Tag Archives: Stocks

Zerodha Review

Zerodha Review

Hello folks, welcome to CCB. In today’s post I’ll be sharing my experience with Zerodha.

I created my demat account with Zerodha back in 2018 and I had to pay an account opening fee for it. Initially there were some hiccups because I tried the online approach. The money was deducted from my bank account but the account wasn’t opened successfully. Therefore I had to visit their office in Bengaluru. The office wasn’t too far from my home. On reaching the office I told the problem I faced with opening my account and also I had called the office in prior to let me know about the documents I had to carry. The staff were friendly and on submission of the documents the staff carried out the necessary steps to open my demat account with them. They didn’t charge me for photocopy of the documents and all I had to do was sign in the necessary sections. One mistake that I made was I didn’t make the nominee for my account, the person who was dealing with me said that I could do it later. Recently I was watching a video from CA Rachana Ranade, where she spoke about the importance of having a nominee and I felt that I should have made a nominee for my account. Well the next thing I should be doing is make a nominee for my account.

Moving back to the story, post all the necessary steps, the Zerodha personnel said that my account would be live in 2 days and I can start trading.

Well that was the account opening story. Moving on further things were a cakewalk but occasionally there were some hurdles. One such hurdle was as follows, I had my stocks on one exchange and the app was showing my stocks on the other exchange. Therefore I missed a chance of making money on one day. If you are a day trader then that could mean a lot because the market is open only 5 days in a week and one day is literally 20% of it. The issue was rectified the following day but only partially. I could trade the stocks on both NSE and BSE, now the app Kite by Zerodha showed my stocks on either of the exchange. Well that was one problem I faced with Zerodha. Another issue which isn’t really an issue is that stocks that no longer trade on the secondary markets aren’t shown in the holdings section of the app. Initially I felt that my stocks are stolen but post checking the Console section of Zerodha I could see that the stocks are there in my demat account but it isn’t visible in the holdings section. Well if you are a long term investor and if you own too many stocks (stocks from different companies) then my suggestion is kindly write down all the names of the companies in which you hold shares and keep it in a safe ledger. Also take print of the contract note that is sent by Zerodha post purchasing or selling stocks and keep it safely so that you can use it for later clarifications. And if your inbox happens to be cluttered by thousands of emails, kindly star the email containing the contract note, so that you could find it easily in the starred emails section.

Well, now let us move to the good things about Zerodha. I use the Kite app by Zerodha and it is amazing. I am a day trader and things work amazingly with this app. The app gives you most of the technical details that’s necessary to day trade. It’s also simple to use. Zerodha also has an app called Varsity that makes complex stuff pretty simple for newbies. Basically Varsity is an educational app. The next good thing about Zerodha Kite is, ease at which money can be added and withdrawn. Everything can be done from the comfort of your smartphone.

Moving onto brokerages, Zerodha is a discount broker and if you are a day trader this comes in handy. Charges for ‘Delivery’ is zero at the time of writing this post.

When I created my account the Zerodha official said that the annual maintenance fee is free for accounts whose account doesn’t exceed ₹25000. And post that it would be ₹350 / year for the next slab. However, when I recently googled the charges, a website just showed INR 300 per year and an account opening charge of ₹200. The aforementioned numbers are not a constant and therefore I’m not stressing more on it.

Well we are getting to the end of this post and the final question is “Should you open your account with Zerodha ?”. My answer to this is, if you are someone who trades a lot and brokerage matters to you, then Zerodha is a good platform to open your account. If you are a long term investor and if brokerage isn’t something that hurts you then you can definitely check out other brokers. The next deciding factor is which broker are the masses into. I recently saw an Instagram post which said that Zerodha has a stake of 38% of Indian investors and it’s the largest Indian broker. Going by that number Zerodha is definitely a good platform to start your investment journey. Moving onto competitors, it’s the time of Indian Premier League and I’m seeing a lot of advertisements from Upstox. So with millions of people glued to their televisions and mobiles during the IPL, the question is, “Will Upstox overtake Zerodha ?”. We’ll know the answer quite soon.

Well folks, that was a lengthy post. See you next time with a different post. Byeee 🙂

Should you quit your job to day trade ?

Should you quit your job to day trade ?

Hello folks, welcome to CCB. In today’s post I’ll be sharing my thoughts on whether quitting your job to day trade is right or wrong decision.

