Do you want to be a Conservative investor or Audience or Player in the Stock Market?

By: Satyajit Mahalik

Before we co-relate Audience and Player into the stock-market, let us discuss these with an example:


In every sport there are players who play on the ground and the audience who watches the match from the gallery. While matches go on, the audience is emotionally excited and they cheer their favorite team/players when their favorite player scores run/hits six in the Cricket or scores goal in Football/Hockey match, audiences clap as it makes them emotionally happy. At the end of the match the player who scores more run/played match-winning innings, he/she gets the Man of the match. So this is the recognition and reward he/she gets in exchange for their performance.

Out of some audience, they want/wish to become a Cricketer/Football/Hockey player, but they never give any effort or just thinking to be like a player. So, in the long run, they only remain as audience and will spend a very thick heavy amount on ticket buying and no rewards/recognition they can get as compared to a real player who plays on the ground. The player will get an advertisement contract, brand ambassador of some event/Govt program, and huge cash contract from these.

In the stock market if you want to earn money or making profitable trading income one should become an active trader, not as an audience. An active trader always finds the opportunity to enter into the stock buying/selling at the correct price level with details technical analysis and proper risk management.


In contrast, the audience in the stock market only observes the stock market but never take the right decision at the right entry/exit point. If they buy the stock never monitors the price movement, no risk management, no active involvement, no back-up plan, no capital protection plan.  

Another type of audience is who only sees the market/stock movement but never enters the stock due to lack of knowledge or doesn’t have confidence in the market, whether they can earn money from the market.

So, as a result they lose money or never able to earn from the stock market.



Let’s take an example of Conservative Vs Audience Vs Player



Conservative (Investor1): The conservative normally never invests in the stock market due to either doesn’t have the knowledge or maybe due to fear of losing money. Some conservative investor regularly takes update of the stock market news but never want to put money into the market. These type of investors normally parks their money into traditional investment products like Fixed Deposit (FD), Recurring Deposits, Postal deposits, secure bonds, etc.

Let’s have a look into sample investor1, which we have classified as Conservative as he/she has put whole money into less risky product FD. 

Audience (Investor2): As we have already explained this type of investor normally doesn't keep track of stock movement or only observes market. In the below example we have shown the Investor 2 as an audience. Suppose Investor2 wants to park 10 lakh into the stock market, so bought 1000 shares at the price 1000, after some month price started going down, as he has no active involvement in the stock market and no risk management, so at the and he was in loss of -45000.

Trader (Player): As we have already explained normally these types of trader we can term as players, as they normally actively involve in the market, enter the at correct price level with proper risk management. 


Please have a look into the below screenshot for better understanding.

In this example if you can see from below graph player has set the target price and loss booking price, even though at one price he booked loss but finally net profit 87280 which is net 8.728% approx.

  

NOTE: Tenor we have defined here, the trading period of a 1 year if somebody is profitable at any time or target achieved, can exit depending on his portfolio planning

So finally, if somebody wants to ba e successful trader he must be a player.

If anybody interested to learn stock market basics and technical analysis, please contact: 

s2learntrade@gmail.com