Everyone believes there are two categories of market players: one is a trader, and the other is an investor.
I always say
“There is nobody called an investor. Everybody is a trader.”
Trading is a business of managing risk. Is there nothing called investment here? No.
There is a term called investment and is relevant in banks and bonds.
So, what exactly is the investment?
When you put your money to receive guaranteed profit, only then it is called as an investment. For example, if you put your money in fix deposits at a guaranteed 9% rate of interest and you get a that in writing on a piece of paper, then this type of transaction is called investment. When you put your money in a money-back scheme of an insurance company, the moment you have given your premium cheque, the money-back is guaranteed to you. That is an investment.
If you are in the stock market and buy any stock such as Reliance, Tata Motors, or TCS, do you receive anything in writing for a profit? is the profit guaranteed to you? No. Only when you sell it will it be known whether you sold it in a profit or a loss.
Profit or loss is the mechanism of every business in the world. The ideal approach for any business is buying at a wholesale price and selling at the retail price. Every trader does the same. He tries to buy at a wholesale price and tries to sell at a retail price.
Is there something called 90% or 95% success in trading? Forget about it. You will meet people you see. They will come to you and say “Sir, take our tips. Our tips are 95% accurate. And you ask him back- “Hey if your tips are 95% accurate, why don’t you borrow some money, trade your tips and become very very rich with it? One thing I have known in trading, those who know how to make money, do not ask other’s money, and those who ask for your money don’t know how to make money.
In the last 11 years since I have been associated with this market, one thing I know is that you cannot predict the market. All efforts in trying to predict the market are futile. You can only flow with the market. It is the trend that is important. The trend is your friend till it bends at the end.
Trading, like any other business, needs to be learned. You have to train yourself. You have to become skilled in your business. And various kinds of assets are available now. You can trade stocks, options, futures, commodities, and forex. And there is one thing many people are not aware of is that there is a lot of money to be made when the price is going down beside when it is going up. So do you know how to make money in both directions?
If you train yourself, you have a strong chance of making money in the markets. So do not be dependent on others. Train yourself, and then only you have a chance of making a consistent amount of money from the market. Remember, consistency is the key. Making money once in a while is not good enough. You have to make that money month after month after month if you want to have it as a second source or first source of income.