Just try to search something about stock trading in Youtube and you’ll be bombarded with enormous number of videos teaching you how to make profits in the stock market.
These days COVID19 is at its peak probably, people are suffering, Governments are trying their best to educate people and restore normalcy. However most importantly there is a fear of job loss in every working person’s mind almost. Some jobs have definitely been lost but new opportunities are also opening up, and it’ll certainly take more time for a complete normalcy to return. Probably this is why people are looking for a second income and hence exploring stock trading as an option.
I have seen many people who were never interested in stock markets before COVID19, are now learning the same. There are thousands of videos in Youtube teaching stock market trading to common people. Some people have started stock trading during COVID19, maybe because they were really interested in it and the lockdown gave them a chance to explore. But there are also many who have watched numerous videos on Youtube claiming to make you reach via stock trading and dived in straight into stock market. Are those videos really telling or showing the truth?
That’s what we’re going to discuss here and then I’ll suggest you some ways to invest in the stock market although you don’t understand what stock trading is.
What the videos show can be outlined as below:
Stock Trading is Easy:
Okay… maybe be for the makers of the videos it’s easy, but not for all. If you try to teach a fish how to climb a tree, then you can think what the results could be. After a lot of tries over months I could learn just very few things about stock trading which is maybe just enough to buy and sell stocks, but not to make profits consistently. I tried to learn the charts the markers the templates and of course I make some profits but also a bit more loses. So if something is profitable, it can never be easy, either you work hard to learn it or you switch to something else that you fully understand and can use to earn. If you understand stock market well, then go ahead, you probably don’t need this article.
Types of stock trading:
Then comes different types of trading, e.g. Intraday, Cash n Carry, Positional and maybe some more that I still don’t know. I tried intraday and it turned out that it’s a full time job, if you don’t take right decisions at right time then the loses could be more than the profits. But when you make a profit, it feels good because your money grew in just one day.
In CNC you decide and buy the stocks that you want to keep for long period, because you expect it to grow in long term. Still you can’t just keep it and expect it to grow many folds after some years. After 5 years when you want to sell them, they maybe suffering a downfall at that time. Hence you may incur loses or make very small profits. So you have to be very carefully find a stock that will definitely grow in 5 years and calculate and keep a time in mind when you must sell it to earn the profits. But if you remember what was the share price of Maruti-Suzuki 5 years ago and what it is now, you’ll understand that it’s all about timing. Buy when the stock price is low and sell when it is up. That’s a full time job! Also you wait for so long, your money got stuck and now you’re earning peanuts!
Positional trading is like CNC but you keep the shares for lesser time, e.g. few weeks or months.
You’ll see in the Youtube videos people would show you their earnings in Lakhs of Rupees. I’m not saying it’s impossible, but it demands a lot from you.
You Can Earn a Lot:
Yes you can, but only if you understand the process completely, can read the market well and time it. Otherwise, even professionals fail many times, I have asked some of them.
Also, even if you understand the market and know how to trade you need to have a lot of money to invest. Why? If you invest just Rs 5000 and get 10% return, which is Rs 500, was it worth the effort? Frankly…..NO. But if you invest Rs 5,00,000 and get a 5% return only then you earn Rs 25,000. So this is another requirement, unless you have huge sums of money to invest, your stock market skills won’t give good returns. If you have enough money to invest and understand trading well too, then this article is not for you.
So you can earn a lot isn’t really true for everybody. So now what do you do to grow your money in stock market? See below:
Mutual funds have their own fund managers. When you invest your money in a mutual fund, the fund manager decides and re-invests your money in shares that he/she thinks would be profitable. However, you need to select good mutual funds by seeing their performance over a number of years. You may ask your friends or other people that you trust and know better than you about mutual funds. You won’t see quick gains in mutual funds, but over long term they give good returns. The good thing here is that you don’t have to select the stocks to invest, a knowledgeable fund manager does that for you.
Interested in mutual funds? Read below articles for mutual fund specific information:
This method I came across very recently. They make theme based bundles of stocks of various companies that they expect to provide good returns. For example there is a bundle named “Electric Mobility“; it contains stocks of companies that are expected to benefit from growth in the electric vehicles ecosystem. You can also see in detail what percentage of the bundle is in either of large, medium & small cap companies. You may invest systematically like SIP or in lumpsum also. The fees they charge you for your transactions are also very reasonable. Also when you invest in any smallcase bundle, every few months they review the stocks in that bundle and suggest changes to make it better, they call this activity “rebalancing”. Basically, you’re investing in stock market on your wish, by following advice from smallcase; you have the right to ignore their advice as well, if you know what you’re doing. You may go ahead and sign up for small case at https://www.smallcase.com/#signup.
For smallcase also you need a demat/trading account that you’ll have to open with one of its partners as part of the sign up process.
Since the time I came to know about small case and invested in it, I have seen nice growth even during these turbulent times. Hence I wanted to spread the info so that others can take benefit of this too.