Nithin Kamath explains how much return a trader should generate to gain profits

To break even yearly on their portfolio, on Monday the Zerodha founder and CEO Nithin Kamath said the minimum return an active trader should generate is over 20 per cent. To offset the capital along with impact costs, the returns are suggested by him.

Kamath says that most of the traders don’t realize that what they’re paying consists of a good chunk of their capital as costs, terming the suggested returns as indeed high and tough for active traders. Further added that to break even yearly on their portfolio if the impact costs are added, the minimum return an active trader should generate is usually well above 20% and it is that high and that tough.

Along with their capital without considering the costs, the largest possible positions in every trade are been taken by most traders making the break-even per cent a big challenge, as said by Nithin. Reducing the trading size shall be one of the ways to reduce the impact of costs along with increasing the odds of winning, as suggested by Kamath.

He further added that while 20% of active traders incur 80% of total costs, the statutory costs incurred are more than the trading costs at Zerodha.

As compared to the income tax paid by the 25th largest company in India, the STT plus stamp duty paid by the Zerodha customers is more than that. From the year ago period, the STT collection for the June quarter is set to double due to increased buoyancy and retail participation in the stock markets, as per the report.

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