Huge loss in banknifty

 This week started with the huge losses. I had the 3 positions of calls sold of the banknifty for the strike price of the 25100 weekly , 25000 monthly and 26000 monthly at the premiums of the 60,100 and 100 respectively.

Today that is on Monday 31 Aug 2020 , as the banknifty opened up with the gap up opening and hence the premiums of the calls drastically increased. These increased in the premiums caused the loss of around 45000Rs to me.

I had the portfolio of the sbi nifty bank , which too increased but I had to square it off in order to neutralize the loss. At the end of the day I will be able to get the complete details of the overall loss.

Lesson Learned from it.

As I had the portfolio of equivalent to 1 lot of the Bank Nifty even then I sold the 3 lots of the banknifty, Which means my loss will be 3 times and that happened.

The value of the ETF didnt increased that much but the premiums of the calls increased alot and causing me the huge lose. So the lesson I learned is never ever loose the hedging, plan to earn big and loose small than earning small and loose big or even earning big and loose big

What will be the next strategy

As I have zero positions at the moment and I have cash available I will plan to take the next position on the bank nifty etf. I will try to buy the etf of around 1 lot in small quantity on each fall. Then I will send the covered call of banknifty but this time it will be limited to just one lot of either weekly or the monthly , not more than this.

BankNifty trend this week.

I feel the banknifty has moved a lot towards the north , now there may be some profit booking at the current levels and hence which may give a little correction.

But still a trader should remain hedge.

What are the other strategies that can work in this scenario of banknifty

There are a lot of option trading strategies that could work in the current scenario of the banknifty. The ratio strategy can  also be implemented at this point of time or buying a put can be a good strategy right now.

But as for me, as I have already mentioned I prefer to buy the stock at the falling market and sell at the rising , so I will wait for few time and then I will buy the etf again at the lower price and then I will again start selling the covered call of the banknifty.

What if the bank nifty keeps moving up

If the banknifty keeps moving up, I would avoid buying the etf for some time untill it shows some correction. Meanwhile I will prefer to park my money on the bharat bond or the liquid bees etf. This way the idle money will keep on earning some interest on it.

Why not go for the stocks.

Buying and selling of the options in the stocks can be alot more riskier than the index. As I am still new to the options I will take some more time to learn while trading and index are much better and stable for this purpose.

Conclusion

1. While anyone trades with the option , he should be strictly hedged. 

2. Decide your stop loss in the premiums as well or you may incur a huge loss.

3. Never hesitate to square of your positions if the trade is going against you. Taking small loss may prevent the big loss.

4. Be prepared to square off the portfolio as well if the call gets in the money.

5. Market will always give opportunity to buy a stock at low price, just be prepared it by having cash or parked money for it.

Keep trading :)

27 Aug 2020 Banknifty weekly expiry position

For this week of the 27 august 2020 weekly expiry when the Bank nifty was trading at the value of the 22400, I sold the call option at the premium of the 40rs per share for the lot of 25 of 23300 strike price, that means I received the 1000rs as premium.

What is the current scenario of this position

Yesterday, that is on 26 Aug the banknifty crossed the 23300 and hence the value of the premium too increased. At some point in the day it came near to the 23200 where I squared off the position when the premium price were around 137 rs resulting in the loss of around 2500rs approximately.

Was it a covered call?

At the starting I made the plan to sell the covered call, But as it crossed the 22300 and the trend seemed to be strong bullish I squared off my call position and I am still holding the banknifty ETF. Now this ETF will be used to sell the covered call for the higher strike price.

What is the total loss.

As my profit from holding my portfolio of the banknifty etf is increasing but the loss from the call of 23300 was around 2500rs , I squared it of at that price.Overall I am in profit but as I have not planned to square off my portfolio I can say this week I am in a loss of 2500Rs.

What are the other positions I have opened.

I have opened the new positions of selling the calls at 24500 , 25000 and 26000. I will be posting about these in details in my upcoming posts. I am in loss on each of them as the banknifty is rising and these positions are of the monthly expiry for the September series.

Lets see how they perform.

Am I going to manage the loss that occurred?

I am not going to run for the loss I occurred as it could give me more losses. I am happy as per my strategy. My portfolio is increasing as per the strategy I choose and I will continue following it.

