How to Avoid Loss and Earn Consistently in the Stock Market: An Easy-To-Understand and Practical Guide for Every Investor by Prasenjit Paul

Chapter – 1
How to Avoid Loss in the Stock Market?
1.1 Introduction
Ask your friends, neighbors or your relatives regarding stock market
investing. Most of them will discourage you and mention that it is another
form of “gambling”. Many individuals still believe that there is no “logic”
behind the stock price movement. Those who earn big from the stock market
are just “lucky”. On the contrary, the interesting fact is that almost all
billionaires in the world have created their fortune through the stock market,
either directly or indirectly. “Directly” refers to the direct stock investing and
“Indirectly” refers to listing their companies on the stock market. One of the
world’s richest persons, Warren Buffet created his fortune from direct stock
investing while other well-known billionaires like Bill Gates (founder of
Microsoft), Mark Zuckerberg (founder of Facebook), Larry Page (founder of
Google) made their fortune by listing their companies on stock market. Even
in India, you will find many billionaire investors (e.g. Rakesh Jhunjhunwala)
who created their entire wealth from direct stock investing. 
My question is if stock investing is another form of “gambling” then how
have these billionaires created their fortune from the stock market? You may
earn one thousand or one million from “gambling” but it is not possible at any
cost to become a “billionaire” or to become the world’s third-richest person
by “gambling”. Can you say they were just lucky enough? Luck can favor
once, twice or even thrice, but they are consistently earning from the stock
market over several decades. A gambler can’t make billions consistently.
Moreover, luck is not sufficient enough to create a billionaire. So, there must
be some different story.
On the contrary to this, 80% retail investors lose their hard earned money on
the stock market! In this book, the term “retail investor” is widely used.
“Retail investors” refers to those who engage in some different full-time job
(or source of income) and invests (or plans to invest) a portion of savings into
the stock market. As per statistics, 80% retail investors suffer overall loss
from equity investment. Now, the most important point that arises is why
maximum retail investors (small investors) lose their hard earned money in
this market while a group of people are creating their fortune?
This book will explain in detail why the majority lose money in stock market,
how to avoid it and what are the methods to build a fortune from the stock
market.
To avoid loss in the stock market, you need to know the reasons why people
lose. I am going to share a real-life example that will explain the reasons for
losing money. Existing equity investors can also co-relate with the following
story.
1.2 An example worth sharing
Few months back, I was having a conversation with an investor (Rohit) and I
was surprised to know that he had lost around ₹ 10 lakh (₹10,00,000) in the
stock market. During the last five years in the stock market, he had applied
various techniques, followed many analysts and ended up with a cumulative
loss of around ₹ 10 lakh! However, at several instances, he made money, but
the profit was too little as compared to the losses occurred.
I am dividing his stock market journey into 4 phases. Let’s have a detailed
look at each phase and let’s analyze exactly where he went wrong.
1st Phase-

Around five years back, Rohit didn’t have any idea about the stock market
but was eager to invest. One of his friends was a stock broker who used to
trade regularly. Rohit was interested but didn’t have any idea how to start. In
such a situation, Rohit approached to his broker-cum friend. Without delaying
further, his friend opened a trading and a demat account. Rohit then handed
over an initial amount of around rupees one lakh (₹1,00,000) to trade on his
behalf. That was the best available option as he didn’t have much knowledge
about what and how to buy and sell.
Initially, everything was running smoothly. Almost, every day his broker used
to share some news based tips and asks for his permission to trade on that
stock. Then at the end of the day, Rohit used to receive a phone call regarding
the earnings. After some initial gain, Rohit handed an additional fifty

How to Avoid Loss and Earn Consistently in the Stock Market: An Easy-To-Understand and Practical Guide for Every Investor by Prasenjit Paul