looking at stock advice thread I had this question. I know it is not exactly real estate but then again we've so much expertise here why dont we put it to use.

What's your view of stock trading as full time job? Is it possible?
What characteristics are required?
What training would be useful?
What is the minimum capital required to earn a sustainable income?
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  • Originally Posted by stoxxx
    looking at stock advice thread I had this question. I know it is not exactly real estate but then again we've so much expertise here why dont we put it to use.

    What's your view of stock trading as full time job? Is it possible?
    What characteristics are required?
    What training would be useful?
    What is the minimum capital required to earn a sustainable income?


    In the current market situation (from over last six months), it is increasingly difficult to make your living only on day trading or stock market as a full time business..
    Characteristics - one need that temprament to get out or get in...rather time the market...super sense of the situation, insider info, news etc.
    Training - one should be thorough in technical analysis..
    Minimum Capital - To make good living, (my guess) one need at least 25 to 30 L in rolling and tremendous risk taking appetite... Earning a suitable income is very individualistic thing and it all depends on his need and greed...but if a stock learned person rolls 30L in his portfolio, he could make his living as an aam admi (average person)...

    I guess, PCP, Wiseman, Venky can add first hand info out of their (part time) stock experience...
    cheers
    monds
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  • Originally Posted by monds
    In the current market situation (from over last six months), it is increasingly difficult to make your living only on day trading or stock market as a full time business..
    Characteristics - one need that temprament to get out or get in...rather time the market...super sense of the situation, insider info, news etc.
    Training - one should be thorough in technical analysis..
    Minimum Capital - To make good living, (my guess) one need at least 25 to 30 L in rolling and tremendous risk taking appetite... Earning a suitable income is very individualistic thing and it all depends on his need and greed...but if a stock learned person rolls 30L in his portfolio, he could make his living as an aam admi (average person)...

    I guess, PCP, Wiseman, Venky can add first hand info out of their (part time) stock experience...
    cheers
    monds


    Thanks...how much can we realistically earn on INR 25 lakhs...will it be somewhere 40-50 K per month.
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  • Originally Posted by stoxxx
    Thanks...how much can we realistically earn on INR 25 lakhs...will it be somewhere 40-50 K per month.


    I never did it, but my guess - if the person is experienced. learned and expert in Indian stock market, he could make about 30K +/- over a month's rolling...

    What all I am quoting is my imagination and out of little grasp in mid/long term stock investments, the reality may be different...so just don't go by it and take any position :D
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  • Yes, u can do so - trade and make a living out of it. However, the person needs to be extremely meticulous and discplined and invest his full time into the markets.

    I found some traders - who are doing this - trade in extremely unvolatile but F&O stocks...like colgate, power grid, HUL, ITC with very low beta...
    If the price rises by 1-3%, play it on margin - hence earn a decent 5-10% on their investment for the day.

    The main thing - they first practice a particular stock for a month or so...and then take the actual bets...
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  • Originally Posted by pcpune
    Yes, u can do so - trade and make a living out of it. However, the person needs to be extremely meticulous and discplined and invest his full time into the markets.

    I found some traders - who are doing this - trade in extremely unvolatile but F&O stocks...like colgate, power grid, HUL, ITC with very low beta...
    If the price rises by 1-3%, play it on margin - hence earn a decent 5-10% on their investment for the day.

    The main thing - they first practice a particular stock for a month or so...and then take the actual bets...


    Thanks. How much can a person make out of it? How much capital is required?
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  • This is interesting. Well has anybody thought of trading in Commodities. Very Good Option these days and safer than stock market if traded smartly.
    Return will be minimum 2-5% per month but this should done in consultation of a good Broker/Sub-broker. I had been earning 5% almost every month except few bad months in last 2 yrs. Overall I have earned 10 times or my investment however it does not happen with everybody but you never know.
    The only point is trade with a person who can personally take care of you as a clients.
    I basically trade in Gold & Silver and in a worst scenario they can not go to zero unlike a stock. There are many other better reasons to invest in this market like it facilitates service on margin as it is only an F&O market.

    I have found this below group on Facebook, I get tips for Free if not from my service provider.
    Follow this group for better consulting:

    Log In | Facebook
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  • I hope you have gone through the book "Trading for leaving" search google for more information.
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  • Originally Posted by tech1978
    I hope you have gone through the book "Trading for leaving" search google for more information.


    by "Elder Alexander" ?
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  • Originally Posted by stoxxx
    Thanks. How much can a person make out of it? How much capital is required?

    Try with whatever you have 10K, 100K, 500K. However, use the "margin" available to increase the number of shares you are buying, understand the concept of strict stop loss, and then first try virtual trading on some site for a month.
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  • luck like dhoni's. for every one jhunjhunwala there are at least a thousand zerozerowala. yes, you need to be that lucky. one may say you need to say bye bye to fear and greed to succeed in trading, but it is easier said than done.
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  • Yes you can !!!

    I'm making living out of stock/bond trading after 15 years in IT.
    I just completed 2 years.


