Those who are the readers of my article are well aware about I am totally against stock trading or day trading. It is because of the following reasons. As I explained in my various articles, we can find two types of people dealing with stock markets. First one is stock investors and later is stock traders. An investor should be aware about the meaning of both investing styles and need to select proper path to build wealth. Please read the below article carefully:
Day trading as know as stock trading is nothing but deal with a small period of time. Stock traders buy stock and immediately sell the stock after an hour or couple of hours. They are mainly using the technique called technical analysis to analyze the up and down as well as the profit possibility of a stock. They are entirely depends on the day to day changes happening in the economy as well as political conditions in there own country to predict whether the stock market move up or down in the same day or the next day by the influences of these factors.
Technical analysis is a method to analyze stocks by collecting its historical uptrend and down trend data as well as the past buy and sell volume details. Till now, I have not understood the idea behind this analysis method and how it help a trader to decide the future trend of a stock. It is entirely depends on the confidence of a trader and the money he has in his hand.
In simple words, stock trading is nothing but another kind of gambling. It is similar to an online lottery buyer, who selects his numbers from the given group. If those numbers are in the winning list, he will get money or he will loose money. There is no neutralization in this activity. Either you will get money or will lose money. An example, if a day trader buying a stock and the price sustaining in the same. After some time he is deciding to sell the stocks. In such situation, he will not get any money because stock price is intact but he will lose money in the name of broker commission.
The psychology behind a stock trader is more interesting. Majority of them commit to stock trading by the influence of other traders. They are thinking in a way that, trading activity is the best way to make enough money in less time with very less work. This is one of the worst thought about money because, from the experience of legend investors, money required enough time to grow. To strengthen the same, I can argue that by saying no legend stock traders in the world available by a famous name as well as the record of continuous profit from short term stock trading. We can see legend stock investors, who are investing on the stock for long term by thoroughly study the possible future profit possibilities of a stock, today as well as in the history. Warren Buffet is the best example for the stock investing genius today.
As a newbie, selecting the stock trading instead of stock investing path is very dangerous because of its gambling nature as well as non availability of trustful resources. It is always advisable for a newbie to select other available investment instruments to get 100% equity exposure. Deal with direct equity investment only after achieving enough knowledge.
This article will be a great help for newbie to identify various investment instruments other than direct equity investments, to get equity exposure other than direct equity investments without proper knowledge.