Nifty is up 2.9% currently. A good start to the week!
Investors cheer when the market goes up. Traders can cheer when market moves up or down
Investors can also cheer to some extent when markets go down through mutual fund and nps investments, not much as traders even though.
A class of traders who pledge equity-linked securities will feel the heat when the market goes down. They will be forced to cut position size as the net equity value and hence the net margin available for trading diminishes with a market downturn. They will also prefer the market to go up.
Besides the post-Covid era, traders haven’t seen a bear market yet. It is always good to see and feel a bear market.
Jisne bear market dekha nahi, woh trader bana hi nahi
This statement carries a few implicit biases:
- Oversimplification of Investor Psychology: It assumes all investors have the same reaction (cheering) to a market increase. In reality, experienced investors might feel a mix of emotions, including caution about potential overvaluation or concern about the sustainability of the rally. Their primary focus is often on long-term growth and stability, not just upward price movement.
- Stereotyping of Traders: While it correctly identifies that traders can profit from both upward and downward movements, it might subtly suggest that their only concern is the direction of price, implying a potentially short-sighted or purely transactional approach. In reality, successful traders also employ sophisticated strategies, risk management, and analysis, and aren’t simply cheering every tick.
- Ignoring Nuance in Market Movements: “Market goes up” and “market moves up or down” are broad generalizations. The speed, volume, and reason behind market movements significantly influence both investor and trader sentiment. A slow, steady climb might be viewed differently than a sudden, sharp spike. Similarly, a volatile market with rapid reversals presents different challenges and opportunities than a more directional one.
Again a bias, without the understanding the nuances of portfolio management and risk management. NOT TRUE.
Similar to how I actively avoid discussions on options or APIs, on this forum or anywhere which is because that is not in my circle of competence. I feel people shouldn’t generalise an asset class, if they don’t have an expertise in it.
In investment, for someone to make a profit, whatever one has bought must move up. In trading, one can profit whether the security moves up, down, stays flat or is volatile. Am talking only about the many windows of opportunities available with trading relative to investing only. My idea was not to make it more nuanced…
Anyway investing or trading only a small % of all the people who open an account with a stock broker make significant realised profit from the stock market.
What I posted is a risky side of pledging equity-linked instruments and trading with margin derived from it. It is not much talked about, especially amidst the bull market euphoria…
This is a forum where we can share our thoughts. You may have seen this option right at the top. What this says to us is that we can express our opinions regardless of our expertise in anything…
That’s why before pledging the capital for trading one should invest it across diversified asset classes like Commodity, Debt, and Equity both domestic and foreign to survive major drawdowns.