Stocks can help shareholders gain a return on their investment in two ways:

• With capital gains from the stock’s price rise; and
• With dividends, which companies may distribute to shareholders depending on annual income.

In this article, we will discuss only the Capital Gain. It refers to the difference between the selling price and the price at which stocks were purchased.

We have always heard from our elders that the share market is "Satta" where you will lose money much more than you will make it. But is that the case?

So let me tell you, whether the share market is a boon or bane depends upon how you see it.

If you are looking at it as a machine of quick money then the result might be like Harshad Mehta or worst.

There are several cases where people end up losing everything to pay their obligations in the share market.

But on the other hand, there are cases like Rakesh Jhunjhunwala where people have built extensive empires, from rags to riches, from Rs 5000 to Rs 3400 crore.

Do you remember Mahabharata, where in-game Panchali is mortgaged in the game? Mahabharata would not have happened if Pandavas didn't bet something which they can't afford to lose.

So firstly you should keep in mind is that the share market is not FD, where you are guaranteed that you will receive minimum predetermined Principal and Interest, here the Capital invested can go down, so you should invest only that much amount which you can afford to lose.

Whether you become rags to riches or vice versa, depends on the following.

● Your mindset

Your mindset does 80% of the work in the stock market. If you are entering the market, with having below mindset then the result will be the same as in the movie.

Always remember that nothing is free in this world, if you are getting quick money, be suspicious. But if want to be in a race for longer, keep an investing mindset, not a trading mindset.

Large market players believe in the Delivery option over Intraday, which means holding for sharing longer than a day, instead of squaring it off on the same day before the market closes.

● Your greed

In Intraday trading, the more you earn the more you trade, also the more you lose the more you trade, to recover your losses. This greed of earning more profits and reducing losses increase the lose manifolds.

Also, people incur losses because of their greed. Suppose you have a share of 100rs, which is now trading at Rs 234, but we will not sell it, hoping that it might reach 300Rs. But this is a share market, it is not necessary what you think happens. Now if shares reach Rs 180, then you will have a loss of profit of Rs 54, so one should never be greedy in this market.

●Whose Money you are using

One should never enter the share market with other’s money, because if you lose it then you will have to repay the amount along with interest, share market brokerage and other charges such as STT, DP charges, etc.

●Ability to take sensible decisions keeping aside your emotional thoughts like ego. 

When people lose money in the share market, they keep continuing trading more and more, hoping to get the lost money back, this increases the loss. One should have control over his emotions and should know what his limits are and where to stop.

●And most importantly time.

Time is money and is more important than everything because you can never get this back even when you spend millions.

Time is the most important factor in the share market as well, the longer the time, the greater the returns, because of compounding.

Albert Einstein is reputed to have said, 'Compound interest is the eighth wonder of the world.

You should know When, where, and how much to invest. If you know these three answers, then you are the king.

It is better to invest when the market is on the dip, in the shares which match your Risk Appetite, and the amount invested should be such that which you can afford to lose.

●Patience

This is the most important trait to be a good investor, you can't expect to double your money in a day or two; you need to wait at least for a year to earn good returns. If you don’t have patience and you sell the shares, then you might lose handsome profit which you could have earned.

●Margin Money

In Share Market, there is a concept called Margin, which is provided by the broker to trade shares much more than your actual money.

It is a type of loan provided by them for T+3 days, this in in fact a trap for investors/ traders where they trade in shares by borrowing money from brokers at a higher interest rate such an 8% per day this is beneficial for brokers as they will get more brokerage, more your trade.

But you should not fall prey to these tricks, use only that much money which is yours and which you can afford to lose.

So it's on you, what you want to become, Rakesh Jhunjhunwala or Harshad Mehta.

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