There are basically three types of stocks in a market- VALUE, GROWTH and INCOME. You can make money in the market by following different strategies depending on the stock type you can Earn Money From Share Market with right knowledge less investment
- A growth stock is a company which is growing at a very fast rate compared to its industry and market index.
- These stocks have a large PE ratio.
- A growth investor doesn’t care whether the stock is trading above its intrinsic value as long as the market price of those stocks keeps rising.
- As the growth and earnings of those companies are way higher than the peer companies, the investors expect those stocks to trade at a high PE.
- A value stock has completely different characteristics than the growth stocks.
- These companies do not have a high growth rate, rather they grow very slow. However, these stocks trade at a low market price.
- The value investing approach is simple. The value investors look for an opportunity to buy a stock which is way less valued in the market that it’s intrinsic value and buys it.
- A value investors believes that this stock will rise to its true intrinsic value in future. He holds that stock until it goes back to its normal value.
- This is the third way to invest apart from the value stocks and growth stocks.
- An income stock approach is investing in those stocks which pay a high, regular and increasing dividend.
- The high dividend yield of these stocks mostly generates the overall returns.
The stock market refers to a place where shares of pubic listed companies are traded. A stock exchange facilitates stock brokers to trade company stocks and other securities. A stock may be bought or sold only if it is listed on an exchange. Thus, it is the meeting place of the stock buyers and sellers. India’s premier stock exchanges are the Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE).
The stock market can be split into 2 main sections: the primary market and the secondary market. The primary market is where new issues are first sold through initial public offerings (IPOs).
Institutional investors typically purchase most of these shares from investment banks; the worth of the company “going public” and the amount of shares being issued determine the opening stock price of the IPO. All subsequent trading goes on in the secondary market, where participants include both institutional and individual investors.
There are two segments where you can make money in stock market:
1. Dividends: If you own a company’s stock that pays dividends, you can make money when the company does well. However, not all companies pay dividends. Typically, a company that pays dividends will deliver them in cash, a “cash dividend.”
2. Capital Gains: Stocks of companies are bought and sold each trading day with a stock price that is constantly changing. When a stock price is higher than the price you purchased it for, you can sell your shares to make a profit. Profits made this way are called capital gain. However, if you sell your stock for a lower price than you purchased it for, you will experience capital loss.
Once you start investing in stock market, following are few tips to keep in mind.
- You should avoid herd mentality. Typically, buyers usually get influenced from their families, friends or neighbours. It generally happens when everyone invest in particular stocks, so we also do the same as they do. But this strategy will not work in long run as few stocks may go higher or vice-versa. One should do proper research on particular stocks before investing your money.
- Investors generally go by the name of the company or the industry they belong to.
- Invest in business which you understand. Sometimes, we directly invest in stock instead of knowing its business. One must invest in business before investing in a company. In other words, before investing in company one should know what business the company is in.
- Don’t get greedy or emotional while you investing in stock markets as this lead to bad decisions leading to capital loss.
- You should create a broad portfolio because diversification of portfolio across asset classes and instruments is the key factor to earn optimum returns on investments with minimum risk. The level of diversification depends on each investor’s risk taking capacity.
- There must be realistic expectation while investing money in stock. You could be heading for trouble if your financial goals are based on unrealistic assumptions.
- If you want to take risk in a volatile market then see whether you have surplus funds, which you can afford to forego. However, it does not mean you will always end up losing money. Your investments can give you gains in the months to come. Your investments have to be well researched. Also, no one can be 100% sure, how stock markets react. That is why you need to have a strong risk appetite if you intend to invest heavily in volatile markets and earn money from stock market
- It is important to remember that if any important event happens in any part of the world it does have an impact on financial markets. Hence, we need to constantly monitor our portfolio and keep making the desired changes in it to mitigate risks.
- Taking help of good financial planner is advisable if you can’t review your portfolio due to time constraint or lack of knowledge. If that is not a viable option, then stock market based investing is not for you. Better put your money in safe or less-risky financial instruments.
How much profit the trader can make in a month?
If traders follow a simple strategy called “Take small profits and do multiple trades” which is explained in following subsection then trader can easily earn Rs.500/day.you can Earn Money From Share Market with right knowledge less investment.
Take small profits and do multiple trades
The successful strategy for day trading is to “take small profits and do multiple trades”.
Basically it has been observed that many times traders lose money due lack of knowledge. For example – Suppose if day trader’s buying price is at Rs.200 per share then he waits for the price to go till Rs.204 or Rs.205 and then he will plan to book profit, which is highly impossible on very frequent basis in single trade.
If you are expecting Rs.4 to Rs.5 as profit on share price of Rs.200 in single move then you are expecting 2% profit in single trade. So do you think it is convincing you? Our analysis says this doesn’t sound practical and this is the reason why traders lose money after waiting for long time.
