- Algo Trading – Answer to all algo trading questions. Does Algo Trading Work? Do I need to be a programmer to Algo Trade? How Investors use Algo Trading? And many such faq’s
- Arbitrage Funds – Arbitrage funds use the price difference in the cash and derivatives segment to generate returns. They aren’t for the NSE and BSE cash segment arbitrage.
- Average Up Or Average Down – Averaging down means buying more when the share price is down. Similarly averaging up means buying more when the stock price has gone up.
- Acid Test Ratio – Acid Test Ratio is a measure of the ability of a company to pay its liabilities using quick assets by converting them into cash in a very short span of time.
- Arbitrage – In Indian markets stocks are traded in two major exchanges – NSE & BSE, which means you can take advantage of buying in one exchange and selling it in the other and bag the difference as profit. Wait …
- BitCoin – Answering all Bitcoins questions – What is Bitcoin, blockchain, and mining? How miners make money? How to trade in Bitcoins in India and is it legal in India?
- Book Profit – When should a long-term investor with the view of 5 or 10 years book profit? Should overvaluations be criteria for booking profits? If not what else?
- Buyback – What is stock buyback? Why don’t large Investors participate in the buyback? How is buyback different from promoters buying shared and what should small and retail investors do in buyback? How retail investor should use buyback for arbitrage play along with contract notes
- Bonus and Stock Split – What is Ex-bonus? What is Stock Split? What is the difference between Bonus and Stock Split? Why the share price fall by 50% or so when a company goes ex-bonus?
- Book Value – Book value is important such that shareholders will receive that much amount per share if a company is liquidated as on date.
- Chit Fund – Chit fund makes the adrenal rush just for being part of the lucky draw. More important once in the tenure, winning the lucky draw is sure which is the key to its success.
- Circuit Filters or Circuit Limits – Answering reader question: Why some stocks like RCOM can rise more than 30% but stocks like Vakrangee or Manpasand Beverages stop trading after 5% change in price? Why few stocks have the circuit limits?
- Close-Ended Funds Vs Open-Ended Funds – What is the difference between Close-Ended Funds and Open-Ended Funds and should retail Investor consider a Close-Ended Fund or an Open-Ended Fund?
- Credit Score – What is CIBIL credit score, how it is calculated, how to get your CIBIL score, how to improve your CIBIL score, why should everyone know their credit score even if they don’t need a loan?
- CAGR or Compound Annual Growth Rate – Compound annual growth rate or CAGR – is the annually compounded rate of return. The rate at which investment should grow to reach an ending balance.
- Candlestick – How to read candlestick for trends. Understand different types of candlesticks. What is a shooting star candlestick, understand DOJI and pin bar candlestick
- Call and Put Options – What it means when you are buying a call option, buying a put option, selling a call option and selling a put options with chart to help when to use which one.
- Commodity Trading – What is a “Commodity”?, What is a commodity exchange? , What is Commodity Futures?
- Day Trading – How to find the right stock for day trading in NSE and BSE and how you should go about day trading as a whole in India.
- Debt and Debt to Equity Ratio – Good management knows the impact of debt and so they will never take more than the business can pay off. Not so good management won’t focus on how much the business can pay back but will decide on how much debt they need.
- Diversifying Your Portfolio – Understand diversification and see why Indians crave for portfolio diversification and help you diversify your portfolio even if you know very little about the market.
- Doji Candlestick – What is Doji Candlestick? The Types of Dojis, Real Life examples along with relevance, limitations, and application of Doji candlesticks to identify trend
- Direct Plan For Mutual Funds – SEBI has mandated Mutual Fund Houses to come out with two varying options for all their schemes, namely Standard and Direct. The standard version of all mutual fund schemes will incur a charge which will be treated as an agent fee or commission and the direct plan is free from any charges.
- Dividend – Dividend is the money paid (typically once a year but some companies pay more than once as interim dividends as well) by a company to its shareholders out of its profits.
- DVR Shares Or Differential Voting Rights Shares – DVR stands for differential voting rights which means the investor holding DVR shares has different voting rights than the investor holding the normal shares of the company.
- Earnings Yield – Earnings yield is the ratio of the earnings per share or EPS divided by the current share price. It is inverse of the price to earnings ratio
- ELSS – ELSS tax saving funds have a lock-in period of 3 years which makes investors remain invested for the long-term. When new investors check the return for the funds, they are positively surprised. But it also makes them feel ELSS funds is the only route to building wealth.
- Expense Ratio – Everything An Investor Needs to Know About Expense Ratio Before Investing In any equity Mutual Funds in Indian Markets in an easy Question and Answer Format.
- EPS – Everyone knows EPS is earnings per share but how to use it effectively to invest in stocks? What if I say Page Industries is one of the cheaper stock to invest into?
