How Much Money Can be made by trading Stocks ? :
I have advised some people in the past to take up trading in stock market as full time or part time activity.
This should be taken up as a serious business activity and not for passing the idle time.
This activity qualifies as a business for the following reasons:
(a) It generates profit or loss.
(b) You can expand the business by increasing the turnover by trading more quantity. Or you can go for Futures and Options.
(c) Even international markets can be traded.
(d) If you are doing well, even more people can be employed to do the same job under your guidance.
And the best part is:
There is no boss to report to.
There is no client satisfaction to worry about.
The working hours are excellent and weekends are free.
With all these positives , the trading business should be a cake walk.
It is not.
Traders are hindered by their fear and greed.
It is not the market but their own lack of control over the emotions which causes them to lose money in the market.
They become compulsive traders unmindful whether a trade actually exists.
A True Story :
I was talking to one of my colleagues about a work plan.
Me: Rao, it is necessary to have a plan. If it does not work out, no issues. At least we enjoyed making the plan.
Rao : Sir, please elaborate the enjoying part.
Me : Like I am planning to earn Rs. 1.00 Crore from stock trading. I am planning every year and not succeeding. But I am very happy when I am writing down the details about how to achieve this goal. Sometime I may succeed or partly succeed.
Rao : Sir, but I have already succeeded in making Rs. 1.00 Crore.
Me: What ?
We did not talk about work after this. He told me how his investments in Infra Sector resulted in huge profit. His net investment was about Rs. 16 Lakhs and currently it was valued at Rs. 120 Lakhs.
This was in year 2010.
By 2013, his portfolio was back to where it had started.
It was around Rs. 16 lakhs again.
Prices kept on falling and he did nothing.
Had no exit plans.
Markets and stocks do not always keep going up.
Markets correct and stocks go down. Good stocks come back, poor stocks stay down and go further down.
One has to be careful.
Some of the things to avoid/follow are already explained here:
Pramod Kumar's answer to What are the common mistakes made by a first time investor in stock markets?
Pramod Kumar's answer to How do people lose money in the stock market? If I bought stocks today, and after some days the value of stocks go low, then I can wait for some more time me until stocks go up. What is the thing that make people lose money ?
Pramod Kumar's answer to What are few tips for trading in Indian stock market? What are the trading secrets?
How Much Money Can be Made ? :
There is no limit.
Mr. Rao of this story made more than Rs. 1.00 Crore in little more than one year.
It is another matter that he gave all of it back.
Staying profitable and avoiding loss is important for any trader whether new or experienced.
Your aim should be loss prevention.
Profits will come. Any profit is a good profit.
I hope this answers the question.
Thanks for reading.