The stock market can be a tempting arena, especially with the stock market zooming up for many years for the Covid downturn of 2020. But before you jump in, it is crucial avoid the rookie mistake of confusing trading in stocks as an investment.

Traders even over the medium term do not make any profit, if not make significant losses. Short term gains are more often than not is a lucky break, and it’s very difficult to differentiate luck vs skill.

Let’s look at some typical behavior which will put you directly in the bucket of a trader.

• Buy-Sell decisions based on a tip from a broker or based on technical analysis, without any understanding of the underlying company fundamentals
• You need to enter the hottest new segment in the market – in May 2029 this can be something like Defense stocks, EVs or Solar Power & avoid “down” sectors like FMCG, or Specialty Chemicals.
• Buying on margin – you can always square-off the trade intraday.
• And finally, the most dangerous – option trading. Do you know there is no limit on the losses while your upside is capped?

There are basic industry terms intentionally used in this blog

• If you don’t know what it means - you should definitely not be playing in individual stocks.
• If you don’t know how to read a company’s balance-sheet, P&L statement and take a call on a stock’s valuation – Stick to Mutual Funds or Exchange Traded Funds.