Start trading in the Indian stock market and see a significant return on your investment from day one.
(Short Term Trading)
(Golden Tips for Beginners/Public)
Introduction:
⦁Everyone wants to earn money as much as possible.
⦁ Given below are some options that the public has adopted to earn money.
⦁Putting money in a Fixed Deposit can give only you a single-digit (<10% per annum) interest.
⦁ Invest in real estate (book a flat/shop or purchase land) - This requires a lot of investment and enormous risk involved. In an emergency, liquidity is difficult.
⦁Investing in physical gold - is not a good idea because of the safety risk, tremendous investment, a good amount of making charge, and slow hike in gold rate.
⦁Invest in the Indian Stock market - many options are available, like:
⦁a. Long-term investment - required to wait for more than a year. Good, sufficient, and deep knowledge is required for the companies in which we want to invest. The public may not have such knowledge.
⦁b. Mutual fund investment - The command of investment is not with you or not visible. NO excitement at driving your investment, just like your car, driven by a hired driver. The lock-in period may be there. Instant liquidity with some deductions (exit load). You may not get the dividend-like benefits. For the selection of mutual fund schemes, expert knowledge of the market is required. The public may not have such knowledge.
⦁c. Future and Options Investment - Deep knowledge is required. Most of the people suffer a heavy loss. It may not be suitable for the public.
⦁d. Intraday trading - Again Control of sell out is not in your hands. Deep knowledge is required. Without expertise in the field, the chances of heavy loss are more and more.
⦁e. Short-term trading - It may be the best option for the public. With some tested tips, you can earn good money with less risk. Now we will describe these tips here:
Short Term Trading;
Requirements:
1. Having a DEMAT account connected to a bank account is essential for carrying out transactions in the stock market. There are many trading platforms in India. Here are some trading platforms that are listed below:
Upstox, Angel Broking, Zerodha, Motilal Oswal, Groww, Sharekhan, HDFC Securities, Kotak Securities, SBI Securities, Fyers, ICICI direct, Bottomline, IIFL, Paytm, etc. You can approach any of them on the phone, the internet, or physically, etc.
Some platforms may be customer-friendly and respond very fast. Their representatives may come to your house to open a Demat account.
2. Make sure to fill in the Demat account accurately. You and the nominee, both should have PAN and Adhaar Numbers.
3. Now, the important point is how much money is required to start the Short term trading. The golden tip is very clear, you are supposed to invest only surplus money. Surplus money means money left after fulfilling the following three needs:
a. It would be best if you had a regular monthly income to bear your daily and annual expenses.
b. You should have a sum of a good amount in an FD or savings bank account for at least 6 months to fulfill your daily and annual needs if your regular monthly income stops because of some unforeseen situation.
c. You should have a good health, life insurance policy, etc. to meet the demands of your needs.
d. The minimum amount for Short Term Trading should be 1 lac approximately.
Strategy for Short-Term Trading:-
⦁You are required to use a smartphone or laptop/computer to start the trading.
⦁On a mobile phone, open the app of the platform that maintains your Demat account. For example, if you have opened your Demat account in HDFC securities, then you are required to open the app of HDFC securities on your mobile phone. If you are working on a laptop or computer, then you are required to open the site of HDFC securities on your laptop/computer. It is advisable to work on a smartphone because it is easier to carry anywhere and faster to work on that. Moreover, you can work while you are on the move, standing anywhere, or engaged with a job.
⦁ Live Trading:
⦁ How to buy/sell the shares during the live market session?
1. Market timing of the Indian Stock market for the public is 0930 to1330 hrs. daily Monday to Friday except for the declared holidays. In the morning, have a look at any live business channel news like CNBC Awaaz, CNBC News18, ZEE business, etc. Keep in mind the indicators and stocks of companies making the headlines before opening the market. I suggest you open a live business news channel throughout the working hours of the stock market to act on any breaking news.
2. Non-retailers can start trading in the Indian stock market at 0900 hours. We as a public (retailers) cannot trade during these 15 minutes, however, it is important to watch the indicators during this period to start your trading at 0915hrs.
3. Keep opening your DEMAT account APP on your mobile phone or DEMAT account website on your laptop/computer. Also, keep open the official website of the NSE (National Stock Exchange) before 0915 hours.
