June 16, 2009

Why Stock Markets Attract and Look Easy

This is going to be important and useful series of article. Today we will discuss how a new-comer to stock market should start. In these series of articles we will discuss following things.

  • Why stock markets attract and look easy
  • Understanding what you want to do exactly
  • What are important things when you are in stock market
  • How a new comer should start in stock markets

Why Stock Markets Attract and Look Easy

Why Stock Markets attracts?

You must have heard lots of stories about people who became millionaire over night or in a short span of time from stock markets trading.

There are two kinds of people who make money from stock markets:

# First kind, are the people who make money because of luck. They buy some thing, it goes up and they think it was their skill that made the profit. Next time they buy something again and wooo!!! It makes money again and now they are the king!!

Then comes one day when their “best time in the market” is over and they start loosing money and this time its “bad luck in market” as they say!! They keep on trying to prove that they are knowledgeable and have mastered the skill to understand how markets operate.

At last they go bust and return from where they started. Smart people in this category are those who make money once or twice because of luck and don’t come back. I appreciate their smartness.

# Second kind of people are those who are real game players, They have done their homework, failed lot of times, learned from their mistakes and worked hard to make money. They know the rules of stock markets and take it seriously.

They are successful traders or investors.

People hear that lots of people make lots of money in short span of time from stock market and how easy it is to just open your trading account then choose some stock, later on buy or sell and magic happens! You make money. This is Far from truth!!

This thinking that “Lots of money can be easily made from stock market without much hard work” is the main reason why stock markets attract lots of people.

Why it looks easy?

“BUY OR SELL”, that’s all you have to decide? Either you will Buy something or you have to sell something. One of the renowned trader Larry Williams says this is the reason why most of the people think that its an easy thing to make money in stock market because they have very less decisions to make i.e. BUY or SELL

This is a human psychology which tends to believe that anything with less decisions is easy and one can do it. Everyone thinks “I am different”, “I know all these people where not able to make money, but I can understand things better and I can do it in a different way”!

This thinking is appreciated but, until it becomes over confidence. It’s true that you are different and you can do it but each and every area has some ground rules and unless you follow it thoroughly it’s almost impossible for you to succeed.

What you must understand?

You have to understand that you are a newbie and a small player!  A new born baby ,who cant even crawl in  the world of stock markets, but dreams of running a marathon and that too on one leg 😉 . Each profession needs specialization and experience and Making money from stock markets is no different.

Just like becoming a Doctor, Engineer or anything like that demands extreme study, experience, knowledge and other things specific to that profession, stock market demands all of that. The people who want to make money without doing it can not sustain for long and will hurt themselves very very badly.

We will discuss more of this in 4th part of this article “How a new comer should start in stock markets?”.

Here are others Parts

Part 2: Understanding What exactly you want to do in Stock Markets
Part 3: 8 most Important Rules in Stock Market
Part 4: A small Guide for newcomers in Stock Markets