|| Rich Preach || A financial liberation movement

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Rich Preach is a compendium of financial awareness. This is an attempt to ignite financial literacy and demystify the tricks of making money. The approach is not a short cut but knowledge driven. The author has tried to keep the vital information crispy and understandable to a common individual.

Traders, barring stock brokers, tend to loose money by playing for short term in the equity market. If you book handsome profit while trading, it is by dint of luck and not due to smartness. Let us dig further why you may loose money this way:

1. Commission costs: Frequent buying and selling means more commission paid as brokerage. Almost 2-3% money is gone both ways.

2. Entry barrier: Traders create an entry barrier in a share themselves. For example you buy a stock at X price and sell it at 1.2X price. In next few days it goes further up and touches 1.5X price. Now, you will not feel motivated to put money in this stock and you missed the entire rally.

3. Indiscipline: On few occasions greed motivates the conscious decision making process. In expectation of big rallies of a share we keep holding while the stock price is going down. You must maintain a stop loss and ceiling associated with each stock you buy.

4. No preparation for volatility: In rising market, when the market is overstretched, trader might forget that market corrects by a huge margin at times. They tend to invest entire money when market rises. Now, if the market corrects traders are handicapped and do not leverage the fall in absence of liquid money.