Here are some methods using which you can invest and earn in stock market with little money. We all come from different situations. In fact, anyone can invest in the stock market with little money. You just need to know where to invest and certain strategies of share market. Here are some ideas –
Use Leverage
Consider buying a 500 INR stock with a 1:10 leverage which means getting it for 50 INR. So if the stock goes down 10%, your capital is wiped off! Similarly, if the stock goes up by 10%, your initial investment is doubled.
That’s the tragedy.
Derivatives – Options and Derivatives are highly volatile and can go up or down 10%-30% a day easily. It has faster settlement of T+1 days also. You may have a look at this nice book – How To Make Money Trading Derivatives.
Here are three awesome power of options which allows to enter anyone in stock market with little money-
- Low Capital Requirement.
- Small Trade Size.
- Leverage
Intraday Leverage – I use leverage (1:500 mostly) while I trade in forex but the only place I get leverage is Intraday in India. But the Risk:Reward ratio is really high on intraday basis.
Risk Appetite
How much you invest in the stock market never matters. What matters is how much youโre willing to put on stake; the precise term is risk appetite as well as it depends on your expertise on the stock market.
Your risk appetite derives from how you view the stock market. Most people see stock market as an instrument of alternative investment but most people see it as a source of income. Obviously second one has significant higher risk and needs dedication.
Most of the fellow traders (so do I), we all used to speculate and then sweat followed by giving moral inspiration to move the candlestick charts in a favourable direction. But the secret is we need to operate it as a business. Speculators lose and makes money to the traders and investors.
In fact there is a 90/90/90 rule which says 90% of the speculators lose 90% of their money in 90 days.
Big Capital is a must
In an accurate mathematical system, chance of making 100 INR to 200 INR has same probability than making 1,00,000 INR to 2,00, 000 INR. So starting with a staggering amount has its own leverage. Successful traders like Rakesh Jhunjhuwala themselves had access to huge volume of money or most of them have borrowed.
They will publicly say not to borrow money from others but most of them did it their selves.
I used managed account services like Minance, Return Wealth, Square Off and few others for 10% of my wealth.
- I value invest 85% over long horizon
- I take risk with the rest 5%
So I will suggest you to distribute your portfolio ๐
PS: For my risk segment highest drawdown I made is around 34% on the surgical strike day but I bought all of those stocks investing more capital in them and it inflated my portfolio.
