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How Much Capital Do You Require To Trade In The Stock Market?

Thousands of traders trade in the stock market daily and millions of shares get exchanged between people every second. Starting from amateurs who barely have Rs 5000 in their trading account to big mutual funds and prop desks who have 1000s of crores in AUM trade daily. So, the biggest question that arises whenever someone new comes to the stock market is that how much is enough to trade the capital markets? Is 1000 enough? or 10000? 100000? What's the number?

The answer to this question will shock you, but you don't need a lot of money to generate income from the financial markets. All you need is the skill; money will follow you automatically.

The myths

You don't have to be a millionaire to trade in the markets. You can start from even 100 rupees in the stock market. Now that we have busted this myth, the next big question is how much is enough for you?

As you can see, this question is completely dependent on the perspective of the person who is asking this. For a few, maybe 15000/month is enough. For others, maybe 1L is enough and for a few others, maybe 10L and for a few, even 2-3k may make the difference. The answer depends on the following points:-

  • How much is your risk appetite?
  • Are you trading for a source of passive income, or are you wanting to make it your primary source?
  • How much time can you devote?
  • What is your financial goal?
  • How much experience do you have?

Now, upon answering this question, you will kind of get an idea about what type of trader you are.

Now, there is always a required amount and a recommended amount. So, let's answer all your doubts in a phased manner and get to know what type of sum we are looking for all types of people:-

1) The passive income ones

The ones who want to make this a source of passive income must finalise how much they need to be satisfied. But in any case, if you want to swing trade in cash, you must have at least 50k-1L in your account. And if you want to trade in FnO, then at least 4-5L is recommended.

2) The Long term investors

Those who are simply there to create wealth over the long run, don't need to invest a lot of time or money daily to study charts or stocks. You can start investing in stocks as small as Rs 2/unit to 80k+/unit. Decide a % of the money from your income and invest that as a SIP every month.

3) The day traders

Day traders are the ones who take the maximum leverage out of the 3 mentioned here. But in any case, it is recommended that you must have at least 1-2L if you are trading in cash to generate sustainable income, which can become your primary source per month. And if you are thinking to enter into FnO, then you must have upwards of 5L.

Please remember all these numbers are recommended and not the minimum. You must do your due diligence before entering any trade. And be it swing or intraday, never risk more than 2% of your account in any single position.


06-05-2022
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