What is the 90% rule in the journey of trading?

Intelligence is useful in trading, not imitation: Everyone comes to trading markets to earn money, no one comes to lose their capital, but to increase it rapidly in a short time. The biggest mistake of all new traders is that they follow someone who is making money from this market and they think that they will do the same.

What is a zero-sum game?

SEBI (Securities and Exchange Board of India) statistics show that 90% of traders suffer losses in the market because they do not know that it is a zero-sum game, someone loses and someone wins. In the beginning, new traders lose 90% of their capital in just 90 days and this statistic has been shown as a warning by every trading platform for the last two years, we call it the 90/90/90% rule. But due to misconception and some social media influencers, new traders lose money in the market. Most people come to trading because of the information on social media that it is a platform to make money easily. Social media is full of such influencers who buy wrong information and suffer losses, and when they suffer losses, they invest again to compensate for that loss and suffer a bigger loss, this game continues until the 90% rule is applied.

First read, know, understand and then trade

People should understand that this is a highly skilled job, not that you just come into this field and make money. Skilled professionals earn a lot of money, but they invest their time and money in education to learn these skills and they also read some good books and literature. They understand the market from some expert gurus who are in this field for the last many years.

Trading is a game of big players:

The market structure is made in such a way that small players lose and big players win, so we should invest our time and money to learn these skills first. You also need a good degree to get a good job in this industry. Similarly, you need to have excellent knowledge of market structure, financial processes, technical and basic knowledge to earn some money from this financial industry. Statistics show that if you are a normal learner, you need at least 3 to 4 years of experience to make a profit.

Trading is a slow and studious process:

Please do not blame social media people who say that you can double or triple your capital in no time. There is a slow and studious process by which you can earn good returns, which will definitely be more than your FD or mutual fund returns. So be very careful while investing in the stock market because there are many factors governing the market and only good financial experts can understand these factors. This is the only reason why every investment advice is followed by a disclaimer that “Investments are subject to high market risk, please read the documents carefully before investing.” So think and reconsider before investing your hard earned money in any market.

Dr. Dharmendra Singh is Director, Sanskar Educational Group, Ghaziabad

Disclaimer: This story is for educational purposes only. The views and recommendations above are those of individual, not Storypitch. We advise investors to check with certified experts before making any investment decisions.

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