By Irshad Mushtaq
Intraday trading can be unpredictable and stressful, while long-term investing offers more stability and potential for growth.
1. Emotional Decision-Making in Intraday Trading
Emotional decision-making often leads to financial losses.
Example: A trader might sell shares of Infosys in a panic during a sudden market drop, only to see prices rebound later in the day.
2. Volatility and Short-Term Fluctuations
Unpredictable Market: Short-term market movements are difficult to predict accurately.
Example: Sudden policy changes by the Reserve Bank of India (RBI) can cause unexpected market swings impacting intraday traders.
3. Emotional Biases
Fear, Greed, and Overconfidence: These emotions can cloud judgement.
Example: A trader might hold onto a losing position in Tata Motors due to overconfidence, waiting for a rebound that doesn’t come.
4. Long-Term Investing as a Safer Alternative
Focus on Growth and Stability: Investing in fundamentally strong companies for long-term gains.
Example: Investing in HDFC Bank over several years has yielded substantial returns due to its consistent performance.
5. Power of Compounding
Wealth Over Time: Reinvesting dividends and profits for compound growth.
Example: An initial investment in Reliance Industries in the 1990s has multiplied several-fold due to compounding returns and the company’s growth.
6. Historical Success of Long-Term Investors
Rakesh Jhunjhunwala: Known as “India’s Warren Buffett,” he built significant wealth by holding long-term investments in companies like Titan.
Radhakishan Damani: Founder of DMart, Damani’s long-term investments in undervalued stocks have made him one of India’s richest.
7. Strategic and Disciplined Approach
Reduced Risk: Avoid the allure of quick profits and focus on disciplined investing.
Example: SIPs (Systematic Investment Plans) in mutual funds help Indian investors build their portfolio steadily with reduced market impact.
Conclusion
Consider the Risks: Intraday trading can be emotionally and financially draining.
Opt for Long-Term Investing: Focus on solid, reliable investments like quality shares, mutual funds,ETFTs for wealth building over time. Your financial health will thank you.
By following a strategic and disciplined investment approach, you can reduce the emotional stress and financial risks associated with intraday trading and build a more stable financial future.
- Learn from the insights of writer and investor, founder of MI Securities and Business Partner at Sharekhan! Reach out to him at [email protected] for valuable knowledge on financial matters
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