HOW DO PEOPLE GET RICH FROM STOCKS?

Browse through forums related to stock markets and seldom you will find that no one raised this question. Reading newspaper, your eyeballs accidentally get stuck to a news saying - ‘Man turns 5000 Rs into 5000 crores’! You guessed it right, it’s the legend - Rakesh Jhunjhunwala. The very next moment you are excited to know more about how he made this fortune and on reading the article,your eyes get glued to a word- ‘stock market’. You wonder if there are any other people too who made this kind of fortune through stock markets and so you google for the richest stock market players…AND gosshhh you come across an ace investor, the oracle of Omaha who is one of the richest men walking on this planet- Warren Buffet! For a brief moment you are blank, going into flashback looking at the struggles in your professional life and realizing that you still couldn't make a million where as there are these legends who have amassed billions. You think, what went wrong in your life. You wanted to be rich, affluent and at the top of the world. You were well educated and worked harder than your colleagues could comprehend but still you aren't as rich as these stock guys!
Desperately you open a DEMAT account, start trading on tips/advices, burn your account. You again try doing the same,miseries and anxiety increases but not your stocks. Now you question, what’s wrong?Were those people lucky?How are some people becoming so rich trading stocks?Is it a gamble or a real profession?

The above script is basically what a normal guy goes through once plans to get into the stock market game. Statistics says it all 96 % people loose here. Believe me these are the best of the minds our world has, the best in their respective professions, gold medalists etc yet they FAIL! So, the question is -

HOW DO PEOPLE GET RICH FROM STOCKS?
Being a trader/investor by profession, I believe I am in a better position to answer this question. There are some quick pointers which I would like to highlight which can help you to become rich from stocks.

*Trade sentiments not stocks*
Its a common myth that pro traders/investors trade stocks. In reality we trade sentiments. We consider trend to be our friend and trade accordingly. To get rich you need to make trend your friend.

*Risk Management*
Pro investors/traders always manage their risks. They make sure they either hedge their portfolios. They don’t let their emotions run their trades. They take control and manage their risks by adopting strategies which suit their trading style and personality. Ususally their risk reward ration is 1 :3!

*Power of compounding*
They use compounding method with their capital and compounding is the best tool to grow wealth. They start with a capital and keep growing the same on annual basis.

*Cut losses quickly and let profits run*
This is where a lot of retail players or novice traders fail. They fail to accept when they are wrong and continue to hold a loosing trade which in most occasions gives a big damper to the portfolio. Sensible investors, cut losses quickly and let their profits run so that they can make consistent gains.

*They trade/invest 20 % times and 80 % times just observe*
Who says to make big money in markets, you need to trade 24/7. Most pros like us mainly observe,wait and only take a trade when we feel confident. Some times this might mean sitting idle for hours and hours and not even taking a trade. Controlling your mind is very important.

*Networking*
Now for those wondering why networking is important for become rich via stocks is because they do get good pieces of advice, strategies, news and analysis after networking and meeting like minded people. This enhances their horizons for thinking and polishes their trades.

*They read and watch a lot of stuffs*
They do read the latest reports, books of investing/trading , economic analysis ad watch a lot of interviews just to get some ideas for their trades. It doesn't necessarily mean they blindly follow someone, but this essentially helps them to formulate their own strategy.

*They watch news but act as per will*
As mentioned in the previous point, they do look out for news and related analysis on TV but that is to get a fair idea of whats buzzing. They finally take decision based on their own analysis and intellect.

So, one can understand that getting rich via stock markets has been a dream of billions but seldom here some one makes billions. Some come on these grounds with the intent of gambling, the moment fate changes such people get their hands burnt. Some, come here for quick money who fall in prey of wrong advices ultimately bursting their accounts and finally there are handful of people who are left who first understand the stuff in and out and then enter the markets. If you follow the above pointers and act upon them, I am sure no one can stop you from becoming rich through stock markets. Hope this article helps.