Strategy

"Trading is a serious business which required same amount of time and effort like any other business. Here, 99% of participants loose money.  To become profitable trader, first step is to have right expectation and appropriate effort."

"Here at QUANTZAAR, our primary goal is to make you financially literate and more smarter. So that you can asses risk before making decision about any financial activity. Hence, proper backtesting and planning is must before doing actual trading."

Q&A:

1.  Who should trade?
   - A person who has another source of income or have sufficient cash. You should be mentally prepare to loose all your money.

2. Why a person who has another source of income is better suited for stock market?
   - If you have read our article about - A complete trading plan. Then, you would have realized that trading strategy is just part of whole trading plan. Risk management and psychology are as important as trading strategy. So, a person with another income source has better state of mind than other.

3. If 99% lose then does it mean that 1% will get excellent income? People say trading is zero sum game.
   - No, remaining 1% traders do not get excellent return.
   Reasons:
   A) trading is not completely zero sum game. Every year people's money goes into internet charges, electricity bill, brokerage, STT and GST or other charges. This amount could be 60k crore to 1 lakh crore per year.
   B) Margins are different for winners or losers. Ex: options buyer loose money but to win for option sellers have to put 100% margin which ultimately translates to 0.5-1% profit on their capital. So, as a winner will you feel that it is huge amount?

4. If I have backtested my strategy, does that mean it will give me similar result if I do actual trading?
   - No, if you are a quant trader then you should understand the concept of overfitting. Backtesting just tells us that strategy is working on historical data not future data. To understand more read backtesting section where we would learn techniques which helps us avoid this problem.