My friend is a long-term investor but likes to become a trader.
He has around 30L invested for the long term, but he feels like he wants to become wealthy in a year. Like he wants he cross the 1C mark. He said that there is no point in becoming wealthy in old age. He is 28 now.
How much capital should he need to risk? And what type of trading does he needs to do? He is a profitable investor for more then 5 years but has never done trading…
How to pick stocks?
Someone who doesn’t know a thing about trading or picking stocks wants to 3x their capital in one year. Just amazing!
Point your friend to this piece by Nithin Kamath (tell the friend who Nithin is, if they don’t know): What does it take to win at trading?
Ask your friend to think deep and long about the following quote (from that post) of Nithin:
less than 1% of active traders earn more money than a bank fixed deposit over a 3-year period.
Expectations are a complete recipe for disaster
Forget 3x, MOST people lose in trading. Why does your friend believe he can make quick money ? Does he have any data to back it up or just dreams and vanity ?
Making money by trading is possible, but learning to trade will take many years of work. Multiple failures in initial couple of years is almost certain. Why would anyone commit large capital when he is learning ?
Even once you have become a profitable trader, future income is uncertain. Focus has to be on risk management first and returns later. So multibagger type of returns in short period are only possible by taking irresponsible risk.
But same returns are possible over multiple years - and with much better risk control that index.
So money can be made, but need a lot of patience and control and that too only after slogging through initial years.
Even returns are not going to be exponential say 20-30% pa with max 10-15% drawdown risk. Can do bit better too, but best to have conservative expectations. And future returns are not guaranteed, so you may do well but then things can stop working too.
So trading needs good capital to make money and a focus on compounding over the years to make it worth it.
If all of this sounds too much work for too little gain, then better stay away from trading or only looking at it as an outlet for gambling instincts and risk only money that you are happy to lose.
Is your friend you?
Are you really asking this kind of questions?
I mean when your friend ask you, and you thought the best way to get to 1 cr mark is to ask in tradingqna?
Really.
Really. I mean you took time to write this question. Does it not come across your mind that this is really not the way to go forward?
Hmm, 1 year 1 crore. No trading experience. That’s pretty tight spot.
Well, tell him, the best way to start is to bring 1 crore to the table. Fund his account. That way, he ld have 1 crore for a start.
This question needs no answers.But why not, bring liquidity to the market.
Cm on, let him bring money to the market.
He is making a mockery for start anyway.
Totally , agree with this. There is similiar quote" If you are not happy or your happiness depends upon achieving X then even after achieving X you won’t be happy"
True that. The goal post can keep shifting. After 1cr, he might be like I’ll be happier with 2cr.
I am both an investor and a trader, so I guess I can tell a thing or two. As he has some experience in investing, he knows about the volatility in the market, so that is good. But just as in investing, luck plays a part in trading too.
Say I have done some research on the company using quantitative and qualitative parameters and I invested in a company, for some reason, the price goes up and up and within a year it doubles or even triples, a multibagger, so to speak. This is luck, not my stock picking skill, this is getting more than I had imagined, what should have happened in 5 years happened in a few quarters, in cases like this even the management of the company cannot imagine such a movement in the price.
Like the same, luck plays a role, a bigger role in trading, the overall market should be trending, and if the person does not know about shorting, the trend should be only up and not down, so in a trending market we get many opportunities, success rate is high only with many opportunities, if the opportunities are few, so will be the success rate. But if the market is does not move, we don’t get many opportunities for trading, so target is tough to reach. If the market is falling, an investor is happy, as he gets to add to his existing positions or buy new stocks for lower prices based on his framework, but a falling market is not helpful to swing traders or positional traders, they can do day trading or derivatives.
So yes, we can put the knowledge acquired from investing to trading, but right from the way of looking at the market, to the way trading is done, returns, time period, risk, all of these are completely different to investing and trading. We can do this but we have to learn how to do it, and this takes time, because there is so much to learn, just like in investing.
Investing and trading are playing in the same ground, with the same ball, but in two different styles. So we can start with a little capital and see how things work out.
There is a quotation from Warren Buffett - ‘Investing is simple, but not easy. No matter the intelligence, the knowledge, things take time. You cannot become a father in one month by impregnating nine women.’
So investing is relatively easy but it takes time, and trading is quick money but it is very hard until one learns, and this learning takes time, and even then there is high volatility, emotional ups and downs, stop losses being hit etc. I don’t think 3X in 1 year with no experience can be achieved easily.
Actually, it wasn’t that hard during the corona dip.
Infosys raised 226% from 2020 to 2022 (in 2 years) and has paid the dividends as well.
There were many such stocks during the time frame…
It’s not hard even now,
if you can predict the future that is.
Tell me about your trading side. How long have you been trading?
I have not traded continuously for any periods of time, despite in the market for some time, except for some occasional positional and day trading without any proper system in place.
I have started doing positional trading again, learning and practicing for a few weeks now, with more seriousness and a system in place, and as the market has been rising ever since, I got more opportunities and good success. And the more I spend time, the more I could be able to deduct things, so I believe I could do it but it will be a long journey.
You have got more knowledge and experience than me, as with most of the members in this forum, so except for some elementary, broad gyaan there is nothing I could tell you. If anything, you can tell me.
For how many years, you’ve been in market?
You are talking about one of the fastest bull markets ever, a global liquidity spectacle. 90% of the stocks would have given bumper returns.
Does your friend has the same thinking as you, or you want to trade too, or you did not ask for a friend but asking for yourself?
No one who has been in the market for 5 years would say what you have said. No one can be just lucky for 5 years and not know a thing. Only one of the two things is true. If both are true, which I find hard to believe, I guess there is nothing I or anyone can say.
Investing is easy, trading is tough. 3X in a stock in 1 year is more likely to happen in investing than trading, of course with the element of luck included.
5 but I did not have any method in learning, I did not learn or practice anything in any particular order, market looked like a buffet so I started grabbing and consuming whichever I felt attractive or thought I could understand, there was a rush, there was a novelty. So there is no structure in my learning, all mixed up, and tangled.
So in a way, I am still learning the basics, I am still scratching the surface, because such is the depth of the markets, although a bit of this and a bit of that if put in an order may seem like I know something 
Man!
First point, The moment he asked you for suggestion shows, he don’t have any expertise to handle his own money.
He asked you, As if you can help him? Consequently you came here while all are bunch of losers lurking here. ( I’m one of them😛)
I support and will definitely help him to reach that 1 crore. Time i don’t know. But i will. For that can he pay me 5%?
For your own good sake. Answer him( i don’t know bro) let him decide whatever the f he wants to do. Later he will mess with you 100% if something goes dirty. I’m pretty good at this encounters more than 100 times.
So conclusion! Take me in our you get out of his mind. 
I wanted to know what is the profit margin of traders here.