Does anyone really earn money in the market”? These are the thoughts that start polluting a trader’s mind when he trades unsuccessfully in the market.
Even after spending time in doing research and analysis the result is more disappointment and fast depletion of the capital.
This is a vicious cycle and it only comes to an end when the trading capital is zero or as good as zero. Trader eventually gives up and the life of a trader comes to an abrupt end.
In general, a life of a trader is for not more than 9-10 months.
Broking Industry know this and that is why they urge you to trade frequently and trade big so that they can earn a huge commission from you. They know your capital will ultimately exhaust, so, they try and ensure their commission is maximized before a trader stops trading.
Ever realized why a relationship manager encourages you to trade in equity and not in future and option. Well, the answer is, in equity brokerage is 10 times higher compared to future and option. A broking house goals are not aligned with your goals. There is a conflict of interest. You want to trade less and stay invested for a long time. Whereas Broking house wants you to trade more and frequently churn your portfolio as they get more commission out of it.
So, the advice you get from broking house is meeting their own goals rather than achieving your goal.
So, one thing is clear when it comes to your own money you just can’t trust a broking house or anyone for that matter unless you have paid a fee for the advice.
So, does anyone make money in the market? Well yes, smart money do and they do it consistently.
We divide the market into two participants – Smart money and Crowd. Smart money consistently earns money in the market, makes fewer mistakes, their gains are much bigger than their losses. And on the other hand, we have the crowd who does everything possible to lose money.
It will be correct to say most people lose money in the market, around 80% people lose money while only 20% end up earning. And the market is a zero-sum game so, someone’s loss is someone’s profit. So, money these 80% people are losing comes to only 20% so imagine the kind of money is pouring into the pockets of just a few people.
Smart money is willing to learn and get better than the opponent in order to win consistently. Knowledge of the subject and being trained by a mentor will give you the edge that the other 80% people don’t have.
A small edge is all you need to tilt the scale in your favor. This small edge over time becomes a huge advantage. Scientists refer to this effect as “accumulative advantage.” What begins as a small advantage gets bigger over time.
It’s not impossible to stop being part of the crowd and be more like smart money. The only thing needed is mentorship and passion for learning the stock market.
In this market, the sky is the limit for profit and for losses as well.
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