Saturday, December 17, 2011

Good Things Comes In Small Packages

How much one can earn from the markets?.

This is my concept from my own experience.

Let us consider 10 friends enters into market for investment. Most of us enter into markets from investment perspective and later switched to trading.

First round - In the first 1 or max 2 years, they lose all their 80-100% capital. 5 out of 10 friends do not return to markets again.

Second round - 5 friends return to markets with reloaded capital. Capital swings + /- 40-50% for next 1 or 2 year and finally almost 75-100% capital is lost. 4 friends take back the left out small capital and say goodbye and never return to markets.

Third round - Only one remaining person stops trading for a while after 2-3 loss making years. He analyses his past trading carrier and decides about future. He lay plans and enters with additional capital (mostly borrowed) for the final innings. He always remember his past wounds and accidents freshly in mind and plans his travel very cautiously. Very rarely people go wrong in the third round of trading.

If someone who cannot survive in the market even in the third round, trading is not for him and he misconceived that his passion lies in the markets which is wrong. He should stay away from the markets.

If a person can survive at least for a year in the third round, then he is capable to stay in the market for long time.

Ok, how much he can earn. After passing 3-4 years i.e, surviving after all the three rounds, one must be having a rule book of his own to approach markets. This rule book is obviously from his good and bad experiences. This will help him for sure in any kind of circumstances.

If he has a discipline to follow his own rule book, he can earn peacefully at least 100-200% returns per year.

Yes. This is possible for sure. If a trader is in the market for more than 3-4 years and if he can't still make 100% returns in a year, then he should stop trading and think proactively to change his approach.
(source OJN NIFTY)

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