- ebitda – ebitda stands for Earnings Before Interest, Tax, Depreciation and Amortization. In simple terms ebitda is earnings capacity of the company with pure operations factors only.
- Exchange Traded Fund – What’s the difference between exchange-traded funds or ETFs and mutual funds? Which is the right one for investor investing for the short, medium and long term?
- Fundamental Analysis – What we all know about fundamental analysis from watching news channels is completely wrong. Understand the fundamentals of fundamental analysis
- Free Cash Flow – What is free cash flow or FCF? How Free Cash Flow is Different from Operating Profit? What is Ideal Value of Free Cash Flow? What I Prefer in companies cash flow?
- Growth or Dividend Re-Investment – The dividend is not paid to the investor, often it is considered as equivalent to growth option but there is a difference. Let us understand each of the options and see what’s the difference between dividend re-invested option with growth option and which is a better choice for an investor.
- Growth Or Value Investing – Growth investing or value investing which one is right for an investor. Growth at what price and when the company invested as a value pick will make it happen?
- Hedging – Answering all the Hedging questions – What is Hedging, Why should one Hedge, Where can one Hedge, How Hedging Works and When Should one Hedge.
- Higher Top Higher Bottom Chart Pattern With Examples – Everything to know about Higher Top Higher Bottom Chart Pattern – What it is? Why does it work? Is it Only for Traders? Investment Examples
- High Beta – Beta is a measurement of share price movement as compared to the overall market. In other words, High beta means higher volatility, which implies higher risk.
- Index Funds Vs Mutual Funds – How Index funds differ from the traditional large-cap fund? Why it makes more sense now after the new SEBI guidelines to invest in an index fund over a large-cap fund?
- Intrinsic Value of Stock – Intrinsic value is the future value of an asset. Let’s see how Warren Buffett calculates Intrinsic value and use his formula on Indian stocks
- Interest Coverage Ratio or ICR – The interest coverage ratio determines how easily the company can pay their debt. The ratio is a factor of companies earnings and the interest being paid.
- Inflation – It is important to understand the fact that when the inflation rate goes down, it does not mean that prices are actually declining. It only indicates that the rate at which prices are going up has slowed down to a certain extent.
- Jobbing – Jobbing in the stock market is an ultra-short term trading of securities with the intent of generating small profit by analyzing the job spread.
- KYC – As per recent regulatory developments, from January 1, 2011, KYC (Know Your Client) is mandatory for investors wanting to transact in Mutual Funds, regardless of the transaction amount. This means you will not be able to process any fresh MF purchases post January 1, 2011, unless you are MF KYC compliant as per CDSL Ventures Limited (CVL) norms.
- Long Term Capital Gains or LTCG – What is LTCG? What is Grandfathering of taxable LTCG up to 31 January 2018? Does LTCG apply to Mutual Funds? What is the tax percentage and How to calculate the tax?
- Lower Top Lower Bottom Chart Pattern With Examples – Everything to know about Lower Top Lower Bottom Chart Pattern – What it is? Why does it work? Is it Only for Traders? Real Examples
- Margin for Day Trading – Margin is the darkest element that traps retail investors. Everyone wants to make big money with the least possible amount and this leads to all the catastrophes of the market.
- Moratorium – What is Moratorium? All you need to know to understand with an example. More importantly, answer to the question should you opt for it or not?
- Mutual Funds – SEBI (Mutual Fund) Regulations 1993 defines Mutual Fund as “a fund established in the form of a trust by a sponsor to raise money by the trustees through the sale of units to the public under one or more schemes for investing securities in accordance with these regulations”.
- Mutual Funds Types – Categorize the mutual funds and invest into as many category of mutual funds as possible to make mutual fund portfolio well diversified.
- Market Cap of a Company – What is market capitalization or market cap of a company? What is enterprise value or EV? Why, as an investor, we shouldn’t focus on enterprise value or EV?
- MOAT – Invest in Companies With Economic MOAT – Understand the term coined by Warren Buffett MOAT in its true sense and then invest in companies that have significant MOAT compare to its competition
- Margin of Safety – Some consider the amount of cash in the companies book as the margin of safety whereas others consider growth and better business environment as “margin of safety”.
- NFO – Answering Why fund house come up with NFOs? Why fund house don’t come up with new funds often? and When you should avoid investing in NFO?
- Nifty Listed Companies – When I talk with many people and tell them that its time to invest in Nifty / Sensex listed companies they have fairly little idea about which companies are listed and so thought I would list them here for reference.
- Nominations – Nominations – What it is, Whom to Make a Nominee & Everything An Investor Need to Know About Making a Nominee In Mutual Funds, Bank Accounts & Other Investments
- Net Asset Value or NAV – Everything you need to know about the Net Asset Value or NAV for mutual funds including the formula for calculation of NAV along with the cut-off time
- No Trade Zone – Stock’s price may move in such a manner that they should be avoided for trading (you may consider investments). Such a price range is termed as no trade zone.
