Trading is a gamble you never win

With increasing market participation, more money of the retail investor is lost than gained. The Indian economy is one of the fastest-growing economies in the world, with a GDP of dash and a growth rate of dash. With the tap of a smartphone, one can now buy shares of any listed company. Since it is very feasible for any common man to buy or sell shares, it is made to look very lucrative to participate in the market. Any growing economy with a promising future generally sees an upsurge in retail participation as the market grows and new arenas of commerce open up. The brokerage houses start running after bringing more and more people to their trading platforms. Advertisements, often with familiar celebrity faces, are flashed before the public, telling all the success stories of the market.

The stock market can never be predicted in the short run. Period. However much technical analysis or chart analysis is done, the market is unpredictable in the short run. What boosts the confidence of new traders is temporary gains that they may be able to capitalise on during a short bull run. This is a recipe for disaster.

Trading in the stock market generally means buying and selling securities in the market within a short time frame. It is not owning the security but holding it for a short time with the hope that some profits will be made during the movement of prices. A hope to make a quick buck. Full stop. This proposition is simply set aside by a simple argument: if it were that easy to make a quick buck consistently, wouldn’t the world be full of wealthy people? Trading simply does not work for most people, and those claiming that trading works are simply lying.

Technical analysis has become irrelevant for the retail investor. There was a time when gains from securities were not taxed by the government, but now all types of short-term gains from securities fall under taxation. So, a retail investor who cannot afford to lose much should also be aware of what other charges are deducted from the gains, excluding taxes. After deducting taxes and other charges by brokers, the gains should not be much in comparison to the time and effort wasted. Also, the fact that big players can manipulate the market according to their convenience makes the market more unpredictable. So, a small investor should never opt for trading in the hope of getting rich quick.

There are some educators and intellectuals who advocate technical analysis and deduce complex mathematical formulations and lots of exceptions to the same formulations.