Beginner traders, like you and me, often set a common goal of earning a daily profit of Rs. 1,000. While Rs. 1,000 may seem like a small amount, eventually you can be better at intraday trading and make it a significant source of income for you.
To earn a daily profit of Rs. 1,000 from the stock market, I would suggest you have a minimum capital investment of Rs. 50,000. This will allow you to make use of leverage, which can amplify profits (risk also).
Leverage involves borrowing funds from the broker to trade at a bigger volume, with the hope of earning a big profit. But you have to pay the interest on the borrowed funds. Remember, leverage can also result in significant losses if the market moves against your strategy.
Before digging deep into earning Rs. 1000 per day, let’s learn three primary trading types to earn money in the Indian stock market
3 Ways to Earn Money in the Share Market
#1. Intraday Trading
Intraday trading involves buying and selling stocks within the same trading day, with the goal of profiting from short-term price movements. This method requires a lot of attention and focus, as trades need to be made quickly and more frequently.
For example, you have identified a stock, ABC Ltd. to trade which you think has the potential to increase in value over the next few hours.
The current market price of ABC Ltd. is Rs. 100 per share.
At 9:30 am, when the market opens, you buy 100 shares of ABC Ltd. for Rs. 10,000. You hold on to the shares for a few hours and watch as the price of ABC Ltd. rises to Rs. 110 per share by 12:00 pm.
You decide to sell your shares at this point, making a profit of Rs. 1,000 (Rs. 110 – Rs. 100) in just a few hours.
#2. F&O Trading
Futures and Options (F&O) trading is where you can buy and sell contracts that represent the right to buy or sell a specific asset (such as a stock, currency, or commodity) at a predetermined price and time in the future.
F&O trading allows you to profit from price movements in the underlying asset without actually buying or selling the asset itself.
#3. Swing Trading
Swing trading involves holding a stock for a short period of time, usually between a few days to a few weeks, with the goal of profiting from short-term price movements. This method requires less attention and focus than intraday trading but still requires careful analysis and decision-making.
How to Earn Rs. 1000 per Day in the Share Market in India
#1. Open a Trading Account
You require a trading account to buy and sell stocks in the stock market.
You can open a trading account with a discount broker like Zerodha or Upstox if you want to pay less brokerage on your trades. Or you can also go for full-service brokers like Motilal Oswal that will help you with stock advisory services but you have to pay high brokerage fees in return.
I prefer the Zerodha demat account as they have a good trading platform as well as low brokerage.
#2. Add Funds for Trading
Once your trading account is opened, you can easily add funds to your trading account following the process below –
- Just go to the ‘Fund’ section in the trading app
- Select “Add funds”.
- Select Transfer of funds type – UPI or Net Banking.
- Transfer funds.
#3. Pick the Right Stock
Picking the right stock at the right time is important in trading. Three important factors that you must consider are –
- Liquidity – Choose stocks that are highly liquid with high trading volumes making it easier to buy and sell stocks at the expected price.
- Volatility – Look for stocks that are volatile with good potential to move up or down quickly. High volatility allows you to make immediate profits.
- Strong trend – Go with strong trends or momentum stocks. To understand the strong trend, you must know how to read the price movement chart, which we’ll discuss in the next point.
#4. Studying the Chart
You can study the chart of the selected stock to identify trends and potential price movements to grab potential trading opportunities. Here are 5 major steps to study charts for intraday trading:
- Identify the Time Frame: You can plot a chart over different time frames, such as minutes, hours, days, weeks, or months. For intraday trading, you should focus on charts that show price movements over shorter time frames, such as 1 minute, 5 minutes, or 15 minutes.
- Choose the Chart Type: There are different chart types that you can use, such as line charts, bar charts, and candlestick charts. Candlestick charts are commonly used for technical analysis as they provide more information about price movements and trends. The above snapshot shows a candlestick chart.
- Use Technical Indicators: Technical indicators such as Moving Averages, Bollinger Bands, Relative Strength Index (RSI), and MACD can help you identify trends and potential trading opportunities. You can use these indicators on the chart to understand which way the price is moving upward or downward.
You can also go through our list of the best technical analysis software in India to explore better options for your chart analysis.
- Look for Patterns: Chart patterns such as Head and Shoulders, Double Tops, and Bullish Flags can provide valuable information about potential price movements. Identifying these patterns can help you make informed trading decisions.
- Check the Volume: Volume is an important indicator of price movements and can help you identify potential trading opportunities. High trading volumes usually indicate a strong trend, while low volumes can indicate a weak trend or consolidation.
#5. Define Entry and Exit Points
Once you shortlisted the stock, now next important step is identifying entry and exit levels. The entry-level is the price at which you enter the trade, and the exit level is the price at which you exit the trade, either to take profits or limit losses.
You can follow the steps below to identify entry and exit levels for intraday trading:
I. Look for Support and Resistance Levels
Support and resistance levels are price levels where the stock tends to bounce off in the reverse direction. These levels can provide potential entry and exit points for intraday trading. You can use technical analysis tools such as Pivot Points, Fibonacci Levels, or Trendlines to identify these levels.