Well if you are planning to quit your job then a number of questions arise. The first question is whether you have different sources of income. If you want to make a living by day trading then the capital required to day trade and make sufficient income could be quite high. For example, if you invest 5 figure numbers, then the profit you make would be in three digits per day on the higher side. Well that’s what I made. So is that a good number ? Well if you are already making 4 digits per day from your day job the question is ‘Is it worth quitting the job ?’ Well the answer to this is you can make 4 digit profits per day but the capital required to day trade in such a situation would be in six digits. Also another thing to note here is, the markets are closed on weekends. So you only have 5 days to trade. Meanwhile if you are in a traditional job your salary would be on a monthly basis, so when you calculate per day income you usually include holidays too. So technically if you only take working days into consideration then the amount you should make per day by trading stocks gets even higher. Well those were the numbers. The next question is ‘Do you make money every trading day ?’ The chances are no for most cases. Another thing to take into consideration is losses and charges like brokerage, tax etc. well the net profit narrows down further isn’t it ? If that scared you, don’t worry, I’ll talk more good things about stocks in this post, so just read till the end.

The next question that arises is, do you have the trading knowledge that’s required to make money on every trading day ? If the answer is yes, then that’s a good sign and the decision to quit your current job and become a day trader is partially justified. If the answer to the aforementioned question is ’NO’, then girl you must take that into consideration before quitting your present job. The learning process is time consuming and if you are a beginner then quitting your job mayn’t be a good option.

The next question is ‘How long does it take to learn day trading ?’. Well if you are a quick learner you could learn it real quick and in terms of days I’d say maybe one year is quite sufficient to master the game. The next question is ‘What’s you age ?’ So boy if you just graduated from college, you are in a good position. You have time with you and you don’t have family burdens and monthly liabilities like the older people. On the other hand if you are old don’t worry, because you could learn it from the masters of the game but that’d cost some money. If you are willing to trade cash for knowledge then you could spend some cash to learn from the experiences of others and reduce the time in learning the game. Does that sound like a scam ? Oh girl that was just my suggestion you need not do the aforementioned. Moving back to dudes who are still young, my tip for you is get an internship at a place where they trade stocks. This would enhance your trading skills and you could get better at the game quite early in life and make good money with time.

Are you there ? If yes, congrats, there’s more coming. Is there a way to make money in the stock market without quitting your job ? The answer to that is yes and the solution to that is Swing Trading. How about holding a stock for a week and sell it at the end of the week, possible right ? And how’s that done ? Well, the answer is you could place your order during the after market hours and the orders will get executed the next trading day. To know more on how to swing trade you can checkout YouTube or wait for my course that’s coming soon. Still here ? Here’s some bonus info, if you are interested in trading stocks, checkout the following two YouTube channels,

◦ CA RACHANA RANADE

◦ PIVOT CALL

Is there another way to trade without quitting the job ? Well, if you are married and your better half is a home maker, then you could ask her / him to trade during the market hours and do the household chores prior to or after market hours. I highly suggest this method because if your better half knows how to trade you can make more money than investing in mutual funds. When it comes to me, my two month gross profit of 2021 is 12.4 % of my trading capital. If I just multiply it with 6 to calculate yearly returns then that’d be 74.4 %, which is quite good and far more than investing in traditional mutual funds.

Is there one more way to trade ? Well the answer to this is yes and this is how it could be done. Suppose you belong to a upper middle class family and have a source of recurring income without you having to do a day job then you could use a small chunk of that recurring income to fund your day trading journey. When I say recurring income I mean returns from real estate in the form of rent, returns from fixed deposit etc.

Well folks, that was it for this post. If you liked this please share it with your near and dear ones because that would benefit my blog and if my revenue from advertising increases then you could expect drop in price for my courses. See you next time with a different post, byeeee 🙂

Stocks Lesson 01

Little Things You Should Know Before You Start Investing in Stocks

Well, if you purchased this product it means that you are interested in trading stocks, aren’t you ? I assume the reply to be “YES” and without further ado let me explain the little things you should know before you start investing in stocks.

Stocks are a great means to earn money but it comes with a lot of risks. In this post I’ll explain you about the risks associated with trading stocks, how to minimize risks and maximize profit. Most of the things mentioned in this post is based on real market experience and not based on any arbitrary assumptions.

The first thing you need, to trade stocks, is a ‘Demat Account’, demat stands for dematerialization i.e. you can hold stocks in electronic form and to open a demat account you can either approach your bank or any broker who is registered under Securities and Exchange Board of India.

The things you need to check while choosing the broker is, the brokerage charges, annual maintenance charges and other terms and conditions.

Once you are done with opening an account you are ready to trade. But here comes the problems, “which company to invest in, how many stocks to buy, how to calculate the breakeven point, how to sell the stock that you bought, when to sell the stock that you bought ?”.

