Formulate Your Own Trading Strategy For Equity Funds
No matter which equity trading strategy you follow; market analysis
, equity news, annual reports of various blue chip companies, and other stock related external and internal factors require a deep analysis.
Equity trading strategies
The equity market is thronged by various investors who follow various types of investment strategies. Some follow the fundamental approach and others are more inclined towards psychological strategies. Academic approach is also followed by certain investors in making their portfolios. However, the eclectic approach that combines the features of all the other three is found to be the most suitable in the real time share market. India has a stock market that requires penetrating analysis before any investment strategy is followed.
Fundamental strategy and psychological approach
The fundamental strategy focuses on buying undervalued equity shares and selling overvalues equities. Although fundamental approach is essential to establish benchmarks when you enter the share market, India has an equity market that is very volatile to depend entirely on this strategy. As per psychological strategy, the equity prices are influenced by the mood and psychology of the investors. People following the psychological approach believe that investors moods can make the market bullish or bearish. Although this strategy is very useful in certain instances, it can not be relied on completely or in isolation.
Academic strategy and eclectic strategy
Academic strategy states that share prices are highly influenced by the flow of information and past trends of stock prices are not good enough to predict its future prices. Any new piece of equity news or any other relevant information has the power to promptly affect the share prices and make the past records redundant. Stock market is neither so organized as stated by the academic strategy nor it is as speculative as psychological approach assumes it to be. Eclectic strategy combines various strategies to take a balanced equity investment decision.
So, in order to formulate a balanced equity trading strategy, it is advisable to combine all the above strategies and use them according to the existing market conditions.