For novice traders such as ourselves, a common aspiration is to reap a daily profit of Rs. 1,000 in Share Market. At first glance, this amount may appear modest, but with time and a honed skill set in intraday trading, it can transform into a significant income stream.
To achieve a daily profit of Rs. 1,000 within the stock market’s realm, I recommend maintaining a minimum capital investment of Rs. 50,000. This financial threshold facilitates the utilization of leverage, which, while amplifying profits, also escalates risk.
Leverage, a strategy entailing borrowing funds from your broker to engage in larger-volume trades, holds the promise of substantial gains. However, it is essential to bear in mind that interest accrues on these borrowed funds, and an adverse market turn can lead to substantial losses.
Before plunging into the pursuit of daily Rs. 1,000 earnings let’s acquaint ourselves with the three primary trading modalities conducive to profit generation within the Indian stock market.
So now let’s watch out how to earn in share market.
- Unearthing 3 Avenues for Amassing Wealth in the Share Market
- 1. Intraday Trading
- 2. Futures and Options Trading (F&O)
- 3. Swing Trading
- 4. Mastery of Chart Analysis
- 5. Define Entry and Exit Points
- 6. Crafting Your Trading Strategy
- 7. Execute a Trade
- In Conclusion
Unearthing 3 Avenues for Amassing Wealth in the Share Market
1. Intraday Trading
Intraday trading revolves around the swift buying and selling of stocks within the same trading day, targeting short-term price fluctuations. This method demands unwavering attention and rapid decision-making, given the need for swift, frequent trades.
Imagine this scenario: You’ve singled out ABC Ltd. as a prospective trade, anticipating an upswing in its value over the next few hours.
As the market opens at 9:30 am, you invest Rs. 10,000 in 100 shares of ABC Ltd., priced at Rs. 100 per share. You hold onto these shares for a brief span, observing as ABC Ltd.’s stock price climbs to Rs. 110 per share by noon.
Recognizing this opportune moment, you decide to divest your shares, reaping a tidy profit of Rs. 1,000 (Rs. 110 – Rs. 100) in a mere few hours.
2. Futures and Options Trading (F&O)
Futures and Options (F&O) trading entails the buying and selling of contracts that confer the right to buy or sell specific assets (e.g., stocks, currencies, or commodities) at predetermined prices and future dates.
F&O trading empowers you to profit from price movements in the underlying assets without physically owning or disposing of the assets themselves.
3. Swing Trading
Swing trading involves holding stocks for abbreviated periods, typically spanning several days to a few weeks, targeting short-term price shifts. While this approach demands less immediate focus than intraday trading, it still necessitates astute analysis and decisive actions.
Earning Rs. 1,000 per Day in India’s Share Market: A Roadmap
1. Initiate a Trading Account
To partake in stock market transactions, the foundation rests on establishing a trading account.
You have the option to opt for a discount broker like Zerodha, Upstox, Bigul or Alice Blue for reduced brokerage fees. Conversely, full-service brokers such as Motilal Oswal offer stock advisory services at the cost of higher brokerage fees.
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2. Capitalize Your Trading Endeavors
Once your trading account is in place, the subsequent step involves infusing funds into it. Here’s a streamlined process for doing so:
Navigate to the ‘Fund’ section within your trading app.
Select “Add funds.”
Choose your preferred fund transfer mode—UPI or Net Banking.
Execute the fund transfer.
3. Select the Optimal Stocks
Exercising prudence when choosing the right stocks at the right juncture underpins successful trading. Key factors to consider encompass:
Liquidity: Opt for stocks characterized by robust liquidity, underscored by high trading volumes. Enhanced liquidity ensures seamless execution of trades without triggering substantial price shifts.
Volatility: Seek out stocks renowned for volatility, predisposed to swift, sizable price fluctuations. Elevated volatility sets the stage for rapid profit accrual—provided you can adeptly prognosticate price movements.
Robust Trends: Align with robust trends or momentum-driven stocks. To decipher these trends, delve into the art of interpreting price movement charts—a topic we’ll delve into in subsequent sections.
4. Mastery of Chart Analysis
Chart analysis becomes your ally when scrutinizing selected stock charts for impending trends and price movements. Here are five pivotal steps in chart analysis for intraday trading:
Pinpoint the Time Frame: Chart plotting can span various time frames, encompassing minutes, hours, days, weeks, or months. In the realm of intraday trading, focus gravitates toward charts reflecting shorter time frames—1 minute, 5 minutes, or 15 minutes.
Chart Type Selection: A diverse array of chart types is at your disposal, including line charts, bar charts, and candlestick charts. Of these, candlestick charts are the preferred choice for technical analysis, as they provide an enriched perspective on price movements and trends.
Harness Technical Indicators: Technical indicators, including Moving Averages, Bollinger Bands, Relative Strength Index (RSI), and MACD, serve as invaluable tools for identifying trends and potential trading prospects. Deploy these indicators within your charts to discern price movements—either upward or downward.
Pattern Recognition: Chart patterns such as Head and Shoulders, Double Tops, and Bullish Flags are fonts of insight into impending price movements. Mastering these patterns will empower you to make judicious trading determinations.
Volume Examination: Volume bears profound implications for price shifts, rendering it a pivotal indicator. Robust trading volumes typically signal robust trends, whereas muted volumes may signal weak trends or consolidation phases.
5. Define Entry and Exit Points
With your stock selections solidified, the next critical stride encompasses pinpointing entry and exit levels. Entry levels denote the price point at which you initiate a trade, while exit levels signify the price at which you conclude a trade—either to pocket profits or curtail losses.