There will be times where I will be booking the losses and there will be times when I will be utilizing my profits to further buy the ETF's.

I will keep my target in my mind and will work to achieve it.

What is my target

My target is to make my portfolio which is currently at 3,80,000Rs to 6,00,000Rs from the banknifty itself . Then I will move to the stocks options.

Conclusion:

This week expiry ended with the loss but I am still holding my complete portfolio of the sbi nifty bank and will use that for further selling the covered calls.

That is why I love swastika just trade

 I am a trader and I am an proud option seller. Most of my trades are in options. As I am very active in selling as well as buying of the options, I seek to sell or but the far out of the money strike of a stock or an index.

But not all brokers allow that, many brokers restricts the clients to trade on the far out of the money options because of the low liquidity in those strikes but the far out of the money(OTM) options can be proved to be the safest options as compared to the in the money(ITM) or at the money(ATM) option strikes.

Why do brokers restricts trading in far OTM options

Brokers want to protect their client from the loses, if there is less liquidity at a strike price and the client trades on it he can get stuck with it and may even cause the loss and hence the brokers restricts trading in that strike price.

Which broker allows trading far out of the money options?

There are many brokers that gives the flexibility of trading far otm options , Swastika just trade or its product Tradingbells is one of them , it is a broker that I personally uses. I am a option trader and many time based on the strategies I choose to trade on a particular index or trade requires to trade on the far out of the money option and as the swastika/Tradingbells allows trading in them this just makes it easier to work within the strategy.

Can I get a referral of it 

Yes, surely. Anyone a member of the swastika just trade can send his referral to join the broker , as I am also a member I do have a referral link for the same. If you are interested to join the broker you can CLICK HERE for the referral link. 

Note: Tradingbells has now collaborated with the indiainfoline as well and one can signup in it as well.

Why I stopped selling the naked call and naked put options

Options are the hedging tool of the stock market, they should be used for the hedging purpose. If used otherwise they may cause huge losses as they have potential to give you unlimited losses. Option selling can be your friend and enemy at the same time, selling of options can give you profits but it is very risky too. In order to understand it completely let us ask some questions and try to answer them.

What is selling naked call or what is selling naked put option

When you simply sell a call option without having that stock that is known as the selling of the naked call option and selling of the put option without having the cash equivalent to the one lot of the stock is known as the naked put option.

How is naked call or naked put option a risky way of trading

Think of a situation in which you sell a call option of out of the money strike for a stock. Now the price of that stock increases and crosses your strike price and making it in the money. From my experience I have witnessed that stocks are capable of moving in one direction. If such a situation arises the value of the call that one has sold will increase and hence will cause the loss to the seller. On expiry the seller has to either square off his position as he is not having the stocks for the physical settlement.

How About the profits in Naked call and naked put

Selling the naked call and naked put are actually most profitable way from the option selling if the things go with your planning, but if things turns out to be against you you may incur huge loss. If you have sold a naked call and the market moves downwards then the premiums will decay and even the option may expire out of the money and could give you the complete premium as profit.

Have I ever sold Naked call or naked put

I used to sell the naked call and naked put when I had the budget of around 1 lakh. I even made the profits from it but once the market jumped too much and I lost a huge amount in that as well , since then I worked to build a portfolio and decided to not go with the naked options.

What is the alternative of naked call or naked put options 

It could be better to build a portfolio and hedge it with the options, covered call or cash based put, this way one will be hedged and may earn some decent profits as well.

Most important thing in trading is to protect your capital while making small or big profits. One will always get alot of opportunities to get a decent return all he have to do is wait for the right moment , stay invested and hedge properly.

27 Aug Banknifty Strategy status

I had sold and call option of the banknifty at a price of 23300 at the price of the 30rs per Lot and it was an covered call as I have a portfolio against it, Now today as the market opened the price of banknifty reached till 23200 as a result the price of the call that I sold too increased causing me the loss.

What will be the loss if the price crosses 23300

As I am hedged with my portfolio the price of my portfolio will also increase as the price of the bank nifty will increase, at the same time the value of the call will also start increasing and will cause me loss.

Technically I will start making the loss when the price crosses 23330 as I have received the 30 rs premium already when I sold this call option.

