How to Earn Regular Income Through Share Market

One obvious question of every new investor or trader is, “Can I earn a regular income through the share market?” The answer is yes. However, earning a regular income through the share market takes a disciplined approach. Stock investment is classified into three categories: long-term, mid-term, and short-term. Since the topic of the discussion is earning a regular income through the share market, I will stick to short-term trading.

Short-term trading or investment is popular in India. However, selecting stocks for short-term trading can be challenging. Most experts recommend choosing large-cap stocks or Nifty 50 stocks, and they also recommend staying away from penny stocks. In this article, I will share some of the proven stock selection methods that worked for me.

What is Short-Term Trading?

Short-term trading means buying and selling within three months. However, what is essential to understand here is that it can be from 1 week to 3 months, and you can hold it for less than three months as long as you achieve your target.

It's essential to keep your target as practical as possible. Hence, you need to start by asking what is an ideal short-term for you and how much you want to earn in every short-term period. Ideally, anything between 10% and 15% should be fine. The best part is that you don't need significant capital in short-term trading.

Strategies That Worked for Me

Before discussing the strategies, it's important to mention that it was never a single strategy but a combination of all the methods that helped me select the right stocks. Hence, you must understand each method and then use all the methods to choose every stock.

Sector Based News

If you are looking forward to making a regular income from trading, you must keep up with sector-based news and wait for promising news for one or more sectors. You can track sector-based news from various sources such as Google News,, Moneycontrol, Mint, and YouTube. Besides, some local or global events may positively impact some sectors.

One easy way is to get to the Moneycontrol Markets page and scroll down until you see Sector Performance. At the top right you will see an option Search By Sector wherein you can select any Sector and hit go. It will show you news pertaining to that Sector.

After you find some promising sectors, you need to find stocks relating to these sectors. For example, if you think the Power sector will do well in the coming days, you may look for Power stocks like Powergrid, NTPC, etc.

Nifty 50 Stocks

When you are choosing stocks for short-term trading or investment, it's essential to choose reliable stocks and, at the same time, stay away from Penny stocks.

Even though some Penny stocks have done exceptionally well in the past, it's better to avoid them and stay on the safer side. Nifty 50 Stocks are considered the most reliable stocks. Hence, choosing stock from the list of Nifty 50 stocks would be wise.

To do this, you can visit the NSE India website and click on MARKET DATA. After that, you need to click on Indices and then on Nifty 50. It will display 50 top stocks of the Indian stock market.

Shares with High Delivery Percentage

While in Intraday trading, positions are squared off on the same day, delivery means holding positions for selling them in the future. Hence, finding the delivery percentage for a particular stock will help us understand the interest of investors in the stock – the higher, the better.

You can find out the delivery percentage of any stock on the NSE India website. You have to search for the stock and click on it after it displays. Next, you get to the bottom, to the Delivery Position. Over there, it will display the delivery percentage under % of Deliverable Quantity to Traded Quantity.

Shares with Increasing Volume

An increase in a stock's volume compared to the last week or two is another excellent indicator of increasing interest. The NSE Top 25 Volume Gainers report provides the list of 25 stocks with the highest volume increase over the past one and two weeks. Hence, these stocks have the potential to generate good income in the short term.

Nifty 50 Index Chart Trend

Another powerful method is analyzing the Nifty 50 Index Chart. You can use the Daily timeframe (1D) and determine the trend first. You also need to decide what the trend will be like for the next 3 to 4 months.

Based on your technical analysis, if the Nifty 50 will remain bullish for the next 3 to 4 months, you can pick up some promising stocks and compare their charts with those of the Nifty 50 Index. In the comparison, you must look for stocks that follow the exact Nifty 50 index trend. Those will be the stocks that you must trade on.

Fundamental Analysis

Once you find 3 to 5 stocks, the next best thing you can do is do a fundamental analysis. To check the fundamentals, you can use the web tool called Screener.

After you get to the website, you need to enter the stock name in the Search field. After it displays, click on it and it should show you the fundamentals of the stock.

