What should be my strategy if I am looking at returns of around 5% monthly on a capital of Rs. 1. 00 Crore?:

This was one of the questions on Quora which I answered 4 years ago on October 29, 2017.

After that my trading has changed a lot.

Readers of this blog know how we have gone from exclusive option buying to multiple strategies. One’s perspective about the market changes with time and with the results obtained.

We shall deal with the issue in two parts.

How it was considered 4 years ago and what do I think now.

Four Years Ago:

Please read on:

At this moment there are 17 answers to this question.

Few of them are discouraging type and few are offering their services to achieve this kind of results.

Some are even questioning why a person who can deploy Rs. 10000000 as investment should be seeking advice here on Quora.

Seeking advice is not uncommon.

Go to wealth management desk of any bank or Portfolio Management Service.

You will find people in their 20s earning a salary of Rs. 25000–50000 per month advising successful people having 2–3 Crore Rupees funds on how to manage their portfolio.

Believe me, these guys themselves never invested a single Rupee in stock market except maybe through some mutual fund SIP. ( Systematic Investment Plan)

Their credentials:

Nothing. Only their organization has trained them to offer this service.

But people do take their advice and sometime it works too.

In a sustained bull run anything would work.

This fact is common all over the world.

The person seeking advice may be from a different line of work and maybe looking towards stock market for the first time.

There is nothing wrong in seeking and giving advice.

But it should be done honestly.

Seeking Consistent Returns:

Some people look for windfalls.

They want to double their money in a month.

Some look for 30–40% returns in a year.

Some just want to do better than bank deposits.

All of the above wishes are possible.

One has to find the opportunity, have an exit plan when things go wrong and be patient when the trades are doing well.

Let the returns be decided by the market.

You only decide about the maximum loss you are going to take.

We can not control market direction or momentum. We can not dictate how much a stock price would move during a day or a month.

We can only protect ourselves by limiting our losses in a wrong trade.

We can exit by booking profits quickly also but then would be missing out when the prices go up further.

If committing a capital of about Rs. 10000000 it would be prudent to spend some time on getting trading/investing knowledge also.

For the actual process of achieving your goals, I would suggest reading my earlier answers on similar questions:

Pramod Kumar’s answer to Can a person earn more than one lakh a month in option trading (NIFTY)? If yes, then what should be the strategy to earn such huge amount of money?

Pramod Kumar’s answer to How do I achieve a 6-7% monthly return from the stock market (short-term trade)?

Pramod Kumar’s answer to Can you earn at least Rs. 70-80k per month with share trading and investing on a capital of Rs. 5 lakh?

Pramod Kumar’s answer to What are some good options trading strategies for the purpose of monthly income generation?

Pramod Kumar’s answer to Is it technically possible to make a 100% gain in futures and option trading in 1 month?

Summary:

It is a common refrain that if such a strategy really existed, why would someone share it?

The fact is that strategies are over rated. They are the fail safe mechanism to satisfy the ego of the trader.

There is only one way to make a profit.

Selling at higher price than the buying price.

And fortunately or unfortunately, this will forever remain the only way of making money.

This is true for whatever you are trading whether it is stocks, commodities or groceries.

It will not be always possible to do so in stock market as prices can go down after you buy.

You have to protect yourself by a sensible stop loss limit.

Keep your losses small and let your profits run.

Do not decide the profit, let the market give it.

It could be more than 5% you are looking for.

Thanks for reading.

Quote Image Source: Google Images

Those were my views 4 years ago.

Present Thoughts:

The time on this blog since January 2018 has taught many things.

Most important being not to have a target for the profit.

We just keep doing our job and let the market do the rest.

We have the following 2 strategies running which have done very well.

https://optionsnext.com/money-in-the-bank-two-year-journey-strategy-that-works-review-of-24-months/

https://optionsnext.com/not-so-lazy-another-simple-strategy-this-too-works-review-of-14-months/

Approximate returns through these strategies are seen at around 3.25% per month.

The logic of the setup tells us that it would be possible to get these kind of results consistently. Occasionally, we may get better results but it would be prudent to keep the expectations lower.

After having experimented with multiple kind of trades, I would like to conclude that it may be possible to get lucky and have 5% per month kind of returns but it would be better to scale down and consider 3-3.5% as a reasonable profit.

With belief, knowledge and some good luck, it may be possible to be decently profitable in the long run.

( Please share with friends. Sharing is caring. )

Enjoy the Sunday holiday.

Let us be back here again tomorrow for the trading day thoughts.