Is it really possible to earn a living by trading in Indian Stock Market?
Making the transition to becoming a full-time trader was one of the hardest decisions I’ve ever had to make. It was also one the best. I knew this was what I wanted to do, but it didn’t happen overnight. In fact, it took about an entire year to get myself set up and prepare before I took that final plunge into full-time. Here’s what I needed to get in order before I made it happen.
That typically means that you continue to make income with no or very little effort on your part to maintain that cash flow.
Let us have a look at these pictures. We will discuss how these people are also traders, earn their livelihood from trading.
This guy sells peanuts.
A very low-end snack. In North India, it sells mostly during the winter season. In summers this person would be selling something else.
A Flower Vendor.
What do you think this man does?
He is a trader. He buys and then sells flowers. That is his source of earning.
The fruits Shop
A very familiar sight.
This is a perfect trading examples. Here the portfolio is diversified in various vegetables ( stocks in case of the stock market trader ). Did you ever see a small vegetable vendor shutting down?
It is rare because these guys know how to ply their trade.
Money can be made from trading :
The reason for quoting three examples of the same kind is that we forget that trading is simple.
The only requisite for making money from trading is:
Sell at a price higher than buying price.
Watch now how i hade over 78.82% in 6 months by trading in Bank Nifty Intraday options!
Click to watch!
Learn the skills required to trade.
Know your market.
Try something more complicated and you will be chasing a mirage and ultimately end up blaming the markets.
We find that small vendors ( traders ) never shut shop but the big stores with Management Graduates looking after their supply chain management go under with great regularity.
To earn a living from stock market learn the essentials of trading.
Practice the risk management with perfection.
Do not use a sledgehammer to drive a nail.
( do not get too bogged down with research )
Keep it simple.It can be done.
Click to watch!
If these guys could earn their livelihood why anyone else can not ?
We do not have to shout to attract customers. We do not have to worry about what bargain a customer would ask for.
Do you want to learn about Options Trading!:
Those of you who have spent years gaining a technical edge by risking tons of money in intraday trading, by self-learning from the huge number of free videos available on YouTube.
With so many free videos available, you may be wondering why on earth you would ever pay for a premium theme. That is a reasonable question to ask, but there are in fact a multitude of reasons as to why you should choose a premium course to learn intraday trading!
Here are some reasons to choose premium course over freeware:
- To shorten your learning period by focusing on proven strategies
- Learning directly from mentors who have already spent years back testing data
- Lost in learning too many strategies from YouTube, fine tune your learning with case studies
- Don’t waste your valuable time on self-learning risking your capital without a technical edge.
Are You Free, Or Premium?
As with many things in life, you get what you pay for. But what about you?
- Do you still learn from free YouTube videos
- Are you profitable in intraday trading,
Happy to shell out a few bucks to get all of the extra benefits covered above? Let us know in the comments section!
But before we get onto that, let’s first answer the obvious question.
This course which I am selling you is purely on technical analysis on ‘’how to identify technical patterns for intraday trading in Nifty & Bank nifty options profitably with consistent strategies.
If you like this article kindly share to maximum, that would make my day!,
Appreciate; Options Trader
Stock trading as a career is not popular in India because it has more social reasons than economical. When someone wants to embark upon a career in stock trading, there are no precedents to tell your parents.
As there would be no sure salary at the end of the month, there is hesitation and uncertainty.
All business has the element of uncertainty.
But their people see some activity, staff, inventory, sale, turnover and it matches their concept of business.
Trading in the stock market does not have inventory, does not have sales in the conventional sense and as most of the traders are the lonely warriors, there is no staff.
So it does not fulfill the stereotype requirements of a business or job.
Hence the lack of social acceptance. And it is tough to take up a career without social acceptance.
This is the social acceptance level of trading that even at the age of 60, you can not engage in your passion if you care for the social norms.
These are just prejudices.
People do not have any knowledge of trading, therefore do not consider this as a good career.
But people do not have knowledge of coding and software also. They are okay with these careers as there is a salary at the end of the month.
They get worked up if you wish to establish a startup business doing what you would be doing a job.
We are not risk takers as a society.
We want others to create and own the businesses while we seek employment.
We are a society of takers, not givers.
And our thought process does not permit us to take up activities like stock trading as a career.
Risk avoidance and lack of social acceptance are the two main reasons for people not taking up a career in stock trading.
Lack of knowledge about this field is another reason.
Due to lack of knowledge about trading, most people consider it akin to gambling. This again is a reason not to seek a career in such an activity.
As more awareness comes in, the situation may change in future.
I started trading carrier way back in 2014, I have started in stocks initially but due to the requirement of more capital & less gain, it forced me to trade Options.
Initially, I was trading with blind guessing, which wiped my account several times, but thanks to my mentors who suggested me to trade small initially.
A trader is an inquisitive person. Whether winning or losing, one would still like to know if there could be some better method for trading. For that, a trader has to know himself (herself) first.
