The Fundamental

The world is full of opportunities, we just have to look out the one that is been there only for us. Trading is also like an opportunity, you have to wait for yours to score big & unexpected. 

But, let us take away our mind from market & trading for once & think why we seek for it? What is the reason that we tend to markets? Well! I believe everyone has their own reason. Like every other person, who wants to earn more, want to have other sources of income, we turn to stock market. But, has market ever stood up to our expectations. Probably not. 

The reason lies in the question that despite knowing nothing or very little about trading we expect to fulfill our need from it. It's like expecting from a new born to graduate from Harvard the next day. Silly, isn't it. Well, I am simply going to tell you about what basics one should keep in mind before entering the market's abysmal realm.

If you don't find a way to make money while you sleep, you will work until you die.

-Warren E Buffett

To start quickly, you need to firstly figure out how much earning from markets would make you satisfied. This may seem boring but certainly, the first ladder to understand market paradigm is patiently calculating our requirement because otherwise, we will terribly fail due to greed. The amount could be anything from tens of millions to hundreds of billions, but a target is must. By, doing this you will get the idea about how much you have right now & how much you need to extract from market. Now, subdivide or differentiate that amount into smaller segments which you could easily earn in a month from market, if you never have to bear any loss. 

"For example, let's assume, my estimated amount is 10 million, now I subdivide it into my per month earning, say 10K which I could easily make from market. But, with 10K pace it would take me around 83 years to earn 10 million". 

Not a good idea, right. Have patience runners, it will not take that long, there are many factors to be accounted for to multiply this 10K return year by year, which is called compounding. By that I mean, for the first year you may get 10K, for second year it may reach 15 to 20K considering 0.5 to 1 % hike in returns (generally it is around 18%). But, again there will be losses incurred too as one cannot simply make profit without losing a penny. Well surely, there is a way to do that. Yes, you read right, making profit without losing anything is now possible. We will talk about this fundamental in coming posts.

The second most important aspect before touching market is to have a source of an active income. One cannot simply depend our livelihood on market by having a return of 10K. Big fishes can do that, but not us we are just starting out, so we need a backup, a proper planning and sufficient bank balance. With that, rest assured about having a passive income from market for your financially fulfilled future.

I will share the fundamental to earn money without incurring any loss in subsequent articles, but for now I have a job for you. Make a decent calculation of your expected earning from market which will be satisfactory for you. If you like, you can share the digits in comment section below.