You can adhere to the ensuing steps to discern these pivotal entry and exit thresholds for intraday trading:
I. Discern Support and Resistance Levels
Support and resistance levels denote price levels at which stocks tend to rebound in the opposing direction. These levels proffer potential ingress and egress points for intraday trading. Technical analysis tools such as Pivot Points, Fibonacci Levels, or Trendlines are instrumental in identifying these levels.
II. Fathom Breakout Levels
Breakouts occur when stock prices surge above or plummet below support or resistance levels. Breakouts are fertile grounds for potential entry or exit points in intraday trading. You can tap into technical analysis tools like Bollinger Bands or Moving Averages to pinpoint breakout levels.
6. Crafting Your Trading Strategy
Once you’ve pinpointed stocks and established entry/exit thresholds, the next crucial stride centers on devising your intraday trading strategy. Your choice should align with your trading demeanor, risk tolerance, and prevailing market dynamics.
The scalping strategy unfurls through a succession of swift trades throughout the trading day, targeting modest price oscillations. The objective? Harvesting swift gains via astute exploitation of brief price fluctuations. Scalping hinges on unwavering discipline and an intimate comprehension of market dynamics.
For instance, envision you’re scalping a stock presently valued at Rs. 100. You acquire 500 shares at Rs. 100, anticipating an ascent to Rs. 100.50. As anticipated, the stock ascends, and you divest your shares at Rs. 100.30, reaping profits to the tune of Rs. 150 (500 shares x Rs. 0.30). This iterative process transpires multiple times during the day, cumulatively progressing toward the coveted Rs. 1,000 daily mark.
II. Momentum Trading
Momentum trading revolves around trading stocks on an upward trajectory while divesting those on a downward spiral. The aim is to harness market momentum and leverage short-term price oscillations. Momentum traders lean heavily on technical analysis to fathom trends and entry/exit points.
Suppose you’re trading a stock on a pronounced uptrend. You pinpoint a trend line on the chart and establish your entry point marginally above it—let’s say at Rs. 550. As the stock price continues to ascend, you offload your shares upon reaching a resistance threshold at Rs. 570, culminating in a profit of Rs. 20 per share.
III. News Trading
News trading revolves around acting in response to market-affecting news and events. The goal? Reaping gains from short-term price movements spurred by news disclosures. Success hinges on staying abreast of current events and grasping the market’s typical responses to diverse developments.
Imagine a company broadcasting positive earnings results. Anticipating a subsequent stock price surge, you secure 100 shares of the company at Rs. 600 before market opening. As expected, the stock price catapults to Rs. 625 upon the market’s commencement. Capitalizing on this uptick, you vend your shares at Rs. 625, amassing a tidy profit of Rs. 2,500 (100 shares x Rs. 25).
7. Execute a Trade
Your analysis and chosen trading strategy culminate in the execution of a trade. Vigilant monitoring of the stock’s performance remains a prerogative, permitting you to institute any necessary course corrections.
It’s paramount to institute stop-loss orders, confining prospective losses within predetermined thresholds. These orders are engineered to activate once the stock price veers unfavorably. Subsequent sections will delve into the intricate mechanics of stop-loss mechanisms.
Nuances to Retain During Intraday Trading
1. Eschew Greed and Fear
Greed and fear constitute two pervasive emotions that can wield detrimental influence over your trading verdicts. Excessive greed may impel you to clutch a stock for an extended duration, hoping for amplified returns, only to witness its value plummet, incurring losses.
Conversely, yielding to fear may induce premature exit from a trade, forfeiting potential gains. To forestall these pitfalls, unwavering commitment to your trading blueprint, and a resolute resistance to emotional sway, is paramount.
2. Prioritize Modest Gains
Concentrate on harvesting incremental profits consistently, as opposed to harboring aspirations of monumental gains stemming from a few transactions.
Consider this: If your objective is a per-trade profit of Rs. 200 and you execute five trades within a day, your cumulative daily profit aggregates to Rs. 1,000. In contrast, channeling all your efforts toward a single trade aiming for Rs. 1,000 may backfire if market trends diverge from your anticipations.
3. Navigate Liquid and Volatile Stocks
Opt for stocks characterized by robust liquidity, underscored by high trading volumes. Enhanced liquidity ensures seamless execution of trades without triggering substantial price shifts.
In tandem, gravitate toward stocks renowned for volatility, predisposed to swift, sizable price fluctuations. Elevated volatility sets the stage for rapid profit accrual—provided you can adeptly prognosticate price movements.
4. Cement Entry and Exit Strategies
Prescribing fixed entry and exit thresholds for each trade is instrumental in mitigating the sway of emotions on your trading judgments. This steadfast approach forestalls protracted retention of unprofitable trades or untimely exits from lucrative ones.
For instance, if you acquire a stock at Rs. 500, stipulating an exit point at Rs. 510 and a stop-loss at Rs. 490, you should divest the stock upon reaching Rs. 510 or in the event it depreciates to Rs. 490. This tactful management curtails losses and preserves your capital.
It bears emphasis that the essence of practice trading is the cultivation of proficiency and the refinement of trading acumen, transcending mere profit generation.
Devote time to acquaint yourself with your chosen trading platform, grasp market dynamics, and formulate a customized trading strategy tailored to your unique disposition. With unwavering dedication and patience, practice trading can culminate in daily earnings of Rs. 1,000 or beyond within the share market’s dynamic milieu.