This is a very common question among novice trader i.e. “How much money do you need to have to start stock trading?’’. The answer can be in one line but there are few important points that are required to be discussed on this topic. To be a successful trader or investor, you need to have a basic idea on how much money you should invest for trading.
So, from the article, we will get to know the ideal amount one need to have to start trading. The price of investment in stocks and associated risk factors are also to be remembered for trading in the stock market. Apart from that, you need to have good understanding of trading psychology, trading capital allocation and risk management which plays an important role for your trading success. Our share market Technical Analysis Course in Kolkata offers a wonderful opportunity for students to gain insights in stock trading and investing. Here you’ll learn stock market from an experienced trader who has deep insights in professional trading and vast knowledge in the Indian stock market. Call +91-8777 565 424 today.
How much Money do you actually need to start trading in Indian share market?
Simply, the answer is there is no minimum amount of money required to start trading in India. In the share market, you can find shares of Rs.2 as well as of Rs.20000. Traders can invest money as per their capacity but one must have the minimum capital to cover the share price and other associated costs such as brokerage, tax etc.
Suppose you have Rs.100 capital. You buy 1 share of Rs.100 and the share price goes up to Rs.105. So, you have profit of (105-100) = 5 but if your brokerage and other charges turn out to be Rs.6, you have actually made loss at the end of the trade. Now, on the other side, if you have capital of Rs.1000 and you buy the same share of 10 quantity (1000/100), you will make profit of (10 x 5) = 50. After deduction of brokerage and other charges of Rs.6, the net value will be a profit (50-6) =Rs 46. So, you must do the basic calculation before taking trade.
How much money should you invest for different types of Trading?
As you know there are different trading types, based on timeframe. Now, we are going to discuss how much money you should invest depending on the trading period. For example the division of your investment capital should not be the same for day trading and long-term investment. First, let’s see the day trading capital requirement.
Capital Requirement for Day Trading
If you prefer day trading, you must remember few points before investing your capital.
Nowadays, many brokerage firms provide leverages. So, for day trading, you don’t need huge money as compared to long-term investment. Leverage amount can vary as per trading types (equity, derivatives) and brokers. Simply the higher the risk, the more margin money is required.
As day trader you must open and close order within a single day and the brokerage charge is higher in comparison to delivery trading. So, first, you must understand your investment capacity prior to place a trading order.
Another most important point is you can start equity trading with small amount of money but if you want to trade future-options (especially future derivative or selling option contracts) you will need a much larger amount of money.
Capital Requirement for Long-term Investment
For long-term, you can invest your money randomly at a point of time or systematically over a period of time. Suppose, you analyze at a certain point that the market is at the end of the downtrend and soon it will reverse to uptrend. You have Rs. 100,000 cash for investment and you invest Rs. 50,000 on 10 different shares at that point of time. Without a single shot, you can prefer staggered buying to accumulate stocks at different price points so that your average holding cost will be lower. After your initial investment suppose the market goes up. And you have already reserved the rest amount of Rs 50,000 for invest later when the market corrects again by a few hundred points. This is called random investment.
Now, if you are a systematic investor, you may invest a certain amount every month in the stock market. Suppose you decide to invest Rs.5000 every month for 1 year in the stock market. This is called systematic investment.
- For random investment, you may invest bulk amounts in a single time or in multiple time as per your analysis.
- If you decide to arrange your portfolio based on systematic investment, it is better to invest a limited amount every month for a long term.
Additional Points before Trading or Investing
Only having capital is not enough to start trading, you must have the minimum basic knowledge about the stock market. Nowadays, there are many websites, videos provide notes and training for stock market course for beginners and professionals.
You may gain knowledge directly about stock trading from professionals too. Our expert stock market teacher in Kolkata West Bengal provides the knowledge about share market, price forecasting and risk management. You’ll be introduced to stock market basics to cutting edge advanced trading methodology. Learn from India’s one of the best Technical Trading Expert, Mr. Arijit Banerjee, CMT (USA), CFTe (USA) and a SEBI approved Research Analyst. Mr. Banerjee has more than 12 years of extensive experience in Investing, Trading, and Portfolio Management.
Therefore, before investing your money in the share market, invest some for your training and knowledge purpose. Share trading class offers the best stock market course in Kolkata which is packed with full of theoretical and practical lessons, doubt-clearance sessions and real-world examples to help you turn knowledge into action. Just remember, the more you gain knowledge the more you can earn from the market. That is the basic rule.
However, at the end of this article, you may get your answer that how much money you need to have to start stock trading in India. You don’t have to have millions or billions; you can start trading with any small amount of money initially. If you are new to the share market, it is advisable to start slowly with limited capital. Learn from your mistakes and follow the market. You will gradually know how much capital you should invest in different trading segments as per your capacity.