Lessons learnt from Speculation (short term trading) in Stock Market

I always thought, so many people make money out of stock market by speculating, why not me? Here i'm not talking about me speculating based on my own analysis but on someone else's tips.

I asked myself, why shouldn't I take tips / recommendations / calls from an established player and put my money in that particular stock and exit once I made considerable profit in no time. Mainly focusing on short term trading / BTST / intraday calls.

I wanted to make quick money through stock market. And I somehow convinced myself that speculation is the only answer to easy money making. But before taking the plunge, I decided to analyze a broker's tips to see if it's safe to put my money in his recommendations and make profits. I started analysis his tips. Few successful calls and I was convinced that this man knows his job too well. His every call money rained. And that's when I decided to jump into trading based on rumours. I knew I am spinning a mess-web for myself. it was like the Ring from "Lord of the Rings" that once you wear, the evil within you come out in open. So the evil power of gambling my money took over me. But I was prepared to lose some money. With the Evil within me, i just forgot the definition of "losing some money".

I'd put small (token) money in first few calls and made small profits. I started thinking that I know this System, this is easy and am the master of the game. I completely forgot that I was relying on someone else's calls to make free money. I started trading high volumes. This phase of my life "making money" was called "Greed". 

Now i started thinking to play big. Trade high volumes and be a billionaire in no time. I started day dreaming of retiring early. You see, when you make small profits, money attracts you like a magnet. I was so taken by it, that i lose my senses and soon forgot the universal truth of life "Karma is a Bitch". Continue reading to know what happened next.

I bought few high volume shares based on rumours / speculation / tips received from multiple sources. I had no idea how the trader concluded it's safe to buy the stock at this price and it will go to this price in X number of days. I waited for X days to finish. But while the countdown was on, i could see most shares plunging. Traders assured not to worry and buy on dips. I did that for few stocks. So more money was at stake. With every passing minute, hour, day, my heart beat kept thumping to see the free fall of stocks i invested.

One fine day, when i asked speculator what is to be done now. He simply said, do your own study and invest. He asked me to hold but i was worried, i mean, literally every nerve in my body was short of air. And that's when Karma turned from friend to bitch for me. I could not stand the pressure of seeing the stock fall further down, i exited with heavy losses. My losses were more than the profits i made. This phase of my life "losing money" was called "Misery". 

I soon realized, Speculation is easiest way of losing money. That was the first lesson learned along with many others. Continue reading other lessons i learnt in this journey.

- Do not go into Speculation /short term trading / intraday unless you yourself has studied the technicals / fundamentals / techno-fundamentals of the stock and know when it's safe to enter and exit. I see many facebook groups, pages, whatsapp groups suggest tips for short term trading and people like me get into such traps just to either make some quick profits and eventually lose big.

If you are planning to make an earning from stocks, understand the stock market first, learn the technical and fundamentals of the company. Educate yourself. Have a mentor who can train you. Read books. Understand the graphs, what they mean, how to understand / interpret them. Practice a lot.

- Be a full time trader and keep a watch on market 24x8 if you want to make money from short term trading. 

- it's your hard earned money. Don't burn your fingers by speculating in stocks.

- Better invest in Mutual funds instead of speculating your hard earned money. Or invest in large cap stocks to play safe.

- Being a retail investor, I had no idea how the circuits work or what is stock manipulation and how volume triggers, trends work. But I still jumped into it. Never do that.

- Avoid rumors / tips / recommednations 

You should not invest based on someone else's idea about the stock. Do your own research and invest in the company. Do not have a blind faith in recommendations. it's like gambling in the casino. You do not ask the unknown person next to you which number to bet your chip on in roulette game.

- Traders invest in a bunch of stocks to compensate losses. 

Even they make mistakes but they always have a backup plan.They invets in multiple stocks to cover up losses from few stocks. As yourself, can you do the same. Do you have a backup plan.