Here is the answers to the aforementioned questions. First of all, the key thing that an investor should have is patience. You might be familiar with the saying “A bird in hand is better than two in the bush”, the same applies to the investor, here the bird is your money. If you take a quick move just based on some newspaper headlines, predictions, rumours, then you end up losing money. As I mentioned earlier, that all the information here is based on real market experience, I will tell you an experience of my own. When I opened my account I was in a bit of hurry and I ended up buying some stocks based on recent news, little things that I had heard about stocks by acquaintances etc. and guess what happened next, I was unable to breakeven on the investment even after couple of months. The reason for it is, the movement of price of that stock hit stagnation at a particular price and the range of price being very less, I would make a loss if I sold that stock even at the maximum price it was being traded at. This particular problem is termed as ‘Chakravyuha Problem’ i.e. you can enter the battlefield by knowing the entry route but if you do not know the exit route, you’ll end up getting stuck in the battlefield. Here the battlefield is referred to the market.

From the aforementioned example you might have learnt one of the little thing that you should know before you start trading. Now I’ll teach you how to overcome the above problem. Before you start investing in a particular company you should know the entry and exit points. Entry point means the price at which you have to buy the stock and exit point means the price at which you should sell the stock. When you buy a stock you end up paying for the price of the stock, brokerage, securities transaction tax, stamp duty etc. And when you sell the stock you again end up paying the aforementioned fees, but if you are selling the stock for a greater price than the price you bought it for you will recover all the fees and you also make ‘some profit’. That ‘some profit’ can mean a lot depending on the type of trader one is. For a good trader ‘some profit’ can mean crazy ultra huge profit, for example 75% profit. Well if you think that is exaggeration then you might have to change your mind. Here is a real example, I bought a stock for a price around INR 10 and in a few days it hit around INR 17.5, sounds cool doesn’t it ? but here is another probability that can happen to the above mentioned stock, if the price of the stock falls from INR 17.5 to INR 10 then a person who entered the trade at INR 17.5 would make a loss of 75%. Bingo !!! you heard that right, that is exactly how volatile a stock can be.

Oops, I think we drifted a bit since I was supposed to teach you how to break even.

This is how you make the calculations, after few trades you will be in a position to know the brokerage fees, taxes etc. for a particular amount, for example say INR 1000. You should note it down in a book or just remember it in mind because after few months of trading you become used to taxation and fees and you can predict the fees much before you get the bill or contract note. For now, let us assume the fees to be INR 5 for easier calculations. Therefore when you buy the stocks for INR 1000 you actually end up paying INR 1005. Let us assume the price of one stock to be INR 100. It means you can buy ten stocks. The stock gets delivered to your demat account after T+2 days. When you sell the stock once it is delivered to you, along with taxes you will be charged something known as DP charge, i.e. the charge for book keeping and this charge is constant irrespective of the number of stocks you own i.e. the DP charge is same for one share, hundred shares etc. At the time of writing this the DP charge is INR 13.5 plus taxes which after taxes costs somewhere around INR 15.93. You might be wondering, why am I telling this aren’t you ? The reason is as follows, imagine after two days the price of the stock that you bought rose to INR 101. It means, now you’ve made a profit of INR 1 per share. This multiplied by the number of shares i.e. 10 gives the value INR 10, which is the profit you made. But since you’ve paid tax of INR 5 while buying the stock, now your real profit is INR 10 minus INR 5 = INR 5. I also spoke about DP charge right ? INR 5 minus INR 15.93 = … You know what the answer is, don’t you ? The answer is negative integer. Which means you haven’t made any profit yet and the rise of INR 10 is an apparent profit and not real profit. In the same example assume you had 100 shares, it means for rise of INR 1 you make a profit of hundred rupees since you have 100 shares. As I mentioned earlier that the DP charge is constant for any number of shares, now your profit would be INR 100 minus INR 15.93 minus taxes. As mentioned earlier if the tax, brokerage etc. for 10 shares is INR 5, then for 100 shares it would be INR 50. If you subtract DP charge and tax from profit, it would be INR 100 minus INR 15.93 minus INR 50, which is equal to INR 34.07. Bingo !!! that is a positive integer.

From the above example you can spot that the person with 10 shares was not able to make profit even after the price of share rose by INR 1 but the person with 100 shares made a profit of INR 34.07.

What if the price hit stagnation at INR 101 in the above example ? Then the person with 10 shares will be experiencing Chakrvyuha problem while the dude with 100 shares would have come out of the problem with a profit of INR 34.07.

