30% profit in one month,will you believe it ?
How much profit you will make in a month? Will you believe, if we say 30%?
If you follow a simple strategy which is called as “Take small profits and do multiple trades” which is explained in following example
Let’s see following example including the calculation of Brokerage and taxes
The current maximum intraday brokerage offered in the market is 0.05% for buying and 0.05% for selling
(We provide 0.03% for buying and 0.03% for selling)
Taxes you have to pay
1. The service tax is of 10.36% only on brokerage.(Update Mar 09- The service tax is reduced to 10.30% including education cess )
2. The STT (Security Transaction Tax) is of 0.025% only on selling amount.
3. The stamp duty on total turnover for a day which is 0.002%.
4. and finally you have to pay Regulatory charges on total turnover for a day which is 0.004%
Don’t worry all these taxes will add up to very small amount at the end of the day compared to your profits.
Example -
Suppose you bought the shares of Kotak Bank at Rs.315 and quantity 100 so the total amount you have to pay is Rs.315 x 100 = Rs.31,500.
Now let’s see how to calculate the brokerage and taxes.
Your buying amount
Rs.31500 (Rs.315x100 Qty shares)
Brokerage charge
0.03% as brokerage (It’s our brokerage rates) on 31,500 which comes to Rs.9.45
Service Tax
The service tax is 10.36% only on brokerage, so 10.36 % on Rs.9.45 comes to Rs 0.98.
Total charges you have pay on buying amount is
The total brokerage + service tax which come to Rs.9.45 + Rs.0.98 = Rs.10.43
Now let’s calculate the brokerage and taxes on selling amount
Your selling amount
Suppose you sold Kotak Bank shares at Rs.316 (you took profit of only Rs 1), Qty - 100 so the amount comes to Rs.31,600 (Rs.316 x 100 Qty shares)
Brokerage charge
0.03% brokerage on 31,600, comes to Rs.9.48
Service Tax
The service tax is 10.36% only on brokerage, so 10.36 % on Rs.9.48 comes to Rs 0.99.
STT (Service Transaction Tax) only on selling amount
The STT (Service Transaction Tax) is 0.025% on selling amount (the selling amount is 31,600) which comes to Rs.6.32.
Total charges you have pay on selling amount is
Total brokerage + service tax + STT on selling amount is
= Rs.9.48 + Rs.0.99 + Rs.6.32
= Rs.16.79
Total amount you have to pay on buying and selling is
= Rs.10.43 (buying) + Rs.16.79 (selling)
= Rs.27.22
Also you have to pay stamp duty and regulatory charges on total turnover.
Your total turn over is calculated by adding the buying amount and selling amount.
Buying amount is 31500 and selling amount is 31600 which adds up to Rs. 61300
Stamp duty is 0.002% and Regulatory charges are 0.004% which adds up to 0.006%
So on total turnover amount (Rs. 61300) the stamp duty and regulatory charges comes to Rs 3.8.
So the total amount you have to pay including brokerage and all taxes is only
Rs 27.22 + 3.8 = 31.02
Conclusion
So now the conclusion is you are paying Rs.31.02 (brokerage and taxes) while you earned the profit of Rs.100.
So your profit is Rs 69 (100-31)
So don’t you think 69% profit in single trade is quite enough to do thousands per day?
If you continue doing such small trades with small profits then you will end up with big amount at the end of the day.
Let’s see how it will add up to thousands
Suppose if you do only 10 trades in a day by taking only Rs 1 as profit then it will add
up to Rs 690 (Rs 69 x 10 trades in a day).
How to make thousands in a day?
Now let’s see how to do thousands with same strategy as mentioned above.
Its simple, you just have to increase your quantity of shares.
In above example you have brought only 100 quantities, if you just make it double then your profit will also get doubled.
How much will you make in a month?
= Rs.69 per trade as net profit (as per above example).
= 10 trades per day (how much trades are possible, you will come to know by doing paper trading practice, which we explained in day trading section, and according to our estimation 10 trades are very easy to accomplish)
= total Rs.69x10 trades = Rs.690 per day.
= total approximate 20 trading days in a month.
So Rs.690x20 = Rs.13,800.
Let’s consider some losses while trading
Trading without losses is not possible for any trader, but trader has to reduce the losses and maximize the profits.
(Please visit our different sections how to reduce the losses in day trading)
If you follow above mentioned simple strategy then have a look on below example how much money you can make in a month.
Now let’s imagine you made loss on some days or due to some reason you are not able to trade on some days, so let’s consider 5 days profit as loss. So 5 days loss comes to Rs 3450 (Rs 690 per day x 5 days).
So the compensation for losses is Rs.3450.
Total Profit
Then also you are making profit of Rs 10350 (Rs13,800 - 3450) profit per month.
Your investment is Rs 35,000 and you are getting profit of Rs 10,350 per month so in just 3 to 4 months you are making your money double.
Make your money double in one Month
In the above example the margin amount is not used. So If you use only Rs 10,000 then you are making your money double in just one month.
Brokers generally provide 4 times Leverage for day trading so for Rs 10,000 you can trade till 40,000.
Precaution - In margin amount the risk also increases. You have to square off your trades on same day if you use the margin amount.
Please note
1. You can even invest less amount like Rs 5000 or 10,000 and earn profits in a month.
2. In above example you are not using margin amount so if in case the trade goes against you then you can hold them and sell later. If you use margin amount then you have sell them on the same day.
3. So the bottom line is forgetting greed factor and taking small profits will make miracle to your investments.
So believe in small and end up the day with big profits.
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