    You need to have following characteristics

    0) This is not gambli*g . Technical Analysts are doing chir-phad in the capital markets - like a Surgeon would do to his patient. Ye boochadkhana nahin hai :)
    1) Like any other field one should have tremendous love and interest in capital markets.
    2) Ready to invest 2 years in the capital market - through your mistakes you would come to know what works - what does not. (There are no shortcuts ....)

    e.g. I never trade in ill-liquid or penny stocks or high promoter holding stocks ABB, Maruti, Siemens etc. I trade only in top 200 Nifty stocks only.

    3) Your personality decides if you going to succeed in this field or not. If you are a person who is too griddy or who is too fearful then this is not a field for you. One should have cool temperament, balanced approach. If you love taking calculated risks then you going to enjoy this field.

    4) Discipline is the key .. i.e. Daily Analysis and keeping abreast oneself of whats happening globally

    5) One need to have solid grasps of Technical Analysis and Fundamental analysis

    6) One can easily get 150% returns on deployed capital in a year.

    If you have lost your deployed capital after 6 months-1 year then this is not a field for you.

    Hope this helps.
    TrojanHorse
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  • trojanhorse, your decision to quit IT and become a full time trader/investor is quite commendable. you at par with what you were earning in IT? and do you have a backup plan (to reenter IT) in case you suffer heavy losses in trading?
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  • Originally Posted by trojanhorse
    I'm making living out of stock/bond trading after 15 years in IT.
    I just completed 2 years.


    You need to have following characteristics

    0) This is not gambli*g . Technical Analysts are doing chir-phad in the capital markets - like a Surgeon would do to his patient. Ye boochadkhana nahin hai :)
    1) Like any other field one should have tremendous love and interest in capital markets.
    2) Ready to invest 2 years in the capital market - through your mistakes you would come to know what works - what does not. (There are no shortcuts ....)

    e.g. I never trade in ill-liquid or penny stocks or high promoter holding stocks ABB, Maruti, Siemens etc. I trade only in top 200 Nifty stocks only.

    3) Your personality decides if you going to succeed in this field or not. If you are a person who is too griddy or who is too fearful then this is not a field for you. One should have cool temperament, balanced approach. If you love taking calculated risks then you going to enjoy this field.

    4) Discipline is the key .. i.e. Daily Analysis and keeping abreast oneself of whats happening globally

    5) One need to have solid grasps of Technical Analysis and Fundamental analysis

    6) One can easily get 150% returns on deployed capital in a year.

    If you have lost your deployed capital after 6 months-1 year then this is not a field for you.

    Hope this helps.
    TrojanHorse


    Great post....it certainly helps.

    does your spouse earn? do you have other fixed source of income?

    I guess what I am getting to is that are you really dependent on the income from trading or is it merely a wealth growing objective for you.

    Thanks in advance.
    CommentQuote
  • Stocks, no. Options, maybe!

    Stoxxx,

    I have been in stocks since the mid'80s and found that only investments work in stocks, not trading (but that could be my weakness and so don't rule it out completely).

    I have the following formula and pre-requisites, if you want to make a decent attempt at trading for a living.

    First have a cushion of at least 2 years' living expenses set aside. In case of disaster, ensure you have ready access to a job again.

    Then learn the derivatives business (I don't do futures and have stopped doing options of various companies - it takes too much time tracking companies news, fundamentals and technicals and there are too many black swans in the making, even for the biggies - Radia for Tatas, 2G and so on for ADAG, etc).

    I have focused exclusively on Nifty Options - having left even the sectoral indices since they too have some black swans waiting in the wings.

    Then set aside some 5 lakhs as your fund for this business. Of this take 25k or 50k as your capital for the current month and start your trading. This way, if you lose all your capital, you would have lost only 5-10% of total and you have 10 months capital to make mistakes and recover. This is called money management and is the most important part of your skills!

    Then learn as much as you can about Options (Calls, Puts, buying, selling) and the potential risks and returns in each of the strategies. You will be surprised that the sellers have the game weighed in their favor, even though it looks otherwise!

    You might get lucky and make some profits in early trades, but do not ever stray from your money management discipline!!! Most people get wiped out on this one alone!

    Then, as someone said, the market does not announce profitable positions with a trumpet. You need to continuously keep tracking the charts, price levels and indicators like MACD, Stochastics, MAs, RSI, ROC, etc to get a feel of what kind of patterns are likely as setups for good profitable moves.

    You will need 100s of hours of hard work (as well as smart work) to finally arrive at a position of confidence (mostly got from taking beatings by the market and recovering from it) that you can put money into Calls and Puts with a better than even chance of making money. The time spent in front of the screen bores the hell out of you much of the time when markets don't do anything and when you are distracted for even as short as 10 minutes, market suddenly moves massively and catches you on the wrong foot!

    Out here, you will find that Stop Losses are a big paradox. If you don't ut stops, you generally lose massive amounts. And if you do place stops, you lose out on massive moves where price first moves against you, takes out the stop and when you are out of the position, moves back in your favor and makes massive gains with you having no stake in it! :)

    After maybe 4 years of finding my feet, I now am able to make in the range of 12-18% consistently on my total capital each month. Thus, if you could make even 8-10% consistently, your 5L capital will make you around 40k - 50k per month.

