How much profit the trader can make in a month?
The following strategy and technique will help day trader to double the returns in less than one year.
If traders follow a simple strategy called “Take small profits and do multiple trades” which is explained in following example, the trader can easily double money in one year. Firstly, understand how to calculate brokerage rates and taxes applicable for trading in share market by visiting How to calculate brokerage and taxes in indian share market
How to make profits in day trading by following simple method called take small profits and do multiple trades
Example - The following example is calculated taking into consideration intraday brokerage rates are flat Rs 20 for buying and Rs 20 for selling. Please note - Currently we are working in collaboration of broker who is offering such low brokerage rates, If you are interested to open the trading and demat account then please visit at Demat account opening Suppose Trader bought and Sold Bharati Airtel as per following data:- Bought Bharati Airtel at Rs.380 and quantity 200= Buying amount Rs.380 x 200 = Rs.76,000. (Please note if you have only Rs 20,000 then you will get remaining amount as margin amount from broker for trading) Sold Bharati Airtel same day for Rs 382. Total profit Rs 400 (Rs 2 X Qty 200). Sold value - Rs 382 X 200 shares = Rs 76400 Let’s see how to calculate the brokerage and taxes.The buying amount is Rs.76,000 and selling amount is Rs 76400. Total transaction value - Rs 152400 Brokerage charges for buying and selling - Comes Rs 40
Service Tax on Brokerage (service tax is applicable only to brokerage charges). The service tax is 15%, so 15 % for Rs.40 comes to Rs 6. Securities Transaction Tax (STT) - 0.025% On Sell transaction - Selling amount 76400 - STT comes to Rs 19.1 -0.002% on total value - Total transaction value is Rs 152400. Stamp Duty Comes to Rs 30.48 - 0.0002% on total value - Total transaction value is Rs 152400. SEBI Turnover Tax Comes to Rs 0.30Rs 40 + Rs 6+ Rs 19.1+Rs 30.48 + Rs 0.30 = 95.88 Total charges to pay including Brokerages and taxes Your gross profit = Selling amount Rs 76400 - Buying amount Rs 76000 = Rs 400 Your Net profit = Gross profit - total charges = RS 400- Rs 95.88 = Rs 304.12
Conclusion The conclusion is, the trader paid Rs.95.88 (brokerage and taxes) while the profit earned is Rs.400. So the Net profit is Rs 304.12 Rs 304.12 profit is earned by the trader in single trade by investing Rs 20,000 If the trader makes 2 to 4 trades in a day then very big amount adds up at the end of the month. And this strategy is called as do multiple trades and takes small profits. If you see from above example we have taken very small profit of Rs 2. Important note - Rs 1 to 2 movement in share price of Rs 300 to Rs 500 happens very easily for many times in a day. So select higher price shares for day trading so that you can take small profits and do multiple trades.
Let’s see how it will add up thousands at the end of a Month. If trader makes only 3 trades in a day then the profit in day adds up to Rs 304 X 3 = 912 In a month there are 22 trading days - Saturday and Sunday are holiday for share market. So, let’s take 20 days for calculation. Per day profit Rs 912 then for 20 days it comes to Rs 18240 by investing Rs 20,000 It is also true that every day is not a trading day and also we have to accept the losses for some day. So take out Rs 5000 as losses for a month.Then also your net profit comes to Rs 13240.
Let’s see percentage wise returns Trader earns Rs 13240 as profit after investing Rs 20,000 so the percentage comes to 66% per month profit approximately. If trader don’t use margin amount and use his entire amount of Rs 76000 then profit percentage comes 17.4% per month and this equals to 200% Important Note - Trading on Margin Amount In the above example the margin amount is used because the trader has only Rs 20000. 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 3 to 4 times of amount and it is also based on scrip. Big Disadvantage of Margin amount - If you use the margin amount then you have to square off your trades before market closes, whether you are in profit or loss. You can’t hold your position if you use margin amount. So it is highly risky to use margin amount.
How to overcome this Big DisAdvantage If trader don’t use margin amount then he can hold trades for next day or as long trader want and then sell the shares whenever the stock price goes up. As the trader is using his own money and not margin amount there is no compulsion of squaring off the trades on same day. So believe in small and end up the month with big profits. Day trading requires lots of experience and market knowledge. Please visit our "day trading section" for more information. New comers to day trading New comes to share market can start trading by small amount like Rs 5000 or 10,000 and earn and once this provides experience then further move can be made. The conclusion is forgetting the "Greed Factor and Taking Small Profits" will make miracle to your Trading profits. Without investment a single rupee the trading can be practiced using paper trading, for paper trading practice