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
Rules to follow for Day Trading:
The quick profits and the no worries about the overnight exposure of the trade coupled with small margin requirement are the reasons that attract the multitude of traders to day trading.
But things can go terribly wrong.
The dreams of quick profits can turn into nightmarish losses within the same trading day.
To avoid such situations, one has to work with a set of rules.
These rules will keep you grounded, protect you from huge losses and will ultimately reward you for disciplined trades by way of profits.
Ignore them and you are into gambling territory.
Rule 1: Do not trade without a stop loss
Any trade can go wrong. We expect to make a profit but care is to be taken to manage the loss. A big loss can have psychological impact on other trades also besides depleting the capital.
A sensible stop loss should always be there to protect you.
In the above illustration you can see, If my stop loss is not triggered i would have lost my entire premium!
Rule 2:Trade with comfortable position size
There are times when a trader is very sure of the direction of the trade. It looks like a certain profit.
At such time there is a tendency to go for a bigger trade.
Do not do it.
Trading is all about keeping your losses manageable. Leave the profits to the market.
If you are comfortable trading 1 Lot, keep trading that.
Go for bigger position when the financial cushioning for bigger loss is available and not when you feel like it.
Rule 3: Leave the Profits to the market
We have fixed the loss limit by Rule 1.
Now is the time to talk about taking profits.
Remember, these are day trades. You are going to exit a few minutes before the close of market either with profit or with a loss.
Do not book profits with pre-determined targets.
It may not make sense to most of us but one must try to maximize the gains even in day trades. You never know where a stock is likely to go.
You booked a profit at 1% and the premium goes up 5% in a day.
Is it not a golden opportunity missed?
Have patience in the trades that go right.
Keep the stop loss trailing and wait for the profits to come to you.
There was temptation all the time to book a profit but I kept waiting and kept changing the stop loss.
Finally was stopped out at 420, netting a profit of about Rs. 12400 in this trade.
The rule ultimately becomes: Limit your losses, not your profits
These three rules have served me well so there is no point in adding many more. Keep the trading simple.
Have faith in your trading plan, here is my net gain!
Have a strong belief that money can be made from day trading.
Do not trade when under stress whether financial or emotional.
Thanks for reading!
Do you want to watch my trading video, click below to learn how my managing simple rules one can become profitable trader!
Options Basics terminology:
CE = Call Options
PE = Put Options
Call ~ Long ~ Buy signifies upside.
Put ~ Short ~ Sell signifies downside.
Nifty Mar 9000 CE = Nifty Staying above 9000.
Nifty Mar 9000 PE = Nifty Staying below 9000.
Buying Nifty Mar 9000 CE means you are betting that Nifty will stay above 9000 on the end of trading session of last Thursday of March ~ 30th March.
Selling Nifty Mar 9000 CE means you are betting that Nifty will stay below 9000 on the end of trading session of last Thursday of March ~ 30th March.
Buying Nifty Mar 9000 PE means you are betting that Nifty will stay below 9000 on the end of trading session of last Thursday of March ~ 30th March.
Selling Nifty Mar 9000 PE means you are betting that Nifty will stay above 9000 on the end of trading session of last Thursday of March ~ 30th March.
So, fundamentally speaking –
Buy Nifty Mar 9000 CE = Sell Nifty Mar 9000 PE
Sell Nifty Mar 9000 CE = Buy Nifty Mar 9000 PE
Options are amazing! Instead of betting that NIFTY will go up tomorrow and doing something; you can bet NIFTY will stay between this range and that range till this August.
Predicting NIFTY will stay in x and y range in tomorrow is comparatively easy than predicting it will stay in that range in the time of expiry right because there will be dozen of movements before that.
So if someone else bet on the same thing you do after few days; his chance of winning is always higher than yours and hence to re-balance this options’ value decreases with respect to time towards their expiry. This is called Theta.
Now the first magical fact is betting on range.
I will give you couple of live setups for this month with proper rationale
Sell Suntv Aug 760 PE at 13.5
Supports of Suntv is at 800,780,760.
It’s a high beta stock so beware. If NIFTY crashes it will crash in line with NIFTY. But as long as it stays above (760-11 = 749) you are in profit.
Margin needed – 73,550 INR
Premium received – 13,550 INR
So total effective amount needed to short this option – 73,550 -13,550 = 60,000 INR
Now the second magical fact is you get that amount you can net as maximum profit in the single option sells beforehand and can be used as your margin hence decreasing your effective amount needed to short.
If all goes right then 13,550 INR profit on 60,000 INR employed in this current month.
The third magical fact is due to theta; the value of option will decrease and hence you can exit before the trade or use your profit as your effective stop loss afterwards.
