We start dreaming big as soon as we open a demat and trading account. Demat account is different than a trading account. Demat account is like a bank account where we keep our money to buy shares or trade options/futures. Trading account is where we are allowed to buy shares, or trade options/futures.
The problem with novice traders is that as soon as they open a trading account they start dreaming big, bring lots of money to their demat account and start trading first “whatever they feel like”, then what their brokers or friends say, then whatever they see or read in any website or magazine, and then when nothing of the above works – they go for tips providers.
When all of the above fail they either stop trading or start learning – reading books, doing a course, self research etc.
Please notice that the most important part which is educating themselves they try last. Before that they have already lost a lot of money. Hell even I am one of them. This is human nature – when it comes to doing hard work we humans try to avoid and try to take a short-cut not realizing that the first thing we learned to achieve success is:
THERE IS NO SHORT CUT TO SUCCESS.
But we forget it and try to take short cut and who fills that gap? Tips Providers – resulting in more loses.
Back to 2008 almost one year after I started trading I remember that I thought to myself that I cannot do it alone I need help let me try “experts tip providers”. Hell my major losses where because of tip providers. 🙁
By 2010 I reached the last stage – SELF LEARNING and RESEARCH.
By 2012 life changed.
Which stage you are?
A lot of us believe that our brokers know a lot therefore they are brokers. Fact is share brokering is a business where they get paid for a service. It does not in anyway mean that they have all the knowledge of share market. This is independent of whether a broker has any knowledge of share market or not. Getting knowledge in share trading is neither limited to brokers or limited to any person.
Getting knowledge in share trading is open to all – its your will which is required to learn share trading.
So before your broker asks you to buy a stock make sure to do your own research – DO NOT follow them blindly. They ask you to trade because they make a living out of brokerage they get of your trading.
Traditional brokers give tips to their clients – Low cost (discount) brokers do not give. There is nothing wrong in giving free tips – but there is huge mistake to follow it blindly and invest your money. As soon as they ask you to buy a stock do your own fundamental research on them. Try to study their balance sheets of last three or four quarters, see their last one year performance, read news about the company. If everything looks good you can invest or ignore.
Brokers usually do not charge for their tips, but if your broker does do not pay tips.
Today morning at 7.15 am I got a phone call from an unknown person. He told me he wanted to trade India VIX Futures and wanted to know where he can trade. I told him there is no liquidity in India VIX Futures and moreover its very dangerous to trade as the lot size is very high.
Then I asked him why he wanted to trade India VIX? He said because his broker told him that India VIX will be above 100 in one month. I was SHOCKED. Then I asked him whats the reason he thinks so. There was no answer.
Here is the historical graph of India VIX since 03-Mar-2009. As you can see India VIX as highest on Tuesday, 19-May-2009. It was 56.07 up by 7.81%. And after that within three months in August 2009 it dropped below 40 and never went above 40 until now – Jan 2018.
You can read about India VIX future trading here.
It takes less than 5 minutes to know to some extend if the tip you got or your any broker who gave you a tip makes sense or not. If you cannot do any research then do not listen to any tip provider even if he is your broker.
It very important to learn and trade yourself.
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You can see testimonials here.
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Dilip Shaw, Founder
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