If you are a trader who is wondering about how to earn ₹5000 per day in stock market, then the best stock market investment strategy for you would be intraday trading. This way, you will be making multiple trades on the same stocks each day, squaring off your trades every day and probably never take actual delivery of your shareholdings. However, chances are high that your daily earnings will be low in the beginning but slowly increase over time due to compounding – at some point you will hit ₹5000 in one day and surely move beyond that.
How much to invest?
The initial investment amount depends on the corpus of funds you have and what percent of it you are willing to invest. It also depends on the minimum investment required to buy shares with a particular price and lot size of the contracts in the share market. Higher the investment, the easier it is to make a higher daily earning in absolute values.
Intraday trading strategies
Intraday trading requires you to have a strong understanding of technical analysis of price movements in the share market. While making stock market investments, you must understand concepts like moving averages, triangle and rectangular patterns, flat top breakouts etc. which are basically different tools to predict price movements. The following is an example of intraday trading strategy:
Say you are tracking a stock of Adani Ports which is trading at ₹900. Suppose, it has been increasing at 3% daily for the last 2 days. You can therefore be hopeful that it will see a 3% increase today as well. Therefore, you wait for the price to momentarily drop to say ₹899 – you buy it at ₹899 and wait until it hits say ₹926. At this point you quickly sell it off as it is likely that the market will correct the price before the day ends. This way you can earn 2-3% returns daily. If, at some point of time, Adani Ports stops giving 3% returns, you can switch to some other high-yielding stock like Bharat Electronics Ltd. which will give you similar returns. That way you can earn a high return daily and skip any momentary market corrections of overpriced stocks in your portfolio. This method gives good returns, but is time-consuming as you must track the stock prices as often as possible.
If you make only an average of 1.05% profit daily, in 250 days (rough number of days the stock market remains open each year), an investment of ₹100,000 can be converted into almost ₹13.6 lakh (100,000 1.0105250=1,361,693). The profit being nearly ₹12.6 lakh over 250 days, in each working day you will have earned over ₹5000 on an average.
Things to keep in mind
In order to reach this level of performance in stock market investments, a trader may need to keep the following points in mind :
Follow short run price action and momentum in the market –
you are not trading long term, therefore do not buy a bearish stock and sit on it just because you think, based on your own complex analysis, that it will turn bullish in six months.
Study the markets and sectors –
just because you are not investing long term does not mean you can ignore knowledge about the market. Expertise on different markets will allow you to diversify your portfolio as well as switch your investments quickly whenever needed. Therefore alongside technical analysis, you must also use fundamental analysis.
Minimise your risk exposure –
Intraday trading is risky already, so try to reduce the risk as much as possible. Set up stop loss orders, diversify and stick to the price range for your strategies that you decided on based on research and not on emotions. Moreover, try limiting your trades to liquid shares with lower lot sizes and higher volumes.
Derivatives – high risk, high return instruments
If you want to earn higher amounts of money with higher risk in stock market investments, you can also choose to invest in derivatives like futures and options. This means you invest in derivative contracts which have stocks as the underlying asset – the price of the derivative varies as per the price fluctuations of the underlying asset in the spot market. In case of derivatives, you can simply invest only the margin requirements and still quickly earn the profit made on the entire notional investment. However, this also means that any losses made will also be based on the entire investment (and therefore, the losses can also be many times the original investment). Hence, derivatives are investments with high risk but high returns. Whether you can earn ₹5000 per day or not will depend on your overall monthly earnings in the derivatives market (as derivatives are traded on the last Thursday of every month and not daily).
It is not too hard to understand how to earn ₹5000 per day in share market. Remember the basic principles stated above and you too can open a demat account and start making profits in the share market.