I think trading and in general stock market related professions will aquire much more veneration in the coming days. More and more of retail segment will succeed in the market. The only sad part is that some people related to the market are spreading too much cynicism towards the market.
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I understand the technology part of it. It definitely is great. If NSE could export the technology and make money, that would be even more wonderful. But probably, NSE is a test bed for the imported technology.
Especially in derivative segment, 95 % lose money. That implies every one is working for the remaining 5%. Probably, you might be one of the 5%. So, it does not matter. Unfortunately, with zero education/knowledge and taking personal loans, people enter the derivative segment. It is for these people, SEBI has to do some thing. Derivative segment is a rich man’s game (money wise, knowledge wise). Some experts say Futures player do not have future and naked options can make one naked. A big investor called high leverage trading as weapons of mass destruction. How many of the new entrants know this simple fact.
I never said stock market is bad. I understand the value/place for it (esp. commodities, currency). We are talking about the high leverage instruments not getting used for hedging.
Many of investors (esp. I know few Jain investors) do not invest in alcohol companies or cigarette companies. I understand it is just a perspective, Intended usage of the derivatives for hedging is mostly done by only big players.
How do you check the intellect and knowledge and ofcourse the financial status ? It may be that SEBI should allow a participant with no finance background (a speculator) to trade in derivatives only after few years of trading experience for example.
Same applies to small business startup’s too. Would you recommend the same solution to them too?
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You ever seen banks how they hound you with phone calls for making you take their credit card if you have big bank balance or receiving consistent salary. Shouldn’t they ban banks selling credit card to salaried class. As a matter of fact they shouldn’t even be given loans to buy house ? because that itself is a leverage in first place. If you buy house or land in real estate with loans its essentially leverage only.
I have no idea why people F&O see this way. You are saved in F&O in a way because Margin call literally square your position away, I don’t think losses and time are that big as losing down-payment & EMI in real estate
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Who typically invests in start ups ? Angel investors that have deep pockets and capability to understand the business of start up (knowledge). It is not easy to get the funding. Further, these are ready to loose in many of the investments and still know that their win in few would be good enough to compensate and also provide big profit.
You have noted it well… credit card companies do not come behind those who can not afford. In fact, they run algos. to find how much reliable you are by looking at credit score/company that you work for etc… Same should be true for derivative segment as well. May be the SEBI should introduce some kind of score ( that may include CIBIL score, tax that you pay etc…) .
yes instead of locking everything with too much regulations in my view government or SEBI should educated public on How to trade and What to trade to become wealth creator. Government must introduce stock market education from class 8 to 10th as Basic fundamentals papers which will turn public from fools to tools to make our economy more stronger than ever.
Well dude you need to understand something that 99% of people don’t understand. It is that , it doesn’t matter what your income, what your credit score is ,it is money management that keeps you consistent and being profitable trader. This is for life as well. I know so many many rich families that went under bus because of taking too much debt. And financial health is fundamental, I have seen families fall apart especially when house, car is under emi, no investment or backup funds and when income stops usually due to job loss, things happen like divorce, partner separation and cheating, kids being displaced , kids education ruined ;all drama I have seen. As a matter of fact there many girls & guys that are actually in a state where they never should have babies because they can’t afford it and mostly are laden with dumb idiotic consumerist nightmare debt like costly marriage , house , car etc ;all on managed by a single income EMI with little to some back up by parents(mostly they don’t have,c’mon they can’t give retirement funds as emergency funds for their kids). They all lacked money management.
Compared to above the stock market , F&O are absolutely nothing. You mentioned 95% lose money . Nope 99% lose money in stock market and in F&O. They lose because they have no money management. It’s that simple. If I had the best money management system and you have great technical analysis system or fundamentals with no MM and I took trade just flipping a coin, I would easily defeat you.
Now for money management you need certain psychology and changing yourself as person. A lot of it has got to do with self discipline, patience , resilience , persistence , initiative all which average comman man does not have.
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I’m not talking about the investors…
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Disagree. Huge margin requirements in unlimited risk products and physical delivery for ITM options act enough as a detterent for retail clients. Trading/investing no longer takes place on a credit basis. There’s no need for a CIBIL score/net worth criteria cause you literally can’t place a trade without having enough margin and the margins aren’t loose either. They are there to protect you from going into negative balance even in the worst case scenario. If someone has got the money and is willing to pay, what right does any entity have to deny you from transacting?