    Of course, if you are eating out of the money set aside, compounding will ensure that even a 12% monthly CAGR will get you a handsome 14 lakhs profit at the end of an year for the 5 lakhs you put in!

    It is potentially a richly rewarding skill. But hard earned.

    Rest of your money, put it away safely in FDs, Stocks, Gold, etc.

    Once in a while a rare move (like the 150 point move in Nifty close to June settlement) comes that gives you a risk free 150% in a single day! Refer another article where I bought even amounts of the 5400 Straddle (2500 5400 Call at Rs.20 and 700 5400 Put at Rs.70) at the beginning of the day and simple waited all day long and closed position near the end of the day with the call at Rs.100 and Put at Rs.20. On an investment of around 1L, in a single day, one made a profit of 1.65L. And this was risk free!!!

    These are the days when all the effort seems worthwhile!

    cheers
    CommentQuote
  • Originally Posted by wiseman
    Stoxxx,

    I have been in stocks since the mid'80s and found that only investments work in stocks, not trading (but that could be my weakness and so don't rule it out completely).

    I have the following formula and pre-requisites, if you want to make a decent attempt at trading for a living.

    First have a cushion of at least 2 years' living expenses set aside. In case of disaster, ensure you have ready access to a job again.

    Then learn the derivatives business (I don't do futures and have stopped doing options of various companies - it takes too much time tracking companies news, fundamentals and technicals and there are too many black swans in the making, even for the biggies - Radia for Tatas, 2G and so on for ADAG, etc).

    I have focused exclusively on Nifty Options - having left even the sectoral indices since they too have some black swans waiting in the wings.

    Then set aside some 5 lakhs as your fund for this business. Of this take 25k or 50k as your capital for the current month and start your trading. This way, if you lose all your capital, you would have lost only 5-10% of total and you have 10 months capital to make mistakes and recover. This is called money management and is the most important part of your skills!

    Then learn as much as you can about Options (Calls, Puts, buying, selling) and the potential risks and returns in each of the strategies. You will be surprised that the sellers have the game weighed in their favor, even though it looks otherwise!

    You might get lucky and make some profits in early trades, but do not ever stray from your money management discipline!!! Most people get wiped out on this one alone!

    Then, as someone said, the market does not announce profitable positions with a trumpet. You need to continuously keep tracking the charts, price levels and indicators like MACD, Stochastics, MAs, RSI, ROC, etc to get a feel of what kind of patterns are likely as setups for good profitable moves.

    You will need 100s of hours of hard work (as well as smart work) to finally arrive at a position of confidence (mostly got from taking beatings by the market and recovering from it) that you can put money into Calls and Puts with a better than even chance of making money. The time spent in front of the screen bores the hell out of you much of the time when markets don't do anything and when you are distracted for even as short as 10 minutes, market suddenly moves massively and catches you on the wrong foot!

    Out here, you will find that Stop Losses are a big paradox. If you don't ut stops, you generally lose massive amounts. And if you do place stops, you lose out on massive moves where price first moves against you, takes out the stop and when you are out of the position, moves back in your favor and makes massive gains with you having no stake in it! :)

    After maybe 4 years of finding my feet, I now am able to make in the range of 12-18% consistently on my total capital each month. Thus, if you could make even 8-10% consistently, your 5L capital will make you around 40k - 50k per month.

    Of course, if you are eating out of the money set aside, compounding will ensure that even a 12% monthly CAGR will get you a handsome 14 lakhs profit at the end of an year for the 5 lakhs you put in!

    It is potentially a richly rewarding skill. But hard earned.

    Rest of your money, put it away safely in FDs, Stocks, Gold, etc.

    Once in a while a rare move (like the 150 point move in Nifty close to June settlement) comes that gives you a risk free 150% in a single day! Refer another article where I bought even amounts of the 5400 Straddle (2500 5400 Call at Rs.20 and 700 5400 Put at Rs.70) at the beginning of the day and simple waited all day long and closed position near the end of the day with the call at Rs.100 and Put at Rs.20. On an investment of around 1L, in a single day, one made a profit of 1.65L. And this was risk free!!!

    These are the days when all the effort seems worthwhile!

    cheers



    Thanks a ton. Reason I took some time to respond is this post is full of some great advice for beginners and experienced alike and took me some time to really understand and appreciate all that you have said.

    Someone should make this post as a sticky for a newbie and this should be followed religiously. I am yet undecided but if and when I decide to take a plunge I'll do my best to follow the advice in this post.

    Particularly the one about money management and stop loss (I guess risk management) is great.

    I am now clearer on money management aspect I think.

    In terms of stop loss though where should one put them? as you have rightly said too tight stops will make one lose winning trades due to short terms sideways / temporary movement in other direction.

    Equally no stop losses will wipe out the whole account including all profits made and the capital with one break out against. So we need stop losses to avoid MOAL (mother of all losses).

    So in your view what's the thumb rule to place stop losses.
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