There is a golden rule followed by successful traders and investors i.e. “never loose your money in the stock markets”. Well this is not possible all the time, as traders make profit as well as losses. But net net they should stay profitable! The most important part is how to ensure not to loose or rather avoid losses as much as possible in the stock market? Simply ensure you understand what is happening in the market? Sentiments Decoder has done this very successfully! With it’s insights interpreter and sentiment data, it ensures traders and investors know the right view in the market as per their time frame, to make right decisions at the right time.
Once you have grip on your losses then you have won half battle! Next half is, to learn what traders needs to do to earn regular money from stock market as mentioned in our previous article – “How to earn daily profits from stock market?” Here is a simple trading math to be understood:
Table of Contents
Mathematically can I earn 5000 daily from stock market?
Here we will do a simple math to understand how to earn 5000 per day from stock markets. Say a trader understands risk management and uses sentiment intelligence tools like sentiment decoder to ensures that they don’t loose capital by taking trades against market sentiments. If a trader has 500,000 INR capital to deploy then it will be 1% every day that he would require to earn to reach target of earning 5000 per day from stock market? Yes they can do this, and No they can’t earn same amount daily, it could vary plus or minus depending on trader’s skills, knowledge and tools.
- First thing a trader need to choose their list of stocks that they understand well over a period of time. This would mean they can decode sentiments in the market in each of the stocks and then they take or avoid trades against sentiment.
- While some trader like to play contrarian as well, they can take trades based on the market sentiments or mean reversion based on sentiment, and put stop loss based on their risk tolerance.
How to maintain good risk reward ratio?
Trader must maintain good risk reward ratio. Suppose earning target per trade should be 1% (5000) they may choose to cut off their loss at 2000 (to maintain risk reward ratio of 1:2.5). This is just an example, based on instrument choice, capital deployed, and risk tolerance his earning may wary. Further if we break this down across the number of trades taken in a given day, say in our case a trader takes 5 trades in a day, then:
- If their win rate is 60%, then they will have 3 winning trades which could lead to gain of ~15000 in a day and looses of ~4000 in remaining two trades. Net earnings in a day would be 11000.
- If their win rate is 40%, then it will have them gain in 2 trades making ~10000 and loose of ~6000 in three trades. Net earning of 4000.
- If their win rate is 20% then it will help them to makes 5000 and looses 8000 having overall day in net loss of 3000.
Key factors to consider – “Discipline”
If you are keen to find an answer to “How to earn money daily in stock market?”, then you need to master one thing and that is “follow the rules and maintain discipline”. Whatever win rate trader maintains, they should have discipline. Discipline can be in one of the following way in our case:
a. Strictly 5 trades in a day, no over trading.
b. Once reached days target no more trading.
While there are still other factors that a trader needs to keep into consideration. What if, stock chosen never moved more than 1%? Even if it moves or shows potential to move 1% but have a trend reversal before hitting the target? Shouldn’t trader exit while in profit before a profitable trade turns into a loss making trade? How can trader confidently maintain his position or exit before it turns into loss making position? When actual money is at stake, emotions plays an important role in decision making! Many times it blinds the trader in making right decision at right time.
Rule #1: Buy on double confirmation only!!!
Live Sentiments View Today on Top 10 Stocks
Tool that will help to earn money daily from stock market
Traders need to identify right tool for themselves that will help them in making right decisions at the right time. What is the use of a tool? Rather how tool should help a trader? Tool should help a trader in making right decisions at the right time. Every trader would like to earn 5000 per day, some may want to earn more and some are ok with less. It purely depends on factors discussed above. But right tools should help these traders in keeping their mind in check and enable them to understand what is happening in the market.
For example, in above math there is an underlying assumption, trader has chosen correct stock where market will move atleast by 2%. So for this they should have tool to identify stocks having potential to move more than 2% on an average (atleast 50% of the time). Then there is an assumption, trader is able to quickly understand the trend, sentiment in the market. This will enable them to avoid wrong trades and saves from loosing earned profit. So at every step trader should have ability to navigate ambiguities. We have sentiments decoder for traders (Sign up for free trial). First use case we are solving is helping traders in navigating market structure and sentiment. Atleast to avoid losses! Traders can also use them to plan their trades and do their own analysis or validate their own analysis before taking any irrational trading decisions.
Summary of how to earn money daily in stock market!
In summary, a trader must follow below 7 rules to ensure he/she earns money daily or regularly from Stock Market.
- Trader MUST identify high probability setups and define crystal clear entry strategy. For example,
- He/she will take buy entry only in the stocks having bullish sentiment in intraday timeframe and weekly timeframe.
- He/she will take buy entry only when stock is breaking out in a defined timeframe and also showing bullish sentiment in higher timeframe.
- Before entering into a trade, trader MUST know its exit criteria. Both – Exit when target is reached! Exit when SL is hit!
- Stop loss (SL), should be defined based on amount of money trader is ready to loose in a trade. Typically it must not be more than 1-2% of the capital.
- Capture profit as soon as target is hit! Set realistic targets based on intraday volatility of the stock and book profit as soon as targets are hit.
- Trader should not take more than 5 trades in a day, because if 1% lost in one trade then in a bad day trader may loose 5% in one day.
- Most important rule!!! Trader MUST note down in a trading journal why he/she entered in a trade and why he/she exited from the trade.
- Trader MUST follow above rules in a disciplined manner. Practice these rules regularly like a daily prayer and he will start becoming profitable.
It’s important to note that day trading involves risk, and there is no guaranteed method to consistently earn a fixed amount like 5000 rupees per day. Market conditions can be unpredictable, and there will be losing trades along the way. With right planning tools, trader should manage his expectations and focus on long-term profitability rather than daily targets.
Frequently Asked Questions
Can I earn 10K daily from stock market?
Answer is yes and no! Math behind calculation and approach would remain same as mentioned above in the article. But basics would not change, that is discipline, practice, tools to help in making right decisions etc.
Can I do trading with 5000 rupees?
Yes, you can do trading with 5000 rupees. Big players do trading with millions to billions! Principle of approaching market would remain same. Infact it would be good idea to start with trading 5000 rupees in the market (considering you are ok to loose this much money!). But use this capital as Stock Market fees to practice discipline, focus, and gain experience before you increase your deployed capital from 5000 to 50,000 or 500,000.
How to earn 5000 per month in share market?
It doesn’t matter what is the target amount a trader wants to earn from the share market. Whether they want to earn 5000 per day or want to earn 5000 per month, approach to earn daily from stock market would remain same.