Loss in Stock Market

SEBI (Securities and Exchange Board of India) has said that 90% of active retail traders lose money trading options and other directive contracts. Now this is just one kind of loss, but we have seen many people lose a lot of money. The problem is people think of it as gambling and in gambling it is very likely to lose money.

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The problem is that most retail investors lose money, this is because the operator or the big players know your move and basically, they can anytime crush you. I like the proverb, "Lose by Money or Lose my Time" That means either you can lose all money because the operator can bring down the price of a stock till your stop loss or if your stop loss is quite low then they can make sure that you don't get profit for a long time and thus eventually you book your loss.

I think this is so true. I have never done options or derivatives but basically, it is mostly for the big players because they can make or break the market any time. They can move the market in any direction so that they can earn either way and thus retail investors actually lose money in that.

So let's take any normal stock into consideration. In that also the best way to not lose money is to stop loss. Like for example, whenever you trade you have to find out the risk and reward ratio. Like is it worth taking the risk if the reward is quite low? If the answer is no then leave it. if the answer is yes and if you are taking a trade-in, you have to be ready to square off your position if you feel you are going into a loss.

For example, you found a perfect opportunity to take a trade and you have taken a position, now be ready for that stop loss so that you don't lose big. For me, 10% and 5% down is the good sweet point. For example, the risk-to-reward ratio is 1:2, so if I am taking an entry then the profit can be Rs 1000 but I am ok to have Rs 500 as a loss for Rs 10K investment.

I don't want my investment to lose like 50% of its value which is quite bad. Mind you here I am not talking about long-term investment, it is for short to medium-term investment where getting 10% is quite good. Even if you take 1 trade every week you will learn the nitty gritty of the market. It all depends on the analysis you do for the stock picking.

If you are not sure then ETF is quite good to trade. Getting 6% profit is not hard to get and the best part is that you can buy more when it goes down because ETF can never go down to 0. I am also learning the trading but I am doing ETF trading which is quite good in my opinion and you can easily beat the index using it.

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