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Disagree. The dreams of stock market must not be sold to the young minds. Basic finance management is okay and all, so that financial upliftment of people at large can take place and hopefully poverty and impoverishment can reduce in the long run. That’s the best scenario scenario I believe. But at the same this is just my personal opinion.
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The general problem with some people’s mindset with respect to derivatives basically boils downs to 4 arguments -
- It doesn’t generate value and is an empty system.
- Most people lose money in this segment.
- It is akin to gambling cause of the above 2 arguments and also because one cannot predict the markets.
- It hurts the equity segment by the way of speculation.
First of all, there’s no real basis to the above four arguments. Let me explain briefly -
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Value is subjective. I find value in derivatives cause I think it provides me and the intermediaries with an earning opportunity. And one might still say, but where is the usefulness, where is the end consumer, it’s just money exchanging hands. And I think that’s a very one dimensional way of thinking about things. I think part of value lies in the liquidity generation that results from all these transactions that ultimately end up benefitting those with real hedging needs. That’s part of the equation and not the whole picture I get it. The whole picture implies that the speculative activity exceeds the actual hedging activity and that’s probably where is whole “zero value” argument is coming from. But I would say how is that a bad thing? It’s not like it’s evil or anything. No one’s getting hurt at least. People losing money is an outcome that results not from the system itself but rather because of people’s own decisions. And someone has to lose at the end of the day. It’s just a part of things and part of life at large. Everyone can’t be a winner. Real evil is when a necessary medicine has its price skyrocketed just because the underlying the company has got the exclusive patent and people are dying as a result. Real evil is when a company indulges in malpractice for the sake of their profits. And basically you get the idea. You can’t blame derivatives cause you can’t really say it’s evil or anything and yes people losing money is not evil, but part of the process.
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Just like everything else in life.
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You can make educated, smart trades that have high probability of winning. There are systems out there that have a good edge. Won’t dig much deeper into this. Gambling relates to absolute uncertainty whereas speculation is probabilistic uncertainty.
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It doesn’t hurt equity investors and actually provides them with a tool to hedge/protect their portfolio.
Rest people can attach emotions and biases to their arguments. I prefer to attach logic and I am willing to change my argument when someone else has got a better point.
Engineering colleges in this country churn out less than 5% who are employable. A similar rate applied to education and trading success means that the profitable percentage is not going to go much beyond the current 1% mark in trading.
Its very easy to get lost in the financial jungle with all jargons and all those paper strategies and remain confused about what is going to work. Its always better if a clear path to success can be shown. This is true in all fields.
E g :- When I work with engineering project students if I give them a bunch of IEEE papers, application notes, datasheets they are absolutely lost. The probability of someone figuring it out is around the 1% mark only. If I point out specific areas which needs to be read to do the task at hand the success rate is over 90%.
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So as per your logic, there should be no concept of loan at all. No personal loan, no housing loan, no car loan and no business loan. Well then if there shouldnt be lending we shouldn’t be having deposits too. If there are no deposits and lending, there shouldnt be banks. If there are no banks in the world I wonder how will you ever buy crypto 
Also, you are not practicing what you preech. You indirectly dont like the idea of lending, but the first share that you bought is ICICI. And if I am not wrong you are still holding 34 shares of PNB. I quote for your reference
Lets talk about where is the smart money and dumb money. From what I understand smart money flows in the business which are doing well. And you are still holding PNB.
You have mentioned about 95percent losing in trading. Well thats right. And so do engineers. So would I be right in saying dumb students take up enginerring?
I belong to a profession where pass percentage is less than 1 percent and the ones who pass have 100 percent employed. So are these smart or dumb. Smart because they passed or dumb because they chose to take risk of being in the 1 percent.
Risk and reward move in the same direction. Unless you take risk you wont get returns. U are very fond of risk anyways considering the asset class you prefer.
Honestly even I do not understand trading. But there are ones who are doing well.
There are pros and cons associated with all classes of assets, all types of profession. What you call smart may actually be dumb and vice versa. There are many more things which I had to say but nevernind. This should be enough. I rest my case.
Edit:
Now realised @t7support has said something similar. Sadly I didnt even read before replying to you post. Thats how much wrong I found in your post. Having said that, I might be wrong too.
Financial sector - Banks, Loans, Insurance, Security markets etc are the basic foundation on which our nation is built.
Manufacturers, Distributors turn to banks to meet their capital requirements, for which they provide an interest. Those who dont have funds to buy a home or car - borrows to buy.
Infact the only industry that can thrive with the kind of Govt. uncertainties we have is Finance.
