Disadvantages of Stock Trading

An article from Sherin Dev of Investinternals.com

There are no formulas identified in the earth to make people rich in a day or week. General mindset of stock traders is to become rich in a fortnight by buying and selling stocks frequently, bypassing the law of above truth. Certain end of such traders would be a great tragedy by generally getting bankrupted or ran out of trading room with lots of debt burdens and no dress. Stock traders have very little chance to become millionaires, but certainly the broker and tax department to get rich slowly by them.

Understanding the dangers and disadvantages of stock trading would help young people, who are attracting to trade in stocks, to not lose money by blindly entering to the trading platform, where emotions precedence intelligence. Here is a list of disadvantages of stock trading for those who want to know the unknowing depth of this black water where traps have no limitations.

1. Traders are just gambling

Yes! They are just gambling by purchasing daily lotteries. If they are lucky, they will get something or lose the total capital. Stock trading also has similar character. It is all depends on the movements of stock market that no one able to predict. There is no system or formula in the world to predict stock market trends. An average trader would be highly depends on stock movements and speculating to trade. He has not option to confirm his speculations are right until the final result comes. Most of the time trading result turns the trader to a total loser.

2. Traders never move on own decisions

Most traders speculating in stock market purely based on daily research reports and recommendations in channels and news papers. Active traders hugely depend on the words of their brokers or representatives. As long as we are not able to predict what will happen to us in the very next minute, how these self proclaimed ‘guru’s can predict the movement of stock markets for next few hours or days? Ultimate victims of these gurus are the traders who blindly believe them and trade as per their recommendations.

3. Trading is the best to become debt trap

While opening an account, inquire whether the broker provide loans to traders or have any agreement with banks or financial organization to arrange fund for traders in the form of loan. If yes, this is a trap. Most traders have habits of borrowing money from others or organizations to play in stock market and finally it will make them liable to repay entire borrowed money with interest. As an already loser, most of the times it will not be possible by them and soon getting bankrupted. Traders have all the possibilities to land in huge debt trap with the ‘fantastic’ help of brokers and other similar elements.

4. Traders unknowingly making broker s and tax department super rich

If inquired, we can easily identify the highest percentage of broker revenues coming from trading commissions. Tax department also get an un-compromised fixed tax from each buy and sell. Most traders ignoring these facts and dedicated their life to make the brokers and tax department super rich through putting their neck to the dangerous traps of debt and ignorance!

5. A trader cannot be an investor

When found any trader uses the word “investor” to describe self, run away from him at the very moment. It shows he even doesn’t know the deference between trading and investing. It is difficult for a trader to become investor. If so happened anytime, the sleeping element, greed to become super rich within a week or month, would be always there in his thoughts and it would wake at any time. Trader turned investor thus have very few chance to become successful with the stock market.

6. Trader and waste of time

Traders generally start their day traveling to the brokerage house. There they will monitor TV channels and computer screen to know each changes happening to stocks. Someday they never trade due to not getting right options and go back to home in the evening after stock market closed. They are thus wasting whole day without any productive activity.

7. Emotional animal

Trading happens on emotions. Fear and greed are two major emotions that lead traders to trigger buy or sell button. Use of intelligence doesn’t make any sense inside the trading room. Instead, greed and fear based emotions; activities on third party recommendations have prime positions there.

8. Ego and stock traders

Most of the stock traders become bankrupt because of their ego to collect the money back which had lost in stock market with previous trading activities. To get the lost money back, most traders put more money, even borrowed money, and finally fell to the huge debt trap.

9. Overconfident to lose money fast

Another back draw of trading is over confidence. These dangerous thoughts would pull traders to put large amounts to bring profits fast. The best word to describe this is, eating like a Sparrow, but defecating like an Elephant. Generally, the receiving profits will be less, but the loss will be huge and unable to recover from it easily.

10. Lose turn trader’s day’s worst

Lost trader never get peace in mind and cannot able to concentrate anything. This will spoil family, relationship and all the good needs to happen in life.Want to be a stock trader to after reading the above, proceed and put your head to the big scissor to end your life easily along with family, dependents, kids etc…

Sherin is the founder and editor if Investinternals.com Blog. Learn more about him here. Follow him on Twitter @Moneyhacker or be in touch with him at Facebook
If you have any queries like to add a guest article in this blog, contact him at investinternals@gmail.com