How to build Wealth by Day Trading

Last week I sent a questionnaire to the people who had been trading from quite some time with techniques discussed in our eCourse and questions asked were the questions that most of us are concerned about.

How do you finance or fund  your trading account?

Is your trading account growing month after month?

How are you building your investment portfolio?

I got varied answers, mostly on expected lines.

To the 1^st question – How to fund  your trading account? Or How to get initial trading capital to start with?

Most common answer was – they were using money from their savings account.

Some said they have separated their trading and investment account and have allotted funds for both. (This is actually a good strategy)

Some even said they had taken personal loan for trading. (This is risky, not recommended)

Few of them said they have created margin against their Stock Holdings (Shares that are already in their long term investment portfolio) and are using this fund for trading. (The best option)

Yes, this is the best way to fund your trading account if you already have shares in your Demat Account i.e. the shares which are lying idle in your portfolio.

Almost all Brokerage firms these days offer the facility of creating margin against your stock holdings. Moreover you will always remain owner of stocks, benefits like dividends and share value appreciation still gets added to your portfolio. Just the shares are pledged to create certain percent of margin for your trading account.

Personally I have also created pledge on my stock holdings. No better way to use your idle shares.

2^nd question:  Is your trading account growing month after month? Are you able to add on to the initial capital that you first started on with?

Most of the answers I received were with varying percent of increase in their trading capital. All were positive (that’s the key). They were able to add 20-80% to their initial capital.

I have always advised that one should invest 25-35% of their trading profits into the long term investment portfolio (Blue-chip or Midcap Stocks with Good management and track record of consistent Dividend payments).

Rest of the profits can be added to increase your trading capital. This is the systematic way to build long term corpus with profits from your trading.

This is what I and my wife do.  We Trade from separate accounts. Use 40% of monthly trading profits to invest in long term portfolio stocks and rest add to our trading accounts. One needs to capture and save part of  trading profits for building long term assets which helps to build retirement corpus and funds for medical emergencies.

Building wealth is not an overnight process, you need to put in consistent efforts towards achieving your  financial goals.

Yes, it is possible to turn a small (trading) account into a huge account, but don’t expect it to happen overnight.

 If you consider ‘trading in stocks’ as one of the processes to reach your ultimate financial objective then it’s important to take it seriously.

Don’t think it as your hobby, consider it as a business wherein your only objective is to make profits.

Work on your Trading strategy, have an actionable trading plan. That’s how you build wealth with the right trading plan.

It’s important to have a successful and proven trading plan . If you can manage to find a mentor in which you believe, you will make it much faster.

Believe in your abilities and trust your strategy

 

Technology has certainly made our lives a little less harder. Never forget to be grateful at the end of the day for the resources that are available to you. You are given a chance to make money by clicking a mouse from the comfort of your home.

How many people on earth can say the same?