Investing = Test Cricket Trading = T20

What kind of player are you?

Investing v/s Trading

Can you play a Test Match like a 20-20?

When it comes to creating wealth we need to play to a plan

Sometimes we get waylaid by our emotions and do not play the

way we have planned. That’s the reason for loss and many heartburns.

The following pages will teach you the different approaches to

creating wealth. And the importance of sticking to your strategy.

Before going for a transaction ask this very basic question

What type of a transaction is this?

Decide Before Ordering

Investments or Positional Trade or Intra-day

There are three basic strategies in the stock market. It is important to know the right strategy

that suits you.

Investments are like a Test Match

• Duration ranges from few months to few years • They are based on Fundamental factors • Strategy is to BUY & HOLD till the theme & under

valuation persists • Let long term remain long term and do not book short

term profits • As they say, Rome was not built in a day

Positional Trades are like a One Day Match

• Duration could be overnight to a few days • They are based on Technical factors • May not be in sync with Fundamental factors • Always make use of STOP-LOSS levels - Use Trailing Stop

Losses • Should not be converted into Long-term Investments

Trailing Stop Loss

Trailing Stop Loss lets you continue to increase the stop to take advantage of any profitable trade. Here till the stock is below purchase price the original stop remains. As the price increases the stop increases. Why book `10 profit when you

can make more?

Intra-day Trades are like 20-20

• Same day square-off • They are based on Technical factors • May not be in sync with Fundamental factors

• Always make use of STOP-LOSS levels • Should not be converted to Positional Trades or

Investments

Intra-day Assumptions

With a reward risk ratio of 2:1, money can be made even if one is right 40% of the time.

INVESTING v/s TRADING

The Golden Rule

Do not trade like an Investor or invest like a Trader

Trading and Investment are as different as TEST

MATCH & ONE DAY.

One does not play a TEST MATCH like ONE DAY or ONE

DAY like a TEST MATCH. If one does, the team may

lose. The same is the case in Stock Markets.

The rules of trading are different from that of

Investment.

Hence, if one trades like an Investor or Invests like a

Trader it would result in loss.

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Disclaimer

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