- Question 1 : What is a Trading system?
- System trading is the concept in which the decision for trading is taken with the help of intelligent software / program in the computer. This software / program is called "system" or
"trading system". These systems, with the help of historical data, understand the price movement very well and have algorithms to take buy and sell decisions. A good system also has risk control
and money management incorporated into it.
- Question 2 : Can a discretionary trader outperform a system trader?
- Discretionary and system trading are like chalk and cheese there is no comparison as such. In system trading strict discipline is required to follow the trading system, accurate and fast
execution no personal decisions and no bias about the news in and out of the markets. In the case of the discretionary trader, everything depends on the trader's intelligence, his ability to accurately
understand the market and his instantaneous decision capability that must factor in the change of price movement and overall market. There is always the chance of inconsistency in his decisions
due to many factors.
It is not always that a discretionary trader is successful or a winner, but there are few good discretionary traders giving consistently good results. Similarly, a system cannot always be
profitable. Markets are always subject to change and only consistent research may survive the test
So both approaches have their pros and cons. But if the system is designed properly and tested,
having all the ingredients like understanding the price movements, money management and risk
factor, then there is a very high probability of success.
- Question 3: How effective is technical analysis in comparison to fundamental analysis for trading?
- There may be war in the Middle East, higher demand for a particular product in the USA, or a
series of other conflicting fundamental picture and noises. But stocks go up or down on supply
and demand and not on the basis of balance sheet alone. Otherwise, how can one explain a 100%
difference between the highs and lows of many stocks virtually every year, even in years where
there is no change in the fundamental picture, Technical analysis in our view is more effective as
it captures the sentiment of the people who are dominating the market, namely the buyers or the
sellers. MarkeTopper has and is developing its own set of indicators and mathematical algorithms,
and is also using a different interpretation and implementation of the available concepts and
algorithms, which are proprietary in nature, and which aim at effectively capturing the dominance
of buyer or sellers. Time tested risk analysis and proprietary money management techniques have
been used to get the best results. Fundamental analysis may have its own benefits, but when you
have the target of being profitable 10 out of 12 months, at least 65 % of the weeks and 55 % of
the days and a target return of 100% per annum based on historical testing, you need more than a
balance sheet and public information to achieve the same. Also, Please note that historical testing
results are never achieved in live trading.
- Question 4: What is the difference between investment and trading on stock markets?
- Starting with investment in the stock market, it means that we buy shares for a longer duration
that is say for a period of 3 months or longer, possibly ranging to years. The return on investments
is in the form of the capital appreciation in the share price, plus any dividend or share splits,
bonus, etc., that is declared during the period for which the shares are held. Trading, on the other
hand, relates to buying and selling intra/day or on a daily basis. The trade position carries on for a
couple of days or for a week. The return on trading is the favorable price movement or
appreciation of the scrip.
- Question 5: Do we require large sums of money for system trading?
- There is always a requirement of a basic minimum amount to use the trading system so that its
can be exploited to its fullest. Sophisticated trading systems need sufficiently large investments to
recover the costs involved in developing the trading systems and to exploit the system to its full
- Question 6: How does one decide that the system developed is good and would give profits?
- Well.. there are some questions we cannot answer here
- Question 7: Does luck have anything to do with trading on stock markets?
- Yes, success or profits can be the result of discipline, perseverance, hard work and dedication.Luck often happens when opportunity meets preparation.
- Question 8: Why do stocks fail to move up even when they are fundamentally strong?
- Technical analysis is based on the basic premise that market moves on the basis of demand and
supply. The basic principle that has been stated in Law of Supply and Demand in Economics is
that prices rise when the demand is more than the supply and prices fall when the supply is more
than the demand. Fundamental analysis is based on the premise that stocks are to be bought when
they are undervalued on the basis of fundamental factors such as the Price/Earning ratio,
profitability factor, etc.
Even if the fundamentals are strong, but the investors are not bullish on the particular stock
(leading to lack of demand compared to supply), then the scrip may not rise.
- Question 9: I have been investing in stocks using fundamental analysis, how would technical analysis
help me in taking better decisions as compared to fundamental analysis ?
