In India derivative stock/index trading is done on cash. Frankly its foolish. Do you know future and option shorting can be done free of cost? By free of cost I do not mean that you do not need cash to trade futures and option selling – you need. But you can easily use this money to buy quality stocks and keep in your demat account and ask for collateral margin from your broker and trade futures and options with that money without bringing extra money in your trading account.
What Is Collateral Margin?
In technical terms is it should be called Margin on Collateral. Basically the invested stock is used as a collateral (asset) to give margin (loan) to trade to the owner of the collateral.
What is collateral?
Collateral is a property or other asset (here other asset is stocks in holding), that a borrower offers as a way for a lender (the broker) to secure the loan (margin). Suppose you lose money more than the collateral amount given to you by the broker then the broker has every right to sell your shares and recover the loss. Since collateral offers some security to the broker they allow a loan to their customers to trade derivatives. These collateral comes at a lower interest than normal personal loans.
Please note that for Group A stocks (large caps) most brokers give 80% collateral margin. It can go down for volatile stocks. Please consult your broker for collateral margin rules. Every broker has different collateral margin rules. Since the rules are different for every stock broker I cannot write a defined rule here. Only thing I can say is that some brokers charge a fees for collateral margin money. Make sure to know all terms and conditions before asking for collateral margin.
However most brokers do not charge any fees if you use only 50% of the collateral margin – anything above that is considered as a loan and charged a small fee. So its better you read the full terms and conditions before asking for collateral margin.
One good stock (Disclaimer: This is not a recommendation to buy or sell. Please do your own research before investing in this stock) is HDFC Bank. It is a fundamentally strong company unlikely to fail. This is one stock that you can keep for life.
These kinds of stocks are called All Weather Stocks. Whatever happens to stock markets these stocks will keep giving good returns over the long term. These kind of stocks come under the Warren Buffett style of investing. He has once said in an interview that – “Our favorite holding period is forever.” This what you should do with a few stocks.
You must stay invested in good stocks until you retire, ask collateral margin on them and trade options conservatively with proper hedge so that you keep making monthly income that comes for free apart from the dividends you get from these quality stocks.
Frankly I have summed up how you should invest and trade and make good money in small steps, accumulate them by the time you retire or in 10 years time in stock markets. Then either leave your job or do whatever you want. Rest is plain noise that’s going on about stock markets in media – Television and Online world. Unfortunately people follow the myth about the stock markets told in golden words and get trapped to lose money.
You Can Read More On My Site
Hi, I am Dilip Shaw, owner of this website. I am a trader like you. I have been trading since 2007, but lost a lot of money till 2010. I then stopped trading and studied options like college exams. Started trading again from 2011 and never looked back since. I did a lot of research, read books and did countless paper-trading before being profitable. You can read about me here.
My conservative trading course since 2014 is helping many retail traders just like you who have a job or business make consistent profits like this:
What Traders Say About This Course
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What People Say Just After Reading My Course
Emotional Testimonial by a Young Woman Trader and Her Mother
One Of My Client Is Making Rs.25k Per Week
Difference Between Other Courses And Mine
What Others Charge for Courses
You can do this course from your home. Some traders make amazing profits like Rs. 16.26 lakhs profit in 5 days though results may differ for all.
This course helps you learn to trade conservative option strategies for monthly income. Once you finish the course you can start trading immediately. You can start trading from any day. No need to wait for expiry. You will make profits consistently.
This course is good if you have a regular job or business. You DO NOT NEED to monitor your trades every second.
What You Get?
Before reading please understand that for all 5 strategies, strike selection will be taught. Strike selection while trading Options is the most essential part to succeed.
You get two conservative non-directional strategies on options, one conservative stock option strategy and two conservative directional strategies on Future & Option combination.
Non directional trades are profitable 80% of the times and make 3-5% per trade (Results may vary).
Directional strategy makes money fast. It does not matter which side the stock moves. In fact you make more when you are wrong in the Future trade. 🙂 Some amazing profits possible here.
The stock option trade makes 30,000 in one trade and if SL is hit there is a way to recover losses plus make 30k in that trade.
Technical knowledge is NOT required. No need to monitor trades every second.
In the course you will learn how to select the strike prices. You learn when to trade, which strikes to sell which to buy, how much profit target you should be looking for, the best place to take stop loss and what to do after taking stop loss – means how to get that money back. The success rate is more than 80%.
Since trades are properly hedged there is no stress in trading my strategies.
I am very confident that you will make money trading my strategies. To help you succeed I offer few months support for FREE.
11 Reasons Why You Should Do The Course:
1. TA Knowledge NOT required
2. NO Software Required
3. Regular Monitoring NOT Required
4. Continue with Your Job
5. Do Course From Your Home
6. 100% Hedged
7. Stress-Free Trading
8. Not too much money needed to trade
9. Scaling Possible
10. One Time Fee
11. FREE Support For Months
To know more Call/SMS/WhatsApp me on 9051143004 or email me now. I know English and Hindi.
Read the details of the course here.
If you want to enroll for the course you can do so here.
P.S: So many years of trading has thought me one thing - it is always better to make small profits month after month, rather than lose money month after month trying to make too much money. It never happens. But small money accumulated month after month can become very big in only a few years.
WhatsApp or Call me: 9051143004
If you have any question you can contact me.
You can read about me here and my trading mistakes here.
Dilip Shaw, Founder
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