- Nifty – Nifty is an index or an indicator of the performance of the top 50 companies listed in national stock exchange. Nifty is a joint holding of NSE and IISL.
- OPM – What is OPM? How to use OPM to invest in the right business? Why OPM is the vital ratio to consider when investing in businesses with a similar product line?
- Open Interest – Explained in very simple terms everything one needs to know about open interest
- Penny Stocks in India – Penny stocks in India: Should one invest in penny stocks? How I invest in them? Remain invested in DHFL/Yes Bank/Jet Airways or they will become penny stocks soon?
- Pivot Point – A pivot point is a simple average of the high, low and closing prices of the previous trading period. There are many commonly accepted pivot point calculation formulas.
- Price Vs Value – The stock trading at a lower price (Rs50) isn’t always cheaper than the stock trading at a higher price (Rs1000). We value the stock at a price and not for a value.
- Process of Investing – The process of investing in the market with the methods that suit your approach in the market is your process of investing. Do you know your process of investing?
- Promoter Holding – In a large-cap company, lower promoter holding can be acceptable to an extent but for a midcap and more so for small cap, I don’t prefer low promoter holding. So let me share what I consider an ideal promoter holding for a particular size of the company before investing.
- PSU (Public Sector Undertaking) – A government of India owned companies are called a Public Sector Undertaking or a PSU. Government-owned means central government owned, any state government owned, union territorial government-owned or a mix of them. A company to be classified as PSU, the government must be a majority shareholder.
- PE Ratio – Understanding the PE ratio and how to calculate forward PE ratio. Why the growth outlook doesn’t help even the long-term investors make money from the market?
- Paper Trading – Paper trading is trading with no real money and just with live market price. Let us understand how to paper trade the right way.
- Pledging of Shares – What is pledging of shares? Who can pledge share? How to find if the promoter has pledged it’s shares and when pledging should be a concern for the retail investor?
- QIP – What is QIP? Difference Between QIB and QIP. The Impact of QIP on share prices. And many such commonly asked questions about QIP by Indian retail investors.
- Rights Issue – Everything a retail investor needs to know about rights issue. Explaining everything from the recent rights issue example of Reliance Industries
- ROCE – ROCE stands for return on capital employed which means the return promoters are able to generate from the cash or capital being deployed in the business.
- ROE or Return on Equity – Answering all ROE questions: What is ROE (Return on Equity)? What is the ROE formula in very simple terms? Why High ROE Isn’t Always Good?
- Sensex Listed Companies – People asked me to have the list of companies in Sensex and so I thought of referring them to Official website or even at Wiki but could not find the list in a very comprehensive manner and so thought would add them here.
- SIP or Lump Sum – When I read this question the initial reaction is always SIP but when I compared the returns, I realized that it is not always SIP that is better.
- Standalone Vs. Consolidated – Retail investors have a doubt if they should look at the consolidated results or standalone ones. Let me clarify once and for all for every investor.
- Support and Resistance – Support and resistance levels are very critical to not only trading in the market but also for investments. So let’s calculate the support and resistance levels.
- Stop Loss – Answering every question on Stop Loss. Explaining everything with an example so you can place a Stop Loss, calculate Trigger Price, understand Trailing Stop Loss, etc
- STP Or Systematic Transfer Plan – STP is a Systematic Transfer Plan, but what I share today is more critical for an investor looking to invest in the market – who should opt for STP and when?
- Sensex – Sensex is an abbreviation of the Bombay Stock Exchange’s SENSitive IndEX to indicate the financial performance of the largest companies listed in the exchange.
- Short Selling – Short selling (also known as shorting) is not very popular among Indian retail investors and I get lot of questions about short selling. So let me try to explain the concept of short selling in very simple language.
- Target Levels – What is no-trade zone, and how can a retail trader calculate the target levels based on stop loss, support, and resistance. Understand with a live example of Marico India.
- Time Correction Vs. Price Correction – Understand time and price correction with the help of real stock and index examples like Nifty, Reliance, Hero Moto Corp and others
- Technical Analysis – What is technical analysis? Why technical analysis works? What is the theory behind technical analysis to work? What are principles of technical analysis? and lastly Why I think technical analysis may work for you as well?
- Top Down Approach and Bottom Up Approach to Investing – The top-down approach identifies the broadest option first and drills down to the sectors and companies. With the bottom-up approach, it’s the companies first.
- Top-line and Bottom-line – Explaination of top-line and bottom-line in a very simple language and in simple examples as well as clarify the difference between the two.
- Working Capital – What is the working capital cycle or days and why it is critical to invest in companies with low working capital requirements?
- 200 Day Moving Average – The 200-day moving average commonly expressed as 200DMA is a very popular and widely accepted technical indicator among traders to analyze the underlying trend.