- Once you start speculating and invest in stocks for short term gains, you lose focus on other stuff. You keep worrying about your stock price movement. Will it go up / down ? What if I lose ? if it goes up, can I wait for some more time to gain extra profit ? What if it crash now and I lose out on the current profit ? All these questions and many more start popping and you lose focus. So better stay away from such speculative trading.

- You not only lose patience as you keep an eye on stock movement with every passing second, you also end up losing lot of time and money. 

- if you trade smaller amounts to gain quick profits (in smaller amounts), you end up paying more transaction / brokerage charges & shidt term capital gain taxes. 

- Technical Analysis do not worry about under / over valued stocks. So you should not be emotionally attached to the stock if you miss the profit ride. 

You tend to hold onto the stock if the technical target is not reached and stock has fallen down from your buy price. Psychologically, you start thinking about the fundamentals of the stock now. Suddenly the stock becomes a fundamental stock after you had losses. And you are emotionally attached to it. You don't want to sell it for sometime till you recover your money. That's nothing but suicide.

- No broker, speculative trader will take responsibility if his tip / recommendations back fires. They always go with an unwritten disclaimer: Do your own study !!!

- Profits that you make in technical trading, major chunk of it goes in brokerage charges, taxes etc. So you are left with only minor profits unless you trade heavy volumes.

I personally believe you can make money in day trading only if you know what you are doing and is fully devoted to it. if you can't and still want to make money from day trading, better hire a financial advisor and pay him for the services. 

I also believe that one can make lot of money in long term trading by holding fundamentally strong companies. it's owning the business. But you need to do your own research for that. Don't go for tips in knowing fundamental stocks as well. Read Annual Reports and do your own analysis. And let the Magic of Compounding work for you.

Thanks

Long Term Investing Lessons

Recently i read a pdf version of a book on long term investing in Stock Market. Although i lost / deleted / saved the pdf somewhere i can't recall now. But i noted the lessons learnt from it. So here are the key takeways from the book on Long Term investing in Stocks:

- Timing is not important, time is important. Start young, start early. Do not try to time the market to buy a stock. Better buy only when market is down for 3 consecutive days.

- Market is always cheap. Buy when you have money. 

- Buy great idea again and again instead of buying variety of stocks

- Look for business which evolve over time and technology. Look for businesses that continue to pay high dividends with changing times and technology.

- Look for business with increasing earning growth

- Buy great idea and not cheap idea

- Buy visible business.

- Buy cyclic business which is ever growing with technology and science.

- Buy during blood bath if you know you are holding a great idea. Dont be afraid of recession, it lasts only for few (1 or 2) years. great businesses run for lifetime.

- Never sell a great business.

- Buy when YOY quarterly results are out.

- Enjoy the benefits of compounding over time.

- Read Director's report in annual report.

5 must have Android Apps - 2015

It's hard to find anyone without a smart phone today. And any person with smart phone, is always in search of best apps freely available on play store. 

Today, I'll be sharing some of my favorite android apps that I categorize as "Must Have". 

I won't be talking about the generic mainstream apps that we install first thing after buying a phone. Neither I'll talk about iOS apps because I find android OS giving more freedom to install apps easily and choose from variety available.

here are my favorite five: 

1. SMS Backup+

One thing we fear the most, chances of losing mobile data especially the important messages (SMS) that we get from Banks, services used, OTPs, transaction details, credit card / loan messages etc. 

Need not worry anymore, now you have the power to backup all your messages from phone in your Gmail account using this app "SMS Backup+". Trust me it's a life saver. Even in an unforeseen event of losing your phone, the app gives you freedom to restore data from your Gmail account on to your phone without any glitch.

Some of the salient features:

• "SMS backup plus" automatically backups your SMS, MMS and call log entries once you connect it with your Gmail account. It creates a separate label in Gmail for better visibility and avoid missing the data with your emails. 
• User can restore SMS and call log (but not MMS) back on to phone easily through the app. 
• it can be installed either on phone memory or SD Card. I recommend you to install in on phone because there are technical glitches on taking backup and data restoration from SD card.
• It's free to download. This has inbuilt app updates from Google play store.
• it does not occupy much of your mobile's RAM. 
• The app performs data backup in background as long as your phone is connected to internet. No manual backups needed if you are using this app.

