“Short-Term Trading” -A Loser’s Game
Over 90% of non-professional short term traders will end up losers, if they stay in the game.
Even those with winning two trades out of three trades will mostly end up losers since losses on losing trades are usually at least twice as large as the average gains realized.
In either case if the market fall sharply or jump sharply, short-term trader find himself stuck. Mostly as a short-term trader, trader books the profit immediately and miss the real creamy portion of the profit.
The few that are successful, professional or not, typically will ultimately ‘burn out’. So, even if successful, the ultimate price can be high.
Stock brokers also prefer their investors to be short-term trader and enforce their sales person to bring more volume from the investors to earn more brokerage. To get high volume and brokerage, sales person of brokerage companies are trained to bring more trades from investors through their calls, tips and market research.
As a human being, everybody likes to have instant money without pain. Looking to the daily price movement of stocks, it seems very easy to make money from the stock market, especially for the new comers. New comers are also favored by a beginner’s luck and they make few bucks initially and end-up losing most of their capital.
New and fresh entries of investors flowing in with the increase in stock market index. These new comers are also favored by “Beginner’s luck” and luck always parades as skill. In the bull market you will see many people who are very happy with their ability to pick right stocks. They may have observed the stock very closely before buying them and satisfy them to make little profit. A rising tide lifts all the boats, even the rusty one. Many stock do well in bull market, even they don’t have anything special. These all unskilled new comers end up their relationship with stock market with the fall of the market.
Short term fixation on economy and market movements is confusing and often leads to emotional reactions to sell at bottoms and buy at peak. By focusing on longer term, more stable trends as investor gives himself a better chance to follow the right road map.
Being a long-term investor, person should not be ignorant with his investment all the time. Timely management of portfolio is required by six months or yearly. Always have to remember no stocks are forever neither Microsoft nor Infosys.
You might also like to read:
Why do People Fail in Stock Market !
Life-Time Rules for Investments
Related Reading:
very useful information and i have found it for a long time,thanks so much.
good information, you write it very clean. I am very lucky to get this tips from you.