Do people really make money through Trading?
This is one question which is very subjective and everyone has their own opinion as per their experience as well as the assumption based on other’s experiences. Going with the facts, around 90% of the traders lose money in the market and only 10% manage to make consistent returns on their investment. There is a huge gap in the percentage and the only reason behind this, is lack of knowledge as well as the awareness. Due to which, we planned to start spreading knowledge regarding trading through our Blogs, which will be posted on a weekly basis.
What is trading?
To start with the very basic, for those who have no idea about trading, can understand this as a simple process of Buying and Selling of Securities. Securities can be in any form which includes stocks, commodities, currencies, indices, bonds, etc, wherever there is fluctuation in prices
Misconception about Trading
Trading is often misconceived with Gambling and is considered as an easy way of making money. Majority of the people think that trading is all about luck and gut feeling (including me when I was not in this field), rather than being a proper study of probability; where we try to maximize our chances of winning and minimize our chances of losing.
Like I mentioned, Trading is a study; which requires a detailed market analysis in the form of Technical analysis or Fundamental analysis or both (which will be explained in detail in my upcoming blogs); and if so much analysis is done, then the question of gamble shouldn’t come into consideration.
Trading is one concept which is very Individualistic, it depends on how you consider trading as; if done on the basis of luck or gut feeling without risk management, then it’s a gamble where either you make it or lose it and this doesn’t comes under the definition of trading.
Infact my personal definition of Trading is
“Making consistent returns with calculated risk”
Three Pillars of Trading
Now coming back to the question from where I started my Blog, “Do people really make money through Trading?” and personally my answer would be YES, provided we use all the three pillars of trading altogether.
Main three pillars of trading are as follows:
- Risk Management
I will be explaining all the three concepts of trading in detail in my upcoming blogs but we all need to understand is that, if we want to make money through trading then we have to master all the three pillars of Trading.
“The more you LEARN, the more you EARN”
I hope the information shared in this blog was helpful for you guys to understand the basics of trading. The more is yet to come, so please keep sharing.