Basic Questions and Answers on Stock Markets

What are the common Unrealistic expectations from Stock Markets ? 

The stock market can be an exciting and potentially lucrative place to invest your money, but it's important to keep your expectations realistic. Here are some unrealistic expectations that you should avoid:

1. Expecting guaranteed returns

2. Expecting to get rich quick

3. Expecting to always beat the market

4. Expecting to invest without risk

5. Expecting to have all the answers

How much is an ideal return from stock market trading?

There is no ideal return from stock market trading.

Historically, the long-term average annual return of the global stock markets have been around 10%, although this figure can vary significantly depending on the time period and specific index or stocks being analyzed. 

Ultimately, the ideal return from stock market trading will depend on an individual's specific investment goals and risk tolerance. 

Can you make 20% per annum is stock markets or more than that ?

It is possible to make a 20% return per annum in the stock market, but it is important to note that such returns are not guaranteed and can vary widely depending on market conditions, investment strategy, and other factors. 

Some investors have been able to achieve such returns over the long-term by taking on higher levels of risk and investing in high-growth stocks or sectors. 

Realistically if you are making more than 18% per annum you are a king as said by ace investor RAKESH JHUNJHUNWALA.

Should you leave your job and become a stock market trader?

It is a significant decision that should be made after careful consideration of your financial situation, skills, risk tolerance, and investment goals.

Before making a decision to become a full-time stock market trader, it may be beneficial to start by building your skills and experience through part-time trading or by investing a portion of your savings in the market. This can help you get a better sense of your abilities and risk tolerance before making a full-time commitment.

What are the historical returns of Indian stock markets?

The historical returns of the Indian stock markets can be measured by looking at the performance of benchmark indices such as the BSE Sensex and NSE Nifty. 

The BSE Sensex has delivered an average annual return of around 14% over the last 20 years, while the NSE Nifty has delivered an average annual return of around 12% over the same period.

However, it is important to note that these returns are not guaranteed and can vary widely depending on market conditions and other factors. 

Should you take loan / borrow money and start trading in stock markets?

It is generally not advisable to take out a loan to start trading in the stock market. Trading in the stock market can be risky, and borrowing money to invest in stocks can amplify that risk.

While it is possible to earn high returns in the stock market, there is also a risk of losing money. If you take out a loan to invest in the stock market and the market goes down, you may be left with a significant amount of debt and no means to repay it.

Additionally, taking on debt to invest in the stock market can put you in a precarious financial situation if you are unable to generate sufficient returns to cover your loan payments.

If you are considering investing in the stock market, it is generally advisable to do so with money that you can afford to lose, such as savings or disposable income.

Why is psychology more important for stock market trading? 

Psychology is an important factor in stock market trading because it can have a significant impact on an investor's decision-making process. Successful stock market trading requires discipline, patience, and emotional control, all of which are related to an investor's psychological makeup.

Successful investors are able to manage their emotions and avoid making impulsive decisions based on fear or greed. They also maintain a long-term perspective and avoid being swayed by short-term market fluctuations or noise.

Who should not trade in stock markets ?

While stock market trading can be a good investment strategy for many people, there are certain individuals who may not be well-suited for this type of investment. Some examples of people who may not want to trade in the stock market include:

1. Those who do not have sufficient savings or emergency funds

2. Those who are unable to handle risk

3. Those who do not have the time or expertise to conduct thorough research

4. Those who are unable to manage their emotions

Who are stock market finfluencers?

Stock market "finfluencers" (short for financial influencers) are individuals who have built a significant following on social media platforms, such as Twitter, Instagram, and YouTube, by providing investment advice, analysis, and market commentary. 

While some finfluencers provide valuable insights and analysis, it is important to approach their advice with a critical eye and conduct thorough research before making any investment decisions. 

It is also important to keep in mind that majority of finfluencers are not qualified investment professionals, and their advice may not be suitable for everyone.

How much % of traders really make money in stock market as per latest report of SEBI?

Approx. 90% of traders incurred average losses of approx. 1.25 lakhs per annum as per the recent report from SEBI for the year 2022.