Over 95% of the traders in lose money in Indian stock markets, Reason isn't really lack of intelligence but lack of discipline
Let's play a game- Imagine there are 100 Ferrero Rocher chocolates in-front of you (yeah that was intentionally Ferrero Rocher :))
You can collect the chocolates anytime, There's a catch, the number of chocolates either increases or decreases each minute and its not in your control. but over long period of time, as per other episodes of the game, the chocolates will increase (yet you don't know how much it can increase to)
- Say after 1st minute, chocolates decreased to 80,
- 2nd minute-130
- 3rd minute- 90
- 4th minute- 60
- 5th minute- 120
- 6th minute-240
Since the change is uncertain, its very likely you'll take the chocolates at 6th minute if you had stayed till then
Let's imagine a case what would have happened if you had not taken chocolate for 2 hours straight
120th minute- 1000 chocolates
This is the same in stock market, a trader knows a very high quality stock (say HDFC Bank) will definitely spike up in an year- but they don't know how much is the maximum it can go... so when it goes to very good level say 10% in a month, trader finds it difficult to see 50,000Rs unsold (unrealized) profit in portfolio- he/she is likely to sell it off.
So Harish, where's the practical tip?
The Practical tip is to keep the chocolates in your grandmothers place which is 5km away from your house, so that its practically tough for you to reach your grandma's home to get chocolates and you can control your impulse to take it out and let chocolates increase more and more for longer period of time.
Always have 2 Trading account- Say one in Zerodha and one in Upstox
Do your day to day trading in one platform
And keep the other platform just for long term investments
Once invested, delete the app chosen for long time investment from your phone until the next long term investment, you can always track the values, if you know for how much you purchased the stock for.
Doing this, you're controlling your emotions acting against you for the long term stocks, Corpus will grow over time and you also end up paying lesser tax compared to short term trades.
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