Here goes another setup :
Sell NIFTY August 9800PE at 57.20
Sell NIFTY August 10200CE at 50.25
Initial credit = 50.25+57.20 = 107.45
Downside breakeven is = 9800-107.45 = 9692.55
Upside breakeven is = 10200+107.45 = 10307.45
So as long as NIFTY stays inside 9692.55 and 10307.45 you are in profit.
Isn’t it good and less horrible than taking a directional bet? It will start generating money spot on as long as NIFTY is staying in that range which is huge range.
Here is another good setup:
Let’s say I am bullish on Axis bank. Instead of buying a futures we can sell according to this following setup –
Even if Axis bank stays between 513 and 584 you will be in profit of at least 10,000 INR.
Our highest profit is 78,480 INR and that too will happen if Axis just stays between a ranges of 540–560. That’s a 20 point range!
Guess our employed capital? 426,480.00 -102,480.00 = 324,000.
Similarly if you say I don’t like range of 513 and 584; I need more leg room towards downside; that can be arranged too.
Your highest profit here is 47,700 INR and you attain this if Axis stays between 520 and 560; that’s a 40 point spread of maximum profit.
You will stay in profit as long as Axis bank stays between 500 and 580 before this expiry. But the loss of profits in 500–520 and 560–580 range is drastic.
Guess our employed capital? 417,300.00-95,700.00 = 321,600.00. Lower than previous setup!
As is says – Each trader has his own appetite. What’s yours? 🙂
loss in stock market, Stock market provides investment and trading opportunities to investors and traders. We hear of few success stories of great investors which attract us to markets. But there are also loss stories.
People come to market with plans, strategies, hopes , dreams and pocketful of cash.Most of them are disillusioned when the strategies fail, hopes are belied , dreams turn into nightmares and money is just gone.Stock market losses hurt a great deal. This question seeks to know how the losses occur.
How Losses are Made ?
There is only one way of losing money.
Selling at a price lower than the Buying Price.
Do not do it. You will never be a loser. Simple !
But not easy.
When you buy a stock, the price is not static. The moment after your buying, you become a seller looking for a better price. The time window may be 2 minutes, 2 days, two years or even two decades, at some point you have to sell to realize your profits.
Stock price moves either way. If it goes against you, a wait and watch game starts. If the decline is steep , one is at a loss to understand what is to be done. The decline continues and after sometime, the investor wakes up to the realization that a wrong investment was made and it is time to exit.
That is when the losses are booked by selling at a price lower than the buying price.
Can the investor not wait further?
Surely, one can wait. But there are no guarantees that the price will rebound. So a decision is made which may turn out to be good or bad in the long run.
In year 2008, Reliance Communication share was a constituent of NIFTY index. It traded at a high of Rs. 844.70 in January 2008. It has been in a terrible decline since then and traded at Rs. 18.40 on Friday, June 09, 2017.
Those investors who did not exit in this long period have seen the stock become almost worthless.
Same is the story with Himachal Futuristics, Suzlon Energy, DLF, UNITEC, GVK, IVRCL, Jaiprakash Associates and many others.
Even with the markets at all time high, these stocks are near their low price.
Some people call it wrong stock selection. I accept it as part truth.
Anyone can go wrong. But action should have been taken to exit at some point of time before the loss becomes unbearable.
Such situations can be avoided by good stock selection, having a diversified portfolio and getting rid of the poor performers in your portfolio.
How to Stop Losing ?
Having learnt how the money is lost, it is easy to make a strategy for stopping the losses. Invest in High Quality Stocks only.
Review your portfolio from time to time. Take out the weeds ( poor performers) and let the flowers grow. A few good stocks will make you rich.
Learn how to pick Quality stocks more from tradepsychology.com, Happy investing.
In most societies any activity which generates money/income with apparently lesser effort like trading than the hours put in a typical 9 to 5 job, is considered either downright wrong or risky ( dangerous ).
We are used to associate money with hard work and trading in stock market does not appear to be hard work, hence one assumes or believes that it is a dangerous activity.
Well, I start with the statement that trading on the stock markets is not dangerous
Why it is not dangerous? :
We are talking of trading only, not investing. Investing has got far lesser risks than trading and is a sure winner in long term. Trading has some implied risks but to call it dangerous is stretching it a bit too far.
A trader tries to make some profit from the daily movement of the stock prices. The trade may be for a day, for a week, for a month or few months but not for a much longer period.
Money is made when the right price movement happens during the trade period. Money is lost when the desired price movement does not happen.
With blind guess chances of being right in a trade are 50:50.
With proper technical analysis, this ratio can change to 60:40 or better.
Even with 50:50, a good trader makes money. In fact a good trader makes money with 40:60 success rate also.
Money Management is the Key:
The loss happens due to trade going wrong. Some trades will certainly go wrong. What is required is the management of this loss amount.