II. Identify Breakout Levels
A breakout occurs when the stock price moves above or below a support or resistance level. Breakouts can provide potential entry or exit points for intraday trading.
You can use technical analysis tools such as Bollinger Bands or Moving Averages to identify breakout levels. I have also made a list of the best trading software in India, that you can check out.
#6. Decide on Your Strategy
Once you have identified the stocks and the entry/exit levels, the next step is to decide on your strategy for intraday trading. You can choose the trading strategy that fits your trading style, risk tolerance, and market conditions.
The scalping strategy involves making multiple trades throughout the day to capture small price movements. The goal is to make quick profits by taking advantage of short-term price fluctuations. Scalping requires a high level of discipline and a good understanding of market dynamics.
Suppose you are scalping a stock that is currently trading at Rs. 100. You buy 500 shares at Rs. 100, expecting the price to rise to Rs. 100.50.
The stock price rises as expected, and you sell your shares at Rs. 100.30, making a profit of Rs. 150 (500 shares x Rs. 0.30). You repeat this process multiple times throughout the day, making small profits each time to reach your Rs. 1000 per day goal.
II. Momentum trading
Momentum’s strategy involves buying stocks that are trending upward and selling stocks that are trending downward. The goal is to capitalize on the momentum of the market and make profits from short-term price movements. Momentum traders rely heavily on technical analysis to identify trends and entry/exit points.
Suppose you are trading a stock that is trending upwards. You identify a trend line on the chart and set your entry point just above the line at Rs. 550. The stock price continues to rise, and you sell your shares when it reaches a resistance level of Rs. 570. You make a profit of Rs. 20 per share.
III. News trading
News trading involves trading based on the news and events that affect the stock market. The goal is to make profits from short-term price movements that result from news announcements. You need to stay up-to-date with the latest news and have a good understanding of how the market reacts to different events.
Suppose a company announces positive earnings results, and you expect the stock price to rise as a result. You buy 100 shares in the company before the market opens at Rs. 600. When the market opens, the stock price jumps up to Rs. 625. You sell your shares at Rs. 625, making a profit of Rs. 2,500 (100 shares x Rs. 25).
#7. Place a Trade
You can place a trade based on your analysis and trading strategy, and monitor the stock’s performance to make any necessary adjustments.
You must place a stop-loss order to limit potential losses. You can set a stop loss order at a price level below your entry level to limit your losses in case the trade goes against you. We’ll discuss stop-loss in detail in the next section.
Things to Remember While Doing Intraday Trading
#1. Avoid Greed And Fear While Trading
Greed and fear are two common emotions that can have a negative impact on your trading decisions. For instance, if you are too greedy, you may hold on to a stock for too long, hoping for a bigger profit, only to see the price drop and incur a loss.
On the other hand, if you let fear take over, you may exit a trade too early, missing out on potential profits. To avoid these pitfalls, it is essential to stick to your trading plan and not let your emotions dictate your decisions.
#2. Focus On Small Profits
You should focus on making small profits on a consistent basis rather than aiming for big profits on a few trades.
For instance, if you aim to make a profit of Rs. 200 per trade and make five trades in a day, you would end up with a profit of Rs. 1,000, rather than targeting a single trade to make Rs. 1000 which may result in a loss if the market trend doesn’t go the way you had anticipated.
#3. Trade In Stocks With High Volume And Liquidity
Stocks with high volume and liquidity are easier to trade as there is a greater chance of finding a buyer or seller for your shares.
- Liquidity – Choose stocks that are highly liquid with high trading volumes. High liquidity ensures that traders can enter and exit trades quickly, without affecting the stock price. This makes it easier to buy and sell stocks at the desired price.
- Volatility – Choose stocks that are volatile and have the potential to move up or down sharply. High volatility ensures that traders can make quick profits, provided they are able to correctly predict the direction of the stock movement.
#4. Keep Your Entry And Exit Points Fixed
You should have a fixed entry and exit point for each trade. This helps to minimize the impact of emotions on trading decisions and prevents you from holding on to a losing trade for too long or exiting a winning trade too early.
For example, if you have bought a stock at Rs. 500 with an exit point of Rs. 510 and a stop-loss of Rs. 490, you should sell the stock if it reaches Rs. 510 or if it falls to Rs. 490. This helps you to keep a check on your losses and gains.
#5. Limit Your Loss Using A Stop-Loss
A stop-loss is a pre-determined point at which you will exit a trade if the stock price moves against you. This helps to limit your losses and prevent them from spiraling out of control.
For example, if you buy a stock at Rs. 500 and set a stop-loss at Rs. 490, you will automatically sell the stock if it falls to Rs. 490. This helps to minimize your losses and preserve your capital.
It is important to remember that the goal of practice trading should be to focus on learning and improving trading skills, rather than just making profits.
You should take the time to familiarize yourself with the trading platform, understand market trends, and develop a trading strategy that works for you. With dedication and patience, practicing trading can help you earn Rs. 1000 per day or more from the share market.