How to make 50000 per month from Trading

Hi, How to make 50000 per month from Trading in the stock market?”. Hopefully, a good and tough question to answer until I answer it here.

How to earn 50 thousand per month in stock market:

Introduction

Nowadays in the job sector 50k salary is considered as better than average for an individual. But at the same time if you have another source of income available as a passive source is a kind of extra butter on bread. To make it possible you need to have some skill set, right strategies, and determination to achieve your goal. In this article, we have covered extraordinary ideas and strategies just after some boring basic concepts.

Let’s Understand the Stock market

Basics of the stock market

The stock market is also called the pillar of the economy of any country which is run by money from domestic and foreign investors. In India National Stock Exchange (NSE), and the Bombay Stock Exchange (BSE) are two major exchanges. Here you have the opportunity to invest your hard-earned money in publicly listed companies. But you can’t invest directly from your bank account to the company shares. First, you have to create a Demat account with any broker and there you can start a new journey to another world of finance.

Types of Instruments to Trade

The major security instruments in share market to trade or invest out of which we will use only First two methods to generate our income source.

1. Equity: Deals with the direct purchase of company shares
2. Future & Options:
3. Mutual funds
4. Bonds
5. ETFs

Here we go..!

To achieve our goal for of 50000 per month we have categorized into two methods, The Less risky way and The Tricky and Little Risky way.

The Less Risky Way of How to make 50K per month from Share market

Investing in stocks could be the safer and easiest way,but we are not talking to act like a rich investor. In this way you have to plan the stocks which are either trading near Support line or having a chance to bounce back in coming days. To detect this kind of stocks you have learn some is basic Technical analysis. No worry! we are here to guide you regarding the support & Resistance line.

If any stock is running near by its support line then its expected to touch next resistance line, so buy at support line and sell at resistance. Choose at least 4 to 5 stocks like this and monitor your profits, and yes never forget to put a stop loss during buying. By this method at least 3 3 will give good return if n but other 2 are booked with stoploss.

Still confused, How to make 50000 per month from Trading? Lets calculate and do Budgeting..

Lets see you are investing 10,00,000 in five different stocks each 2,00,00 individually, three stocks moved minimum 10% in the month making an profit of 60,000 total. Other side let’s two stocks hit stoploss maximum of 5% then you loose 10,000 max. Then net profit you are getting is 50,000 with a minimum prediction and calculation. This was the minimum expectation from the returns, but if you can do a better research and analysis  you can get more than 10% return.

Lets take an Example form real stock:

If you track the above stock you could earn 21% of massive return within 2 weeks of time. Only the skill you have achieve is to detect the perfect candle stick entry position/ buying opportunity on the Candle stick.

Let’s take another example of Aditya Birla Capital(AB Capital) Stock

Same like above example in this stock you are getting 17 % return within one month. Mostly return you are getting with within 5 days of reentry position. Here you can observe one thing is “when price pattern touch 2-3 times the support line, price bounce much vigorously at 3rd time when hit support  line”. So, master the detecting Support and Resistance is must have in skill in stock trading.

Amazing! Right? Once you master it you are not far away from financial freedom and yes, money works for you.

The Tricky & Little Risky Way of How to make 50000 per month from trading

This is one of the riskiest and easiest way to Make money from Index Option Trading. Dear I am talking about most famous Option selling or also called option writing, note that its not about option Buying. This is the secret tool of earning source of all Big investment firms. All of the time option buying is more famous for huge profit which has a very high risk profile and almost only 40% chance of getting profitable.

But whatever the method we are talking about is option selling. In stock market Index is a instrument where most valuable company like NIFTY 50, NIFTY BANK, FINNIFTY, SENSEX are the important indexes in Indian stock market, DJX in Dow Jones, MSCI in SGX Nifty Singapore , DOW of NASDAQ, etc.

Lets take an example of Finnifty option which weekly expiry happens on every Tuesday. One thing you have to do is Sell an OTM (Out of the money) that is little far call from the At the money call(ATM) Call option and hold it for one week till the Expiry. If you look today strike price of Finnifty price is 19988.60,its nesrest strike price is 20000, and call option price is 76 rupees, that is called ATM.

If your analysis says the price of Finnifty will increase strike price up to 20100, hence forth call option price of 20000 lets say will increase up to 150 rupees. If call option price goes up at the opposite PUT price of 20000 will decrease from 82 rupees lets say to 10 rupees or it may be zero on Expiry day.

What I will do now, so that you!

I will buy 5 lots (40 shares each lot) of call option of 20200 Strike price which now costs 18 and I will sell 5 lots(200 shares) quantity of 20400 PUT which cost 407 now ,expecting it will decrease to 50 rupees by expiry day. This technique is called Hedging, it costs less to sell the option price than normal.

Do some calculations now: For the Hedging Process, I bought 1 lot (40 shares) total cost 40 x 5 x 18=3600 rupees

Then I will sell 10 lots(200 shares) cost around 4 lacks. If price decreases from 407 to 107 rupees by the expiry day then profits is = 300x 200= 60000 per week.

Net Profit 60000-3600 = 56400/- Each week.

According to your investment capital return must vary.

Believe me, it’s for one week’s income if you invest like 5 lacks and out of 4 weeks if you remain 2 weeks also profitable then you earn 1,12,800 rupees. If hardly you lose 10% of your investment that is 50000, then still you get 62800/- positive. This is what I am taking as an extreme 50%-50% loss-gain ratio. But it does not happen in option selling, Option selling has a 70%-30% Gain-loss ratio winning streak.

Now the question is if it is so easy then why its riskiest then?

These options instruments are very volatile and if you don’t book stop loss on time then you may lose a major percentage of your investment. This requires proper knowledge, the skill of reading OI(open interest) data, alert about any sudden news in the market, and yes some extra amount of investment also (Minimum 4-5 lacks) for 50000 profit monthly.

Most of the time people goes behind the option buying as it don’t require more amount even 50000 is enough and the way it shows the profit your mind gets adrenaline rush. At the end of the week option buyers don’t earn much as they might have gone through a lot of loss-gain games. But at the same time Options seller like you make the money just by investing more waiting a week patiently.

• Disclaimer: This is only to guide you regarding the ways how to make earn, not to push you immediately into the options trading world. You have to do your own research and then have some practice with the real market and then enter.