There are other apps available to backup mobile messages (SMS). I have tried few (airdroid, mightytext) and I found this to be the ultimate winner. So this tops my list of 5 must have android apps on your mobile. 

I would love to hear from you if you know of or have been using any app better than this to backup your SMS data.

2. MSN Money

This app is for all those interested in stocks, markets and investments. it's an easy way to keep track of your stocks and simplify life.

if you are an investor / stock freak and wants to track your investments on daily, weekly or monthly basis, this is a must have app on your mobile. it works very similar to moneycontrol. The only drawback is you need to have an MSN account to access this app. But that's not a difficult task if you really wants to track your stocks at any cost. 

The best thing about this app is that it does not throw ads on your screen while your accessing it unlike moneycontrol and other apps.

• This app provides  in-depth analysis, statistics, recommendations, price movements, news about the stocks, market movers etc.
• You can create your own watchlist to have a quick look at your stocks and check on their performance.
• You can study indices as per your area of interest.
• it gives you news about the latest happening in markets today.
• it always shares links to blogs / posts about Personal finance.

There are tools available within the app which allows you to:

• Convert Currency
• Calculate monthly mortgage
• Tip calculator
• Wealth Estimator
• Retirement Planner

Search for a stock on BSE / NSE and it gives you an Overview of the stock, news about it, recommendations, Statistics, Trends, Competitor stocks working in the same sector & the Stock profile.

If you are already using any popular apps like moneycontrol etc. to track your watchlist, try this app as well. I guarantee, you will not regret it.

3. Cam Scanner

Gone are the days when you have to go to the nearest cafe to get your docs scanned and send it in email. Who would have thought one fine day users will have an app to scan docs as smoothly as a real scanner and print them. Cam Scanner is the app for these tasks. 

Life just got better for all those always in want of scanning documents to fax / send or print them. 

Now you can easily scan your documents, edit it and send fax or take print outs.

Some of the salient features:

• Scanned documents can be either saved as pdfs or JPEG images
• you can either create individual pdfs of scanned docs or club them together under one pdf
• you can crop the scanned doc, enhance its text to make it more readable.
• you can easily print docs through this app once your printer and mobile is in the same network.
• you can also add watermarks on your scanned docs and set pass codes to protect them

Connect your Gmail account and send the scanned doc in your email for backup.

This app also has a paid version providing you up to 10G of cloud space and auto upload feature. I believe the free version has enough features to lasts for a lifetime. So I would really not recommend to buy the app unless you need some service which is only available in paid version.

4. SMS Notifier (SMS Popup)

How many of you are fascinated with the way iOS show any incoming message by directly opening a popup with message details.

This feature is not available in android (at least in the version I am using 4.1.2). 

So I thought of having it installed on my android mobile using "SMS Notifier" app. This app works just the same way as on iOS. Any new incoming message is notified to the user through a popup without the need of user manually reading the message through the message box. Isn't that convenient. 

It's easy to read your incoming messages even when your mobile is locked. Once you install it, the app works in background and performs the task. 

5. Inshorts

Short on watching news on television or reading a newspaper because of time crunch. How about having an online app to read news. "News in Shorts" app (now Inshots) allows you to read news at any time and keeps you updated with the latest happening around the globe.

Catch all the news, local & global, from around the world, presented to you in not more than 60 words. 

You can set filters as to what type of news you want to read about. Sports / Political / Business / Movies, national / international, you get it all here in 60 words. 

This app has this cool feature to swipe left / right to read news in detail. Swipe up / down allows you to move between the news on the app. it's fun to read news here. The news presented here are not cluttered on one screen like flipboard. 

You can also set the theme as you want to view the app in day / night mode.

This app will definitely give you a new news reading experience. A must try.

If you know apps that you think deserves to be on "must have" list, let me know, I would love to check them out. Thanks