Stock Markets in India are closed today for Eid -ul -fitr holiday.
This festival is about caring and sharing. It is a good feeling to share the joy and happiness.
Greetings to all the readers.
I am sharing one of my recent posts on Quora where someone asked about the harsh truths of making money from the stock market.
The fact is that there is nothing harsh when you are making money. It is the failure in doing so that makes the life harsh.
But some simple truths are given here as I see them and most of the readers too would have come across these facts :
(1) You are lucky when you make money and stupid when you lose it:
Do not expect any accolades or congratulations from friends and family when you are able to make a profit. In their minds you just got lucky. Being smart and intelligent is something people do not associate with trading.
If you were lucky while making profits, you should be just unlucky when in loss. Do not expect the world to be so kind to you. Now you will be termed as stupid.
No appreciation for success and full criticism for failure is a traders lot and one has to learn to live with it.
(2) It is a lonely life:
Try talking about your trading with parents, spouse, children, friends and all you get is a cold shoulder.
Not a shoulder you can cry on in your time of despair but a shoulder which suggests to take your burden elsewhere.
You can not share your success or failures. Either you get indifference or criticism. Do not expect appreciation even at the best of times.
Learn to cope with the lonely trading life.
(3) All the conventional market wisdom, charts and strategies do not work all the time:
We get nuggets of wisdom like:
95% of traders lose money.
It is a zero sum game.
Option Buyers never make money.
80% of options expire worthless.
Then there are charts, bands, theories and strategies which are back tested for some time and promise great rewards if followed diligently.
First about the wisdom part. Even if these sayings are true to some extent so what? Why we can not be among the 5% who make money?
Similar is the talk about 80% options expiring worthless. All these talks are designed to make you a sure loser. Let your mind not be conditioned accordingly. Think on your own. Think like winners.
As for the technicals like charts, bands and strategies , all of them fail and fail spectacularly. If that were not the case, big traders will never lose money. And believe me they lose by the truck loads when the markets go against them.
You have to live by your own methods and by control on the emotions of fear and greed.
(4) Sell at a higher price than the buy price:
And to conclude the topic the biggest and simplest truth of them all.
Profit = Sell Price – Cost Price
This is taught at elementary school level. And we forget this fact and go for complicated and convoluted methods to get to this point.
No other formula for making profit has yet been invented and is not likely to be invented.
Keep life simple.
As we can not control the selling price ( it depends on the prevalent market condition) , let us focus on managing our losses. Once we learn how to manage the losses, profits will start coming in.
To Summarize :
Trading does not have social acceptance in India. Even if you run a big trading firm or are a broker, there are people looking for your failures. Do not expect respect even if you are the biggest and successful trader. Remember, you just got lucky.
As for being lonely as a trader there are few remedies. Write a journal of your trades. Write a blog like I do. share your experiences here on Quora. Other traders can benefit from your insights. Here you will not get the cold shoulder but some appreciation and thanks from those who value your experiences.
Do not give much thought to losers. Always plan for success and gratefully accept whatever the markets give you.
Thanks for reading.
Enjoy the break from trading today.
We shall be back tomorrow morning for that.
Link to the original Quora answer :