First of all I must explain my situation. I'm still a student but when I actually do a job I am planning to save about 30,000 every month and invest it. These two months I have a campus vacation so I wanted to learn a way to safely invest in share market without loosing most of my hard earned money. (that's what happen to many professionals who go and invest in the share market without really knowing what they are doing. I have seen this happening to many of my parents and their friends)
With 20,000 from my parents I started out and tried various things.
First I tried diversifying. I made profits but most of it went brokarage and taxes. I also learned in this phase that if a share is daily traded, it's price go up sooner or later. If you wait a little bit, you can make a short term small profit from almost any share, provided your entry point was good. I also observed that support and resistance levels last in our market for only about three ups and downs and then it gets broken.
Then I tried to move my whole capital so that I can make some substantial profit. That worked. Ofcourse you make losses as well but overall it would be a positive result so it's ok. But I soon realised that you have to allocate a lot of time for this and I wont be able to do it when I'll be doing a job.
Therefore I gave up moving my whole capital in short terms and settled down for mid and long term investments. This is my first week in that and I'm yet to see the results. However I chose RWSL as a solid long term investment and Renuka holdings @62, Grain @ 114 and Hemas @41 as mid term investments (few months). I'm not entirely sure about my mid term choices but I don't think they'll be losses.
One thing more. The technical analysis skills I got from short term trading is very helpful to decide when to buy a share. Most of the long term investors lack technical analysis skills so they buy at wrong time and make losses even with good shares. (To give an extreme example, father of my friend bought blue @60 a long time ago and he's still holding it). I told him to sell it now and invesr the money in something else but he thinks it's a too much loss. He doesn't understand that he's already incurred the loss and is just refusing to look at it.
Oh and one more thing. The theory of unrealized loss shouldn't be considered too seriously, like my friends' father. If you are sure that you made a wrong decision, accept the fact that you made a mistake and sell it. Don't act arrogantly and hold it for a long time because there is a time value for the money, which in the stock market is huge.
Sorry for the long post but I just wrote everything that came into my head.