Related How does the stock market work? How are stock prices of a company decided at particular times, and what factors are responsible for its high and lows?

Every investor wants to make money in stocks, irrespective of the level of experience. It is easy to fall for the temptation, but one needs to have a good strategy in place to be able to protect one’s money and make handsome returns.

Investing in the stock market is simple, but not easy. It requires passion, patience, and discipline. Plus, one needs to have a sound understanding of the market and the forces at work and also some bit of research capability.

Although there is no sure-shot formula or one-size-fits-all solution for success in the stock market, there are some broad guidelines, which if followed prudently can increase your chances of making a decent profit.

Do your homework

“If you do not study any company, you have the same success buying stocks as you do in a poker game if you bet without looking at your cards,”.

You should only invest in what you know and take the time to learn about what you don’t.

There are no shortcuts to make money in the stock market.“It is imperative to do thorough research with a considerable amount of patients. It will be sensible to invest in a company that is easy to understand with a sustainable business moat.

Take small profits and do multiple trades

As the prime intention here is to make regular income, therefore it will be in the trader’s benefit to concentrate on small profits and do multiple trades a day.

Traders need to keep in mind that it is highly impossible to make a 2-3% profit on a frequent basis in a single trade. However, implementing this strategy will help them to achieve profitability by increasing the number of winners and sacrificing the size of the wins.

This is contrary to the “let your profits run” concept where the trader has to sit through a lot of uncertain price action, and may eventually end up turning his profits into losses.

So, the trader must keep booking profits whenever he gets an opportunity rather than exiting on his weakness.

The strategy revolves around three basic ideas:

(I) Exposure to the dynamic market for a small time frame will limit the probability of running into an adverse event.

(II) It is easier for a stock to make a Rs 2-4 move rather than making a Rs 20-30 move in a day.

(III) Smaller price movements are more frequent than the big ones. Even when the market is range-bound, there may be small movements that a trader can exploit.

Thus, implementing this strategy will help traders to generate multiple small wins throughout the day adding to a good amount of daily return.

This way they can earn Rs 500 from the stock market on daily basis.

However, this does not mean to over trade and should take position only when he is confident.

Trade stocks in the news

Momentum in either direction is very much essential for stock to provide a significant intra-day return. This is usually fueled by news flows, which has a direct impact on the price of a stock.

News based on earnings reports, orders, upgrades/downgrades by brokerages, product announcements, FDA announcements, economic data releases, geopolitical factors, and other macro and micro issues can push stock price significantly, in either direction.

Tracking daily news and comprehending the same will help the traders to pick stocks with momentum and place their trading bets accordingly.

Trading in momentum stocks will increase the probability of making profits, thus adding to their daily income.

This is another way one can earn Rs. 500 daily from the stock market.

Stop-Loss discipline

One of the golden tips to maximize profit is to put a stop loss in trading for every intraday trade. A trader can decide upon the percentage of stop loss to be applied depending upon his risk appetite and volatility of the stock.

Application of stop-loss helps a trader in the following ways:

(I) Protects capital erosion.

(II) Helps to churn the money faster, which is essential for increasing profitability in trading.

(III) Helps a trader to reduce the concentration of positions in risky stocks for a longer period of time. Thus, minimising the number open positions, which are vulnerable to market fluctuations.

So, from the above it is clear that adherence to strict stop loss will limit a trader’s loss to a great extent, helping him to earn a better daily return.

Minimising trading cost

This will help a trader to maximize his quantum of daily profit. A trader should keep in mind that every trade that he places comes with a cost and are incurred irrespective of profits or loss made by them.

Trading cost includes brokerage fees, Securities Transaction Charges/Commodity Transaction Charges, Turnover charges, GST, SEBI charges, Stamp charges, and AMC (Annual maintenance charges) among others.

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Thank You For Reading.