There are various reasons for failures in trading in share market but following three reasons are very important and need to concentrate by trader and try to avoid them as much as possible.
Controlling these factors will take traders to consistent gains in the market
1.Lack of Knowledge
2.Greed
3.Impatience
1. Lack of knowledgea) Most of the traders enter into market either based on hot tips or based on very few knowledge and these both will lead to serious losses in the share market.
First of all trader need to gain all appropriate knowledge and information about share market. Trader need to spend minimum 6 months in the share market by daily putting himself in the learning curve. International news and markets also plays major role in our Indian markets as majority of the money invested in Indian share market comes through FII (foreign institutional investor).
b) Without Knowledge of international markets, domestic news/updates, corporate happenings it is not possible to achieve consistent gains in trading in share market. Investing may not require so much knowledge but for trading lots of information and knowledge is required otherwise profits may not be regular and losses may occur.
Investing doesn’t require this much knowledge because investing in strong fundamental company for minimum 18 months will provide good returns because in long term the stock price of company moves based on the company’s performance.
c) It is also not possible for a person to spend few minutes into the market and make regular profits. At least during initial learning phase trader has to spend minimum 2 to 3 hours analyzing the markets which news affects which companies in which manner, keeping eye on corporate happenings domestic as well as international economic updates.
After spending couple of months in all above scenario trader will start understanding the market and then he can do paper trading practice to gain confidence and once the trader start earning profits on paper then he can start trading with money.
2) Greeda) Greed is second factor which makes some of the traders to loose and it in observed that even profits earned are loosed due to greed factor.
b) Generating more profits or less profits it is totally dependent on market direction so just follow market and do trading rather trying to gain more profit by outing big money will not help.
c) On some day if you can only make Rs 100 as profit or even if you accept loss then accept it no need to do forceful trading to recover losses or to make more profit.
Greed factor will provoke trader to trade more and more to get more profits irrespective of market conditions. Trader need to be careful in this scenario.
Even for experienced traders it is no possible to earn profits continuously because it all depends on market and no one is having control over market, so just listen to market and if trading is not possible on any particular day then stay away from it.
d) Listening to rumors of getting provoked to make big profits, participating into forums and blogs to get hot tips, and trading based on sms tips these all ways may lead you to generate big profits but without having self knowledge about market it is not possible to gain consistent profits. You may get profit from hot tips once in a while but it may also give you heavy losses which can wipe your capital.
e) In trading especially in day trading it is strongly advisable that trader need to book small profits instead of waiting for big profit because in day trading the markets/stocks moves by lots of factors and any professional and experienced trade will be unable to judge the perfect direction so if you are into profit (after taking out brokerage and taxes) then take that profit and do next trade doing multiple trading with small profits will end your day with good profit.
If you are very sure about market direction for next couple of hours based on European market opening or based on any government announcement or company announcement then you can hold your day trading position for next hours.
3. Impatience
There are some personal characteristic of human being which also plays major role in trader’s life.
Characteristics like - Greed, impatience, taking quick decision, fear etc.
All these characteristics will have its own advantage and disadvantage in real life but in share market trading the success comes through only practical knowledge and experience and all these personal traits will take trader into losses on some or the other day.
So in short if you have any of above character at extreme level then strong precaution is required in share market and especially in trading
Controlling these factors will take traders to consistent gains in the market
1.Lack of Knowledge
2.Greed
3.Impatience
1. Lack of knowledgea) Most of the traders enter into market either based on hot tips or based on very few knowledge and these both will lead to serious losses in the share market.
First of all trader need to gain all appropriate knowledge and information about share market. Trader need to spend minimum 6 months in the share market by daily putting himself in the learning curve. International news and markets also plays major role in our Indian markets as majority of the money invested in Indian share market comes through FII (foreign institutional investor).
b) Without Knowledge of international markets, domestic news/updates, corporate happenings it is not possible to achieve consistent gains in trading in share market. Investing may not require so much knowledge but for trading lots of information and knowledge is required otherwise profits may not be regular and losses may occur.
Investing doesn’t require this much knowledge because investing in strong fundamental company for minimum 18 months will provide good returns because in long term the stock price of company moves based on the company’s performance.
c) It is also not possible for a person to spend few minutes into the market and make regular profits. At least during initial learning phase trader has to spend minimum 2 to 3 hours analyzing the markets which news affects which companies in which manner, keeping eye on corporate happenings domestic as well as international economic updates.
After spending couple of months in all above scenario trader will start understanding the market and then he can do paper trading practice to gain confidence and once the trader start earning profits on paper then he can start trading with money.
2) Greeda) Greed is second factor which makes some of the traders to loose and it in observed that even profits earned are loosed due to greed factor.
b) Generating more profits or less profits it is totally dependent on market direction so just follow market and do trading rather trying to gain more profit by outing big money will not help.
c) On some day if you can only make Rs 100 as profit or even if you accept loss then accept it no need to do forceful trading to recover losses or to make more profit.
Greed factor will provoke trader to trade more and more to get more profits irrespective of market conditions. Trader need to be careful in this scenario.
Even for experienced traders it is no possible to earn profits continuously because it all depends on market and no one is having control over market, so just listen to market and if trading is not possible on any particular day then stay away from it.
d) Listening to rumors of getting provoked to make big profits, participating into forums and blogs to get hot tips, and trading based on sms tips these all ways may lead you to generate big profits but without having self knowledge about market it is not possible to gain consistent profits. You may get profit from hot tips once in a while but it may also give you heavy losses which can wipe your capital.
e) In trading especially in day trading it is strongly advisable that trader need to book small profits instead of waiting for big profit because in day trading the markets/stocks moves by lots of factors and any professional and experienced trade will be unable to judge the perfect direction so if you are into profit (after taking out brokerage and taxes) then take that profit and do next trade doing multiple trading with small profits will end your day with good profit.
If you are very sure about market direction for next couple of hours based on European market opening or based on any government announcement or company announcement then you can hold your day trading position for next hours.
3. Impatience
There are some personal characteristic of human being which also plays major role in trader’s life.
Characteristics like - Greed, impatience, taking quick decision, fear etc.
All these characteristics will have its own advantage and disadvantage in real life but in share market trading the success comes through only practical knowledge and experience and all these personal traits will take trader into losses on some or the other day.
So in short if you have any of above character at extreme level then strong precaution is required in share market and especially in trading
