Compounding strategy to make money profit in share market

The Art of Compounding in Share Market: A Detailed Strategy
Introduction-
Entering the #share #market requires a disciplined approach to ensure long-term success. The compounding strategy outlined below emphasizes risk management, capital preservation, and a steadfast commitment to a proven formula.
Setting the Scene:
Let's imagine you have a capital of ₹30,000 to invest in the share market. The key principle here is to mitigate risk by only putting a portion of your capital at stake. Initially, you decide to risk ₹10,000.
Step 1: Capital Preservation:
Upon making a ₹10,000 profit, your first priority is to restore your capital to its original amount, ₹30,000. This ensures that you are not trading with your profits but rather with your initial investment.
Step 2: Controlled Risk:
With your capital back at ₹30,000, you again risk only ₹10,000. This cautious approach shields you from substantial losses and allows for steady, sustainable growth.
Step 3: Gradual Expansion:
As your profits increase and your capital grows to ₹40,000, you continue this cycle of risk and preservation. The goal is to gradually build your capital to ₹1,00,000 using this methodical approach.
Step 4: Transition to Higher Risk:
Upon reaching the milestone of ₹1,00,000, you reconsider your risk strategy. Now, you are willing to risk ₹20,000 in a single stock or across two stocks. This transition is calculated and reflective of your newfound capital strength.
The Importance of Capital Preservation:
Throughout this process, preserving your capital remains paramount. It serves as a buffer against market volatility and unexpected downturns. By safeguarding your initial investment, you maintain financial stability and avoid reckless decision-making driven by greed or fear.
Embracing the Formula:
This formula isn't just a guideline; it's a philosophy. It aligns with Einstein's notion of compounding as the 8th wonder of the world. By adhering to a structured plan, you harness the power of compounding to achieve exponential growth over time.
Analogies for Clarity:
Comparing F&O trading to cricket provides insightful parallels. Just as in cricket, where each wicket represents a precious resource, in trading, each capital unit is equally valuable. By focusing on preserving these units, you ensure prolonged participation and increased opportunities for profit.
Daily Reinforcement:
It's essential to internalize this strategy and make it a daily mantra before entering the share market. Consistency and discipline are the bedrocks of success in trading.
Conclusion:
In conclusion, the #compounding #strategy outlined above offers a clear path to #success in the share market. By prioritizing capital preservation, embracing controlled risk, and adhering to a proven formula, you can navigate the complexities of trading with confidence and resilience. Remember: Stick to the #formula, and success will follow.