Introduction
Earning 1 lakh per day from the share market sounds like a dream for many traders and investors, but it is possible with the right strategies, mindset, and consistent effort. The share market, or stock market, is a dynamic world where fortunes are made and lost. However, making consistent daily earnings of this magnitude requires not only market knowledge but also disciplined risk management, proper tools, and a well-defined strategy.
This article will cover various trading strategies, risk management techniques, and market psychology, along with actionable steps to potentially help you achieve the target of earning 1 lakh per day. But remember, this is not a get-rich-quick scheme—significant profits come with significant risks.
Let’s break down how one can strive to reach this ambitious goal.
Table of Contents
1. Understanding the Share Market
What is the Share Market?
The share market refers to the platform where shares of publicly listed companies are bought and sold. It functions as a marketplace, allowing investors and traders to exchange equity in companies and potentially profit from price movements.
There are two primary types of share markets:
- Primary Market: Where companies issue new stocks to raise capital, such as in an Initial Public Offering (IPO).
- Secondary Market: Where investors trade previously issued shares without involving the issuing companies.
Key Concepts to Understand
Before diving into strategies for earning 1 lakh per day, it’s essential to understand a few key terms:
- Stock: A stock represents a unit of ownership in a company.
- Shares: These are the individual units of stock.
- Market Capitalization: The total market value of a company’s outstanding shares.
- Price Movements: The fluctuation of stock prices based on market supply and demand.
By understanding these basic principles, you can better navigate the complexities of the market and identify opportunities for substantial earnings.
2. Psychology of Trading: The Mindset for Success
The stock market isn’t just about numbers; it’s a mental game. A trader’s mindset plays a crucial role in determining success or failure in the market. To consistently make 1 lakh per day, mastering market psychology is as essential as understanding trading strategies.
Emotions in Trading
Many traders fail because they are ruled by emotions like greed, fear, and hope. Common psychological pitfalls include:
- Fear of Losing: This leads traders to cut their winning positions too early, missing out on further profits.
- Greed: Overconfidence may lead to holding onto losing trades for too long, hoping the market will turn in their favor.
- Overtrading: Trading too frequently in hopes of quick gains, which can lead to higher transaction costs and more losses.
Developing the Right Mindset
- Discipline: Stick to your trading plan and avoid emotional decision-making.
- Patience: Be willing to wait for the right opportunities instead of chasing every price movement.
- Confidence: Believe in your strategies, but always be open to reassessing them based on market conditions.
By controlling your emotions and staying disciplined, you can increase your chances of consistently making profits in the market.
3. Key Strategies for Earning 1 Lakh Per Day
Earning such significant profits requires a clear plan and proven strategies. Here are three common strategies traders use to generate high daily returns.
A. Day Trading
Day trading is one of the most popular ways to make large daily profits, but it’s also the riskiest. This involves buying and selling stocks within the same day to capitalize on small price movements.
Steps for Successful Day Trading:
- Use Technical Analysis: Identify trends, patterns, and price indicators. Common technical tools include moving averages, Bollinger Bands, and Relative Strength Index (RSI).
- Watch Market News: Keep a close eye on news that might impact the stock market, such as economic reports, corporate earnings, or political events.
- Set Entry and Exit Points: Determine in advance where you will buy and sell a stock. This helps minimize emotional trading.
- Risk Management: Use stop-loss orders to prevent significant losses. A good rule is not to risk more than 1-2% of your trading capital on any single trade.
Example: Let’s say you have ₹10 lakh as capital. You identify a stock that is moving rapidly with high liquidity. With precise technical analysis and a well-timed trade, you could aim for a 1% gain per trade. A few such trades could get you close to your 1 lakh target.
B. Swing Trading
Swing trading involves holding stocks for a few days or weeks to capitalize on price swings. Unlike day trading, it doesn’t require you to monitor the market constantly.
Steps for Successful Swing Trading:
- Technical Analysis for Medium-Term Trends: Identify stock trends over days or weeks, using indicators like the 50-day and 200-day moving averages.
- Use Fundamental Analysis: Look for companies with strong fundamentals that are likely to experience price movements.
- Entry and Exit Strategy: Use Fibonacci retracement levels to identify potential buy points and resistance levels.
Swing trading offers a good balance between risk and reward, allowing traders to take advantage of medium-term price movements without the pressure of daily trading.
C. Options Trading
Options trading is a higher-risk strategy but can offer significant rewards when used correctly. Options give you the right, but not the obligation, to buy or sell a stock at a set price by a certain date.
Steps for Successful Options Trading:
- Use Volatility to Your Advantage: Options prices are heavily influenced by market volatility. Use this to your benefit by selecting contracts that are likely to move in your favor.
- Leverage for High Returns: Options provide leverage, allowing you to control a larger amount of shares with a smaller investment. This can lead to significant profits but also higher risks.
- Covered Call Strategy: This involves holding a stock and selling call options against it to generate additional income.
Example: Let’s say you buy a call option for ₹100, and the stock price rises significantly within a day. You can sell the option for ₹200 or more, potentially doubling your investment in a short time.
By mastering these strategies, you can target consistent profits and inch closer to earning 1 lakh per day.
