Different Ways To Make Money From Stocks 

Different Ways To Make Money From Stocks 

Different ways to make money from stocks. In this blog, we going to see how to make money with stocks? And what is the different ways are there? So you can translate this blog into Tamil using google translater. So let's dive into the content.

So we would've previously seen about 'the basics of stock market' post, this post is the continuation of it If you haven't seen 'The basics of stock market' post, read it before reading this blog Stock Market for beginners Ao on my last post, I would've spoken about what is stock market, how do they use it, how does a company apply for IPO So in this post we are going to talk about how to make money in the stock market as a retail investor there are different ways Each and everyone will like a different style So let us see about the different styles and ways to make money So, first is 'day trading' second is 'scalping' third is 'swing trading' Next is 'positional trading', which is almost similar to long-term investing and the last is, 'value investing' We are going to talk about these 5.

1. Day trading :

Different Ways To Make Money From Stocks 

Firstly 'Day trading', which is buying and selling on the same day market opens at 9.30 a.m and ends at 3.30 p.m So you can buy and sell any time within that timeframe, for example, buy at 9.30 and sell at 10.30 or buy 9.30 and sell at 9.45 else buy at 12 and sell at 3.30 but you have to sell it by 3.30 so this is 'Day trading'.

2. Scalping :

Different Ways To Make Money From Stocks 

Next is 'Scalping', which is when the trade ends in 2 minutes they aim for small points like 1 rupee, 0.8 rupees or 3 rupees they enter and exit with small price changes it is little difficult to do scalping But some people like to do scalping they get 20-30 points in Bank Nifty/Nifty and exit the trade So this is called 'Scalping'.

Advantages and disadvantages :

Different Ways To Make Money From Stocks 

The advantages and disadvantages between 'day trading' and 'scalping' are,

Advantages :

In this style, how much ever you trade it will end within a day there are chances that price might fall or gain overnight with some news so you can avoid that kind of drastic price changes when trading in intraday loss or profit, it ends within that day so some people would not feel safe to hold shares for more than a day they say they couldn't sleep at night Some people would feel that way, I don't feel like that some like intraday, some like swing each person would have their style they would have their risk capability so it depends on it.

So the main advantage here it is the only thing, that is it ends within a day so whatever big event happens it won't be a problem, as it ends in a day because we are entering and exiting the trade on the same day.

Disadvantages :

So the disadvantage here is mainly the risk-reward ratio So let's talk about the risk/reward ratio first when you enter a trade you have to measure the risk you are going to take before entering that trading band also measure the target price of that trade, this will you give you risk/reward risk is the risk your willing to take reward is your target.

So always a risk/reward ratio should be 1:2, 1:3, 1:4 or more than that for example if your risk is 1000 your reward should be at least 2000 else 3000, 4000, 5000 so this is a better risk/reward ratio 1:1 ratio is also fine as long as your accuracy is more than 80% but doing that in intraday is very difficult if you take 1000 risk, mostly you can keep the target for 1000 only maybe you can keep 1:2 ratio but is very rare, it is only possible in trending market trading market would be available only for 30% of the time.

So if you take 100 days probably can see 25-30 trending market situation that is either continuous increase or decrease in price so your risk/reward would be favorable on only such days so normally your risk/reward would be 1:1 that is if you take 1000 risk, you can expect 1000 return Another thing is that it is very difficult to master intraday. 

learning strategy is easy I will explain in a simple way lets say you are going to learn a new language, Spanish I can teach you everything the grammar, pronunciation sentence formation can all be taught in one or two days but you wouldn't be able to speak fluent Spanish after those 2 days So it becomes fluent as you talk more and more only when you talk to few people you can speak that language fluently and in 3 months or 6 months you will have continuous growth you cannot try to do it in 1 week, its the same here How much time you spend on analyzing charts how much time you spend on the market is what matters it doesn't matter how much you Backtest, you need real-time market experience.

Swing trading :

Different Ways To Make Money From Stocks 

So next is 'Swing trading' so swing trading is when you buy shares and hold it for 2 days to 2 weeks In swing trading your loss would be minimum and profit would be high But its the same in intraday In intraday you take same reward as the risk you take, so you need high accuracy so we have some advantage for swing over intraday when buy for 100 we predict that it goes 120 or above 100 so the advantage here is the risk/reward ratio if you take 1000 rupees risk you can set your target up to 10000 or 20000 rupees this is the main advantage of swing trading so for small risk you get maximum return because even when you have only 60-70%  accuracy you can win here easily because even when you lose in 4 trades you can breakeven with one winning trade so this is its main advantage Disadvantage is that, some people cannot hold position for overnight the main reason for that is they put their entire capital into that one trade so there is more topics like risk management, money management, position sizing.

Positional trading :

Different Ways To Make Money From Stocks 

Next is 'Positional trading (Long-term Investing)' For this, you hold stocks for 6 months and more it can be 2, 3 or 4 years it depends on your analysis so the advantage here is time you are going to do analysis and just hold that stock The disadvantage is also time You wouldn't know how many days it takes to get your profit So again it depends on the analysis, whether you use technical or fundamental analysis and a lot of factors are there.

Value investing :

Different Ways To Make Money From Stocks 

Next is 'Value Investing' So in this style, your analysis should be very accurate and perfect you need to have high conviction towards that business so that is when you can hold it for 10-20 years Warren Buffett follow this style of investing There are lots of people who even follows this in India, like, Rakesh Jhunjhunwala and  Radhakrishan Damani and lot more So these are the ways to make money in stock market you should follow the style which you like I'm not totally against intraday but that is little difficult for beginners According to me swing trading is easier because I myself have seen a lot of people in my community they were able to get consistent income within 3-6 months of doing swing trading so there are people who do intraday they haven't made much money the learning curve of intraday is very big you can't make profits in 1 year there are a lot of people who haven't made profit for 5 years I took 2 years to get profit But I put in a lot of effort I would do both swing trading and intraday but majoity trades would be swing If you have any doubt, let me know in the comments.

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