What is the minimum capital required for swing trading in India?
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How much money is needed for swing trading in india
I do understand your interest in swing trading, you can make short term profits with a little investment. You can start swing trading with a minimum investment of INR 10,000 and rise to INR 50,000. The nature of swing trade shall demand you to maintain at least 10 percent of your investment in the trading account balance. You will have to invest a minimum in the stocks that show medium price movements that begin and last for either a few days, or up for weeks. However, you can pick swing trading as a full time job. Furthermore, you must also maintain factors that lay the foundation for better trading returns.
Let me elaborate the acceptable account risk you can plan for in swing trading. In an Indian context, you should maintain a risk of around 1 to 3 percent and failing that you can experience a drawdown or get your trading account burst.
Invest on a Stock that is 1% of the Trading Account Capital
Let us assume that you purchase a stock at INR 800.00 by setting a stock loss at 10%, and in addition, not to encounter risk beyond 1% your trading account size. In such a scenario, your trading account must not be to the size of INR 1,000.00 but must be about INR 8,000.00 to become 1% of the trading stock @ INR 800.00.
Lets Analyse:
Keeping slippage into consideration, you can risk up to 10 percent of your trading stock, which comes to INR 80.00. Then, the maximum slippage of INR 80.00 is 8 % of INR 1,000.00 ( trading capital) which is greater than 1% acceptable risk.
Hence, to compensate for the risk factor to 1%, your trading account must maintain trade capital by INR 8000.00.
In case you agree for at least 2% risk, then you must maintain a minimum trade account capital of INR 4000.00. Therefore, I would say, go for cheaper stocks when you are not able to arrange for a higher trading capital.
Brokerage:
Do select a brokerage who maintains transparency, like, Zerodha, a stock brokerage company, does charge you a flat fee of INR 20.00 per trade, irrespective of the quantity of the traded stocks.