How Much Money Can You Make from Trading Stocks?
Every single investor trading in stocks aspires for high returns on their investment, regardless of whether they are a beginner or a long-term expert. Making money in stock trading requires a solid strategy. This strategy must be able to protect your money, and at the same time, make investments that lead to good returns.
If you wish to make money on the stock market, you must have a strong understanding of the same, along with a sense of the factors that govern it.
Factors that govern how much you earn from stock trading
Your income potential is determined by different aspects of trading. These include:
- The market you trade in: Every market has different advantages. Generally, stocks are the most capital-intensive asset class. Trading in another asset class like forex or futures doesn’t require much capital.
- The amount of money you start with: If you deposit ₹2,500 in your trading account, your income potential will be far lesser than someone who starts with ₹25,000.
- The time you spend on your trading education: You need about a year or more to develop a solid trading plan that you can implement to earn a consistent day trading income. If you are trading part-time, it will take you much longer to develop real consistency and attain the type of returns that can let you make a living.
Your personality also influences your income potential. Are you a disciplined trader? Do you practice patience while trading? Knowing your behaviour type while deciding on stocks and investing in the same is vital.
Also Read: Guide ton How to Buy Stocks Online
How to make money from the stock market?
Many people ask how much money can you make from stock trading in India. While there is no definite answer to this query, you can increase your earnings from trading by following certain guidelines:
- Discipline: Spend time developing your systematic approach. It is wise to have patience and invest systematically in shares you feel are promising. The stock market is volatile. Even if you plan things, there will always be risks. Thus, you must only take calculated risks and think of the necessary action against underlying stocks, like hedging. Discipline and patience will allow you to take a look at the larger picture and make decisions based on that.
- Research: Stock trading isn’t about being lucky. Investors need to put in a lot of hard work. Before you buy stocks, you must start by researching the company. Spend some time knowing about the operations of the company and its future goals. This improves your chances of making a good investment. It isn’t a good idea to invest based on the price of the stock. Being aware of the business and its prospects helps. If you invest in a sector or business you understand, you can expect good returns.
- Broaden your portfolio: You must build your portfolio by investing in different asset classes. This strategy helps you optimize your returns and minimize risk. How you diversify the investments and the levels depend entirely on you.
- Set realistic expectations: When you set your expectations, make sure your feet are planted firmly in reality. The returns from equity markets come in sudden bursts. It tests the patience of the investors time and again. It is crucial to understand that no asset class can guarantee large returns continually. Having unrealistic expectations leads to incorrect assumptions, thereby causing grief that results in bad decisions.
The amount of money you can make from trading stocks depends on several factors. While the above-mentioned guidelines can help you improve your earnings from trading, the golden rule is to learn the rules and follow them. Most investors read the trading strategies of experts but forget to practice them while trading.
Share Market Knowledge Centre
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Frequently Asked Questions
Preferably, no. When the market is at high, create a watchlist and monitor the stocks. When you identify good stocks, average them out. This strategy will reduce the chances of buying stocks at a high price.
Stock trading in India is not permitted after the markets close or shut down. While physical presence is no longer required for trading, it is not possible to trade after the markets shut down. Trading hours are between 9:15 AM and 3:30 PM. If you place an order after trading hours, it is known as AMO or After Market Orders.
Options and Futures are kinds of derivatives deriving value from an underlying instrument. You can buy and sell Options at the strike price. Future, on the other hand, can be bought and sold at an acceptable future price.
SEBI and FMC regulations prohibit brokers from transferring funds between equity and commodity accounts.
Earnings Per Share is the post-tax profits of the company divided by the number of shares issued by the company.