How To Make Money In Options With Less or Little Capital: Beginner's Guide

Options Trading With Less/ Small/Littel Capital

you can earn good profit/make money in option with minimum capital there is no need for beginners or new traders to follow other traders or trading trainers. You can start with your capital but first keep in mind the momentum, profit/loss, risk, profit margin ratio is different every time you trade and you must study it before trading options.

You know it clearly, you can start option trading in minimum capital but then also you need to study and practise other things also to make money in option market with this small capital and to take advantages of different market situations. So let’s see how you can make good money in option with minimum capital. Focus on one index first then slowly go to other indexes.

First thing you are trading option with minimum capital so there you have limitation on your trading and option market is risky you can lose money instead of earning and most of traders are doing it as per SEBI report. So here best way to trade is focus on only one instrument and index because in index you can get momentum and liquidity easily which required for trading.

When you focus on one instrument then you learn practically many things which makes your trading more effective and profitable. You will get more time and space for exploring what trading is and how you can trade it to make more money but here what other traders do, they try to trade in multiple instrument to make profit so they as a new trader lost thier capital because trading in multiple instrument at same time and this became the root cause of 80-90% traders losing money in derivative market. Other traders trade nifty50, Nifty Bank, nifty financial service or their stocks or any available option for trading and on every expiry. This why they lose money because every instrument is different. so trader need to study them properly first and do practise it and then trade so this trader can make money in options otherwise you trade with whatever capital you will lose it.

See trading options in multiple instruments randamly creates confusion and here you are trading with small or limited capital then you can’t make money like this you must focus on single thing and enough master it then profit is yours. When you focus on one thing you can watch and observe market, direction, intrument trading process properly, try to understand it clearly, practise it, and you will know small things in details but this you can do when you focus on single instrument and trade it. So this way you find right place to trade and make profit from it from your start.

For example: if you have 1000rs capital then you can buy call or put option from sensex, nifty 50 or Nifty bank and trade in it for profit margin of 5 rs or 5 points and hitting this target is not hard but detailed study and single instrument can make it easy at beggining. If you learn it and your position is right then you can make 75*5 = 375, 350-50 = 300. On average you can make 250 to 300rs per trade per day and this is good sign you are trading properly.

Know Minimum Capital Required For Options Trading

Market Direction Up Or Down

This is initial simple way, initially every trader follows it. You also must do it but differently because there is thought “successful people don’t do different things they do things different, so they are successful . So, you trade options with simple method but with detailed study and analysis(different way) that’s makes difference in your trading. Try to learn the market directions in details. Trade when market is in upward direction or in downward direction but differently not like others and also keep in mind you are trading with minimum capital so don’t go to trade directly watch this marked direction carefully and study them. Take notes make a plan and then trade you will make more than others in minimum capital.

When market direction is upward or downward then price of option follows series of upside or downside movements. so you can take advantages of this at different point and make money. For this you need to do detailed study of market direction and create you trading plan so that way you get success in it.

See when you know market direction then you analyse it more and confirms your strategy and take trade before others. So try analysing market direction as much as you can with live and after market closes. so you will get same option contract before time and in discount than other traders and this is point here you make more profit than others in minimum capital. When you understand market direction then buy that option contract immediately because then price of option is less and its just near of further momentum that where you make more profit in same capital this does not happens every time, some time it happens automatically and sometime you have to make it happen by using your brain.

For example: price option contract raises when buyers enters into same trade but there time is different but when they enter price of option become high and go on increasing, so you get benefits of this but if you are in same option trade already otherwise you can’t buy same option after price has raised because your capital is limited and you miss good money making opportunity because you don’t learned little more things in details.

If a option contract closes at 20 rs today and you buy it at market closing time with your analysis then next day it opens above 20 rs and go further of it so this way you can hit your target and make more profit with minimum capital.

Follow Market Trends

Following market trends is good and when you start follow it and exit your position at your target. See market trend change any time so you shouldn’t lose you gained profit and also this way you can learn what is marked trends and how to identify theme to make money. Trading option based on trends is good but with alert because trends can be reverse and your profit converts into loss. So to not happen this you must be aware and exit your position this is how money making in option can be done with minimum capital to take advantage of market condition at your risk level.

