Tips for getting higher returns from share trading

Share trading is a tough job fraught with dangers. Still, if the idea of making quick money attracts you, here are a few tips to help you on your way.

How many times have you bought a stock on someone's advice to make a quick buck and waited for months, may be years, to just recover your cost? Share trading, experts warn, is a risky game. However, it's possible to play it smartly and make a quick buck as well, they say.

Sandeep Nayak, executive director and chief executive officer at Centrum Broking, says, "The main attraction of trading is that people feel they can make quick money. But there are no free lunches. Trading requires a lot of discipline."

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While traders do make as well as lose money, whether this activity suits you depends on your financial position.

"Once you do your financial planning in detail, you know what your commitments are, as well as your risk appetite," says B Gopkumar, executive vice president, Kotak Securities.

TYPES OF TRADES
You can trade in shares and commodities. However, in India, retail investors mainly trade in stock futures and options due to sheer volumes. Trading means buying and selling a stock the same day or holding it for just 2-3 days. The former is called intra-day trade. The latter is called swing trade. Positional trade generally involves taking a longer position and holding a stock for 2-3 weeks.

MAKING MONEY
Profits depend on risk management. "I have been in the market for 10-12 years and I have seen that people do make money by trading shares," says Centrum's Nayak.

Safety tips for dealing with market volatility

This depends to a large extent on how much capital is available, how many opportunities you can explore and your knowledge of technical analysis.

"The returns depend on your risk appetite, how much money you invest and how many of your trades turn out to be profitable. You can make 3-4% in a day or even lose money," says Gopkumar.

SKILL SETS
While any recipient of the so-called 'hot tip' can trade, making money consistently is possible only when you have sufficient knowledge of the markets and skills for technical analysis, which is the science of forecasting prices based on historical data.