At what capital is the trading useless?


#1

They say trading is to build the initial corpus and investment is to grow it further. I get what the veterans mean by this. But my question is, what is that cutoff capital?? At what capital should we stop trading and start investing?

What I’m basically trying to say is this - see I’m pretty much a novice in the share market but still am able to make 2% on 2 out of 3 days. Leverage on such a trade may mean a profit of 30% in a day. Now my question is that if this is true for my amount(₹5000) then will it be true for any amount like in crores? If yes then why not someone like jhunjhunwala use their 1000 crores to make 300 crores in a day. Is that technically possible? Or at such a high amount trading is useless? Where lies the threshold point?


#2

U r not considering the other possibility loss with such a huge leverage.

Say u have 5000 and u have 2 choices

Either buy 2 TCS and 4 wipro shares or u can take huge leverage of 25 lacs intraday TCS

Now this trade may wipe out ur entire 5000 or give u same day profit of 2k

But with investment u take home 6 shares of nifty 50 companies. If not today or next week one day u will earn profit for sure. That is the advantage of investment

Of course investment also u may lose but u have lot of cushion waiting period


#3

not all strategies are scalable


#4

I get your point. You’re right in saying that there’s an inherent risk involved. But trading is a game of risk. My point was that I’m a newbie in stock market and I have devised certain strategies that give me gains more often than losses. So certainly RJ is much much more capable than me. He can do it as well. I mean yes someday he’ll lose out on 100 crores on 1000 crore capital just like I lose 500 on 5000 capital but gains on the rest of the days will far outweigh that 100 crore loss.


#5

Why? Because large amount order can move the market price on its own? If so, then do you have any idea what amount can significantly move the stock price?


#6

Well, to answer you in simple terms “RISK MANAGEMENT”. Try to deploy your own money rather than using leverage and see your trading style change.


#7

There is no answer to this question.

Coming to capital , you are seeing only returns and not risk.

Read those two statements, complete conflict.


#8

But it’s true. May be I should give it some more time


#9

Lol who is peddling this kind of crap advices ? I think all the advices given in stock market are nothing short of crap

Retailers are busy losing their salaries and savings in intraday and Bank nifty type gambling, and you are talking about creating a corpus via trading?

Hahahahaha very funny

Also any person who can create a corpus via trading will NEVER become an investor in their life. I mean investor (only), they will definitely make trading their profession


#10

newbie cat, this will never end.

Every human born thinks he will beat the market , that he is the chosen one and all you have to do is tell him its possible and he will put his entire savings in to trading. Forget investing, thats for idiots. Why would anyone invest ,when you can trade and make 200-300%. Right.

There are no shortages of sheep’s and wolves in this business.

The cycle will continue FOREVER…


#11


#12

@Alok_Ranjan no nifty 50 stock can be influenced by any hni
That is quite another topic. Huge volumes and liquidity make stocks like TCS resistant to such price manipulations. If any HNI attempt to play such tricks on blue chips they will only burn their hand

Other way yes. Illiquid and low volume stocks can easily become targets but that is quite another topic where operators are involved


#13

I keep listening about these guys called ‘operators’. Sounds fascinating like someone from matrix. Can you please explain who are they exactly and what do they do? I have a rough idea that they are the ones who decide a stock price but then that’s quite contradictory with the little whatsoever knowledge that I have is that the stock prices aren’t controlled by any particular person, instead they move on the basis of supply and demand.


#14

Ignore all those stories bro, that time RJ used to do forward contracts trading, and used to hold for months until his price came. Today we dont even trade forward contracts

Here today we have gambling like Bank nifty where you are restricted on strike prices and then get trapped on expiry day when operator decides to move the Video game called Bank nifty against all retailer positions :rofl::rofl:

Also its always easy to do something when you are the first one or when the thing is new, once it becomes FISH MARKET then no one makes profit all just come and give donation to FII and operators.


#15

Again the ‘operators’. :slight_smile: who are these guys? Do they decide the stock price? Up until recently, I was of the opinion that demand and supply for a stock decides the price of it


#16

Lot of operators in stock market - the analyst who comes and gives tips for specific stocks to trap retailers in Gitanjali Gems, the news channel which spreads news as per pre defined rules, the brokers who give stock tips, those who send SMS tips for investment, and finally those who move or manage Nifty and Bank Nifty.

All those stories of no one can operate market are just stories. When 3-5 stocks hold 80% of an index, then anyone can operate entire market.


#17

@Alok_Ranjan i will tell in detail later

Operators are a group of people who target penny stocks or illiquid stocks with low maket capitalization. They may or may not collude with promoter but they buy and sell in huge quantities among themselves and pump the price. They may advertise also like baid leasing. Later on a appointed day they sell the huge piled position thus forcing the stock to hit lower circuits


#18

Also i will give u another example

You will see lot of stories of people buying Bata stock at 10 rs in IPO, TCS at 50 rs in IPO, and now became crorepatis.

Again, its about timing and about how mature the market is. Today market is fish market.

Today faltu stocks are IPO’d at high valuations and 10000 crore market caps, even crorepati will become roadpati if they invest in such IPOs

Then how can we compare ourself with Jhunjhunwala or old investors?

Just have normal targets in todays market like 15-20% CAGR return, and then you will make money. Otherwise people just get trapped due to higher expectations.

One way to increase your wealth is timing the markets well. But there also these advice gurus give crap like you cannot time the market. Means they themselves assume all population of India are dumb and have no brains. Ofcourse you cannot time 100%, but you can time well to increase your returns, buy low and sell high.


#19

I get it. Even I have one example. There’s is a stock called premier synthetic. Some time ago, I got a call from someone who said that I can tell you a stock which will rise by rs. 3 everyday. Invest in it. I looked into it. It was really rising rs. 3 everyday. I decided to watch it more. Everyday it would rise by ₹3. I was astonished with the accuracy. Neither a paise less nor more. Exactly 3 rs. increase everyday it was. You can also check in nse/bse historical data.

And then one day it suddenly fell to its lower circuit. And again the next day. And again. Since then this stock is always hitting lower circuit consistently, almost as consistent as kohli, which is a big deal(big fan:) ). I consider myself lucky. I was about to enter. Just a day before or two before I would have entered, all hells broke loose.


#20

Yes it will go to zero now, and it wont come up even if some one holds it for 100 years also

I had given a warning on that stock here in my thread on fraud stocks before it started falling

It is case of SMS fraud tips which i mentioned in one post above

You are lucky, becoz around 5-10% retailers lose their entire capital due to such stocks and vanish from stock market within days of their entry

Coz such tips mostly trap new entrants, and once 100% profit is guaranteed people will put entire capital, and once capital is put, you will get zero in return

So its safe to assume, out of all new entrants into stock market, 5-10% of those are wiped out from stock market just due to one stock

Just imagine these kind of schemes were there in Jhunjhunwala time, he also might have got trapped i think :smile::smile: