Category: Investing

Like my previous blog titled how to make money in share market?, in this blog I will talk about a unique method to get maximum profit from intraday trading.

One of the important factors that plays vital role for the success of this method is analysis of past trend. If an investor is able to find out the likely movement of price using the past trend then this method can be used for generating profits in shorter period of time.

So, how to get maximum profit from intraday trading??

There is no specific name of this method as this is not a recognized but for the sake of memorizing this method, you can call it as “Purchasing a stock at 3 levels”.

How to use this method to increase your profit from intraday trading?

Step 1:

Search for such a stock whose price is going to be high for that day. It is not that much tough as we think and one can easily find out the likely movement of the stock for intraday.

Step 2:

If your analysis says that yes, the stock of XYZ ltd will go up then it’s time to follow on this method otherwise you need to find another stock whose price is going to be up for the day.

Step 3:

What one needs to do after finding out such a stock which meets the above criteria is to purchase that stock at current market price to earn profit for the day.

Note:

1. Purchase the share only if you think it will go up and will give at least 1 – 2% return for the day in normal circumstances.
2. Do not purchase a large quantity of that stock (Reason for the same is explained in the coming section).

Step 4:

Wait for the movement when it goes down by 1 – 3% then purchase a larger quantity of that stock (In case you find that the price of the mentioned stock is not going down and going high then this method is not more of use for you and in such a case you can sell your share at some higher price to earn profit from that stock).

Note: If price goes down, you have to make sure that the fall in price is temporary and it will reach at its earlier position (where you purchased it first time).

Step 5:

Wait for the movement when the price of the stock further goes down by 1 – 3% and at that moment you need to purchase a larger quantity of that stock once again.

Note: You can skip this step if you find that after purchasing the same stock twice, its price is going high and you need to follow next step.

Step 6:

Now when it reaches at your expectation level or say a little bit down than your expected price, it’s time to sell all the shares you have purchased till now (shares of the mentioned company).

How this method works?

Suppose you analysed a stock whose current market price is INR 100 and you expect it to increase by 2 – 2.5% for the day. Lets assume that you have purchased only 1 share at current market price. Your total investment for the time is INR 100. This method says that if price goes down rather than going up, you need to purchase more shares. Now lets assume that price has gone down by 2 percent and reached to INR 98. Now it’s time to purchase more shares. You have purchased 2 more shares at this price. Your total investment for the time is 296 (100 + 196) and total no. of shares is 3. The price of the share is further going down on temporarily basis and if we follow this method, we have to buy more quantity of the same stock at that reduced price. Assume that price has reached at INR 96 and you have purchased 3 more shares at this price. Now, for the time, your total investment is 584 (296 + 288) and total no. of shares is 6. Now it’s time to calculate your profit assuming that at the end of the day the share closed at 101 (below your expectation level).

On the other hand in expectation of 2% profit, if you purchase 6 shares at current price, your profit will be:

 

Disclaimer: MonetarySection.com will not be any way responsible for trading losses incurred using any of the techniques/ methods mentioned on this website.

If you are thinking of investing in share market to earn some profit, the first thing you should remember is that making a profit in share market is not that much easy as it seems. You can easily find people around you, who have done this mistake. But if you have knowledge of market and knows some basics of investing, then it won’t appear a difficult task too.

Some other basics of investing in share market:

Stock market does not take any guarantee of profit. You have to earn by your own (or through a broker but that is another story of another time).

It is not a piece of cake to understand and predict the share market for an average investor.

Share market seems lucrative but not for everyone.

Process of investing in share market:

Experts of share market define a common process that can be useful in hedging both systematic and unsystematic types of risk. You can consider the process and can adopt if you think it can be beneficial for you. Although most of the people follow this process by modifying it according to their risk bearing capacity and preferences:

 

Step 1:

The first ever task one should do is to decide how much he/she has to invest in owner’s fund and borrower’s fund.

There are several methods to decide that:

Method 1: Deduct your age from 100 and the result is the %age you should invest in owner’s capital.

Method 2: Divide the amount according to given categories:

Invest 75% of your total amount in owner’s fund if your age is 20 – 40.

Invest 50% of your earnings in owner’s fund if your age is 40 – 55.

Invest maximum amount of your hard earned income in borrower’s fund if your age is above 55.

Note: The above methods are not recognized methods, so opt these methods according to your preferences.

Step 2:

After deciding the amount of money one has to invest in owner’s capital and borrower’s fund, the next step is to divide the amount (the amount that one has to invest in owner’s fund) in four categories, as given below:

Reserve: Keep 10% of your amount as reserve, so that you can take the benefit of any future opportunity.

Blue chip stock: Keep 40% of your money for the purpose of investing in blue chip stocks.

Mid cap stock: Keep 30% of the amount for mid cap stocks.

Small cap stock: Keep 20% of owner’s fund to invest in small cap stocks.

Important tips:

You can adjust the %age according to your preferences. These are general categories which are suggested by experts.

Step 3:

The next step one has to follow is to distribute the amount of each category in different industry’s stock. Diversification is very important for the purpose of hedging risk. It will work when one industry passes through a rough patch and helps in keeping your portfolio safer.

It won’t surprise you as an investor if I say that when we invest in share market for very short time period; say for one day to few days, we overlook all the essential factors like complete history, growth rate, profitability ratios etc. which one should consider while investing in share market. If this is the case with you also then this article has a lot of things to impress you.

What we look after, is the return on that stock or change in price of that share in recent past (within few days or weeks). So, if we can’t stop ourselves to try our luck then why should not we do it in a systematic way?

How to make money in share market?

In this article I am going to disclose some unique methods which can be used to make money in share market. These are the methods which are not listed in any book or directory. These methods are based on author’s own stock market experience. So be careful to apply them because the author won’t be responsible for any type of loss due to the application of these methods.

Method 1:

Step 1: Select the stock exchange in which you want to invest.

Step 2: choose an index.

Step 3: Check out the stock which is performing very poor.

Step 4: Go through the news for the same stock in various newspapers and make sure that
nothing is going wrong with that particular stock, company or industry.

Step 5: Now wait for the movement when it goes down at its deepest.

Step 6: Invest in the stock to earn profit in coming days.

 

The degree of return may vary from stock to stock.

Method 2:

This method is profitable only when market is going to operate smoothly in near future and not expected to fall down.
Step 1: Select the stock exchange in which you want to invest.

Step 2: Choose an index.
Based upon your capacity to invest, you can choose more than 1 index.

Step 3: Check out for 2- 3 highest losing stocks on that day.
Again no. of stock can be increased based upon your ability to invest and take risk.

Step 4: Go through the newspaper and make sure that there are no specific reasons for the same.

Step 5: Invest in these stocks.

Step 6: Repeat step 3, 4 and 5 for next few days. For this you should have sufficient amount to invest.

Step 7: Sell the stock when you find it at the top of index because of its increased price.

Important tips for this method:

• Don’t invest all of your money first day. If you have chosen an index which consists of 100 companies, you should invest below 1% of your total amount for one company’s stock to take the advantage of better opportunities in future.
• Don’t sell the stock if its price is not increasing and keep patience.

Disclaimer: MonetarySection.com will not be any way responsible for trading losses incurred using any of the techniques/ methods mentioned on this website

There are some dos and don’ts of investing in share market which should be considered before investing in share market. Below is the list of these basic things, which can help an individual to invest wisely:

 

Dos:

1) Allocate your investment in various industries.

2) Keep patience in case of stock, you have fully analysed but not moving accordingly or moving with a slow pace.

3) If you have enough patience to hold the shares, and have a very little amount to invest then go for medium and small cap company’s stocks.

4) Always go through the news about company’s recent movement before investing in shares of that company.

Don’ts:

1) Don’t invest all of your money in one company’s or industry’s stock even after you are 100% sure that the particular industry or company is going to generate greater returns.

2) Don’t go for short term and try to keep your investment for a longer period of time.

3) Don’t expect quick returns from your investment.

4) Don’t put all your hard earned money at once. Keep some reserve for future opportunity.

5) Never purchase a stock in hurry, because of its increasing market price and if you want, then don’t purchase a large quantity of it.

6) Don’t be so rigid in selling a share at a price which is lower than your purchasing price because it may further go down and can make the situation worst.

7) Never purchase shares of amount exceeding your total amount^* for quick returns because if share prices don’t move according to your expectations, you will have to sell your stock otherwise have to pay interest for that exceeding amount.

• Some brokerage firms give you the option to invest more than your current amount and charge an interest rate on that exceeding amount which is quite higher than the market rate.