Why most of the people lose money in stock markets

“Stock markets are subjected to market risks please read all the documents and schemes carefully before investing”. I think you have heard this line a lot on TV channels newspapers etc. Still, people don’t take it seriously because they see the returns of Elite investors that are making millions in stock markets.

Well, they should say “in stock markets, you can lose money” then people will become cautious.
It is a well-known fact that 90% of people lose money in stock markets and only 10% of the people are earning.
So let’s talk about that 10% of people first, those guys knew everything about stock markets I mean those are professionals and some are big Financial Institutions.They do every type of analysis before investing.
First of all, you should know that when you have to enter and when you have to get out, well those guys know that.

Coming to 90% of the people they are mostly retail investors. They are full of emotions and they mostly trade in future and options, which is like gambling to me because most of the champions of stock markets say that you cannot time the stock market you cannot tell what is going to happen tomorrow or after 2 days you just can say that the company is going to do good or bad in future on the basis of fundamental analysis and on their growth prospects.

So Yeah!There is very less probability of losing money in long-term as compared to short term.
So why retail investors prefer future and options? The answer is that the broker gives you margin on your investment amount.

The second reason is that they try to do intraday which is the riskiest element in stock trading, clearly, the broker will give you more margin on it.
So the question arises does the broker want to lose you money? Well no he just wants to get more brokerage because the more you trade the more he will get the brokerage, there is higher brokerage on intraday and futures and options trading as compared to long-term investments in equity.

3) the stock market is like exams if you do not prepare well you will surely fail and if you get pass well it is just your luck, 99 times you will fail out of 100. You have to prepare well before investing in stock markets. By preparation means you just have to do 3 things you have to study fundamental analysis, technical analysis and you have to know the current affairs of the country’s economy.
If you observe, 99 percent of investors who are billionaires like Warren buffet, Rakesh Jhunjhunwala are long-term investors and they prefer long-term investment for wealth creation.

I want to tell you that making money in stock markets is not easy, don’t do it it as gambling, don’t let emotions come in your investments because I have experienced that when you lose money you invest carelessly in order to recover that loss without thinking anything and when you earn money you invest more in order to earn more money thinking anything, these things should be avoided, search well before investing, avoid the margins and prefer long-term investments.

Read: how to start investing in stock markets?

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Saifullah Khan

Hi there, I am the owner of gloomyworld.com, read more about me here.

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