InvestorQ : Is there any advantage in participating in the equity markets if I am a conservative investor? What is the big advantage of participating and trading in equities? Is it not like gambling?
Sam Eswaran made post

Is there any advantage in participating in the equity markets if I am a conservative investor? What is the big advantage of participating and trading in equities? Is it not like gambling?

Answer
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swati Bakhda answered.
7 months ago


I think that at the very outset you are confusing trading with speculating. It is a well established fact that speculating is certainly a high risk-game. However, trading has a method to it and you do it scientifically if you focus consistently on capital protection. I would go the extent of suggesting that you must open a trading account and a demat account and start participating in equities right away. Here are some very important and strong reasons for you to participate and trade in the market.

a) Trading is the best way to play short term trends in the market. You can never be a part of the market by just observing it. Go ahead, open your trading account and put a trade and make money.

b) Don’t think you need to be a millionaire to trade markets. Actually, you don’t need a large capital to trade so that need not be an impediment. For example, you can buy 1 Tata Motor share for Rs.160.

c) There is no formal qualification required and you can learn trading along the way. Even the best of traders have made their own share of mistakes. Take small risks and build your confidence first.

d) Discount brokers can keep your costs low. Make the best of the offers as you only need to pay the statutory costs in most cases. Trading makes a lot of sense in these cases.

e) Trading is very flexible and convenient and you can trade online through the internet or through a mobile app. Trade out of the comfort of your home or even when travelling in the train, bus or car.

f) Trading can also be done scientifically using research, analytics, screeners and charts. Trading is based on a body of knowledge and is a lot more reliable if done systematically.

g) Traders eventually morph into long term investors once their conviction in equity is built up. In the long run it is equities that create wealth for investors and help them meet their long term goals.

h) An important aspect of trading is that you can become part owners of the company. An investment of Rs.100,000 in Havells in 1997 would be worth more than Rs.28 crore today.

i) Traders benefit from owning shares in two ways. Firstly, there are dividends received on the shares you hold. Then there are capital gains that you realize when you sell shares. Losses can be written off.

j) With a single trading account you can trade equity shares, ETFs, index futures, index options, stock options, currency futures and even currency options and all of them through a single interface.

k) You can smartly use futures and options to hedge your risk. These can operate as margin trading products or even as protection products.

l) Trading makes it possible to not only buy shares but also sell shares and buy it back via intraday trading. If you feel a stock is going down, you can either sell for intraday, or sell futures or buy puts.

m) You are being guided by expert advisors and SEBI registered brokers so that makes it so much safer for you to function as a trader.

There is no rocket science in trading. You just need to go ahead and start out with it.