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| Stock Market Trading |
What is the Stock Market?
The Stock market is where companies raise capital from common people by listing their shares. Extra money is required to run any business. To replenish this additional money, companies invite common people to invest in the companies.People buy shares of companies and the companies get money in return.
People become aware of the habit of investing in the stock market. The stock market returns higher than all other asset classes (Gold, Property, F.D, Saving account, M.I.S, etc.).
In the stock market, the risk is as high as the returns. But if you buy and sell shares after doing complete research and study, then you can be successful in the stock market.
You can read my other articles to learn how to work in the stock market, what are the ways to earn in the stock market, and what things should be kept in mind while working in the stock market.
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How many ways can one earn in the stock market?
There are many ways to earn in the stock market, but the two most popular ways are trading and investment.
Trading – You must have heard the name 😊
Today we will focus on trading only, investing some other time
For some people, trading is like a ghost that will not come off if it gets stuck, for some people, trading is fun, if profit is made then it is okay if it is not made, it does not matter, for some people trading is a profession, a business which can be done. They do it seriously.
For some people, trading is a speculation and people think that someday their luck will shine.
Are you also one of those people? 🤔🤔
Let's find out
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Trading is an art or speculation?
Friends, today's topic is whether trading in the stock market is an art or just a place for betting. We hear from many people that no money is made in the stock market, here only money is lost.
The earnings of small traders are eaten up by big traders. Why is this so? Why do people think that money is not made in the stock market?
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| Stock Market |
One reason for this could be that people are not able to understand the fluctuations in share prices. Many people invest their money in the stock market without even thinking because someone tells them to do so.
A friend said, 'Brother, buy this stock, it is going to go up a lot, but the opposite is happening. People take it as a bet and try to trade on the news.
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Let us know some important reasons why traders fail:-
- Don't do proper research: If you want to earn money from the stock market, you will have to keep an eye on every nook and corner. What is happening in the country and the world, how are the companies performing, whether the companies are earning profit or making losses? How are the rest of the world's stock markets performing? It is your responsibility to know all this.
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| Importance of Research in Trading |
Any trigger can become an earning opportunity. And this trigger can be internal as well as external. Increase your research level, read as much as you can, and keep yourself updated.
- Trusting your luck more than your skills: Someone bought a stock and within a few days the stock doubled and tripled. Now that person started feeling how lucky he was, as soon as he invested the money it doubled and tripled. He works in the stock market again with the same thinking and this time he gets trapped. He keeps thinking that now the stock will go up, now it will go up, but the stock will move according to its own and not according to the luck of others.
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| The luck factor in the stock market |
Instead of trying your luck, it would be better if you learn ways to earn. Who knows, your luck will shine more by working after learning.
- Don't learn technical analysis: Technical analysis is the backbone of trading. If you want to trade in the stock market, you will have to learn Technical analysis. technical analysis is very useful for correct entry and exit in a trade.
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| Importance of technical analysis in trading |
There are many leading and lagging indicators in technical analysis like RSI, moving averages, stochastic, MACD, Supertrend, and Parabolic sars which help you in doing profitable trading.
- Do not use stop loss: Stop loss acts as an insurance policy in trading. People think that once they buy a stock, it will never go down and even if it goes down, it will not go down much. The stock keeps going down and people keep praying to God that now the stock comes up, now the stock comes up but the stock keeps going down.
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| Importance of Stop loss in trading |
People think that the stock has fallen so much that it will not fall further, hence they do not set stop losses. To protect your capital and not incur huge losses in trading, you must use stop loss.
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Suppose you bought a stock at Rs 100 and as soon as you bought it, the stock came to Rs 95 and you did not even put a stop loss. You thought it would be better to hold the trade rather than cutting it, it might go up. But instead of rising, the stock falls further to Rs 90. Now imagine if you square off your trade at Rs 90, it would be better if you had placed a stop loss at Rs 95, then you would not have to bear an additional loss of Rs 5.
It is as important to save money as it is to earn money in trading.
- Investing money in a single trade: The biggest mistake people make is to invest all their capital in a single trade. This should not be done. Divide your capital into pieces and invest in trading. If you invest money in a single trade and that money gets stuck in the trade, then understand that you are stuck for life.
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| Investing money in a single trade |
Suppose you have Rs 50k, then do not invest Rs 50k in one trade, invest Rs 50k in 5 trades. This is also an art of how to invest your capital in the stock market in different ways.
- Try to trade on companies' results: Many people burn their hands by trading during the result season. Unless you understand the business of companies and know how to read balance sheets, and profit & loss reports, do not trade on the basis of results. The price fluctuations at the time of results are so huge that you can get trapped. If many people like the results, they buy the stock. If many people find the results bad, they sell the stock.
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| Try to trade on companies' results |
Instead of jumping into this panic, be patient and let the stock stabilize and let the market decide whether the results are bad or not, and only then trade in the stock.
- Relying on trading tips and recommendations from unknown people: Today people have made a business of fooling people in the stock market. Business of collecting money by giving trading tips to people. Other people will cheat you by giving you wrong tips and taking money from you, they don't care whether you get profit after giving tips or not. Be careful.
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| trading tips and recommendations |
Do not trust any group or channel giving trading tips. Trust only those groups and channels that are certified by NSE. The most important thing is that you should make yourself so capable that you do not need anyone's tips or recommendations.
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Conclusion
Friends, the stock market is not the key to becoming rich overnight. We have to learn from it, understand how it works, why the stock went up, and why it came down. You must have seen that many times the stock goes up suddenly and comes down suddenly, why does this happen sometimes the stock goes up or down slowly.
First of all, you have to identify such stocks. Stay away from stocks that fluctuate a lot. There is no need to burn your hands in those stocks. Try to trade only in good, well-known, and strong companies. The stock market and speculative market are for those who want to make money through luck and not through hard work. And a good business for those who want to make money by developing their abilities.
Friends, in whatever business you invest money, there will be risk in it. You will be afraid that there may be a loss in the business or money may be lost, but if you learn the same work diligently and do it day and night, then your luck will change.
I do not say that the stock market will make you rich overnight, there are very few chances, it happens with rare people that the price of their stock increases many times overnight, but you should not come into the market thinking like this. You came here thinking that I have to stay in the stock market for a long time. To understand how the companies of India and abroad work. Money is made from money, but where to invest the money and how to invest it, what are the options I have, I have to look at those options to earn from the market.
Just as you put in the same amount of attention, dedication, hard work, and effort that you put in any other business, you should put in the same amount of hard work in learning the stock market. If you want to play betting, there are many other options available in the world, go there and play, don't pollute this business.
FAQ
Q. Why do companies enter the stock market?
A. Companies come to the stock market to raise money. By raising money from the common people in exchange for their shares, they use that capital to further expand the business.
Q. Apart from the stock market, how many other asset classes are there for investment?
A. Money can also be made by investing in Gold, Property, Saving Account, FD, M.I.S., Bonds, and Debentures.
Q. How important is technical analysis in trading?
A. Technical analysis is as important in trading as salt is in food. Food tastes bland without salt, similarly, trading is incomplete without technical analysis. Your entry and exit will depend on luck and you may even incur losses.
Q. How important is stop loss in trading?
A. Stop losses are very important in trading to minimize losses and protect your capital. If your money is safe then you will stick to trading in the stock market.
Q. Why do people trust others' trading tips and recommendations?
A. People do this to make quick money and avoid hard work. You should work in the stock market based on your skills and with confidence in your abilities. Other people will cheat you by giving you wrong tips and taking money from you, they don't care whether you get profit after giving tips or not.
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