Option Buyer has the potential for Unlimited Profit and Limited Loss.
But the probability of the Limited Loss is very high. Option Seller has the potential for Limited Profit and Unlimited Loss.
The probability of profit is higher than that of loss.
So most traders believe that selling Options is a surefire way to win the game.
Remember to be careful about the unlimited loss probability.
It can wipe out your capital. One can be a profitable both ways, by appropriate exit when losing in a trade.
Options are not as complex as they have been made by the creation of strategies.
Strategies are needed for large portfolios.
My trading summary: FY18
Here is my summary of trading options, started my performance tracking from June 17 to Mar 18, with a target of multiplying my capital based on my past trading experience form Optin trading,
I have created a trading plan, where I have started with NAV of 1, where you can see month on the month I have been able to gain consistent profits in options trading, here are some of my trade details:
Here you can see how I trade Options, below are some key points to watch for:
- I do not trade every single trade, I trade only on defined pattern I know
- I have defined Risk: Reward ratio for each trade
- I am not winning 100% of trades, my success ratio is just 57.57%
Watch video on my trading performance: Click here
Well I am also not winning huge percent wins on a single trade, I have trading based on the pattern formed Intraday with defined risk: Reward, here you can see my percentage wins & loss over the course of trades!
Here you can observe that I also have losses in trading, everybody has, but no one showcases publically as they post one screenshot of big wins & they are lost over time, Trading is not a one-time activity, to be consistent & profitable trades one should have the edge in trading!
My trading strategy:
Markets are on a high. New traders are coming to the markets every day with a dream of huge profits. Beginners luck gives them some profits and then the dream goes bust.
The learning process starts. Looking for Options Trading strategies is the part of that learning process.Every trader goes through it.
Looking for the Holy Grail. Looking for a method which works every time. Looking for sure-fire profits.
Looking for the best Options Trading strategies. Let me give you the truth in the beginning.
There is no options trading strategy which can be called best.
The quest for the best strategy or even a good strategy is an endless pursuit. Every trader whether trading Options, Futures or Equities is looking for a strategy to stay profitable.
Read more about most profitable pattern basedon technical strategies: Click here
Precious time is spent, huge data is backtested and the experts come out with some formula, method or strategy with the fancy name.
The success ratio may improve to 60–65% with best of the strategies. Will they ultimately be profitable? No, if applied blindly.
As the sucess of trading is not about strategy it is all about Psychology, here is the bifercation of perfect trading plan!
Is Option Trading Really Complicated?
It is human nature to look for problems where none exist. Life is simple, we complicate it ourselves and then spend our time clearing the mess.
What Do You Want To Achieve? :
You want to be a good trader. Work towards that goal.
You want to learn driving. Learn it. Do not aspire to be Michael Schumacher on the first day of driving.
And do not try to become automobile engineer when all you want is to learn driving.That is where most people waste their time and energy.
For crossing a railway track, look left and right and cross. Do not try to memorize the train timetable just for crossing the track safely.
A beginner should observe the movement of Index and the stocks linked with the Index first. The observations should be made in uptrend and downtrend both.
Subscribe to Free Nifty observation course where you will learn how to trade Nifty options intraday: Click here
After few days of general observations, one should become stock specific. Follow just one or two stocks for about a week and make notes about the movements. These are going to become your bread and butter trades once you have gained enough experience.
There are only two lessons to follow initially.
The only way to make money is to buy low and sell high.
It is a universal truth and needs no proof. Only that it is not very easy to accomplish this in practice.
Keep your loss small and wait for big profit.
Again a simple principle but difficult to do.But no profits will accrue if this rule is not followed.
Fundamental analysis is the approach of viewing a publicly traded company as a business instead of just stock, in order to measure the financial health, growth and future prospects. Through fundamental analysis, value investors look for buying good, healthy businesses at cheap prices.
There are many ways fundamental analysis of a stock can be done, but I am going to share 5 step formula of fundamental analysis and how to pick stocks for long term portfolio:
Step 1: The financial performance
The first thing I look for in a company is its past financial performance. Analyzing past performance gives me a clear idea about company’s growth, earnings, profitability and how efficiently company is utilizing its capital. For this I look at 5 to 10 years of company’s data in the form of financial ratios. I use financial ratios because it makes it easier to compare a company’s performance with its peers. The financial ratios that I use are:
- Basic EPS: This is the basic earnings ratio which tells us about the company’s earnings on a per share basis. In other words, it is the ratio which tells us how much a company is earning against each share outstanding.
- Cash EPS: A conservative ratio compared to Basic EPS, which calculates how much cash a company is generating against each share of the company.
- Net profit margin: Gives you a idea about how much profit company is able to make on each sale made by the company. It is expressed in percentage terms. Higher percentage means company is able to charge high price from its customers, leaving fat profits in the pocket of the company.
