It is one thing to occasionally dabble in equity stocks such as buying a stock based on a tip by a friend or stock broker and quite another thing to trade equities on a daily basis. There are some risks associated with this activity that you as a beginner and just getting into it should be aware of in order to safeguard your capital.
Indeed, the share or stock market represents a platform that offers opportunities to everybody to make money. Today, with easy internet access, user friendly trading software and affordable demat as well as trading accounts available, anybody with some money in his bank can get into trading on equity within a week. The volatility that is seen every day in the market is sweet music to the ears of traders. Day traders whose sole occupation is to watch the stock market on their monitors and place trades so as to square of f positions within the day get many opportunities to take buy and sell positions due to such volatility. It may appear that many of them are making easy money by equity trading but the reality can be starkly different. It is not recommended to get into stock market trading if you are one of those hoping to get rich overnight or within a short span of time. There are no quick get rich formulae to help you when you trade equity and commodities or even derivatives. The reason is that there are many factors influencing the movement of stocks within the day as well as overnight positions. The world today is interdependent on economies of different countries. Any development with regard to geopolitical, financial or economic fundamentals can immediately have an impact on the stock market. That is one of the main reasons why day traders prefer not to take overnight positions. Having said the above, it is possible to make money on the stock market trading on equity and other asset classes. You have to possess the ability to constantly learn every day, exercise mental discipline while trading and have the gumption to ride with the losses that are inevitable. Having deep pockets will certainly help tide over losses but that should not make you complacent and motivate you to throw caution to the winds. So read about trading on equity well enough before getting into it full time.
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September 2017
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