Fatal Attraction to Intra-day Trading
There are a few other sites of interest that I visit from time to time. Here's an interesting article that I came across about the fatal attraction of Intra-day Trading.
All the points mentioned in the above article are quite relevant. My own additional two cents to the topic:
- Intra-day Trading is more popular during bull markets than during bear markets - Human beings love to think that markets are looking up. And they love to take additional risks especially when they feel that they are smart - as they do when they see their paper wealth soaring along with the indices!
- The potential returns from intra-day trading is huge - Even 1-2% per day translates into obscene returns on an annualised basis. And who is not tempted by good old Greed? Especially when the markets are zooming.
- People just don't invest adequate time, energy and effort in learning the "tricks of the trade" - Instead, they just trade - Obviously, this just results in losses for them and a bigger booty for the brokers. Only problem is that they realise it way too late - After the horse has bolted and after their "Risk Capital" is gone for good.
- This loss, in turn, ensures that they decide that the share market is nothing but a Gambling Den in disguise and stop investing in shares "Altogether"
- Their resolve to stay away from the market remains perfectly strong as long as the market is going down and a powerful bear market pulls down the prices of "Gold" to levels of "Bronze".
- In the process, they miss out the opportunity to buy a TISCO at Rs. 150, a Unitech at 25, an ICICI Bank at 300, a Hindalco at 50, an Infosys at 1200
- In due course, the market starts recovering - slowly at first, and rapidly later.
- Our friends watch "Everyone else making money" in the Share Market.
- Suddenly, they realise that every neighbour is talking about the "Smart money" that can be made in shares
- Result: Once again, they start from point No. 1 above!!!