Savings on profits setup - A streamlined way to protect and compound your profits while trading
I have been into trading and investing some bucks in the stock market for about 2 years now and to be honest it's been a tough ride with a shit ton of losses but also with a good amount of profits.
If you sum all the intraday trades I have done to date, I am in about 15% loss. But that is not why I am here for.
I like learning, improving myself and I can do whatever it takes to get there. So, I feel I am still in that phase hope will get to the sweet spot soon.
But for sure I have some lessons from all this time and with that, I started a simple plan called "Savings on profits" This process I believe lets you protect your profits and take trades in a controlled manner. Compound your profits by protecting them slowly and steadily.
Let's say I started with an initial investment of Rs. 10K.
Starting with Week 1
Your initial fund is 10,000 You need to make a profit of 750 by the first weekend.
Out of this 750, you will have to put the 500 into some SIP, or if not a SIP, let's say it stays untouched from being your trading capital.
During your Week 2
Your starting capital is now 10,250 and by the end of week 2, you need to make 750 in profits. Then you follow the same pattern of moving 500 elsewhere and carry forwarding the 250.
As simple as this sounds it is equally difficult to manage. You might feel the fear of not making the cut through out the week or you might feel you will make more than 750 this week and overtrade sometimes it might work and sometimes not. This is meant to get your thoughts and mind under control and only follow a process and not do anything else. If this is followed for some duration. You will slowly be adjusting your captial and the SIP amount etc. Slowly feeling confident in trades because you know you are not loosing and overtrading.
It's tough but its possible. Please give it a shot, it has worked for and it might work for you too. By the way if you are already an experienced trader, then this might no be for you.
The gist👇 Go through the image below once to get a gist of the procedure.
Some thoughts to consider
- It is considerably easier to make a 750 on 10000 investment, if traded wisely and sticking to routine/decisions and respecting target hits and stop losses
- It is not for sure that you will make a +750 every time sometimes maybe more than that and or maybe less than that. Adjust your carry forward amount and SIP amount according to your initial capital and risk appetite
- This is meant to protect the profits and slowly increase the trading capital.
- This I think mainly suits those traders who are getting into trading slowly, but with this setup, in place, I think it will help following a strict discipline
- It doesn't also mean that you will have to trade in mind with the very aspect of making a +750 instead of the trade like your usual days, but with more discipline, routine, and a strict pattern.
Alternate places to put your SIP amount
- Setup a weekly Mutual fund SIP
- Setup a stock SIP
- Mentally keep account of the amount and never use it for trading (this is tough to keep track of)
- Withdraw the amount during the SIP date (but this might incur some charges by some platform, but it is free on your brokerage platform, then go ahead)
I use
Zerodha for my intraday trading, Click here to signup for Zerodha
Upstox for long term investments Click here to singup for Upstox
Zerodha's Coin for Mutual Fund investment