Someone with just salary income should never finance car, costly marriage, house and other consumerist items of loans & credit card. Because its basically consumption. Debt should be used to increase productivity. For example, you are a farmer and have land. You made less grain. You took loan for a tractor and other advanced irrigation equipment. You efficiently use the tractor and irrigation equipment and ended up making lot of grains. This is how debt should actually be used.
I am saying debt shouldn’t finance consumption. I am saying this for salaried class(i.e you just have salary as income) Not for business people. Business folks have lot of capital and tangible assets back up but essentially their returns exceed the interest they pay to banks. Its not same for salaried class. I hope this makes sense to you. Only exception would be education loan but that’s very subjective as education itself is a joke these days.
let me give you a nice example of how I used debt to increase my productivity and prosperity. So after college I, like all engg grads failed tons of interview and ended up in a crazy call center. Those days were weird. After failing so many interviews I started looking at industry and saw they needs these IT skills. I was learning crappy aptitude the entire time. So I borrowed Money from my mom and got a 70k laptop & 30k online course. A course like udemy. I took a debt of 1lakh from my mom. I put in effort 8 months created my own project , got a job of 3.2 LPA. I spent many nights working on my skills creating apps and projects of my own and perfected them. 4 years down the line I am sitting at 8.6 LPA now. I paid around 2lac to my mom back. I didn’t borrow money from bank but I hope you understand the context of which I am saying how loans should be used.
Dude give me break 
. That was 2011, I was in 10th class. I was just 15 years back then. Read the post completely. I made mistakes too I don’t deny that and been stupid too believing stock market and investors are some kinda crazy cult that looks on fast moving numbers on black screens.
The main reason I am holding 24 units is , the capital of 4k is very small. I decided to leave it as it is. Its not hurting me financially and like everyone else fell into value investing. But bottom line is , it is not hurting me financially.
Dude there are lot of insane level of vacancies but we don’t have employable engineers in first place. Its not the fact we have more dumber engineers , its the fact many are not willing to learn skills and just want a degree. @t7support has mentioned it wrongly. Engineering is more practical needs lots of equipment. You need to apply what you learnt. You need bread board, oscilloscope , capacitors etc. You need to apply what you learn which takes another learning curve. The point is majority of colleges especially their curriculum is more class room theory based rather being practical and experimental. Colleges themselves discourage students to do all this because all these are costs. Tuition fees other expenses drain students , with high import fees and stupid customs babu’s(not engineers themselves and read UPSC for entire life) that block shipment of rare electronic equipment from germany and US, where do you think students can shape their skills ? (IMO entire education industry is big scam and is anti education)
Its easy in IT and computers since you only need a laptop but there also you need to put the work , effort to learn and hone skills.
Engineering or trading or getting better in any field requires self discipline, resilience, persistence and patience something which average common folk don’t have. Majority of that goes back to being self responsibility . If you are self responsible you wont be risking more than 2% of account and would stop at 45% drawdown account. There is a lot to talk here about money management and psychology overall.
as rich dad said take calculative risks(reference from rich dad and poor dad book). I agree about risk and reward but one should take calculative risks .
The point is very few come for knowledge and most are after degrees and jobs. If one works well with the college lab passives, actives and equipments he/she sure can become employable. Having a strong foundation knowledge wise is the key. But having this boils down to individual passion and perseverance in our formal academic scheme which is more mark and certificate oriented than knowledge or skill oriented. Teachers memorise text book and spit out in class. Students memorise text book and write exams. Its staggering to find engineering graduates failing at simple application of ohm’s or kirchhoff’s laws.
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Damn. You made me feel too old. I was wondering what I was doing back then. Then I remembered i already had finished my masters before 2010.
I just couldn’t skip this. Nice to see lots of young blood. Carry on guys.
The best way imo, is to keep a kind of basic derivatives exam(in all 23 languages), some countries have it.
I don’t think there is anyway else to reduce participarion.
We defo need a crackdown on these dumb loss making youtubers like Chooming Chulls
, and all those tip providing services, they give false hope of money.
Should be a rule that to sell any kind of financial service you need to have qualifications/or a +PnL of atleast 12months.
If this happens 99% of the courses won’t exist. And easy money shit won’t be propagated.
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I think you didn’t understood what i said i talked about wealth creation. As happenes in USA and Europe people need education about investment. Otherwise people get wrong expectation when they jump in the market suddenly and loose money quickly and they do it just because they see other people getting money from market.