So you need to study these different market treads like uptrend, downtrend, sidewaysyfrom your side and how then happens in live market while trading otherwise you can't trade and this is not in your control and may you need to face losses. So the thing is follow market trends but be aware and alert and to take advantage of it. buying and selling happens in trading big players or day traders can square of their position and that’s why trend can change for a while and you lose your money.so to not happen this you set proper small target and a stop loss.

Setting small targets with stop loss and trail your stop loss (changing) are best smart way to be consistent in profit rather than making profit sometime and sometime loss. Whatever profit you make it must be consistent and not series profit and losses.

Target, Profit/Loss And Risk Ratio

Setting right target and stops loss is sign of good trading means you are trading in right direction but it depends on risk ratio. Traders when they enter in option market set it to medium or high without any self-understanding and knowing its impact on your trading. Because of this you take more risk and this decide your trading target and stop loss. in this way you can face losses and can lost your whole capital.

Remember you are trading in minimum capital so you have limitation to take risk because your capital is limited. If you remember this every time and go ahead to trade options then you can make good profit most of the time but if you forgot this then you will lose all capitai either at once or in multiple trades.

For this take small risk and based on this set small target and place stop loss once you able to control this small risk in all the market situation then slowly increase it and trade with it and try to make profit if you want experience with more risk try to reduce it and see you can control it or not and then trade this is how it work for making money with minimum capital. For example: if you trade with 2000rs then you must trade with one lot and set target of 5rs or 5 points per trade and take risk of 150 rs means 2rs or 2points stop loss. This is how you can make small profit and further when you add them together it will more than your capital. This way take small risk and set small target and make small amount of money but without losing your capital.

Price Action Terminology or Concept

Price action is a terminology in trading used by traders to trade and book profit. This is another way of making money in option with minimum capital see prices option contracts are not same all day all time. So prices of option changes from low to high or high to low you should take advantage of it by trading option at right time and place then profit is yours.
See the option chain you willsee prices of option are from 1 rs to 200 or 300rs but you are trading with limited capital so as per your capital limit focus on some particular option and when they come your trading zone then as per your capital limit buy call or put option which is most near to ATM strike so you can get required momentum to trade. In price action price of option go up and come down so you can buy same option at same price again and book profit in it. Or further strike of that option from option chain and make profit from but be careful when you chain strike its momentum also change so your target is small than previous one ok. Price action happen every day you just focus on the important levels of price on charts of opiton contract and as per your capital buys that strike and set target and when it hit exit position. This is how you make money in options with minimum capital if you focus on small then you can make more and more money further but if you focus on big target then you will lose it because this breaks your continuity of following your original plan.

Expiry Tradable Situations

Whatever option contract you trade is going to expire one day means at epiry day so to make money with minimum capital by taking advantages of these options stages. Expiry period of contract is weekly basis, monthly basis or 3 month basis so you trade in weekly and monthly expiry trades. So when expiry of a option come near lots of trader enters in market and they trade before and on the expiry day to take advantage of this situation because they want to make money by this way and you learn this thing and remember you will get more volume and open interest before and on expiry day than other days. so you take advantages of this situation because in this period marked can bullish or bearish, markets can follows trends and price action happens regularly so you know this already and by combining all this different things together you go trade option to make money from options. here you can make more profit because of expiry day with same risk. But also know other side, on or before expiry option is going to expire so every expiry almost all the contract going to expires so volume spikes up may in up direction or downward direction this can change marked direction, market trend so you must be aware of this things and learn them carefully if you know it clearly then you can trade option on and before expiry without any fear and make money with limited capital.
On and before expiry price of contracts are low and going to be 0 and in this price action happens many times in day and with big move by taking advantages of it you make good money in less capital this is smart way trader ccan follow but needs to more do detailed research,study and analysis than other traders.

Your Own study, Knowledge, Skill and Experience is Real Profit

To make good money regularly in option trading of derivative market with minimum or limited capital needs or required your own things and this only done by information, study, knowledge and experience you want to make money in option and have limited capital then its ok you can make it but you need to do learning and trading and trading and learning both same time alternately in live market and after market all seven days to study things in details and gain knowledge and experience, develop skills you need do it theoretically and practically. Your own knowledge and experience with live trading is the key of successful profitable trading. This process begins with small…..and bring big money for you
So all the best to all new traders.