Trading in the stock market

 

Let me clearly tell u, there is no strategy which is without risk in stock market. All strategies involve risk may be some are huge risk and some are less risk.

When it comes to Option trading, It involves both huge risk along with huge returns. other side it has few strategies which are of less risk and less returns depending on ur capital .

There are 100’s of option strategies which can help you to make money on monthly basis from 1% to 10000% returns in options .To make it easy to understand im explaining you as below,

Option Buying Strategies :-

It’s one of the Best ways to multiply your amount in quick time . It involves huge risk along with huge rewards. Personally i have made 10K account to 2L in span of 2 days and also have made it nil in initial days. You dont need huge money here , need minimum capital also to start with and also to make good money too but only thing is, you need to be right all the time to make money. It is having Limited loss and Unlimited profit scenario.

Here making consistent profit everytime is not possible . On an average out of 10 trades 5–6 trades can be profitable and remaining will make you total loss. Need to be very very cautious while buying options and also while booking profits too. Here whole capital amount will be at risk , so following proper risk management only can help you to make money else you will make your account NIL at the end .

Option Selling Strategies :-

It’s one of the best way for less risk and less returns . You need to understand OPTION GREEKS completely here to be profitable overall . One trade can make you all your 1 year profits nil. Profitability ratio here is 80% as Traders gets benefit from time decay which plays an important role. You need huge capital here to make money . It is also risky because in this, Profit is limited and loss in unlimited , so need to be always careful in every trade, every time.

Keep this in mind, Only with options selling alone will not help you to make money consistently on monthly basis. You need tohedge your positions sometimes i.e. You need to Buy and need to Sell options depending on market direction and at the end of the expiry you can be in profit. By making positions hedge , you will be trading irrespective of market direction & irrespective of market movement . But sometimes, because of your negligence you may end of all profits in single trade also.

1. Options sellers Profits will be limited where as Loss is unlimited.

2. To Sell options, you need to have Full Margin Capital, Which is high normally.

3. To make profit in most of the trades, one should know more about Position adjustments, i.e. You should know what action to be taken if market moves 3–5% in any direction in that expiry so that you can make it profitable .

I would say to make consistent profit of 4% on monthly basis, You can even make it both ways in option buying alone and also in option selling alone. But you can’t be profitable all the time, and it’s difficult too.

To make it simple , Learn option greeks , Learn about options in depth properly , learn the risk management . It may take some more time but im sure it will be worth. If you follow this then making 4–6% monthly returns will not be a bug deal for you.

Personally i do both options buying n option selling depending on market condition. From last 5 years, making 8–15% monthly with options selling { options writing }. It looks simple but yet very difficult to manage it for long time . Anyway, practice makes you perfect always.  

• One has to Study and Observe in Which Phase, Market is Behaving.
• Market Moves in Three Different Phases 1) Trendy Market (Smooth Uptrend / Down Trend) 2) Narrow Range or Range Bound Market Phase 3) Highly Volatile Market Phase.
• There are hell lots of Strategy in Options, but Not All Strategy will Give Good Result in All Market Phase.
• Some Options Strategy will Perform in Trendy Market such as Long Call/Long Put, Bull Call Spread, Bear Put Spread etc.
• Some Will Perform in Range Bound Market such as Short Strangle, Short Straddle, if Narrow range move is expected.
• Some will perform in Volatile Market such as Long Straddle, Long Strangle, if Market is expecting wild moves.
• Money Management plays a Main Role in Options, as Time Decay kills Premium And U can not put all your money on One Trade as On Expiry OTM Options end up ZERO, so Trade size, Strike Price Selection are Important Factor to keep in mind.
• One should Have Pattern base or Predefined Trade Set Up, which should be Back Tested to Get Better and Consistent Result.
• As We work On Probability, we should have good Success Ratio, which is derived from back testing.
• Risk Reward Ratio, which also derived from Back Testing.
• For Basic Understanding, One Must go through NISM Website and get glimpse of Equity Derivatives Module and Options Strategy Module. Or Enroll for Workshop or Course.
• Once u get comfortable with Academic concept, Paper Trade in Live Market, And Then in Live Market(initially with Options Buying Strategy means Debit Premium Strategy so that can have defined losses in worst case scenario.)
• Consistently Performing on Your Selected Trade Set Up, will end up Marking good Money and Reasonable Good Return.   
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• don't know if you are new to this. If you are new, then what I am going to say it may be hard to accept because you might be already biased that you can make money by trading in olymp trade, binomo etc. I will try to explain.