- If one is investing in stocks, technical analysis can help many ways. It can give not only the intra-
day and short-term (2-3 days to four weeks) prospects of the investment, but can also provide the
long-term (three month to year) picture of the investment considered. Moreover the technical
analysis can give the person an idea about better options available for entry and exit at any point
- Question 10: For a novice to stock markets, what would you suggest one should use, technical analysis or
- Technical analysis and fundamental analysis are two different methods for studying the market.
They can be used individually as well as together to study the stock market. Technical analysis is
associated with analyzing the historical price data of the stocks using various indicators and
pattern studies and strongly follows the economics rule of supply and demand.Fundamental analysis is associated with studying the balance sheet and income statement using
ratios and other financial tools. Moreover, it is said that a trader should follow those rules which
suit his personality and temperament.
- Question 11: I am a student of MBA Finance and have a query. When the EPS of a company remains same, then why do prices still keep changing?
- There can be many factor like the present supply-demand situation of the stock, individual
investment plans (people buy and sell after achieving their targets), present analysis of the stock
sector-wide, industry-wide, the company's own planning, management decisions, overall
economy situation country-wide, world-wide, periodical movement of the stock, etc.
- Question 12: Supply and demand is a concept in Economics. Does it play any role in stock market?
- Yes, the view of the stock's valuation varies time to time and the supply and demand, the
technical movement and the fundamental aspect of the stock always keep on changing the
investors/traders decisions which further alter the supply and demand.
Definition of Demand: The relationship between the price and quantity demanded of a good,
when everything else is held constant.
Definition of Supply: The relationship between the price and quantity supplied of a good, when
everything else is held constant.
- Question 13: I am a pure marketing guy. I am interested in the stocks market and would like to learn
about technical analysis. Where do I get the study material on it?
- For starters I would suggest you to read the book by Technical Analysis of Stock Trends by
Edwards and Magee. It is a good book available for understanding the chart patterns used in
technical analysis. Technical Analysis from A to Z by Steven B. Achelis provides information
about the indicators used in technical analysis. Get hold of software like Metastock or study any
charting analysis software. Those interested in a purely system driven approach can look at
Omega Tradestation 2000i for starters. The more you read, the more you learn. The more you
practice, the more you understand.
- Question 14: What is the difference between Analysis and analytics?
Data analysis is the act of transforming data with the aim of extracting useful information and
facilitating conclusions. Depending on the type of data and the question, this might include
application of statistical methods, curve fitting, selecting or discarding certain subsets based on
specific criteria, or other techniques. Data visualization is sometimes an important part of data
analysis, especially in the case of explorative data analysis.
Data Analytics perform research in machine learning and data mining to discover scalable
computational methods for finding useful models from massive amounts of data. These models
can be used in a variety of tasks, including clustering/discovery, regression/prediction, and
classification/ranking. So Data Analytics is building predictive models and discovering patterns from data. While Data Analysis Convert Data Into Intelligence and Build Better Customer
- Question 15: What does an analyst do in MarkeTopper?
- Focus of this job profile is on study of published literature and exploration in the fields of data
analytic, pattern recognition, scientific computation, probability and mathematical/statistical
modelling with an aim of developing analysis methods (trading systems) or software platforms in
a time bound fashion. It will require a unique blend of academic pursuit with the progressive real
world deployment with each deployment a milestone for measure of success.
- Question 16: Which skills are required to be an analyst in MarkeTopper?
- You should be a post graduate (computers, electricals, Math, physics, statistics) or P.H.D. from a
known institutions (ISI, IIT, MIT etc.) and conversant with at least one computer language, or
you have a great interest in stocks/commodities/currencies markets and have worked on technical
analysis or have worked on stock market and creation of models (the models may or may not be
stock market related).
- Question 17: I am a post graduate with a non-technical background. Can I apply for the position of Data analyst in MarkeTopper?
- Surely you can apply provided you have a deep passion towards financial markets. You should
be affluent with at least one computer programming language and you should have made some
trading systems of your own. Please note that a passion is not a passion if you cannot
demonstrate your interest in the subject of your passion.