But as my portfolio value will also increase I would be in overall profit but I will have the opportunity loss.

What is opportunity loss.

As the loss from the call option is increasing as the price of banknifty is increasing at the same time the portfolio profit is also increasing and hence they both will cancel out each other. This way the oppurtunity that I had that would have increased the value of portfolio is reduced. Overall I am in profit but I would have been in more profit , this situation is opportunity loss.

Where could be the banknifty expiry on 27 Aug

As per my analysis , I feel the banknifty may expire between 22800 to 23400 range, If it expires within this range I may still have a little or no loss from the call option and my portfolio will also be appreciated well.

Market cannot be predicted , the actions can be taken against the moves.

What is my current profit or loss.

As I said my portfolio value has increased but the loss from the call has also increased. Below are the screenshot of them.

 

In these screenshot it can be seen that my portfolio has appreciated from 3,60,000 rs to nearly 3,80,000 rs where as the call options which I sold at the rate of 30 has increased to 85 causing me loss of 55 per lot. But still the profits are more than the loss and overall I am on a profit.

Conclusion

I will carry forward the positions till the expiry that is till 27 Aug and will decide as per the market scenario if I should book profit with my portfolio too or should I carry it forward too.

What about the september month banknifty positions.

I had sold the 24500 and 25000 call options at the price of 100 each, now I am going to carry forward these positions as well , currently I am in loss in both of them but I will still carry forward them as I feel the banknifty still has a distance to cover to reach to that level.

 

My september month option selling strategy

As I am into optionselling ,i try to sell the options of banknifty each month as well as for each week. This week that is august 27 expiry will be monthly expiry too.

Many traders like me like to place the next month expiry positions in this month only as we gets the good premiums.

For the September expiry I have sold the call option of the banknifty at a price of 100 rs for the 24500 ce strike price. 

Why 24500

This strike is too far from the current price and also the premiums at that level are too good and even if the banknifty will reach to that level I will sell all my holdings and will get good amount of profit.

Simple Strategy

I tries to follow the simple option selling strategies that has the highest chances of success. These strategies are easy to use and gives good result.

Not only that but I am somhow hedged for the downside as well. I dont like to buy the put for the downside hedging but instead I try to sell the call for the same purpose , I have long term view but at the same time I am ready to take short term trades as well.

Total earnings from this

As I sold the call at 100 rs premium and one lot is of 25 shares and hence premium received is 2500 rs .  

In the coming posts i will be sharing the risks and rewards ofy strategies as per the various price change .

BankNifty September option strategy

Today I took a position for the September month expiry for the banknifty. I always prefer to trade on banknifty because of the two important things 1. It is index ,2. It is quite stable comparing it to the stock.

Strategy I followed

I have the SBI Nifty Bank ETF in my portfolio and I sold the call option of 24500 at 100rs premium. Total premium received is 2500 Rs.

View on Bank Nifty for September expiry

Because of the pandemic , I still feel that the banknifty may under perform for few time as a result I will be selling little far OTM calls for the same. If the call will expire OTM I will use that premium money to buy more ETF of the SBI nifty bank.

Target on BankNifty

I have money related target for the banknifty, as my total investment is around 3 Lakhs and 50 Thousand , I will be following the same strategy till I achieve the amount of around 6 Lakhs . I will also try to book profit from the portfolio and will try to reinvest if I get the opportunity to buy on the low values but if the price keeps on increasing I may go for the Bharat bond to park my money.

Why I am not trading on NIFTY

I feel a little bit more comfortable in Bank NIfty , but I wont be just limited to this , with time when my portfolio size will increase I will move to the nifty as well and also further to the stocks specific as well.

I am planning to go slow with this. As the people say Rome was not built in a day. I will take tiny steps and will try to book small profits while taking the small loses.

What else I am planning 

I have another portfolio of the mix stocks of around 80 Thousand Rupees value. I am trying to book tiny profits from it as well while buying only Kotak Nifty ETF. I will be trying the covered call strategy in this as well when it will grow, also I try to invest around 4000 to 5000 Rs per month. I am building portfolios with the index funds and will keep on buying the stocks on dips.

Soon I will start sharing the screen shots of the trades I take to give more clear view on my thinking and idea.

