Friday, 2 October, 2009

Fatal Attraction to Intra-day Trading

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:

  1. 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!
  2. 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.
  3. 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.
  4. 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"
  5. 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".
  6. 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
  7. In due course, the market starts recovering - slowly at first, and rapidly later.
  8. Our friends watch "Everyone else making money" in the Share Market.
  9. Suddenly, they realise that every neighbour is talking about the "Smart money" that can be made in shares
  10. Result: Once again, they start from point No. 1 above!!!

Sad, indeed!

Regards,

N


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