How to lose money in trading in stock market

There are many ways to lose money in market, mostly in trades and in that mostly in intraday trades and in that mostly in short selling. Yes you read it perfectly right and trust me it works really well and if you want to lose money as quickly as it takes to cook Maggie, try what i am going to tell. With this approach even if you have picked right and good scrip, you will lose money in day trade.  

There are many principles that works behind to make you lose money in trades in market, let me mention just few.

Using Intraday Margin to go long in Intraday Trades: 

Intraday trading runs mostly on momentum and news and if you are late to catch momentum and getting scrip at higher price of day, you will start expecting that demand is too much so it will go even higher but it doesn’t and ironically falls below your buy price. Then you start expecting market to do things running in your mind which tells that once it comes bit down, buy more to average out your buy price, then it falls further and you add more to lessen your buy price, it comes more down and you add more using Intraday margin (almost 10 times of actual balance in your account) given by your broker. You keep hoping it will go to at least day’s high but it doesn’t as momentum has fizzled out. That’s it, you are trapped now, especially if you trade in big volumes. As you have used Margin money, you have no option but to square off your position with loss even if the scrip is good and has great chance of moving up in next few days or weeks. If you carry forward the position to next day, your broker would expect you to pay entire amount in T+2 days ( and no, you can’t use credit card to pay for stock broker companies 😊). So to make it simple if you want to lose money in trade, use Intraday Margin provided by your broker.

Short selling in Cash Market: 

Another good way to lose money is by going for Short selling option in Cash market. Google short selling if you don’t know how it works 😊. You see a stock has risen to level of first resistance and expected to come down and you short it, it still goes bit up and you again start running script in your mind that it’s just a minor upward moment and might come down, but it doesn’t. It goes further up though with less volumes and you short sell bit more to average out your sell price, It sustains at higher price despite very less volume and oh dear!! trade time for day is about to close. You are still having loss and though every chart pattern and fundamental data shows that this up move won’t sustain and price will come down in next few days, you have no option but to buy back the scrip by booking loss, this is because you can’t carry forward short selling position to next day. So if you want to lose money, try short selling in Cash market.

Thinking like Bollywood movies: 

This is easiest way to lose money in day trades, hoping against hope that at last all will be good 😊. Scrip price goes down of your buying price and you hope that it will come up as you are a good person and you have done no wrong to any one :P, but scrip is a villain and it ditches your faith as always. Scrip that you have short sold goes up and the one you have longed, goes down. You keep waiting for things to turn good by 3 PM, 3:10 PM, then by 3:20 PM and boom…. It doesn’t turn out the way it happens in movies. You can cry like SRK or be angry like Big B, market doesn’t give a F. So if you want to lose money, start trading while thinking like Bollywood movies.

Courting on Number of Buyers and sellers in trade window: 

The simple rule is if demand is more than supply, price will move up and vice versa. The question is are you sure about demand or supply you are seeing in trade window is actual value? Many times those are not as brokerage companies give you option to hide your order size by 90%, which means if you are buying 1000 shares, you can just show it as 100 in trade window and many people do it to make sure their order is executed completely rather than partially. So if you want to lose money in trade, rely on Demand and supply shown in trade window.

Well there are many more ways to lose money in trades but I guess these are more systemic ones and as I have followed all these (of course not voluntarily), I can vouch for it that it works really well 😎