Which Trading/Investment concept has helped you the most?

As we all know, the stock markets do not really favor anyone. In order to be in line with the markets and manage one’s long invested portfolio, it is quite necessary for everyone to simply follow some basic strategies to enter into any trade or manage one’s own portfolio.

Just for everyone’s information and learning, let us use this thread to share any financial concepts or strategies that may be one should know or have helped you to be better. You can write anything from the basics of the markets to the complex concepts with no ends and it wouldn’t matter. Surely, someone reading out there will be benefitted in one or the other way.

To begin with, one concept which I like is the Top-down and Bottom-up investing approach. Used to follow and read about this in my initial days of grad when I started learning about markets.

Top-down: Here, we look at the bigger picture first. This approach lays emphasis on looking at the economic trends of a country, the industry and then pick the stock for investment. This helps to be true as some of the industries/sectors are believed to perform well during certain economic cycles.

The emphasis is laid on macroeconomic factors such as GDP, inflation, interest rates, etc, and the sensitivity of different sectors to these factors. For example, if the domestic economy does well, it is believed that the financial and consumer discretionary industry may perform well.

Economy > Industry > Company.

Bottom up: Here, the main focus is intially towards the individual company, the industry and then the overall economy. The focus is less on the industry and the economic factors as one does an indepth fundamental study of the company to decide on its long term growth. This focus of this approach includes reading and analysing the financial statements, the growth of the companies, ratios, net profit margin etc.

Company > Industry > Economy

For Investments : There was this Motilal Oswal Ad that used to air a lot on TV many years back, which went “Buy Right, Sit tight”. It got spammed so many times, that I stopped trading Suzy and JP Infra and i decided I will only buy right, no matter how small the quantity. So i started stocking TCS and Infy in 1s,2s,10s,50s depending on how much money I had on me at any given time.And this accumulation is to continue until they are no longer “right”

Ah, found the ad, still fresh as ever : AKSHAY SETHI IN MOTILAL OSWAL ADD - YouTube

For Trading : Theta Decay is the concept that I have come to love the most. I Spam Bear Call Spreads and just come back around expiry to see how many times I was tested. It usually isn’t many times if you are sitting on safe levels. But even when you do get tested, it actually feels good or atleast not that bad, because Nifty broke through my Bear Call because TCS and Infy in the portfolio usually went green as well so I book part profits there.A very unintuitive way to Theta Wheel but works. Do this with a large enough Capital and it becomes almost unfair.

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For Trading: Volume analysis. More specifically, focussing on market positioning. Reading the tape. Old school stuff.