They have been through the ups and downs of the physical market; know how to take losses on the chin, and whom to trust. They don't understand graphs. But they do understand sauda. And they have the best noses in the business for sniffing out opportunity, collectively or alone. For them, the vaida bazaar is another way of playing for that elusive ‘ek rupiya per bori'. Unless your dad is one of them, you stand little chance.
Then there are the moneybags bored by the easy game of shares and stocks. They have so much cash and so much appetite for risk that a bouncer or two only whets their interest further. Equity market players are crowding into commodity markets in search of novelty.
Do all these three types of players matter to you? Yes, because your paths are destined to cross. Like a one day cricket match, commodity exchanges are zero-sum. There is a winner and a loser. Some one makes a pay-in and some one else receives the pay-out every day by 12 noon. Once the futures contract has expired, there is no tomorrow. If your trade turned out badly, you must take the full loss.
Always remember that you are competing against others in the commodity market. In equity markets, you are competing only against yourself. The professional trader, the lalaji and the Dalal Street big boy are all going to make money when somebody else loses. There is a very strong chance that someone may be you. Studies elsewhere in the world show that only a handful of amateurs last more than three years. The rest are broke.
The other big point to remember is that in commodities, there is no ban on inside information. In equity markets, companies and brokers who use inside information to anticipate or cause stock movements are investigated by Sebi and even jailed. Futures traders have no such restraints.
All commodity traders have a jungle sense of what will make the market move. Outsiders have limited chance of understanding their smoke signals.
You will also never know how much position each company or big trader has taken. There is limited public disclosure. Investors who own 5 % or more of a company's stock must publicly disclose their holdings. Commodity exchanges certainly know who is doing is what, but that's of little use to you. It is easy for small investors to enter the commodity markets. Surviving them is another matter
Then there are the moneybags bored by the easy game of shares and stocks. They have so much cash and so much appetite for risk that a bouncer or two only whets their interest further. Equity market players are crowding into commodity markets in search of novelty.
Do all these three types of players matter to you? Yes, because your paths are destined to cross. Like a one day cricket match, commodity exchanges are zero-sum. There is a winner and a loser. Some one makes a pay-in and some one else receives the pay-out every day by 12 noon. Once the futures contract has expired, there is no tomorrow. If your trade turned out badly, you must take the full loss.
Always remember that you are competing against others in the commodity market. In equity markets, you are competing only against yourself. The professional trader, the lalaji and the Dalal Street big boy are all going to make money when somebody else loses. There is a very strong chance that someone may be you. Studies elsewhere in the world show that only a handful of amateurs last more than three years. The rest are broke.
The other big point to remember is that in commodities, there is no ban on inside information. In equity markets, companies and brokers who use inside information to anticipate or cause stock movements are investigated by Sebi and even jailed. Futures traders have no such restraints.
All commodity traders have a jungle sense of what will make the market move. Outsiders have limited chance of understanding their smoke signals.
You will also never know how much position each company or big trader has taken. There is limited public disclosure. Investors who own 5 % or more of a company's stock must publicly disclose their holdings. Commodity exchanges certainly know who is doing is what, but that's of little use to you. It is easy for small investors to enter the commodity markets. Surviving them is another matter
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