousands, may be of 30,000 to 40,000 by trading in futures.
Hope you all have understood, which is the best role to assume for any market participant.
Lesson-Be a investor, dont be a trader!!!
If you like this article, Kindly read this "How a SIP of 10000 can do wonders for you"
Hope you liked it!!!
Regards
Mayank Gupta
mayankportfoliomanager@yahoo.com
http://www.wealthbazaar.in/
As I mentioned, there are three market participants,
- Investor
- Trader
- Trader cum investor
Investor is a person who comes to the market with a view of 5 years & more & expect to take a compounding effect on money invested, which means (for simpler understanding of a layman), Re1 invested becomes 2, then thereafter compunding makes Rs 2 into 4, & then Rs 4 into Rs 8.
A investor is a person who is always benefitted from the market as he doesnot have to sit in front of the screen & abuse his brokers, shouting at them. Investment is a game which has made people rich & that will in the future also. To give you a simple example, I myself is a Tata Consultancy Services (TCS) investor for 6 long years since IPO & I am able to make my money 6 times. I bought 21 shares, on first bonus, my 21 shares becomes 42, on second bonus, my 42 shares becomes 84 & the price has almost doubled
Trader is a another market participant who looks for short term gains, book profits & run away from the markets. But strange enough for many readers, he is not able to do so. There is a typical reason behind this. You must have heard of this "Half of the battle is fought in the mind". Bit in stock market trading 80% of the battle is played in the mind. Example- When to open position, when to book profits, when to book losses, which nobody does & in the end the loss becomes so big, that he says to himself that "Stock Market is not my game"
Trader Cum Investor is a participant which we will find in every househiold, in every galli-mohalla. Ha Ha Ha!!! Yes. Let me explain. This person gets a trading tip from his broker, say "Buy Unitech at 97, target 102, Stoploss 95. Broker also says, sir "Jalde karoo, Unitech bhaag raha hai, 98 ho gaya, jaldi karoo, stock looo kya...........???? .Person with a greed in his mind agrees & becomes happy by looking at his position running in profits. He becomes more greedy by seeing the prices above 102 & doesnt book profits. And when after touching 102, he goes back to 93 odd levels, where he feels that he should have booked profits at 102. Then, he deciede to wait for his price to come but taht never come & a trader becomes a investor & ultimately make a loss in thousands, may be of 30,000 to 40,000 by trading in futures.
Hope you all have understood, which is the best role to assume for any market participant.
Lesson-Be a investor, dont be a trader!!!
If you like this article, Kindly read this "How a SIP of 10000 can do wonders for you"
Hope you liked it!!!
Regards
Mayank Gupta
mayankportfoliomanager@yahoo.com
http://www.wealthbazaar.in/
Hi Mayank. Your articles & content simply rocks. I have also visited your oficial website http://www.wealthbazaar.in/
ReplyDeleteIt is amazing. Keep on the good work!!!