Let us see another probability, if the price of the stock that was bought initially at INR 100 fell to INR 99. In this case the person with 10 shares would lose 10 rupees and the person with 100 shares would lose 100 rupees if they exited the trade at INR 99. Suppose the price fell further to INR 98, then the person with 10 shares would lose INR 20 and the person with 100 shares would lose INR 200. I guess this probability would have made some sense in your mind with regard to trading stocks.

The drop in the price of share example might have made you go pale, so let us look at an happy example. Assume the price of share that was initially bought at INR 100 climbed to INR 1200 after ten years. You do the mathematics now. If you are done with the calculations, try to find the name of the job that would pay you the profit that that you’ve calculated in the above example and the hard work and brain work involved in that job. The hard work involved with purchasing the right stock ten years back on your demat account was just tapping the screen on your phone. There was a change in tense there. Ten years back people would most likely have not used mobile banking, so ten years back actually refers to present and ‘after 10 years’ refers to 10 years from now. Hang on, I forgot to mention that companies pay dividend, some annually and some quarterly and some during particular months and some never pay at all since all companies don’t grow the way it was mentioned in the above example but some do. To verify this you should check ten years graph of those companies which prove that capital appreciation by many fold is possible. I have identified such companies and that is the reason why I trust in trading stocks. If you are that type of person who would sell the stock after a decade then you are known as a long term investor.

Many people say that long term investment is a good option but let us have a look at the loop holes in that statement. Well it is pretty true that price of stocks appreciate over long period and one can also compound the profit by reinvesting the dividends to buy more stocks, here are some drawbacks in this approach. The first drawback is the purchasing power of money with respect to inflation. You might see some posts on social media which reads that investing x amount a decade back would have given you a huge profit of y amount now. Well the problem with this statement is that people forget to notice what one could have bought with x amount a decade back. If you found it hard to interpret the statement here is an example, when I was in grade 5 I used to live by the country side and the price of 1BHK apartment was somewhere around 3.5 lakhs. It means that you could get an apartment for 3.5 lakhs 12 years ago and if you look at the purchasing power of 3.5 lakhs today, forget apartment you can’t even buy an iMac pro. Some days back I got an opportunity to check the brochure of a real estate company and the price of 1 BHK was 46 lakhs. Assume you invested INR 3.5 lakhs in stocks 12 years back and you got an appreciation of 12 fold on that capital. It means  INR 3.5 lakhs * 12, multiplying this would give you an answer of 42 lakhs. Well this is capital appreciation, if you add dividends to it the value would increase. Also an important thing to note here is that dividend doesn’t follow a particular pattern i.e. during that 12 years there could be some years where the company doesn’t pay you dividend and there could be genuine reasons for it, and one such reason is plough back. Plough back means a situation wherein a company would use its profits to expand the company. Going back to the 12 year story, there could also be some years like recession, drought, sudden economic reforms etc. that would slow down the rate of growth. In such a situation you mayn’t really achieve the target that you expected. Now imagine you invested in stocks instead of buying 1BHK and rented out a home for 12 years. Calculate the rent for 12 years. Now check the difference amount between capital appreciation in stock price + dividends and inflation in the price of 1BHK. Do you feel that you made profit ? An important thing to note here is that the price of the rent keeps increasing by a definite percent every year in accordance with the rental agreement.

What is the moral of the above example ?

Do not get carried away by what you see in social media or what somebody says. Work out the mathematics before you go in for a trade.

What should you do if long term investment should go in your favour ?

The answer is wise trading. Now if you want to know what this is, here is the answer. There is something known as compounding. Many of you might be knowing the magic that compound interest does. But how to do it in stocks. Imagine you have 1000 stocks of a company which pays 2% dividend per year, assume the price of the stock to be INR 100. 2% of that is INR 2. Multiplied by number of stocks gives you INR 2000. Assume the price of the stock hit 150 in the second year, it means that if you invest INR 2000 of that dividend amount back into the same stock you could buy 13.33 more stocks (ignore the decimals). So the next time you get dividends for 1013 stocks. Assume the dividend percent is constant for the second year which is 2%. 2% of INR 150 is INR 3, this multiplied by 1013 stocks gives you INR 3039 as dividend

If you keep on doing the aforementioned process again and again the number of stocks in your portfolio will increase and so do the dividend income. Sometimes companies may even issue bonus shares when they  don’t pay dividends.

That is it for this episode, we will continue forward from where we left in the next lesson.

Disclaimer : Trading stocks is subjected to market risks. Please read all the terms and conditions before investing. The motive of this lesson was to teach little things about stocks for those who do not understand much about stocks. Candidcanblog.com will not hold any responsibility for any losses incurred to the readers of this post.

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