• First thing which came to my mind when you asked this is, “how can I go to a casino and make consistent money by investing a small amount of money”. This is because these platforms misguide people saying that they are online trading platforms. But people don't understand these are just binary options which is NOT actual trading at all. Binary options is merely betting against the broker. This means that when you enter a call, you are essentially betting against the broker that the price will go up. So when you win broker will pay you. When you lose, broker gets to keep the money. So how much and how long do you think the broker will pay you out of their pockets if everyone starts tomake money? Even if you start consistently profiting, they will simply manipulate the priceas these brokers are not properly regulated.

  As I said, it is just like gambling in a casino because the broker has an edge here. No matter what, in the long run the broker will win even how good your strategy is. This brokers edge here is the “time” factor, and payout structure because when you win you may not get 1:1 return.

  Apart from this, these brokers are NOT regulatedby most of the countries financial regulators. Most of them are regulated by cysec, which is of no use for residents of other countries apart from cyprus, because if you check in their website, you’ll find that all disputes are valid within their jurisdiction only.

  Now, if you are really interested about the financial markets and would like to invest money and make money(definitely not big money from small investments), then I would suggest you toinvest your time and take time to learn! Learn about real stock market trading or investment, forex, commodities or even real futures and options can be traded which are highly regulated. Always keep in mind you cannot become successful overnight. It takes time

  
  

  The question is specifically about booking consistent profits in Intraday trading on low capital.

  Yes, even with current restrictions on margin/leverage by SEBI, one can effectively manage money to book decent profits of Rs. 1000-1500 everyday by trading in right instruments.

  My suggestion to beginners and small retail traders is to not worry about capital, just focus on strategy execution.

  Even with small capital base of Rs.8000-20000one can start and build up capital over and above it.

  When your capital base is 5000 - 20000, then you need to be very clear with your strategy and instruments that you should be focusing on.

  For intraday traders best instuments to tradewith low capital are :

  Cash Equity segment
  (One can start with Capital as low as Rs.2000-5000).
  Nifty, BankNifty Options (Buying Only)
  (One can start with Capital as low as Rs.8000-12000).

  Commodities Intraday trades:
  Goldmini, Natural Gas, Silvermini.
  (One can start with Capital of Rs.18000-25000).

  Managing to book consistent profit on low capital requires strict discipline and adherence to proper Risk-Management rules. 

  
  
  

  Intraday trading doesn't test your technical analysis skills, it actually tests your risk-management skills.

  
  

  Not a single Intraday trade should be executed without placing a stoploss.

  So to succeed in Intraday trading, you need tomaster 2 things:

  1. A good momentum trade setup picking strategy.
  2. A good Risk-management or stoploss management strategy.
  In Intraday if you follow proper process to trail your stoplosses then your Risk-Reward will improve a lot.

  A capital building framework that I ask beginners to follow is that you should pull out or withdraw your initial capital at least twice from the profits that you generate.

  
  

  Regular withdrawal of Profits gives immense confidence. In initial days it also helps in balancing your mind against over-trading and over-confidence.

  To succeed in long run a well-balanced, calm mind is necessary for intraday trading.
  Your mind gets conditioned and Mapped to a trading system with proper money management.

  I have already written a lot on momentum Intraday trading strategies and tools of Risk-Management. 
  Techniques on how to keep compounding your daily profits starting with small capital etc.

  I would suggest to invest for Long term in Quality stocks that may turn your money 3X - 5X or more and you may find passion in this and make this full time Career. And this time of recession is good time for Investors to enter the market. Be cautious and take advice from Experienced persons and then invest slowly. patience is key in Stock market. Dont run for Money. Look for good Companies to Invest. Dedicate time for finding good companies.

  And also to be decent investor, one has to have just Common Sense. Keep your eyes and ears open and see around what is getting sold most.

  Many methods and techniques are available in the stock market these days, and most traders are only looking for short-term profit. After the covid pandemic, so many newcomers and youngsters started taking an interest in the stock market for some extra income and we all know that in the 2020 pandemic situation so many lost their job and some people didn't get their salary for some months so almost 80% people were finding some source for an extra decent income.