Cut your losses in a wrong trade & Let your profits run in a right trade.
Take small losses & Try to take big profits: Do not take 1% profit when the market is willing to give you 6% or more. One good trade should be enough to make up for 2–3 bad trades.
I can go on giving theories, but it would be best explained with real trading example:
Nifty Options Trading summary:
As I am a Nifty options trader, attached is my screenshot of my recent trade,
In morning session I was in loss as the market reversed the direction which I least expected, so booked loss of -450 from 8300 CE.
But, at afternoon session when I saw a clear breakout of support and market was falling, I bought Nifty 8000 PE & booked profit of +1440.
From the above example you get a clear picture of money management skills, associated with technical skill & trading experience.
This is taking profit through loss management. Losses were kept small, confidence in the trade is maintained and one right trade is enough to earn decent profit.
Where is the Danger Then?
Markets are not dangerous. The psychology of the trader is dangerous.
Succumbing to fear and greed is dangerous.
Not having a trading plan is dangerous.
But why blame stock markets for the danger.
Crossing the street without looking at the traffic is dangerous. We do not do it.
Then why approach trading in stock markets without caution?
Danger lurks within us and not in the markets. We blame the markets for our own flaws and shortcomings.
Why Very Few Traders Make Profits? :
The question detail states that only few people are able to trade and earn money. This is true. But this is true of any business activity.
Only good businesses make money or rather the business that makes money is called good business.
Whether it is a small grocery store, an ice cream parlor or a car hire company, all work in a competitive environment and earn or lose money based on their business model and efficiency.
Same with traders. They earn or lose depending on their trading skills, trading strategy, capital adequacy and money management.
Only very few have the skills to earn good profits and they do it regularly.
Rest are the ones who make up the numbers, get lucky at times and ultimately pay the price due to lack of trading skills.
The losses of the vast majority of traders are not due to markets being dangerous, these losses are mainly due to poor loss management. Most traders do not have the patience to wait for the big profit. But somehow they have the patience to wait in a big loss.
To master skills of money management & to be profitable you need to first learn as much as you can, Practical learning is more effective than theoretical learning, my blog is concentrated with practical case studies which can better understand the aspects of trading.
Trading in stock markets is not dangerous.
It should be taken up as a business activity and not as a gamble or fun.
An informed trader with good money management will always have an edge over other traders and will perform better.
Individual trader need not worry about computers dominating the trades. There are opportunities for everyone.
Become a knowledgeable trader, start learning.
Markets will be willing to reward you with huge profits !
Some few reasons why a fair number of professional traders Surgical prefer index derivatives.
- Liquidity – Nifty Derivatives are among the most liquid instruments in the world. You cannot ask for more. When you have big money at stake you cannot afford slippages.
- Predictable – Ask any index trader and they would tell you based on their observation or intuition that indexes are very predictable. Same would show up if you run analytics on the data.
- Leveraged – Derivatives by their nature are leveraged instruments and hence are more cost effective when it comes to trading.
- No Manipulation – Indexes cannot be manipulated the way individual stocks can be. Since the index itself is a derivative of the several stocks.
Many investors have avoided options, believing them to be sophisticated and, therefore, too difficult to understand.
Many more have had bad initial experiences with options because neither they nor their brokers were properly trained in how to use them. The improper use of options, like that of any powerful tool, can lead to major problems.
Finally, words like “risky” or “dangerous” have been incorrectly attached to options by the financial media and certain popular figures in the market. However, it is important for the individual investor to get both sides of the story before making a decision about the value of options.
How Profitable? :
It will depend on your style and strategy of trading.
For the purpose of this answer, I would say that you can make unlimited profit in a single day and you can lose 100% of your money on the same day. This possibility of very high gains attracts traders to options and makes trading exciting.
I shall illustrate with examples:
Remember the Surgical Strike made by Indian Armed Forces across the border. The day was September 29, 2016. It was option expiry day, being the last Thursday of the month. Market had opened higher and then crashed around noon time.
Image of nifty on 29th 2016
Put Options rose in value as a result of this and Call Options lost Value.
This Option opened at Rs. 7.95, touched a low of Rs. 4.25, went to a high of Rs. 189.60 and closed at Rs. 161.85.
The Option could have been bought for Rs. 5 and sold for Rs. 180 on the same day which is 3500% profit.
Yes, such profits are possible !
On the other side, NIFTY 8600 CALL on September 29, 2016:
It opened at 189, went up to 193 and ended worthless. The entire money gone in one trading session. This is how profitable or loss making Options trading can be.
How to find such winners will be discussed on this blog in future course, found interesting subscribe to Email alerts for daily Updates & find us on YouTube channel for daily chart updates.