looking at stock advice thread I had this question. I know it is not exactly real estate but then again we've so much expertise here why dont we put it to use.

What's your view of stock trading as full time job? Is it possible?
What characteristics are required?
What training would be useful?
What is the minimum capital required to earn a sustainable income?
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  • The stock trading games on CNBC.Bloomberg etc - where so called experts try to make money from trading - is a big eye opener for those who think they can live by trading.

    Most of the time they break even. Profits are small to non-existent over the week.

    If these so called experts cannot do it, how can we?

    Trading is a big no-no - a total waste of your capital.
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  • If my broker could be so smart, why does he work for me? He gets up early in the morning, runs to catch the metro, reach office to get lost in files and s. If shares go down, his client loses - if shares go up, his clients gains. He just make a living out of the commission in trading, Cannot go out of business. You stake your money for full time trading - you will go out of business.

    Share market / online trading - I have never seen a single person who can claim to make a full time earning on his own.
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  • Originally Posted by Venkytalks
    The stock trading games on CNBC.Bloomberg etc - where so called experts try to make money from trading - is a big eye opener for those who think they can live by trading.

    Most of the time they break even. Profits are small to non-existent over the week.

    If these so called experts cannot do it, how can we?

    Trading is a big no-no - a total waste of your capital.

    Absolutely right. Trading in Stocks is not only waste of capital...it is waste of time and getting frustrated in the process. Not more than 5 out of 100 would make money in trading.

    And to do trading to make a regular living is a BIG NO.
    One may make occasional money on certain deals...yes that is possible..and this is where lies the trap..one gets hooked and wants to make bigger deals and more often than not, some of these go wrong and in a whisker you loose the gains and go further to lose the capital...and it happens so fast that there is no going back. At that stage one tries to make up the loss by putting in some more...and the result is the same.

    If one wants to protect capital then trading is not the option.
    Only disciplined investments over longer time horizon...3 to 5 years can make you earn good to handsome returns...and if you are new to all this...I would recommend go for Mutual Funds..that too bit by bit (SIP)...this will give you decent returns and peace of mind.

    I learnt it the hard way...and sharing the above based on personal experience of a few years.
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  • Originally Posted by VedKapoor
    Absolutely right. Trading in Stocks is not only waste of capital...it is waste of time and getting frustrated in the process. Not more than 5 out of 100 would make money in trading.

    And to do trading to make a regular living is a BIG NO.
    One may make occasional money on certain deals...yes that is possible..and this is where lies the trap..one gets hooked and wants to make bigger deals and more often than not, some of these go wrong and in a whisker you loose the gains and go further to lose the capital...and it happens so fast that there is no going back. At that stage one tries to make up the loss by putting in some more...and the result is the same.

    If one wants to protect capital then trading is not the option.
    Only disciplined investments over longer time horizon...3 to 5 years can make you earn good to handsome returns...and if you are new to all this...I would recommend go for Mutual Funds..that too bit by bit (SIP)...this will give you decent returns and peace of mind.

    I learnt it the hard way...and sharing the above based on personal experience of a few years.



    Actually I am not even convinced this 3-5 year horizon and MF route.....there are ample examples that people have not made enough money or in fact lost in last few years even with systematic investment....

    Look at index - it has hardly moved overall in last 5 years - in March 2006 it was at 12 / 13 k and where is today after 6 years. At least index is manipulated - they rotate high performing shares in to index and maintain it. There are so many stocks that have been beaten blue and if you kept holding them then your capital has eroded for sure.

    Trading I agree it cannot be full time - may be not even part time. You can forget when you would become a gambler. I have seen umpteen examples.

    Most dangerous thing is people make money in first few trades and then loose. They then start looking for revenge and try putting more and more until all is lost.

    But a person who treats trading strictly as a business - most important knows how to take loss and contain it they can make money. Whether it would be decent and how it would compare against other options I am not sure.

    thanks for all the response folks. It convinces me to stay away from full time trading idea and limit it to once in a while for a nice trade or even to hedge my positions in stocks.
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  • As far as India is concerned, it is volatile and underdeveloped.

    Trading is a big no - but staying invested is also dicey, except bluest of chips.

    Timing entry and exit over a few years works best.

    Buy mutual funds when markets are low (like now), sell the fund when markets are booming - seems the best way to make gains from India.

    I myself follow a SIP plus bulk buying when low entry strategy, and then booking part profits when markets are high system.

    I never exit market completely. So assuming I have a 20-40% allocation to stocks, I would up the amounts from 20 to 40 when markets are low like now - and reduce from 40 to 20 when markets are high (last Diwali and early in the year). THis I do with funds and stocks.

    In direct stocks, I rotate sectors counter trend - I buy the beaten down sectors, hold for a few years and exit when these sectors get hyped.

    Currently, I have exited FMCG and pharma. I bought infosys at beaten down levels last month and am buying beaten down banks currently.

    In 2007 I exited infra and Real estate and a lot os funds.

    In 2000-2001, I exited my infotech funds (before 2000 I did not have direct stocks) and in 2003 I re-entered into mutual funds.

    It has worked well over the last decade, although I did end up missing about 3 entry opportunities (including march 2009).

    But losing opportunity is not same as losing money - I have never lost money in the markets so far, although I am sitting on stocks at half purchase price currently - I know in a few years they will deliver.
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  • Life is a gamble!

    Years ago I was an "Investor". Learnt to buy shares, but not to sell them - though I even have a book titled "Its Selling That Counts".

    Luckily for me the planetary position was favorable and the economy boomed and I made money on my purchases, though, until the other day I thought it was my brilliant mind that did it.

    I will take some credit in terms of picking the right stocks, but even that credit should go in part to my parents and teachers of an earlier generation who taught me to be prudent and cautious and so I used those principles to buy stocks (which seemed to have a good track record and a future) at REALLY cheap levels (remember the below 8 P/E I always talk about.

    But I now realise that buying stocks and sitting on them for a long period of time is getting to be a gamble now. Its probably going to take much longer to make the 80s and 90s kind of returns from now on.

    And if you are into MFs, God help you since these take money from your pocket every day of every year in many many ways. They churn portfolios at a much higher rate than they should. Then they take their annual "management" Fees. So on nd so forth.

    So, looking at all these, I don't see how you are going to make a large enough nest egg by your retirement age simply putting some of your savings into MFs!!! MAybe you might make it if you did your own management and saved all the nickel and dimes, which actually works out to a lot.

    I looked at all of these and decided to trade (especially in these volatilie times when markets are going up as well as down). And if its trading, why not go the whole hog and trade F&O?

    The objective is, put in 10% of the money you intend to put into the stock market, into F&O. And look to see how to develop a trading philosophy and system that gives you a decent chance to reach your retirement nest egg goals!

    cheers
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