4. As soon as the market opens at 0915 hrs., go through the indicators like NIFTY 50, NIFTY NEXT 50, and NIFTY MIDCAP SELECT (always refresh the site, else you will get old data and may cause losses.) on the official website of NSE. Similar indicators may also be available on your DEMAT account app., you may use these indicators as well. NIFTY 50 means TOP 50 Large companies in the Indian Stock Market. Similarly, NIFTY NEXT 50 means the next 50 top companies. NIFTY MIDCAP SELECT means the next 25 companies. So, therefore, we are considering here the total top 125 (50+50+25=125) companies in the Indian Stock market.
5. Opening time (0915 hrs.) is very crucial because you will see a lot of volatility (fluctuations) at this time in the stock prices of different companies.
6. See quickly top losers in these three indicators (NIFTY 50, NIFTY NEXT 50, and NIFTY MIDCAP SELECT). Consider only those stocks for which the trading price is going down more than 4%. Purchase first the one which is falling more heavily. For example, if you find that 3 stocks are falling approximately 4%, 5%, and 6%, then purchase first, which is falling 6%. However, if you know that a particular company is facing some serious issue (you can judge with the help of the latest or live business news) or the stock unit price is roughly less than 50 Indian rupees. Please don't purchase such shares. To judge properly, check the previous day's price volatility or search on the internet for the reason for the falling price of such shares. If you find anything seriously negative (legal allegations, court cases, shut down the company's units/offices, financial crises, warning/ negative remarks from USA agencies, etc.), don't purchase such type of shares.
If the share price of any company is not falling below 4% (say the top loser is HUL -3.72%). so you are not supposed to purchase any shares at this time, but chances are there to purchase it because it may fall up to 4%. So you may place the buy order with a limit price equal to down to 4%. Here, you may place the buy order with a limit price of 2400 rupees, roughly equal to 4% down from the last trading price of the previous trading day. If any share is falling more than 4%, then also put the limit price as 4%.
7. When you are going to purchase the shares, the following, or similar data, you are required to fill out the following:
Buy, company name, exchange, quantity, and price rate on which you want to purchase (Limit or market price), disclosed quantity (minimum 10% of booked quantity), type of trade (deliver or intraday), place the order, etc. It is advisable to fill the disclosed quantity, to make more possibility of transaction.
If the share price is falling more than 5%, put the limit price at 4%, to stop purchasing the share at a price not less than falling at 4%. For example, if the unit share price of a particular company was closed (LTP = last trading price) on the last trading day at 100 rupees and today it is trading at 95 rupees (means losses 5% from the LTP). Your limit price should be 96 rupees (4% lower than the last trading day).
Type of trading - we prefer always delivery, not intraday. In intraday, we can not hold the shares for the next day. At the end of closing time of the same day, automatically shares will be sold by the exchange. So if at the time of closing, your lot of shares are suffering a loss, these shares will be sold automatically in loss. For general traders, not have deep knowledge of the market, not advisable to be involved in intraday trading. So always opt for "delivery" (type of trading).
8. Exchange - you are required to opt for NSE or BSE. In India, only two exchanges (the National Stock Exchange and the Bombay Stock Exchange) are authorized platforms for trading. On some DEMAT account handling sites, three options are available (NSE, BSE, or SOR). SOR (smart order routing) is a facility that provides the best rate for your buy/sell orders on available exchanges.
9. Purchase at a time for the value of roughly 5000 Indian rupees. For example, if the unit price of a share is 130 rupees, the quantity to be purchased should be 39 or 40.
10. If the unit price of any share is roughly 6000 rupees. Avoid purchasing it, if you do not have a minimum of 6 lacs (approximately) for investment. Similarly, if the unit price of any share is roughly 8000 rupees, you are supposed to have roughly 8 lacs for investment, and so on. Otherwise, you may not purchase further because of a money deficit to make your average price lower and to come out in profit if the unit price goes down further and further.
11. It is advised to purchase the shares of 5-6 companies only if you have limited money (not more than 5 lacs rupees) for investment. Otherwise, you may not come out in profit. Your portfolio should be diversified, which means purchasing shares from different sectors. There are many sectors like Pharma, IT, Auto, Bank, FMCG, Energy, Agriculture, metal, Cement, Finance, Healthcare, etc. Your portfolio should have shares from 5 to 6 sectors.
12. If on the same day, the price falls further by more than 1% for the already purchased stock, purchase another lot of shares of the same company for roughly 5000 rupees. Similarly, you may purchase further if the price falls more than 1% on the same day.