- Debt/Equity: Gives an idea of how the company’s capital is financed. Companies with high debt usually are riskier investment because if a company suffers a loss, it still has to pay its debt, which can sometimes even lead to bankruptcy of a company. A company with low or zero debt is always preferable.
- ROCE: It is a financial ratio that measures how efficiently a company is utilizing its capital. For example i a company has employed Rs. 100 of capital and earns a return of Rs. 20, it means company’s ROCE is 20%. While Net profit margin shows the difference between the cost of making a product/service and revenue generated from the same, ROCE is calculated on total assets used by the company. Company with high ROCE are better investments as it shows company has good control over its financial resources and is able to run the business.
- Dividend per Share: It is the ratio that tells us how much dividend a company is paying against each share outstanding. Dividend is a part of company’s profit that company distributes to its shareholders. A company with consistent and growing dividend/share is a good investment as it keeps investors invested in the company.
Step 2: Reading Annual Reports
Reading annual report of the company for the past three years. This gives me an idea about what the company has been doing in its business, what goals and targets it had set for itself and if it has achieved them. A company that sets clear and time bound targets for this business shows how professional, and ambitious the management of the company is.
Step 3: Future plans
Every company has some future plans for its business. By looking at the company’s future plans, I get the direction in which the company is headed. Is the company going to start a new business, is it going to expand its current business? Is the company planning to go overseas? All such questions are answered by analyzing company’s future expansion and diversification plans.
After going through all the above mentioned steps I try to figure out how the company is going to look like in the future, what kind of revenues I can expect and what could be the profitability in the next 3 to 5 years. I don’t try to get the exact number but just a ballpark percentage growth I can expect in the future.
Step 4: Critical analysis
The fourth step I follow is to write down all the logical and rational reasons why I should invest in this stock. Doing so gives me ample positive and negative points about the company and areas where I should be cautious while investing. It is said that “If you cannot fill a page with logical reasons why you should invest in a stock, then you should not make that investment.“
Step 5: Waiting for the right price
Finally, I wait for the market correction to buy the stock at a low price. I do not put all the money at once, but buy on every dip in the price. Then there is a very long period of waiting, giving my investment time to grow. When I feel it is time to sell the stocks I start selling them in small quantities on every rally.
You may feel it’s a lot of work, but trust me it’s really worth all the effort.
Stock Markets are full of experts.
There is fundamental analysis and there is technical analysis. And then there are a plethora of technical indicators and charts.
Armed with so much firepower of data and analysis a trader sets out to trade.
His indicators tell him to enter a trade at Rs. 1130.
It is a day trade.
Same indicators tell him to exit at Rs. 1137.
The exit is done.
The lot size was 750. A profit of 5250 taken.
A good trade.
Only minutes later, there is another surge in price and stock keeps moving up and ends 4% higher at the end of day at Rs. 1175.
The trade which could have given you Rs. 45 was exited after taking Rs. 7 only.
This is what happens with most traders.
Sorry, this is not true.
What actually happens is that if the stock fell by Rs. 40, the trader will book a loss of Rs. 40 but while booking profit, it will be booked at 3–7 Rupees.
It happens to everyone.
Still we do not learn.
After wiping out the initial capital, traders return to market again. This time they come with better technical analysis and better indicators.
The results remain the same.
Profits still remain a distant dream.
Why does this happen?
We have made trading very complicated.
It is quite unnecessary.
Most of the traders are small traders. They do not need bucket loads of data to enter one trade to get Rs. 1000–2000 profit.
Even big traders do not need it, but I am nobody to talk about them.
I like to tell stories.
A Small Story : Conversation between two guys A and B:
A: Can you tell me how many sheep are there in this herd?
B: Sure, there are 168 sheep.
A: Real smart. How did you count them so fast?
B: It was easy. I counted the legs and divided by 4. I do it quite often. I am a stock market analyst.
Most of the technical analysis is like the above example.
Doing the simple things in a complicated way.
It is like using a sledge hammer to drive a nail.
The trader gets awestruck by the number of strategies and data points and misses the most important point— Trade.
How to succeed in day trades or What are the secrets in day trading ?
There are two secrets.
They are so obvious still I call them secrets.
Because people are missing the wood for the trees.
They ignore the obvious and go in search of secrets.
I have stated them earlier and I repeat these two facts without following which, no profits can ever be made:
- Buy Low Sell Higher.
- Keep the loss in losing trade lower than the profits in winning trades.
Without (1), there can not be any profits.
And (2) is about loss management.
Some trades will go wrong and some will go right. Maintain the risk reward ratio.
Let me keep it simple.
Exit the losing trade at a fixed loss.
Keep waiting in a right trade. Protect the profit by trailing stop loss. Do not exit till the move ends or the day ends.
Easy to say but difficult to practice.
But who said making money was easy?
Profits will take care of themselves.
To understand more clearly on how to keep it simple stupid, watch below video!