some say that trading is gambling be an investor, but how many investors making money. other people say strategy is nothing risk management is king, those who are following risk management are they making money. once jessie livermore told that real gamblers are investors. My final conclusion is apart from knowledge don’t listen to any free advice don’t do this that, continiously acquire knowledge take your own decision with that knowledge.
There is an upward drift in index prices. To capture that, we need to hold long term through potentially very volatile times. If one can do that, just buy and hold index for 10-20 years, then there is a good chance that we will get some decent returns over inflation. But nothing is certain, we might get very unlucky and may have to wait another 5-10 years at any point.
For most people, it would be much easier to make money by investing in index funds / mutual funds via SIP from their salary and keep holding till close to retirement + diversify some into debt for emergency money/diversification etc. There is not much skill required here, other than the capacity to hold/forget/buy when market is under severe stress.
Investing directly, and trading, both need skill. Its best left for someone who is willing to make the sustained effort required for it.
There is a lot of luck involved too in short term and because of that we don’t get good feedback from market on whether what we are doing is good.
Anyone who says that you don’t need a system/plan is full of shit. We cant make random entries and hope to make money over large sample of trades. And lack of risk management, what does that mean ? - that we have no control over risk - then even the best of edges will get you bankrupt eventually by definition.
Trading needs an edge first of all, something that works. Markets do have tendencies - some very simple things can work. But this will only work in probabilities, so you win some and lose some and have some profit after costs.
Then it needs discipline to apply that edge day in day out.
You need risk management that allows your system to go through tough phases, perhaps worse that whats happened historically.
And you also need the ability to sustain through large amount of uncertainty.
And even after all above, we need to accept that systems can stop working in future and be able to manage that.
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Point -1 Everyone is gambling like the saying goes war is always a gamble but the major difference between them is that who is doing as a business or just doing random trading!
Point -2 By following only strong RM you will only generate brokerage for your broker. So, you must have an edge otherwise you will not survive.
Point -3 I do both investing and trading. Reality is Are you doing it as a business or just random trading.
I think you don’t understand my point, if we are building our own trading system and risk management that suits our trading style means we already gained knowledge, i said avoid free advice don’t do trading, some times i risk 5% and some times i risk 3% based on my knowledge and trading style i take my own decisions. I never treat trading/investing as business they are completly different for me.