Are you ready to invest in the stock market?

Why do you want to invest in the stock market?

What a silly question, Sanu. I want to make money. What else? Well you see, that is the first roadblock in your path to making money in the stock market.

For starters, your goal is too vague to succeed in the stock market. If you really want to succeed in the stock market, you need to have a very specific set of goals. And you need to ask yourself some very tough questions.

• What is your risk appetite? Are you OK with seeing your principal amount go down by 50-60% and not be scared to sell at loss?
• What are your short-term and long-term goals? 
• I want to make money( ₹100,000) for an iPhone 11Pro in the next 6 months.
• I want to make money( ₹300,000) to pay off my remaining student loan.
• I want to make money (₹ 300,000) for a Europe trip next summer( June 2021).
• I want to make money to buy a Toyota Fortuner ( ₹34 Lacs) in 7 years.( Not a good goal BTW).
• I want to make money to buy a house(₹ 75 Lacs) in 15 years.
• What is your current financial status?
• Are you a 23 year old with a ₹50000 in hand salary with no obligations and financially dependent parents/spouse/children?
• Are you a mid-career professional with ₹3Lac/month in hand salary with ₹1Lac/month EMI, a financially dependent spouse, and 2 children?

Once you have written down the answers to these questions, I feel you will have better clarity of your goals and the motivation to achieve those goals.

OK!!! I have it all written. Now, when can I start trading?

Hold on. Having a goal is not good enough. We need to have a solid plan and strategy in place before we jump to the trading terminal and start placing orders.

There is a small but not exhaustive list of things you need to be crystal clear about before start trading:

• How much capital do I want to begin with? To put it simply it means, how much money I can put in my trading account to start trading.
• How much money am I willing to risk in a single trade. For e.g. I have 100,000 as my initial capital. So in a single trade( either when buying or selling), I am willing to lose 5000( 5%) of my capital at the maximum.
• How much time can I spend each day analyzing the Chart patterns(more about it later) and planning my next trade?

I know these are really boring questions to answer but having the answers before you put a single rupee will save you a lot of heartaches later.

Questions	Your answer (Fill your answers)
My risk appetite	high-risk appetite
Goal for trading	Buying Royal Enfield Desert Storm (₹2.5Lacs)
Current financial status	No liabilities, no dependents, No credit-card dues.
My initial trading capital	₹100,000
The money I am willing to lose in a single trade(Drawdown)	₹5000(5%) maximum
The time I can spend each day analyzing the chart patterns and planning my next trade	2 hours
My monthly return target	3-4%( This is a fairly optimistic return)
The time it will take to achieve my goal based on my projected return	₹2.5lac/3000 per month ~ 84 Months ( Cost of bike/ profit per month) excluding taxes and brokerage charges.

I know the time taken to achieve the goal doesn't look very exciting at first, but even the most successful traders don't make more than 4% per month( 48% averaged yearly).

So let's meet again when you have filled in your answers and are ready to take the next step.

Disclaimer: I am NOT a SEBI registered advisor. All my blog posts are written for educational purposes only and do not constitute specific financial, trading, or investment advice. The blog is intended to provide educational information only and does not attempt to give you advice that relates to your specific circumstances. You should discuss your specific requirements and situation with a qualified financial adviser.