How Much Capital Should You Start with?: Investing in the stock market can be a profitable venture, especially when done in a disciplined manner from a young age. As a beginner, you may be curious about the minimum amount needed for day trading in India. In this article, we will explore this question and provide some strategies for first-time investors in the stock market.
Many new investors mistakenly believe that a specific amount of capital is required to start investing in the stock market. However, there is no set minimum for day trading in India.
The cost of stocks can vary greatly depending on the company, with some stocks priced as low as ₹.2 per unit and others at ₹2000. The key consideration for new investors should not be how much money is needed to start day trading, but rather how much they can invest. Here are a few strategies for novice investors to consider:
1. 100 minus your current age strategy
The “100 minus your current age” strategy is a popular option for new investors. It aims to reduce risk over time by adjusting the percentage of stocks in your portfolio based on your age. This strategy suggests that the percentage of stocks you hold in your net worth should equal 100 minus your current age.
For example, if you are 25 years old and have savings of ₹ 1000, then your investment amount should be 75% (100-25) of your net worth. In this case, you would invest ₹ 750 in the stock market.
2. The X/3 strategy
Another strategy for new investors with low-risk appetites is the “x/3” strategy for beginners. This strategy suggests investing a fraction of your total investment amount, typically one-third, in a stock. If the stock performs well, you can invest in the same stock again and repeat the process a third time.
For example, if you wish to invest ₹ 7,500, you could divide the amount into three equal parts and invest Rs. 2,500 each time in three rounds. This strategy helps to mitigate risk.
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3. The 75 percent profit strategy
The “75 percent profit strategy” is another approach for new investors, which states that if 75 percent of the stocks in your portfolio are performing well, then you can continue investing.
For example, if you have invested in 8 shares and 6 of them are performing well, the strategy is working, and you can consider increasing your investment. However, it’s important to note that it’s rare for all of your stocks to perform well, as volatility is an inherent aspect of stock market investments.
It’s important to note that these are just general guidelines and the amount of capital you should start with will depend on your circumstances. Before starting to trade or invest, it is essential to have a clear understanding of your financial goals, risk tolerance, and the type of trading or investing you plan to do. It’s also important to remember that trading or investing should only be done with money you can afford to lose.
As a new investor who has just started earning, you may not have thousands of rupees to invest. You may wonder what the minimum number of shares you can buy in India is. The answer is simple: you can start trading with any amount you can spare and buy as many or as few shares as you like. If you have any doubts or wish to start investing, you can reach out to Trading Fuel for all your investment needs and expert advice.