"Market timing brought out the worst in me," says X. "When in the market I would invest in very aggressive growth and sector funds. Then I would get completely out of the market. When I was in the market I would monitor the funds daily and keep upgrading to the highest performing so that by the end of a market cycle I was very aggressively invested and took large losses when the market dropped and scarring me in the process..
Short-horizon retail investors may like to think they can beat Sensex and Nifty at its own game and make a killing in the stock market, but the odds of making a profit, let alone earning enough to retire early, may be far longer than they’d like to hear.
Day traders—who buy and sell securities in extremely small time frames, holding them for less than a day in order to profit off short-term momentum—have a nearly 80% chance of losing “real money” over the course of a year. That figure comes from the blog CuriousGnu, which also calculated a median 12-month loss on investment of 36.3%.
The study was derived from eToro, a self-described “social trading network.” The service isn't available in the India, so the fortunes of indian traders weren't taken into account—the two biggest markets for eToro are the U.K. and Germany, according to the blog.
When users sign up for eToro, a default setting allows other users to view and even copy their trades; the analysis was based on this data, and looked at roughly 83,300 traders who had made at least three trades over the previous 12 months.
It wasn’t clear what the analyzed traders invested in or the size of the individual trades. The author of the CuriousGnu blog post, who declined to give his real name, couldn't say for sure whether the performance of the traders was impacted by platform fees, although he believed that was the case. He also admitted to “a liberal definition” of the term “day trader,” adding that in some cases, investors could have held positions for longer than a single session.
“Nevertheless, the high leverages (and overnight fees), which eToro offers, encourage short-term trading,” he wrote in an email.
London-based eToro didn’t immediately respond to a request for a comment.
While an 80% failure rate for profitability might seem high at a time when major stock indexes are near record levels, other studies have indicated that short-term traders actually perform far worse.
A 2010 study from the University of California at Davis indicated a mere 1.6% of traders were profitable net of fees. Because of this, most financial advisers will urge diversified “buy and hold” strategies, as opposed to short-term trading, as well as investing in index funds rather than speculating in specific stocks.
“Day trading or trying to time the market is just a very difficult way to make a living,” said Frank Davis, director of sales and trading at LEK Securities in New York. “Professionals advise against it, no matter who you are.”
this can be seen in the case of Satyam.
In January 2009, the Satyam Computer scrip fell more than 80% from Rs 188 to Rs 31 in one day. If it is a leveraged position, you could lose more than you invested.
and presently with 2008 recession and this year 2016. It has seen its share of sudden bear runs from the britain exit, surgical strikes and recent Trump presidency and demonetization.
As of demonetization, it can be seen the index within few days, has gone to its 6 months low and still in the downwards trend and many are forecasting that this will still continue for coming days.
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