Can a retails investor get good return from the option trading

There is an saying in the stock market that the big money attracts the small money towards itself, similar thing happens many times with the retail investor too. Also there is a saying that the rich becomes richer and poor becomes more poor in the capitalist world.

But the world do not runs on the sayings, people do says things and people do believe things but the practical situation is always different for each of us.

When it comes to trading the option trading can really be a amazing tool that can help you not only in protecting but appreciating your portfolio with time.

Option trading is a riskier game

Calling it game will not be right, option trading is a hedging tool which is used by the big players to hedge their portfolio. In simple term we can say it works as a insurance for the people with the big portfolio.

Who are retail investors

I believe that the retail investor are the people who are individual investor who invest for by themself for themself. Often they have lower amount by which they trade or invest in the stock market. People like me and you , we are retail investors.

Should retail investor trade in options 

Option trading is basically a hedging technique it is used to hedge the portfolio. In India options can be traded in the lots and if you will look closely you will find that the cost of 1 lot of any stock that is trading in the future and option category will be somewhat around 6 Lakhs rupees.

If you are buying 1 lot of a put for any stock , that will be insurance for your portfolio of around 6 Lakhs.

Now think of a situation , you have less amount of money and you are buying the insurance each month in order to protect that money , how will that be beneficiary for you. You will be paying each month a premium amount and that may be a burden for your portfolio. But if you have a large sum of money invested than that premium amount may proved to be negligible.

Hope this answer this question.

Still got no clue

Ok if you are a trader and looking for the trading opportunity you can choose the options to trade as it looks a little cheap to buy than buying the complete shares.For example with the small amount of ten thousand you can get the 1 lot of shares of any stocks and if you are looking for the trading in it that is a good deal but it has its own risks too.

What are the risks

For the option buyer the premium amount could depreciate faster near the expiry and it may turn to 0 if the option expire out of the money and hence loosing the entire amount. For seller there is the unlimited risk as the stock could rise to unlimited value (theoretically) and even fall to a much value and may cause huge losses. 

So what is the best way

There is not best or the worst way, what I believe is one should focus on learning first. Once you are aware of the functionality of each technique you should try them with the small quantity. Further if you become confident even then it will be a good idea to build a portfolio rather than going for the naked positions.

Do I trade in option trading , what is my budget

I have tried option selling , I am retail investor. I had good experience about it. But I learned about it from the starting and gave most of my time in learning. further I built a portfolio and now I am trying different strategies to protect my portfolio and appreciate it in value. I have a budget of around 3.5 Lakhs and I try to invest a small amount each month on it.

Will I share my strategies in here

I am already doing it and I will be sharing my more of the trading and investing experiences in here.

Expiry plan for banknifty 20 Aug 2020

Hello Traders, As the 20 Aug 2020 expiry is tomorrow , we all option seller are curious to know about the range of the banknifty expiry.

 

 

This week strategy

As per the trading strategy I have the holding of the sbi banknifty etf and I will keep holding it , other than that I try to sell the covered call. I already squared off my call which I sold for 64rs at the 16rs price and the total profit was 48rs per share and a total of 1200rs (as per 25 shares per lot).

Portfolio performance

This week was quite good for me, I had the Sbi banknifty ETF in my portfolio and its value increased as the price of the banknifty increased to 22300. I have already squared of the call I sold for the price of 24000 with a profit of 1200rs and I have a monthly call for 26000 at the price of 84 , which is currently at the price of around 48 rs.

Weekly profit

Profit were basically from the increase in the value of the etf that I am holding and from the call option I sold. Total booked profit is around 1200rs and un-booked profit is around 15000 rs which I am not going to book as of now or may be book a little on the monthly expiry of the august.

Expected expiry range

The banknifty seems to be in the uptrend and I see it in the range of 22000-22800 this week, this is just my personal opinion.

Upcoming strategy

In the coming week I will be studying the banknifty performance as per the various technical indicators like MACD, RSI etc and will take a trade probably on selling the call option for the next expiry looking into its performance on this expiry. I prefer the covered call as I feel covered call is the best strategy if you are looking for little safety and want to appreciate your portfolio with time , I prefer to do trade mostly on the index as they are little less volatile as compared to the direct stock options.

