Other than having skill and making money in trading …What is the value provided ? What is the purpose ? How do u define trading ? @nithin
Profits are just byproduct of the the value provided below:
1.Market Making/Liquidity: Without traders the spread would be huge hence even for very good script people can’t invest due to spread loss or liquidity issues( can’t sell easily ) .
2. Funding for business: Markets supports the innovation, business ideas. You hear multibegger companies( INFY,Reliance.Adani etc), who became unicorn it won’t be possible if traders/investors haven’t put in there money.without investments they would not have grown at all.
3. Pricing the value of the company/Sentiments: Its like voting machine in long term, Pricing/market cap indicates the future valuation/report card of whats the overall sentiments about the company.long run they are aptly priced.Companies running for bankruptcy will already became penny few years before.
4. A market place to park your money: Market is the place where you can easily diversify with hell lot of options. Its traders which make it possible which creates liquidity. Its like crowd bank where big business can raise partnership(equity), loan(debt fund) same what banks and other financial institution ultimately do when you put your money in the bank.
5. Traders are infact Risking there own money to support the market: There is no free money anywhere in the world. Any business can only sustain if its win-win for both the counter-parties when this equilibrium breaks there is no business.So for traders/investors profits are the fees for all the value they are providing,they are ultimately taking the risk of capital. Its only people(traders/investors) who makes the market without them its won’t even exist
Curious - what is the meaning of “to make the best trades” - money is secondary.
I have zero idea about trading and hence the question. Is there any other basis to judge.
I always thought in stock market, the only benchmark is how much money she/he made and nothing else.
Interesting perspective - new to me.
once you spend at least 4000hr+ learning and trading the market, you 'll understand its about building system,edge which keeps upon changing( nothing is permanent in the market) so you keep on building edge and new system. In market PNL is your instant report card of your work its like instant quantitative/qualitative feedback of your work(trades) so PNL is just number which in real world is off-course money but traders knows if skills are right its about taking trades consistently and improving the skills. So our goal is to make the best trades (build the skill) and money is byproduct. Also its always losses that teaches us (build the skill), profits just boost the ego.
I agree with what @AlgoEye has said. While traders themselves are trying to make a buck, they provide liquidity, reduce risk, and help in better price discovery.
Yeah agreed @AlgoEye @nithin … Do you think trading is really a great skill compared to other professions?
people think it is just sitting in front of a computer and clicking buy-sell buttons.
Not a professional trader but, for me trading is providing cushion to the market. It helps market move smoothly rather than sharp falls or sharp rise in price. We as traders do provide a smooth range of price which motivates investors to invest as they won’t do it if volatility in price would be tremendous. Buying when all are selling and selling when all are buying keeping profits in mind - that’s trading for me as a newbie trader.
To survive trading long term requires crazy amounts of discipline and skills. You are always just one stupidity away from giving it all. I have said this before, trading is the toughest place in the world to make easy money. You have better odds of making money and keeping it by buying lottery tickets, than trading. When you have a large outcome with lottery tickets, you will probably go use that money to do other things. Traders will typically bring that money back to the markets, so if you did get lucky without skills or discipline, you will probably end up giving it back to the markets over time.
The lure of easy money is what gets people to the markets. If only people knew how tough it is to succeed in trading and how many people actually end up making money as traders in the long run, I don’t think many would try their hands at trading. Actually maybe many know this but still want to trade because Greed/Easy-money sucks everyone in.
What are your views regarding growing number of retail traders in markets , I mean what is happening is that most of them have started at market lows last year and sitting at profits , since most of them are long only ones and it is creating a notion that markets are not that difficult and so on , even brokerages are aggressively pursuing people to invest and trade in markets and even FnO , running campaigns like (simplify FnO etc) , lots of people are active in social media sharing the screenshots of there option profits and stuffs like that.
In short people have started thinking it’s very easy to beat the markets or at least be profitable instead of losing . Do you think ultimate results for most of the people would not be as expected by them?
Very true … Thanks for the response.
The main purpose of trading in my view is wealth creation and maximization of available funds
@neha1101 Best trades reward you.
Don’t chase money but finding the best probable trade is primary than making money.
Anyway, when you make the best trades, you’ll get rewarded.
This is just my personal view.