No broker nor an expert who comes on the paid channels is ever going to tell you the following things…BE CAREFUL…read on..

Almost every second ad today urges you to trade. Equities, Debt, Money Market, Forex, Commodities, why even Real Estate flipping!

Fairly obvious to these invites there are risks involved – and obviously only jokers like me look at risk! Here are a few things that your broker forgot to tell you:

1. Leverage is inherent to an Options deal: when you buy a put option or a call option YOU are leveraging. And leveraging hurts.

2. You start small -say 30 shares of Bharti was your first transaction (Rs. 9000 apporx) ….then 300…then 3000 shares with leverage.

3. Trading like alcohol, is addicting. Initially you trade shares, then after a while you are waiting by the computer from 9 am ! And worse there is no equivalent of puking in equity trading – unless you consider running out of money as a sign of puking.

4. Trading requires tremendous ability to take losses, and a heart of steel, nay, diamond.

5. There are traders in the market far more skillful and with deeper pockets who can withstand market fluctuations better. I know some seriously rich (upwards of Rs. 100 crores family networth – ignoring primary residence, cars and office) who do positional trading. If you are doing day trading consider Hedge funds who play the game too. The odds stacked against you are too high.

6. There are many theories, and algorithms which work – but whether YOU have the discipline ONLY you know

7. If I am short on margin, I will ruthlessly sell your stocks. If one of us has to die, it better be YOU, not my business.

8. The regulators and politicians all over the world can make the market go in the opposite direction to your play.

9. The big stocks like Reliance and Bharti are also liquidity seekers and liquidity providers, so a 2% movement is par for the game.

10. I hate to tell you, that I make money on velocity, you make money on wealth creation. There is a conflict. 11. If I do not discipline you with margins, SEBI or the exchange will discipline me – and I will pass on that hurt to YOU.

12. If you lose in 5 trades continuously, take a break. If you take 5 breaks in a day, please find a new broker.

13. If you do not maintain a learning diary, you will lose tons of money and the lessons too.

14. When you watch TV regularly, it increases their ad revenues. When you trade with me – and do regular trades, I the broker, make money. Velocity is good for everybody EXCEPT you Mr.Investor.

15. Trading is addicting. If you do not know the definition of addiction, look up the dictionary.

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  1. A warning, but a necessary and a compulsory warning indeed for every one, and for those beginners who belong to a middle class.
    Thank you Sir

  2. recently a relative has quit his job (i’m sure he was fired as he was overpaid) and does day trading sitting at home. entire family is in awe about how disciplined he is – apparently when he earns 20k in the day, he just logs off. problem is no one talks about what happens when he starts losing in the day 🙂

  3. I don’t agree with deeper pockets being an advantage in point 5. Actually, one of the benefits of a small trader is that he has a small portfolio and he can be more agile than a large hedge fund or a large institution. Many ideas which can be made use of with small portfolio size don’t scale and hence hedge funds don’t use those ideas.

  4. I agree with you that trading is difficult but the money also that can be made many times justifies the risk… I have been trading for a very long time and it took me a while to realise that i need to up my game. Now after fine tuning my techniques, improving my skills, it is possible to make money. My suggestion, choose a good broker who has trading platform which can help to trade better and best brokerage rates.

    my friends and me formed a group to improve and motivate each other. till now, out of 5 friends, we 4 still trade very frequently.

    Avoid brokers with no technology or transparency. Try these guys, maybe you can change your perspective

    Reading some good books will help too.

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