📈 Long-Term Investing vs. Short term Trading📈

Now-a-days stock and derivatives trading is considered a get rich quick scheme and it seems like anyone with a few grands can double their money in very short span of time.

However, there is a lot more then it meets the eyes.

There are some disclosures (by SEBI) like :-

1. 9 out of 10 individual traders in equity Futures and Options Segment, incurred net losses.
2. On an average, loss makers registered net trading loss close to ₹50,000.
3. Over and above the net trading losses incurred, loss makers expended an additional 28% of net trading losses as transaction costs.
4. Those making net trading profits, incurred between 15% to 50% of such profits as transaction cost.

So what, transaction costs won't matter as long as we are making profits and we should focus on becoming that 1/10 that makes profits.

But lets try to put things logically.
Doubling the money means 100% ROI
Now the Richest Investor in the world is Warren Buffett. Of course he must have more knowledge and experience than any of us. But how much annual return was he able to generate - only 22% P.A.
Lets keep him aside as he is a long-term investor
Best Stock Trader in the world is considered to be "Jim Simmons" The man who solved the market, a Mathematician also known as "Quant King" But what was the maximum annual return he could generate - 70%

That is why getting even a return of more than 1.5% per month from trading is more than enough as its merely not possible at all to double your money in trading on a short term basis. Those who earn Lacs and crores put in 100x capital in the market which they have earned from selling courses or from any other means.

But that doesn't mean that money cannot be earned from market.
This is where compounding comes into play- had simmons started early at the age of 30 with even a $1000, his net-worth now would have been $300 trillion i.e. more than the world's economy. That's why time is money and compounding is such a wonder of time.
So if you are thinking about trading as a source of income- research thoroughly ,treat it as any other normal business, gain some good knowledge and capital, expect realistic returns and then start.

But on a long term basis Investment is the ultimate path of creating wealth