Which broker allows far OTM option trading?

If you are a option seller you must be aware of how the far OTM option strike is important to manage the risk and reward for your option trading strategy.

Many brokers blocks the scripts with the low volume or low open interest, as a result many brokers blocks the far OTM looking into the OI and volume. Liquidity plays an important role when it comes for the option selling in case there is low liquidity there is a possibility that one will not be able to buy or sell the option of the strike. The brokers blocks these strikes in order to avoid any potential losses that can be make by the traders. This is done for the benefit of the traders but also if a trader is aware of such risk and is ready to take such risk there is no point in blocking the strike.

Many brokers still allows to trade on far OTM strike price. One of the broker is tradingbells. I have been using this broker and I sells the far OTM calls and far OTM puts from this and I didnt faced any problem in it.

Many times there are liquidity issue but that is totally different problem.

If you want to join the tradingbells you can use my referral for the same.

CLICK here to visit the signup page, I feel this is the best broker for the option trading and one can use the options for the full potential.

Do let me know if you feel otherwise in the comments sections and if you are using the tradingbell do share your experience.

 

How to invest in banknifty

As we know banknifty is the index of the bank, this index consists of the 10 public and private sector bank.

We cannot buy the index directly but still there are ways to trade and invest in banknifty. If you want to trade in banknifty you can do it by trading in its option or future , the price of future of banknifty is very similar to the banknifty price and the movement in price of the banknifty is very similar to the banknifty future price, one can trade in any of the 3 series available that is current , next and the far series.

Similarly one can trade in the options for the same. Banknifty has weekly expiry options too , so it can also be used to trade.

But if you are a long term investor and want to invest in the banknifty for a long time still then there are few ways available , let us discuss them one by one.

1. Banknifty etf :- Yes, in order to invest in the bank nifty one can buy the banknifty etf , there are many etf's available for the banknifty. I prefer to buy the SBI Banknifty etf for the same purpose. The banknifty etf has the same proportion of the shares that the nifty have and it is a passivly managed fund which tracks exactly the price of the banknifty. It is one of the best way to invest in the banknifty.

2. SmallCase:- you can create your own basket just like the banknifty from the smallcase. You can create a smallcase with the similar proportion of the bank stocks and it will be quite similar to the banknifty.

3. By purchasing the individual stocks in the right proportion :- As many brokers still do not support the smallcase yet , one can still buy the banks stocks in the right proportion. This can be little tricky to invest as buying and selling of the 10 stocks at the same time is not easy.

My favorite option is the banknifty etf's as it is very simple to invest in this way and these can be purchased and sold very easily in the market. I have even made the investment in the same and like to trade it.

These are  the ways that I know as of now, there may be other ways too. I hope enjoyed the post and you too invest in the banknifty with this way. Let me know which method do you guys prefer for investments.

Which broker is good for option selling

In order to trade in the stock market one is required to have a demat account and can open an account with the brokers.

These days the discount brokers are trending and everyone are moving towards the discount brokers. The reason for the same is well understood that the discount brokers have very less brokerages plans and even many are providing the free delivery of the stocks.

As I am into the option selling I prefer the brokers who allows the users to place order for deep out of the money strike price. Many broker blocks the strike price if they don't have the enough volumes and people may not sell far otm strikes.

But , I prefer to trade in tradingbell , for which I had good experience till now and they allow buying and selling of far otm strikes. Below is the link to join the same.

https://tradingbells.com/open.php?code=TB70075

Trading bell is also an discount broker and it charges rs 20 per order , it is an amazing platform to trade in future and option as well. The mobile application is simple to use. The thing I liked the most about the tradingbells is that it even allowed to trade on the scripts like crude when it fell to a very low price. Most brokers banned the crude when it fell and took away the opportunity from the retail investors to trade on crude for a low price but tradingbell allowed to trade in it at that time as well.

For trading in the future and options the tradingbell platform is good. Other than the good side it also need improvement in some areas. Its mobile application still needs more features, the future and option further can be improved by showing the various option greeks for the different strike price , showing the heat map etc.Other than that I feel the platform is doing good and one will like it when they will use it.

