10 Dark Secrets You Never Knew About Investing in the Stock Market
Knowledge illusion is more dangerous than ignorance.
I've recently come across a lot of disputes and discussions between people about the "Dark Side of the Stock Market."
I focused on two main points:
First of all, the persons who spoke about the "Dark Side" of the market were not ordinary traders but rather themselves. They either engaged in trading for a few days and lost their money, or they engaged in trading "sometimes."
Second, they haven't done a thorough analysis of the stock market. Their knowledge of trade is restricted to what conventional definitions or rumours claim.
Since 2007, I've been trading in the market, and in 2016, I made it my full-time profession. Several folks I've seen have made more than 1 crore (140,000 USD) in a single day, but I have also seen many people who lost all their capital in one day.
Thus, based on my trading history, these are the stock market's dirty little secrets:
Secret #1
Stock Market Trading is comparable to a heated match between YOU and Manny Pacquiao, Rocky Marciano, Muhammed Ali, Mike Tyson, and more all at once.
You can see who is punching and from where they are coming at least in boxing.
Yet in trading, you don't have the opportunity to watch these excellent punches.
It's due of the way that trading is constructed. Everyone is welcome to enter and take part in the game. Always keep in mind that you are competing with many people who have been in this industry for decades when you can accept a trade.
#2 Secret
The market has been controlled by robots for three to five years.
On most trading days, a large number of computerised algorithms models punch the great majority of transactions and quantities.
As a result of the error in the coding strategies, we can observe numerous bizarre trades and price surges.
Secret #3:
Without sacrificing the profit component, 80–90% accuracy is impossible. Individuals that claim accuracy rates of 80–90% are either false, gods, or just click-bait.
For instance, calls like "Buy Bank of America (BAC) at 38, Target 40, and Stop-loss at 20" are likely to provide over 90% accuracy. Unfortunately, they are unable to profit from genuine trading.
Secret #4
Your reputation, education, or experience are worthless to the market.
It returns your money if you are correct and provides it to you if you are incorrect.
Secret #5
Many Indians are still unaware of the distinction between a discount broker and a traditional broker.
As a result, many customers who choose traditional brokers find up paying more in brokerage and fees (it is insanely high, sometimes up to 5–10 times of the discount brokers).
secret #6
It is impossible to make money off of the news in the long run. This concept only works in movies (ex-The Big Bull).
It takes a lot of effort to constantly scan the news, and there is a good chance that you will get information too late.
Secret #7
Trading without a stop-loss, keeping a stop-loss in mind only, or having a stop-loss on a closing basis is a stock market sin.
People who use any of the above methods will have their accounts deleted soon.
Secret #8
Trading Psychology and Money Management are more important than technical analysis.
Secret #9
The majority of IPOs are overpriced. Many people subscribe to these IPOs and lose money as a result of the hype surrounding their release.
Although a few traders have struck gold by investing in IPOs and profiting from the rising value of the shares, this does not mean that everyone receives the same returns.
Secret #10
Except for brokerage/taxes, the market is a zero-sum game.
When the market falls, many news outlets claim that NNN,000,000 dollars have been wiped out.
However, this statement is technically incorrect. Because when the market is falling, someone (or many people) may have chosen to go short.
They would have made enormous profits after the fall, and they would be spending their vacation on beaches.