How to profit from Short Term Investments in Stocks?

Stock markets are a part of the Indian culture. India has one of the largest community of Stock Market Investors in the world. As in October 2021 there are more than 73.8 million demat account holders in our country. This number is twice what it used to be three years ago. The NSE is the ninth largest stock exchange in the world with a market capitalisation of 3.43 trillion US Dollars. The Bombay Stock Exchange is one of the oldest stock exchanges in the world. With a record like this, it is no wonder that millions of Indians trade on the Indian stock exchanges everyday. Their numbers have sharply increased in the last two years driven by the pandemic led loose monetary policies of global Central Banks which led to an unprecedented bullishness in the Indian stock markets. So the big question is how to profit from short term investments in stocks?

Stock market Investors can be segregated as short term traders and long term Investors. This article focuses on how short term  traders can benefit by trading on a daily basis and gives an insight into the kind of returns they can expect.

For those of you who are not familiar with what short term trading is, it refers to taking short term positions in stocks which you may square off on the same day or within a few weeks or months. If you hold the positions for over a year then technically it becomes a long term investment. You can comfortably earn a return of 20-25 percent per annum with your short term Investments provided you start with enough capital, take active interest in your daily trades and develop or hire the right level of expertise or advice. I would like to warn you though that short term trading has one of the highest levels of risk associated with it and you must not engage in it unless you are expert or you have the right guidance from an expert. The minimum capital that you need to start with such a venture is about 4-5 lakh Indian Rupees. If you are planning to start of with a couple of lakhs you may not be able to effectively diversify to reduce your risk. Also if you have just 4-5 lakh Rupees, don’t put all of it in trading,  it is not recommended.

Once you have all the above infrastructure in place you can use a good App to conduct your trades or hire a stock broker. Make sure that you allocate sufficient time everyday to enhance your trading expertise or to stay in touch with your broker. This is an excellent opportunity for people who have sufficient capital and time, to earn rich returns. If you don’t intend to hire a broker, you must learn Technical Analysis and undertake good courses which teach you how to profit from Short Term Investments in Stocks. Happy Trading!!