Understanding Net vs Gross

We are often bedazzled by the profit screenshots of full time traders on the social media. Even seemingly unknown traders appear to be making 5-10k every day. You might wonder if you can achieve same level of profits. And that is the key. Profits. The money left after paying for all the expenses.

If you have a source of income other than trading, it might already be covering all of your expenses. In that case, every single rupee you make from trading is your profit. Now consider someone who is making 10k every day from trading. She makes a handsome 2L gross profit per month. But from that she has to pay for all her expenses. And I am not talking about food and electricity. It includes, brokerage, transaction charges, taxes, data feeds etc. So her net income might be a lot less than the screenshot that is posted on the social media.

So if you ever consider going full time in the markets, please account for the loss of a consistent income from your other source. The pressure of ‘needing to make money’ is tremendous for the new full time traders and you will feel that. Because a trade doesn’t just remain a trade. It becomes ‘gas bill’, ‘movie night’, ‘rent’ and so on. And even the best of the traders admit to having some bad months where they make very subpar profit or even incur losses.

So next time you a screenshot with a large profit, take all this into account.

Leave a Reply

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.