13. Stop purchasing the shares if you have invested 75% of the reserve money. For example, if you have 1 lac rupees for investment, then invest only 75000 rupees in one go. Keep the remaining 25% (25000 rupees) for emergency investment in the coming days, not on the same day. Emergency investment means if you find that the share of some company falls more than 5-6% in a day only because of some non-serious reasons (changes which will not affect the share price in the long term). invest. But Keep in mind that your portfolio should not have more than 5-6 companies at a time. You can go beyond 5-6 companies if you have roughly more than 5 lacs rupees for investment. Follow this rule: number of lacs rupees = no. of companies in your portfolio. For example, if you have 10 lakh rupees for investment, you may keep around 10 companies in your portfolio.
Sell of shares (online market/Live Trading):-
Here, we will discuss how to sell the shares during the market hours/live trading.
⦁ Same-day buy/purchase of shares of a particular company :
⦁ Suppose you have taken delivery (purchased under the delivery mode, not intraday) of share/shares of a particular company during live trading of a day, watch the unrealized profit on those shares, if this unrealized profit is more than 1% on the shares of a particular company, you may sell these shares on the same working day by putting the limit price at minimum 1% of profit. Share purchased under delivery mode if sold in the same working day, will not be treated as delivered and you will not required to pay delivery charges (it may be roughly 1.5% or a minimum of 150 rupees - including buy and sell charges), instead, you will be charged only intraday charges and these are roughly .15% to .20% (including buy charges + sell charges) of the total invested amount. In this way, you will get roughly a minimum of 0.80% profit in a day.
⦁ Sell and buy charges are different on different platforms. I am considering maximum charges so that you will always remain on the profit side at any platform.
⦁ If profit is less than 1% of the invested amount for a particular company, don't sell on the same day. Please keep it in your portfolio.
⦁ Sell on another working day (not on the day of purchase):-
Shares purchased on a particular day and not sold on the same day will be delivered to you and you will pay delivery charges. As already discussed, delivery charges may be a maximum of 1.50% (.75% buy + .75% sell or 150 rupees, whichever is higher). To get a minimum 1% profit, you are required to sell at least at the profit rate of 2.5%. Each platform shows the unrealized profit percentage of each company, so you can judge your profit. So calculate the selling price of a unit of a share after including 2.5% profit. And in the limit column, put that amount to place the order. For placing the sell order, you are required to follow a roughly similar procedure as in the buy order.
Off Market Trading:
⦁ If you are already engaged in a regular job and doing the stock market trading as a side business. No problem, here it will be discussed, how to place buy and sell orders after or before the live trading hours. These orders are called AMOs (After Market Orders).
⦁ Off-Market (AMO) Buy Order:- How to place Off-market (AMO) Buy Order, we will explain here:
⦁ Open the official website of NSE, go through the NIFTY 50 table, and check the top 5 losers' stock. If any stock loses more than 4%, choose that one. Similarly, go through the NIFTY NEXT 50 and NIFTY MIDCAP SELECT.
⦁ Note down all those shares that lose more than 4% in these three indices. For example, you found 5 stocks which lose more than 4% (say 4%, 5%, 6%, 8% and 10%). then discard the stocks if anyone slips down because of some long-term problems like huge debts, litigation, closure of company offices, etc.
⦁ Now consider the remaining shares. Share who loses 5% or more, in a buy order, put the limit price as the last trading price (LTP) which is given in the NSE table.
⦁ Shares losses of around 4%, put the limit price at around 1% less than the LTP.
⦁ Example:- Balkrishna industries show a downfall of 6.73% and LTP is 2531.90 rupees. so you can put the limit price as 2530 or 2535 (in the round figure). and Hindpetro stock is falling by 4.56% and LTP is 431.9 rupees. Put the limit price as around 430.
⦁ OFF Market (AMO) sell order:-
⦁ How to place an off-market (AMO) sell order (AMO), we will explain here.
⦁ Go through your portfolio and select all those stocks that are in profit. If any stock is in profit for 2.5% or more. Place the limit price as the LTP of that stock.
⦁ If any stock is in profit for less than 2.5%, calculate the amount to be added in LTP to make it 2.5% profit and add it in LTP and put the limit price, which will make the profit of minimum 2.5%.
⦁ Now you may put the limit price in your off market (AMO) sell order as given below to make the minimum profit of 2.5%:
⦁ General Information:
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