How much Capital is required to start trading
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🟢The Thread is designed for a complete beginner who wants to get started in the world of option buying.
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@kuttrapali26 @KommawarSwapnil @bhatiamanu
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🟢The Thread is designed for a complete beginner who wants to get started in the world of option buying.
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@kuttrapali26 @KommawarSwapnil @bhatiamanu
Baseline rules and facts to decide min capital
🟢 Beginners should trade with only 1 lot
🟢Option buyers mostly prefer to trade ATM or slight OTM strike price
🟢 premiums are maximum on Friday
🟢Capital should also be able to handle a drawdown of 15%
🟢 Beginners should trade with only 1 lot
🟢Option buyers mostly prefer to trade ATM or slight OTM strike price
🟢 premiums are maximum on Friday
🟢Capital should also be able to handle a drawdown of 15%
🟢Price of ATM on Friday as per current situation ranges around 350 to 400.
🟢So for 1 lot buying = 400*25 = 10000 Rs
🟢Should be able to handle 5 consecutive losses with max SL of 30 points
🟢loss after 5 losing trades = 5*25*30 = 3750 Rs
🟢min cap for execution (C) = 13750 Rs
🟢So for 1 lot buying = 400*25 = 10000 Rs
🟢Should be able to handle 5 consecutive losses with max SL of 30 points
🟢loss after 5 losing trades = 5*25*30 = 3750 Rs
🟢min cap for execution (C) = 13750 Rs
Taking Brokerages and charges into consideration
🟢Assuming to make max 40 trades a month
🟢Broker+charges per trade for 1 lot approx 70
🟢Total expected charges (B) = 40*70=2800 Rs
🟢Assuming to make max 40 trades a month
🟢Broker+charges per trade for 1 lot approx 70
🟢Total expected charges (B) = 40*70=2800 Rs
Buffer capital or safety net capital
🟢 There might be some unexpected events that can make premiums go high (high vix situation)
🟢You might face some unexpected losses due to execution challenges
🟢To handle them buffer capital = min cap for execution (A) = 3750 Rs
🟢 There might be some unexpected events that can make premiums go high (high vix situation)
🟢You might face some unexpected losses due to execution challenges
🟢To handle them buffer capital = min cap for execution (A) = 3750 Rs
Total minimum capital required
= A + B + C = 13750 + 2800 + 3750 = 20300 Rs.
🟢if you make 20% of account size as profit then you with a consistent return of at least 2 months then use the same logic to start trading with 2 lots.
= A + B + C = 13750 + 2800 + 3750 = 20300 Rs.
🟢if you make 20% of account size as profit then you with a consistent return of at least 2 months then use the same logic to start trading with 2 lots.
Use above method as default template or you can also use the logic to create your template.
⭕️To 1st 100🐦 Re-tweets I'll DM the excel file of the above template.
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educating people one thread at a time.
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⭕️To 1st 100🐦 Re-tweets I'll DM the excel file of the above template.
⭕️I am on journey to share 100 educational threads.
educating people one thread at a time.
👥@AakashSSawant1
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