Why your get rich scheme by stock trading usually doesn’t work


You see those ads - on stock trading tips,  advice reports where more than 90% trading calls are successes, ads by brokers and advice firms who want you to believe money making by trading is an easy game you can win 

I've also known people, who haven't invested a penny in their careers, start trading with their retirement money to multiply their wealth. Some even go to the extent of doing trading full-time quitting their regular jobs. But a bit of thinking and analysis will tell us the reality


The game is set against you

Do a survey of your friends who trade; how many of them actually make money? My experience so fat been only a very few people manage to make money. Most lose. Trading is a zero sum game; you can make money only at the expense of someone losing it. Despite whatever people may claim on forecasting stock movement, trading is almost gambling. 

Statistically speaking, this game is set against you, the normal trader. Imagine a novice football player thinking he can beat the masters at their own game. Likewise is trading; there are huge institutional players  with deep pockets, IIT/IIM/Harvard/Yale MBA graduate employee traders with decades of experience, supported by automatic trading systems which trade based on formulas that are back-tested against real data and such techniques. They can drive the market, manipulate prices as they want. It is really a game between those big players. You and I are marginal onlookers who scrape any chances left. You can't make money playing against most of them.


Trading is a full time business

Traders who make money aren't average. They spend years training themselves behaviorally, reading a lot about technical analysis and several others. They build their own systems and identify a strategy which works for them and play along it. They don't get this as soon as they start trading. With patience, they lean to manage money better. They try to not bet the entire money. They build the skills, understand market movement and develop expertise. There is years of effort, learning and practice behind their success. You cannot just think you would start making money by trading so easily. Moreover, thinking you can manage it doing part-time is foolishness.


No quick route to financial success

Except for lottery winning or inheritance, there is no short-cut to becoming wealthy. All the businesses that invest crores to generate 10-15% return on capital will start trading if it was so easy. Even trading is like a business, considering the amount of time and money they have invested; the returns are comparable to any other businesses. Moreover, the opportunity cost lost in terms of their career, the time spend on some other things instead of trading could he humongous. With that perspective, quitting job to become a full time trader is a sure shot route to ruining oneself.


Money making is about habits

The real success of making money lies with developing habits which make you wealthy by default. Develop them one by one and you would be much better off even before you realize. And it takes time; however, slowly but surely, you will move forward and reap the benefits of this habits. Check out my other post on the real secrets for bulding wealth. People who are good money managers develop good habits, and by default they make money even without consciously realizing it. Fortunately building such habits is much simpler than finding out the next multi-bagger stock which will triple your net-worth in a year


Check out our free DIY financial planning course, where you would be sent step by step instruction to help you manage your money. It would need 1.5hr a week for 4 weeks to get stock of your finances, savings, earnings etc.

Disclaimer: This article is for educational purposes only and is not an investment advice / financial advice and should not be construed as such. Decisions taken are solely at your own risk. Read disclosures page for more details.


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