Risk-return tradeoff is the principle which links high risk with high reward. Commonly known as higher the risk, higher is the return and lower the risk, lower is the return. The higher returns with Stock market are due to the higher risk associated with it.
People think that stock market is a place to make higher returns “quickly”. This view is partially correct. While stock market can give higher returns than other investment instruments, it is not necessary that the returns can always be quick. In pursuit of higher returns, a layman ignores the risk associated and gets trapped.
When someone starts trading in stock markets without learning, the outcome is uncertain. Uncertainty cannot be measured and leads to confusion. He wants the market to move in his trade direction and when that does not happen it impacts his psychology and emotions
They might even lose their capital and there is a saying, “If you lose your capital, there is no capital market for you.”
There is a saying, “If you lose your capital, there is no capital market for you.”
Risk cannot be avoided in any business but it can be measured. With calculated risk one knows the extend to which they can gain or lose. Technical Analysis is a probability study which helps in breaking the uncertainty and measuring the risk. So, while stock markets are risky, trading using technical analysis shows which direction has high probability.
Ankit has 15 years of experience in Financial Markets of which over 10 years was with NSE and Standard Chartered Bank FM Surveillance within Compliance and 5 years as a Proprietary Trader dealing in Indian Indices, Stocks and Commodities. He loves sharing his experience with everyone wishing to begin their journey in Indian capital markets, helping them avoid the common mistakes people commit and providing a proper roadmap to anyone who is interested in direct market investments.