Screener presents you with comprehensive data for every stock you look for, and it can be a little overwhelming for beginners. However, to keep things simple and quick, you can start with the one year chart and see how the stock performed. Next, you can look at the pros and cons.

The Peer Comparison part is by favorite where it compares the stock's performance with various other leading stocks of the same sector.

Next, you can compare the Quarterly results and Net Profit. Lastly, you can check the Shareholding pattern to see if there is a good FII, DII, and promoters participation since they are the ones that drive the market.

Price Range

Next, checking the technical chart of the stock you are planning to trade is essential. For this, you can use the Tradingview website. Since you may have to hold it for up to three months, it would be wise to use the Daily timeframe, i.e., 1D on Tradingview. To determine the trend, add an EMA indicator and change the value to 50.

Once the 50-day Exponential Moving Average is plotted, it should help you determine the trend. If the price is trending above the EMA line, it's considered Bullish, and on the contrary, if the price is trending below the EMA line, it's considered Bearish.

For a short-term trade, you must only choose bullish stocks. Next, using the historical data, you must determine the price range for every rally and correction. You can utilize the Price Range tool, as illustrated in the image. As you can see, the price does a correction of 24 to 30 points, and when the price is in a rally, it goes up to 94.60 points in 1.5 months.

Define your target

Now, when you are done with all the analysis parts of the stock, you should be able to determine a target you want to achieve in three months. Something between 10% to 15% should be fine, but movement might vary from stock to stock. Hence, you can decide based on the price range of the stock.

Entering a Position

As always, entering a position is the most tricky part, and if not done wisely, it can get really risky. Your efforts will be in vain if you don't plan your entry correctly. So, what exactly is a proper entry? In an uptrend, when you expect the price to go higher, it will not go higher immediately; instead, the price will do a correction and go up. That's how the price moves; hence if the price is already up, you must plan an entry at the next correction.

You can do it using simple price-action or 50-Day Exponential Moving Average. Price action traders use trendlines to find entry points. An easy alternative to this would be using a 50-Day Exponential Moving Average and waiting for the price to get back to the EMA to enter a position.

As far as exiting is concerned, you must book your profit immediately once your target is achieved. On the contrary, you must never exit before three months unless your target is achieved. It's also important to close your positions no matter what once it's three months.

Stop Loss or No Stop Loss

Now, one question that many beginners keep wondering about is if they should use a Stop Loss in Short-Term Trading. The answer depends on your risk tolerance, and there are two ways to go about it. One important thing to understand is that the price of a stock can't be zero, and Nifty 50 stocks are reliable. There are two perspectives about Stop Loss: The investors' and the traders' perspectives. Investors don't place a Stop Loss, while traders usually prefer placing a Stop Loss to keep their capital intact.

Both have advantages and disadvantages. Trading without a Stop Loss leaves much room for the price to move, which also helps you stay in the trade longer. However, sometimes, a big, unexpected move can be against your direction. You may trade without a Stop Loss if you are okay with it.

Using a stop loss in a short-term trade differs from day trading. First, you need to place a wider stop loss, unlike in day trading, wherein you can set a Stop Loss for 10 to 20 points. Even after placing a wider Stop Loss, it can easily get hit with Gap Up and Gap Down openings.

The only way to use stop loss in short-term trading is to use a GTT order, which allows you to set your target and stop loss while placing an order. A GTT order is valid for one year. Here is how you can set a place a GTT order with a defined Stop Loss and Target:

Capital Requirement and How to Invest

Once you select 5 to 7 stocks using these filters, your capital is the next most important thing to consider. ₹50,000 is a good starting capital; you can diversify the investment into 1 to 2 stocks. However, before you invest, it's essential to do a proper technical analysis on a 1D timeframe and wait for the price of the stocks to do some corrections and reach a major support level.

You may also like: Best Nifty Index Funds in India 2024.


One important thing to remember is that trading and investment are games of probability. With analysis, we can certainly get closer to winning trades. However, many factors influence the market, including global and local events.

Hence, winning trades may sometimes turn into losing trades if there is sudden, shocking news or a global or local event that negatively impacts the market. As a trader, you must be mentally prepared for losses and see them as part of the game.

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