The link mentioned will redirect you the platform page where you can signup if you feel joining it 

https://tradingbells.com/open.php?code=TB70075

Also , the trading bell has a referral program where you can refer anyone interested and earn money from it , above is my referral link , if anyone chooses to join from it he may too can refer the others and earn some part of the commission from it.

Other than this I am also using the angel broking platform for my trades. I keep some of my investments in the angel broking and some in the trading bell. I work on the strategies of selling the options and I keep trading bell for the banknifty option selling where as I keep angel broking for the nifty option selling.

In the angel broking I try to buy the other stocks than index etf as well , but in the trading bell i completely buy the banknifty etf and bharat bonds in order to work towards a strategy to make most out of it.

I like both the platforms and will continue to use both of them.

Below is the referal link for the angel broking .

https://tinyurl.com/y8dnf7xu 

Angel broking is also a growing platform and it has also started discount broking with the name itrade where it charges 20rs per order brokerage. For more details you may visit the link above.

 

NOTE : Do your research on the brokers if you wish to join the same , I personally uses their service and I am part of their referral program , I may earn the commission if you join from my referral links. Do study and choose from your own analysis.

 

Option selling strategies in India

Stock market across the world work in almost similar manner. In India we have a rule to settle the future and option in physical form , that is in the form of shares.

For the index there will be cash settlement. Due to this we Indians can use this settlement way to try different option selling strategies.

Stock market is one of the best place where you can invest your money to gain some returns , it has the potential to give more returns than the fixed deposits or any other safe investment. But there are some investment risks involved, do asses your own risks and study before making any investments.

In this post I would like to share how I being an option seller try to get some returns out of my investment. Below are some of my strategies that I follow and I will share more in the upcoming posts.

Selling a naked call option :- Many of the times I try to sell the naked call option , this way the premiums I get are the maximum and I prefer to sell the deep out of the money call option for this. I prefer to sell options for the index and out of which I prefer banknifty for the same.

Bank nifty has a lot of 25 units. 

Whenever I sell a call option I prefer it for the weekly expiry this way I get the one week time and if the market is up trending it still take time to reach the value for which I have sold the option and giving me profit , but if my strike becomes in the money I am ready to take the losses as well.

However , selling a naked call is best when the market is either in the downtrend or in the sideways and is riskier when the market is uptrend.

Selling a covered call option :- Recently when the market fell due to the corona virus issue , I planned to create a portfolio. I purchased the sbi banknifty etf worth four Lakh rupees , now I wanted to make more out of it hence I decided to sell the call option for the upper price. This is known as the covered call. I have a portfolio and I will sell it at a decided price , I sells a call for that price. Now let us consider how the price behavior makes me profit/loss.

case 1 : If price of banknifty remains side ways :- If the market remains side ways my call becomes out of the money and on expiry I get the premium amount, I uses that amount to buy more units of the banknifty etf.

case 2: If the price of banknifty goes down :- If the price of the banknifty goes down in that case, my portfolio amount also goes down and causes me loss, whereas the call option I sold gets out of the money and I get the premium for the same, I further uses that premium to buy more units of the banknifty and hence average out my buying price.

case 3: If the price goes up :- If the price move up from the strike price for which I sold the call , my portfolio value also increase but the call will start giving me loss. I can square off both at the expiry and still be in the profit , but this way I will have to sell my portfolio.

well , in this post that is all for now , but do remember this blog is just for the educational purpose , do not make any investment decisions based on my experiences , do study and analyze on your own and consult your financial advisor before making any decision.

On the upcoming posts I would like to share my recent trades and my learning and thoughts about the reason I chose that strategy.

Power of compounding

One a great man said the power of compounding is eighth wonder of this world.Can you believe the money has the power to generate more money, this power is known as the power of compounding.

Power of compounding is believed to be the eight wonder of the world. One can utilize the power of compounding by many ways. In this post I would like to share how does I utilize this power in my investments to get the good rate of return

But before that I would like to explain the term "Compounding" : - In order to explain the term I would like to give a example , say I have 100rs and deposit that in bank , the bank gives me 4 percent rate of interest on the amount , at the end of the year I will have 104rs as my money , on the next year I will get 4 percent return on the 104 amount.

So from the example above the power of compounding simply means getting the interest on interest plus principle amount.

