Is this really possible? With so many analysts & new channels churning out buy sell calls and guidance to the novice investors who always aim for big ticket returns and finally end up losing their hard earned savings. Some get frustrated and quit half the way, while quite a few stay on and loose all their account capital. What is the reason for this?
Many investors who approach the markets in the urge to earn some extra money from their regular income. Some on the other hand are lured either by their neighbors or friends telling them that that they made a fortune in the market. hearing all this the human instruct runs amok about why not we too make it in the markets. They put in all their savings and some times even borrow huge sums to invest in the markets to chase unrealistic returns.
Very soon they realize that they are not the same as what their neighbors or friends told them. Little do they realize what was their mistake, when others can make it big why not they? But this question seldom arises in their minds. Instead they bet more, from even more borrowed funds using the Martingale analogy, buying into stocks what others tell them are multi baggers or so called blue chips. For example one of our bluest of blue chips Reliance, a one time favorite among all investors have not given any good returns for the past few years now. Did any one reason out why it is so? No, they blindly bet on the stock, hoping that one day it will revive and get back their invested money. Here we should note a point, it is not big gains that they want now because of the frustration of waiting, they come to satisfy themselves even if the stock manage to break even at their entry levels.
As that never happens for a quite a along duration that they are holding on to the stock, time value clicks in and in the mean time many stocks with real strength in the mid cap segment or those with good prospects surge ahead to give multi bagger returns. Take for instance the present markets, though it is in a good bull run, not many blue chips are performing well, it is the mid caps that are surging ahead to give double and triple digit growth. Where as these novice investors loose on them. By the time they realize the run up, sell their losing positions and buy into the winners, it is a far cry , but again they make another mistake, they jump the guns by selling off their losing portfolio and jumping into these highly strong stock, by which time they have already finished their run up and are in the downward trajectory.
Now what is left is another loss and this time it will be a steep fall. As fast as a ball thrown up goes does it come down with the same speed.Finally they loose all their saving and also are in debt to finance their borrowings. But still they do not bother, they blame the markets, the analysts and the media for their losses and once after the loans are cleared, again venture into the markets in the same fashion. In the markets 90% of the players loose, 5% break even and only the rest of 5% make it into profits. The profits they make are very high, do you know why? All the losses that the 90% of participants suffered are the gains of the very few 5% lot. Isn't it huge?
More some players shrug it off as the market is a gamble and advice all their associates not to invest in it for the fear of losing. All these are the perceptions of the losers, while the winners quietly mop up gains and live a lavish life. The only vocation that does not need any external hassles is the stock market, you do not need a nagging staff, a non-paying customer, bad debts and no competition, this is known only to a few people. And they don't advertise themselves of their gains. Some times they too spill out their positions but it will be far long after their entry into a well establish stock.
Too much of research and analysis will only lead to a paralysis. Anyone can make money in the markets, if you enter at the right moment and exit at the appropriate levels. Plan how you have to trade and execute your plan without second guessing. Markets are abundant with opportunities, if not one trade there is always another trade to give you good returns which eventually wipes out the accumulated losses and keeps your account in positive.
In the lure of making fast money people approach the markets with intraday trades, futures, options etc., and most of them do not know the basics of how the market works. Why is the stock moving up, why is it falling, why is your option not increasing in value while the stock does so? Venturing into the,markets with half backed knowledge or even without knowledge is suicidal.
Always know your position, why are you buying at a particular price, after your entry what should the stock do, in case it is not as per your plan, when to exit. All these should be written down before you even decide to trade a position. Once you decide on a trade and are in it, you should not look back to take any decision, you should just follow your written plan.
Many investors do one more great mistake, putting all their nest egg into one basket. Rarely does the stock you trade goes up in value and fetches you fantastic returns. What if it fails, will not the whole capital get wiped out in one trade? To insulate yourself from such risks, diversify your portfolio to the extent that you can manage and track. Then even if one stock fails the other will profit and make not only your account equal but also go positive.
With out much effort and by selecting random trades from a particular system, risking minimum sums per trade you can generate above average returns in the market consistently. To know more about the plan, please write to success@bravisatempletree.com
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