I felt it would be a good idea to share with you the learnings from all these interactions and my own successes and failures as a trader. I’ve been immensely lucky to have interacted with thousands of traders in this period, both before and after starting Zerodha.
I’ve been a trader for nearly 25 years now, most of my adult life. While this percentage seems abysmally small, it is, in fact, similar to the success ratio of ordinary businesses just that the ease of entry entices a large number of people to give it a shot. Here is the thing though: less than 1% of active traders earn more money than a bank fixed deposit over a 3-year period. The ease of getting started adds to this allure. If you buy a house just because the price is attractive so that it can be sold when the price rises, it is a trade.Ĭountless people have been lured to the markets by mis-sold dreams of getting rich quickly and achieving financial freedom. For example, if you buy a house to live in with no intention of selling, it is an investment. I think if you enter a position with a time frame in mind (typically shorter-term) to exit, it is a trade and not an investment. What is the difference between trading and investing? While opening and funding a trading account is perhaps the easiest way to start a “business”, making money trading isn’t. The stock market is probably the toughest place in the world to make easy money, especially in the long run.
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