Greed is a Curse in the Market

Greed is indeed a curse in the stock market. You've probably heard this saying many times while in school: "Greed is a curse." Yet, when trading stocks, many forget this wisdom. Most people in the stock market constantly search for tips that promise to make them millionaires overnight. This quest is futile because the future of any business is always uncertain, and it takes years for a business to grow. Similarly, substantial growth in stocks requires time. Therefore, no matter how perfect a tip seems or the period of investment, you should never invest a large amount of capital in stocks all at once.

Imagine you believe that company 'A' will perform exceptionally well and its stock price might double, providing up to 100% returns. If you get greedy and invest one to two lakhs of rupees in the company, and the price doesn't rise in the next one or two months or starts falling, you'll likely experience stress, frustration, and irritation.

Instead, a more prudent approach is to start by investing only 25% of your capital. Think, "If the company is truly strong, let it show at least a 5% gain before investing another 25%." If the stock shows a 10% gain over its current price, invest another 25%, and then invest the remaining 25% if the price increases by 15%.

This strategy can protect you from bad investments.

Another strategy for adjusting large investments is based on the 200-day moving average (DMA).