4. Risk Management: Protecting Your Capital
Risk management is the backbone of successful trading. The higher your potential earnings, the higher the risks, and if you’re aiming to earn 1 lakh per day, you’ll need a robust risk management strategy to protect your capital.
Setting a Risk-Reward Ratio
The risk-reward ratio helps traders assess the potential profit of a trade against the potential loss. A common strategy is to maintain a 1:3 risk-reward ratio, meaning for every ₹1 you risk, you should aim to make ₹3.
Stop-Loss Orders
A stop-loss order is an automatic order to sell a stock when it reaches a specific price. This helps you cut your losses before they become too large.
- Set a stop-loss at 1-2% below your entry price.
- Trailing stop-loss: As your stock rises, move your stop-loss higher to lock in gains.
Position Sizing
Position sizing is the number of shares or contracts you trade relative to your account size.
- Never risk more than 1-2% of your trading capital on a single trade.
- Calculate the ideal position size using a position-sizing calculator or formula based on your risk tolerance.
Diversification
Don’t put all your money into one stock or sector. Spread your investments across different industries or asset classes to reduce risk.
5. Research and Analysis: The Foundation of Profitable Trading
Research and analysis form the backbone of any trading strategy. Here are two essential types of analysis that every trader needs to master:
Fundamental Analysis
Fundamental analysis involves studying a company’s financial statements, industry position, and economic factors to determine whether its stock is a good buy.
- Evaluate financial health: Look at the company’s revenue, earnings, debt, and profit margins.
- Study the industry: Analyze the company’s competitors and the overall market to see where it stands.
- Look for undervalued stocks: Find companies that are trading below their intrinsic value for potential long-term growth.
Technical Analysis
Technical analysis uses charts, patterns, and indicators to predict future price movements. Traders use it to determine when to enter or exit a trade.
- Moving Averages: These help identify the overall trend of a stock.
- RSI (Relative Strength Index): This measures the stock’s recent performance and helps determine if it’s overbought or oversold.
- Bollinger Bands: These indicate volatility and help spot potential reversal points in a stock’s price.
Combining Both
Many successful traders use a combination of both fundamental and technical analysis. For example, you might use fundamental analysis to pick the right stock and technical analysis to time your trades effectively.
6. Tools and Platforms for Trading Success
To make 1 lakh per day, you need to use the best tools and platforms to give you an edge in the market.
Choosing a Trading Platform
Your trading platform is your gateway to the stock market. Some popular platforms in India include:
- Zerodha: Known for its low brokerage and advanced tools.
- Upstox: Offers low-cost trading and a range of investment products.
- Angel Broking: Provides a user-friendly interface and research tools.
Look for platforms that offer:
- Low transaction fees
- Real-time market data
- Charting tools for technical analysis
- Easy-to-use mobile and desktop apps
Using Charting Tools
Charting tools help you analyze price movements and identify trends. Some popular tools include:
- TradingView: Offers detailed charts and a large library of indicators.
- MetaTrader 5: A comprehensive platform that provides real-time charting and automated trading.
- Amibroker: A powerful technical analysis software that allows custom strategy backtesting.
Stock Screeners
Stock screeners help you filter stocks based on specific criteria, such as price, volume, and technical indicators. Some popular stock screeners include:
- Screener.in for fundamental analysis
- Finviz for both fundamental and technical filtering
- Yahoo Finance for screening global stocks
7. Learning from the Best: Real-Life Case Studies
Case Study 1: Rakesh Jhunjhunwala
Known as the “Big Bull” of India, Rakesh Jhunjhunwala started with a small capital of ₹5,000 in 1985. Over the years, his well-researched stock picks, such as Titan and Lupin, have earned him billions. His success is a testament to the power of long-term investing combined with thorough research and patience.
Case Study 2: Warren Buffett
Although not a day trader, Warren Buffett’s investment philosophy of value investing is a guiding principle for anyone looking to make substantial profits from the stock market. Buffett has always emphasized buying stocks of fundamentally strong companies at a discount and holding them for the long term.
Lessons Learned:
- Rakesh Jhunjhunwala’s Approach: His focus on long-term wealth creation, even with a small capital, can be replicated by beginners. While day trading can yield fast profits, investing in undervalued, high-growth companies over the long term can also yield massive returns.
- Warren Buffett’s Strategy: Avoid speculation and focus on companies with solid fundamentals. His ability to see value where others don’t is a valuable lesson for traders and investors alike.
8. Final Thoughts: The Road to Earning 1 Lakh Per Day
Earning 1 lakh per day from the stock market is an ambitious but achievable goal, provided you’re prepared to put in the work. Mastering market psychology, building a disciplined trading strategy, and continually improving your skills are essential steps on this journey.
However, it’s important to remember that with great rewards come great risks. There will be days when the market doesn’t go your way, and losses are part of the game. The key is to manage those losses effectively while maximizing your profits when the market is favorable.
By following the strategies and tips outlined in this article, you’ll be better positioned to make significant gains in the market. Stay patient, stay disciplined, and always keep learning.
Call to Action:
Are you ready to begin your journey toward earning 1 lakh per day from the stock market? Start by opening a trading account on a reliable platform like Zerodha or Upstox and dive into your research today!