Last week, one of my followers contacted me asking for recommendation on a particular trade where he had lost about 40% of his capital in single trade. He was completely in shambles and talked about taking very big decisions… I also have a group of young mentees (on business and finance) who are for many weeks now asking my permission to get into markets…

These two things made me do some research and I found many DEADLY mistakes these young people do when it comes to markets. This blogpost is an attempt to reach out to you young people out there who are attracted to markets and do not know how to start and even those who have burnt their capital and want to have a fresh start.

You experienced people out there, please provide your inputs in comments to help these young kids…

Investment / Trading as a business

Most of you young people out there that I interact on daily basis say that they are in trading (more than investing) to make easy, quick money. They believe that there are no pre-requisites to enter into the market and to start trading and calling bets. Even to drive a car, you need license, to be a doctor, engineer or any other profession you need requisite education. But for trading, you actually do not need any specific certification.

The most important difference is that any of those professions, you would be risking someone elses money or life or security or something. In trading its only your. So as long as you are above 18, no one stops you loose all your money.

I look at market as an Olympic happening every single day, best of best talent from all across with sums of money you cannot even imagine are out there to take away your money for every single mistake you make….

Yes, in this market there are lot of people out there with lesser IQ than you also with smallest of the capitals you can imagine and every once in a while you can make profits, but you dont want to have those large players once in a while take away your money.

This is more complex than complex jobs, more difficult than running a business and you need to have dedicated efforts into being simply the best at what is required….

 

Only way you can win over these experts is to have a strong system that you can have faith in worst of the times and following it like you follow basic rules of life…

I have interacted with tens of thousand of investors and traders, I have thousands of followers and I am yet to find a single successful trader/Investor over a decent time period who does not have strong plan that he is not dedicated to.

Trading plan

Trading is full of decision making. Taking no decision and not doing anything is also a decision. And that rather is one of the most difficult decision.

In 1990 when tech boom was happening, everyone was talking about tech and one old successful investor said “I dont understand this industry and choose to keep away from it” Then had one of the biggest tech boom and people around started talking that this old guy is too old and now done with all his success. Today in 2017 this 85+ year guy is still in business going strong everyday but without investing into tech companies…. He is Warren Buffet. Imagine if you could have held back when every neighbour of yours is making money in any and every tech company, when your investors are asking you difficult questions, when other people who used to praise you are saying your time is over…. Warren buffet may not be most intelligent person on earth. But in my opinion he is one of the most disciplined trader ever and that to by faar margin… Now you decide what you want to be…

In our trainings we are going to be covering what and how to create trading plan and other required inputs towards following of the same.

Being right or being rich?

I find traders around me all the time who are trying to impress fellow traders with either their successful strategies or trying to show how they are better than the best. Some of them are not even making money for themselves yet want to get into discussions on all advanced technical and fundamental indicators and tools.

In Stock market sharing does not increase learning. This is true most of the times. Lets say there are 2 3rd grade students with average IQ discussing theory of relativity. How much ever they discuss and share, can they learn more? I doubt. These people who share information just to prove their superiority are the once confusing people around more and more…

I have on other side no guilt feelings saying I have made mistakes. I have made blunders while building trading strategies, following them and many more. My mistakes are my biggest teacher. But to be able to learn from your mistakes is simpler said than done. You have to first get out of your emotional self about that situation. Talk to you from a third persons point of view and then most important evaluate your learning on couple of occasions.

Trading is my business

Have a good Mentor

It is very difficult to find a right mentor in this world. Mentor has to be firstly knowledgeable and then needs to have your interests in mind.

On Television you have lot of people who are there only to make money. If they really had some key information, or have investment or trading idea, in stead of trading, whyy are they selling that idea for pennies? My limited experience, those people are also humans and are limited with their own limitations.

Good mentor will tell you not to over-trade, he will tell you to have your mind in control and he will tell you to be disciplined first.

The Roadmap to be a good successful trader/Investor

After watching huge number of successful and not so successful people in this business, here is my recommendation by your age and risk profile –

Till age of 25 – Learn to swim in steady waters

I recommend you people to start early in life in your investment journey. There is huge power of compounding. Einstein called it 8th wonder. If I give you one rupee and double the money I give you every day only for 30 days, Do you know how much you will have? You will have more than 107 Crore…. Please do your math…

But most important thing is that you should at no cost take undue risk. Build 3 most important things –

• Capital
• Knowledge
• Experience

Some people ask me where will they get money from. I have seen kids giving news papers, milk and many other things. I give cash in form of gifts to my child and get her into a habit of investing rather than spending it on instant gratification.

It is very difficult not to do trading at this age with all that is happening around you, but then think of Warren Buffet.

Age 25 – 30 – Experiment time

This is the right time when you have sufficient knowledge and experience along with capital. Take 10-20% of your capital as a risk capital and do a risky business. It could be trading. But have a clear idea of maximum risk. I recommend you talk to your parents or mentor and decide amount and also item to risk your money on.

Age 30-50 – Build an empire

This is performance age – you should have your detailed strategy, choice of field, rules and everything else to have solid career.

Age 50+ – Bonus – train others

This is perfect time to give back to the society.