Everyone says leverage can damage your capital and naked options trading is also more riskier. So looking at the margin requirements for trading positional. The margin requirement must be above 100k. What do you think is the ideal way of trading ?
If you want to make consistent profits in futures then you need at least 300k.
Otherwise you can trade in equities.
My losses reduced considerably when I stopped trading options. Vega makes options not suitable for trading intraday unless you have better tools.
For retailer it is difficult.
I was recently talking about this on our educate series of videos. After interacting with lakhs of people, the real difference between winners and losers is risk management.
Important aspect of risk management is your account size. There is no one answer that fits all. I think you should trade with capital which doesn’t stress you much. If you are scared to lose money, chances of panicking and losing are higher.
Also you can’t come to the markets with “Rupee targets” in your mind. Have a target to stay disciplined and sticking to your strategy. If you do this well, money/alpha will automatically follow you.
For me, 10 lacs is an ideal trading capital to make a living out of the market. But I will tell you how I intend to use it. The way it is used is decisive and will decide your longevity in the market.
I have played enough poker in life to realize that you need atleast 20 times the bankroll to be a successful player - to play freely and to play a bit crazy.
Now that I have 10 lacs with me, to make sure I’m playing with a 20-time bankroll, the amount I am permitted to play with at any given time is 10 lacs / 20 = 50k.
Let’s split my total capital into 2 halves. I will invest one-half of it, that is the first 5 lacs, in Mutual funds - a mix of Debt and ELSS funds.
I am now left with the other half - the other 5 lacs.
It is only after I lose my first 50k that I am allowed to bring in another 50k to play with.
So now I can put aside the remaining 4.5 lacs in an instrument such as LiquidBeES.
What can I do with 50k and what do I intend to achieve with it?
I intend to make my 10 lac capital to a 20 lac capital at the end of 1 year. How will I achieve this?
I trade Futures. To do one lot of a Future priced at around 500, it would cost me close to 1 lac to trade it in NRML, about 40k to trade it in MIS and just 13k to trade it in Bracket Order.
I love Bracket Orders. It defines your Stoploss and Profits even before you take the trade. It is very handy for those who have their trading plan worked out and are disciplined/wise enough to stick to the plan.
I know how much profit I want to make on a daily basis. If I am trading a stock like RelianceInfra in Futures, it has a lot size of 1300 and it costs 13k to trade 1 lot in BO.
Since my play amount is 50k at a time, I intend to use only half of it when I take a trade. With 25k, I can do 2 lots at a time. And I wish to make 2 rupees in any trade I take. Assuming I take only 1 trade a day, which is usually the case, I will trade 2 lots to make 2 rupees, so my profit is 1300 * 2 * 2 = Rs. 5200 a day. Let’s keep aside Rs.200 for charges. Your net profit is Rs.5k a day.
In a year, assuming it has 220 trading days, this translates to a profit of Rs.11,44,000. Keeping aside 15% of this for short term capital gains, I am left with roughly around 10lacs of profit at the end of the year. Target achieved.
Now that I have 20 lacs as my bankroll, I can play with 1 lac at a time. Now I can double my trade quantity - do 4 lots for 2 rupees. Now your net profit is Rs.10k a day and the net profit at the end of the year is 20 lacs.
My initial capital of 10 lacs is now at 40 lacs at the end of 2 years. Plus the other 19 lacs is in the form of Mutual Funds and Liquid Bees. So yes, 50 lacs at the end of 2 years is very much possible.
“Drops of water make an ocean and then it can house sharks and ships!”
But in this forum experienced people says high leverage is not good for trading.
but as the risk of leverage part, can we have a plan b of risk handling.
If you have 10 lacs with you and you trade worth 50 lacs, then it’s high leverage and it’s risky… one terrible trade and you can lose over 50% of your trading capital…
If you have 10 lacs and you use only 50k at a time for trading, then the max you can lose at a time is only 50k. This is not high leverage. This is the exact dead opposite of it.
In short if you are a small retail trader with 100k of capital there are less chance of being successful ?
What is success for you when it comes to trading?
If you are able to earn 30-40% of capital every month.
If you have a capital of 1 lac and you intend to make 30k a month, then if there are 20 trading days that would be 1.5k a day.
You will have to figure out how to do this. It’s very possible. If you make 1.5k a day then you are a successful trader.
But leverage on some trading days makes a big hole on our capital and we waste the remaining days trying to recoup the losses resulting into our bad trading decision.
So in the end everything comes to our performance I think, if you are good you can use leverage for your profits and if you are average you may always be in the losing side.
What about the losing days??.. how are you so sure that you will make ur 2 points everyday. The most successful
traders have a hit rate of 50%-60%.
U need to have 100% successful strategy(which does not exist) to get 2pts in all 220days. No words about risk reward?
What about loss ,nobody ever in history got profiy in 220 days per year in profit?
It just theoretical work, but Stock Market is full of surprise.
Market is full of uncertainty, what worked yesterday will not work today and what worked today, will not work tomorrow.
The capital is totally dependent on your budget. You are strictly advised to trade with your own money which will not effect your routine life. You need to enter the market with the professional approach with good risk management plan. Have a good time!
I am new to trading ,I had capital amount of 50k and lost almost 29k and now only 21k .
Please suggest me get good profits in this amount only
Do only paper trading for 3-6 months and move onto real trading once you are successful at paper trading
Any other advice you will receive will make you lose the remaining 21k soon
What is paper trading actually?
How do we know that which shares will give profits today ?