Your intention is to earn money in a day, so just concentrate on small profits and do multiple trades instead of waiting to get huge profit in just single trade and earn money from stock market .
Markets are always right so to avoid the further risk it is always recommended that day traders should keep booking profit wherever applicable.So please have a look on following example about taking small profits and doing multiple trades and how it will provide Rs 500 profit per day and at the end of the month you will be able to earn good amount.
If you continue doing such small trades with such small profits then it will end up with big amount at the end of the day.
Suppose if you do 2 trades in a day then your net profit will be Rs 500 x2 = Rs 1000
In above example we have bought only 500 shares and If you increase the number of shares then your profit will increase accordingly. Try to take small profits because there are lots of changes for small price fluctuations.
Monthly profits –
Your daily profits have come to Rs500. In a month there are 22 trading days. So your profits becomes Rs.500 x 22 = Rs 12000
We also believe that it is not possible to earn profit on daily basis and also some losses would happen due to market fluctuations. So we will take only 50% profit from above amount so from Rs 12000, it comes to Rs 6000.
So believe in small and end up the day and your month with big profits.
Important note –
1) Only profits are not possible in day trading, losses are also part of day trading. If your trade goes wrong then trader has to accept losses and come out of trade. Even if you lose 50% profit then also you are getting 50% returns.
2) Trading on Margin Amount
Margin amount is the extra amount given by the broker to trade for a day.
Margin amount varies from broker to broker but generally broker provides 4 to 5 times margin amount.
Above process is fine but how to earn money from stock market ?
Here is one need’s to follow some rules to churn profits
- Patience is main weapon in stock market
- Decide a target that how much you want from market @ own greed.
- Follow some regular known stocks on continuous basis and keep updated.
- Habituate to go through financial news papers and news channels.
- Start with minimal capital so that you will be able to dump again when needed.
- Be ready to faces losses in some situations, it not a place where you get always profit.
- Look for some proper Buy and Sell signals.
- Don’t go against market follow the trend.
- keep always stop loss to minimize losses
- Do paper trading before going to real.
- Finally opt for less brokerage plan where your Break Even Point (BEP) has to be very low.
Here are the steps to open a demat account:
- Choose your broker
Search for the list of brokers and compare their brokerage rates. Many sites offer a comprehensive comparison of the various brokerages in India and the plans they offer.
Most brokers can be broadly divided into two categories; full service brokers and discount brokers. The basic difference is that discount broker offer you only the trading platform, but a full service broker offers you other amenities such as training sessions and trading tips.
2. Submit application to open your demat account
Many brokers offer a range of plans, choose the one you like and ask them to open an account for you. You’ll be trading in delivery/equities, as that is the most common type of share trading. Most of the brokers offer you a home visit to collect your documents, which makes it very convenient.
Ensure that you have the important identifying documents with you, such as the PAN card, Aadhar card, passport or your driving licence. A PAN card is mandatory for opening a demat account.
Some online brokers also offer a paperless account opening, so if you have your phone number linked to your Aadhar card, you’re all set! You’ll just have to upload copies of your identity, address, and income proof along with a verification video, without having to submit any physical documents. Online brokers do require a power of attorney though, this is required so that they can remove shares from your demat account when you want to sell them.
You’ll also require a trading account to actually trade the shares, but it’s usually bundled with the demat account. What more important is that you’ll need a savings account to store your money. Full service brokers usually offer you a 3-in-1 account, but you can opt to link your existing savings account to your demat account.
3. Learn some basic skills
Share trading is not gambling. It’s true that you can’t predict where a share will be in the future, but you can get a very good idea if you study properly.
4. Start practising what you learn
Once the demat account is opened, start monitoring the stocks and the markets. Figure out how to identify a good company based on its fundamentals and buy their single share. See how the price fluctuates, and keep reading the news.
Research the companies that are listed on NSE and BSE, and lookout for IPOs. Identify companies that show strong fundamentals. Check up on them regularly. Also watch the stock charts, and try to identify patterns in them which will help you to enter and exit the markets at the right time.
Why we are earning more in intraday then delivery- see i have a simple concept. im here to make money that’s it so the brokerage im giving it should be cheap or least . i have been trading sine 2013. but my entire profit goes to brokers hand because im giving him 1–3% which is quite high. lets say my transactions if of 1 lakh rs and my profit is 500rs but here i have to give minimum 1% brokerage which is equivalent to 1000rs. so at the end of the day my entire profit goes in red. we are trading from zerodha it is cheapest brokerage firm in india where just giving .01% on interday whereas other investors still charged 1–3% so be an intelligent investor. save your hard earned profit do not give it in other hand by the means of brokerage. to open an instant account.