I know this question might have raised at least once in your mind while reading the success stories from stock markets. Is trading like gambling?
I am sure, you have heard about Warren Buffett and Rakesh Jhunjhunwala and already read their history, watched their interviews on YouTube.
But still you are not sure whether I should try it or not…
You think trading like gambling, or you feel you will be crushed out by the big players in the market.
I would say, it is your perception which decides whether it is a gamble or it is a business. I know people says trading like gambling even after trading for years.
Now you may ask one question. Why an experienced trader says it is gambling.
Yes, there is a reason behind that. I will tell you a story of one of my friend. He is a very good friend of me, and he is the man who taught me how to trade in stock markets. In Indian language he is my ‘guruji’.
Lets start the story first,
I have never seen my friend doing any kind of technical analysis or even looking at charts. He never tried to learn new things, never read any news before market opening. I doubt whether he has ever checked sgx nifty.
All of his trades where on gut feeling. He used to ask me.. Hey Subhash, what do you think today? will Nifty cross 8500? I used to give him some random answers. I still don’t know whether he had expected any answer from me, it was just like a routine call.
By 10 o’ clock he would place some random buy or sell orders as per his philosophy and wait for the stock to move into his desired direction. According to him stock trading like gambling or in his own word “jugaad”.
Once if he managed to make a small profit, he would get out of his seat and come to me to explain his strategy and to prove how successful he is. Out of curiosity one day I asked him, there is something called stop loss which other traders use, do you have any idea?
He said yes.. But it is not required since he is playing a kind of safe game.
This went on for around six months and sometimes our friend made profit and sometimes incurred loss. But he managed to gain around 20% profit on his capital.
During this period I started learning and was using ICICI virtual trading account and I have managed to make good profits in the virtual account. But my friend never encouraged me, but made fun of saying, “anyone can make money in virtual trading, show me it in real trades..”.
Days passed on. I also had created a trading account and started trading. In the first month itself I lost 20% of my capital. I tried many things from futures to marginal trading, options, BTST. Everything was failure.
My friend was very happy, because I could not continue my winning spree on the real market.
My friend had put himself as a super trader and started trading on high leverage.
And… finally that day has come.. NIFTY crashed 5% in a day. Friend had a huge position opened without stop loss. Moreover he had gone to wash room and was not knowing what was happening on the market. When he came back and looked at the monitor there was no open position. His broker had squared off his position and he had lost all of his profit along with his capital in a single trade…
So sad, isn’t it? Yes and he had stopped trading and I have never seen him trading for last three years.
Why I have said a long story here… what made our friend to loose everything and why he has not restarted trading? ..
The answer for all these questions are same. My friend oh sorry.. our friend considered trading like gambling. He is not ready to gamble once again..
So, it is up to you whether you want to take trading as a gamble or not. Let’s decide it first and wait for the second part of the story.
Dear my friend, if you’re reading this please don’t blame me for publishing your story. If your story helps someone from losing his hard earned money, then it is the best thing that you can do for someone.
Hope this article helped you to understand trading better. Do you still feel trading like gambling? Happy reading..