Higher the amount interest will keep on getting higher as the compounding is giving interest for interest as well. There are many ways to utilize this power and earn returns. These returns can be used for the monthly income as well , or at least I would say I prefer to have a income from this interest amount.

I prefer to have fixed deposits , PPF , insurances , SIP in mutual funds in order to utilize the power of compounding.

In PPF the rate of interest is high from normal saving and fixed deposit and hence it is one of my favorite type of investment, but the money gets locked for a period of minimum 10 years in it, this way the compounding will work in much favorable amount as each year the interest earned will be more than the previous year and the total maturity amount will be very good.

In PPF one can deposit a minimum of 500 rs to a maximum of the 1,50,000 (One Lakh and fifty thousand) Rs. It is most promising investment as it is from the Govt. of India. 

Other than PPF , I prefer to have the fixed deposits :- I invest in the fixed deposits because they are liquid and provide good secure rate of interest. I like to create the FD's and then keep the monthly payout of the FD's to earn a regular income from it. I invest my earned money into the FD's and try to use the earned interest for my expenses. This way my expense money is increasing month by month and my principle amount is safe and secure. Wherever I have a plan to buy something of a big amount, either I wait for it to mature or I simply break a FD.

Liquid Funds:- One of my other favorite is liquid fund, these funds may be good way to use your power of compounding. I try to park my extra money in them as well because they too provide good rate of return than saving account. As there is no lock in period one can always take out the cash where ever he requires it , In order to earn a regular income from it one may choose for the systematic withdrawal plan as well.

SIP in other different types of fund :- I have started a SIP in the balance and an debt fund , this way each month some of my money goes into the mutual fund and I earn a return from it. The value of the unit increases and decreases each day and as a result for the month SIP , if the unit decreases I gets little more unit for the same price and if the unit price increases I gets little less of the units for the same as price and as a result I gets the better overall average price.

There are many other ways which can be used to utilize this power of compounding like insurence : - Insurence is not a investment but can be treated like a investment. The amount paid in the form of premiums get the good rate of return and you get dual benefit from it , one in the form of insurence , other in the form of return. In order to secure the financial future of the loved ones one should have atleast 2 types of insurences, 1 term and 2. purpose based.

Term insurence do not give any return.

But the If you have planned something financially you can start a policy for the same for the period duration , this way you will pay the premium each year and if you survive you will get the matured amount and if you do not your loved ones will get that amount.

I have life insurence and term insurence to make my family financially successful ever if I am not with them and I believe everyone should consider the insurances while financial planning.

Well , this is all for this post , In the next post I would love to share about the various ways to invest the money for the working professionals and how I make my investments.

Till then stay tuned.

 

 

Introduction

Hi Everyone , welcome to my blog.

My name is Navankur Chauhan, I am a working professional and an active investor and trader in the stock market. I have learned many things from the market and I tries to perform my own financial planning.

I have more than 3 years of experience in the stock market and I have seen many highs and lows of it. I have made losses as well as the profit time to time from the market. Once I started investing I began with learning the fundamental analysis , then I started learning the technical analysis further I worked on the Option analysis.

I believe one should focus on learning before entering the stock market as stock market is full of risks involved and there are chances that one can make huge loses in it. If you are familiar with all the concepts of the stock market and confident about them , the you can start with a small amount as many things can only be learnt if we enter into it hence a small amount can always protect us from making huge loses

I entered the stock market with very less knowledge and in the starting weeks itself I made losses. I lost about 90 % of my money in the trading , only then I thought of learning about it. That is why I am requesting you to learn about it first and practice your investment in the simulated environment.

www.investopedia.com  is an amazing platform where you can learn as well as start a simulated investment with the dummy money.

This way you will be more familiar with the concepts of the stock market. I too uses this to practice and check various information about the stock market  also I try to check various investment strategies in the same site before making any final investment decisions.

Well, further about myself , from profession I am a software engineer and I have hobby of investing and I try to invest a small amount each month in order to earn good returns from it. In today's technical world investing has became so easier to do, one can do it by his phone. I prefer it from my phone as it is always in my hand and it takes seconds to see how the market is performing.

The best part of investment is that it can be started with a very small amount, and you can choose invest a small amount each month.

In my next post I will be talking about the power of compounding and how can you get benefited from it .