There are over millions of day traders in the Indian Market, and many struggle to break-even & this is mainly due to the fact that this people Over-Trade either without any Target or with an intention to overcome their previous losses or to be a millionare over-night. To Overcome this Issue let me share with you the funda of 'Reasonable Profit' .

What It Is ?

Reasonable Profit,is the decent and logically arrived profit after adjustment, which a trader can expect with an intention to create wealth on an sunstained basis.

How it is arrived ?

Assume that you posses a initial capital of say Rs.20,000 and gets a margin of 20% (which is mostly the trend). With this each can hold up to Rs. 1 lac in positions.

Now, it is found that on an average stock swings about 5 % every day in this market. At this margin and Volatility, the trader can expect to lag at the most returns of about 25 % a day(Economic) and 5% a day (Accounting).
Is it possible ?

Let us assume that it would not be possible for everyone to time so as to sell or buy at the intraday high or low, so let us assume that 20 % of the traders time it, in other words we are taking a S.D of 0.80 for our 5% return, so after adjustment the Reasonable Return arrives at 5 *0.20 = 1 %.

Finally what is my 'Reasonable Profit' ?

So. finally my fellow people trading with a margin of Rs 20,000 can expect a 'Reasonable Profit' of Rs. 1000 ( 1,00,000 * 0.01 ).