How to grow your stocks portfolio Faster
Topics covered-
Introduction
Invest some time in building positions
Make use of a Market crash
Set your portfolio preference
Importance of less stress
Importance of proper allocation in the stock market
Take notes of 200DMA
Identify the correction and differentiate it from a crash
Introduction
I'll be covering up some important technical data points that you required to grow your account quickly, along with how you need to think in terms of compounding your money.
Invest some time in building positions
The first thing is that institutions always take time to build positions. See, as a retail trader, you've been told that whenever the breakout happens, you need to get an early in order to capture the entire trend in motion, but it is exactly the opposite that you should do. Initially you should be in a role of a total choice. That is whenever the breakout happens,suppose the breakout is happening here. Enter some quantities here, but give time for trend to mature, there will be a pullback in the trend, and this is where you need to then go forward and add positions again. If you see a breakout, this is where you need to add positions before the move happens. And this is something I've explained in a lot of my free videos and especially for a community member. This is what I teach you in an established trend, how you need to identify proper pullback structures, and then you need to take those traits. This is one of the key points that I'lltell you that is required in order to grow a small trading account, because this is where risk reward is in your favor and you won't be chasing momentum blindly. So keep this in mind and always take note of this point, that institutions build positions over a period of time. And you have to adopt a role of a total is initially when you're starting to buy into an ongoing trend.
Make use of a Market crash
The second important point in terms of growing a small account is to make use of a market crash. See when the market crash happens, fear is an emotion that dominates every trader. This is because your fellow tradersare posting targets on the downside. You see a lot of negative news flow,but this actually is a huge opportunity. That market is giving you in this particular cycle, you need to adopt a role of a rabbit and you need to grab all the carrots that the market is giving you. You don't have to go ahead and buy everything at once. You can do something like sip that is systematic investment plan and make use of buying companies here, large cap companies, maybe mid cap, small cap, good companies that are available at 30, 40, 50% discount, because this is where market is skewed on the downside and your potential to profit. And to grow your account is actually maximum. In this particular range, you've got to make use of market crash. Don't get fearful because of the new slow. This is something that happens every five to six years and in between you'll get plenty of opportunities that are even 15 to 20% sort of corrections that you get. So the next timeyou see a correction, have a list of stocks ready and start buying them slowly, look into systematic investment plan. This is a huge tool in your favor that will lead to a lot of potential account growth in years to come.
Set your portfolio preference
Now the third important point in terms of growing a small trading account is to set your portfolio preference before hand and to take it step by step, especially if you're a big note. Now, what I recommend is that if you're a beginner in the market, first start with large cap stocks, large cap stocks are safe to trade and invest. And in this cycle, you will understand a lot about trend and the importance of volatility. When it comes to the second year, you need to then start focusing on good quality mid caps also because by then you would have developed solid understanding about price action, volatility, and volume analysis. This is actually vital in terms of print trading that is longer form of trading and investing to this stage is very important. And by the time you reach year three, this is where you can start handling small cap stocks and micro cap stocks. Because by then you will have understood a lot about market cycles, position sizing, and risk management. And once you cross the three year benchmark, which is actually a minimum period thatis required for a beginner to understand various cycles in the market, then you can adopt a balanced portfolio approach where you will be creating a mix of large cap, midcap and small cap stocks. I'll be telling you a few things about how I allocate money with respect to large cap, mid cap and small cap stocksin the latest section of the video, but keep this point in mind, because this will give you experience in the market and we'll gradually move you to the next phase. That is important in terms of growing a small account in the market.
Importance of less stress
Now, the fourth important point in terms of growing a small account is learning the importance of less stress as a trader and investor. And I've repeated this many times that you need to get rid of all short-term trading data, no open interest,no option, chain analysis. All of those things are useless when it comes to growing a small account in the market, you'll simply divert towards futures and options, and you'll end up blowing up your entire account. You also need to practice to stay away from news politics, social media, WhatsApp, telegram, all those sorts of things that will lead to distraction. There are only two things that you need to focus upon. Number one, what is the direction of long-term trend and number two, how you need to trade pullbacks within an ongoing trend. These are the only two points that you require in order to grow small trading account from a technical analysis perspective. So all of your analysis, all of your hard work has to be with respect to these two points. Only. Now don't underestimate what I've just told you stressful, not only affect your own personal life, but it will have a huge impact onyour trading and investing account. So get into a habit of leading a peacefullife by taking stress and looking at short-term data, you just won't grow in the market.
Importance of proper allocation in the stock market
Now the fifth important point to grow your small trading account is to learn proper allocation in the stock market.Let me just explain what I do now. When it comes to me, 50% of my money goesinto long-term trading and investing. And I first begin with sectors again, if you're a free member of the channel or a community member, you know that my first step of analysis is to always begin with sectors. And I usually pick out the right sectors that are going to move in the market. It does nothing but practice, but it takes some period oftime to develop the skill. So when it comes to my entire allocation, let's say I have only a hundred rupees to allocate in the market. 50 directly goes to long-term trading, long-term investing. And mainly here I'm taking sector bets in the market. When it comes to stocks, this is where I get into midcap and small cap segments. And this is where I prayed those stocks, which usually don't belong to the index. And this does give a boost to your overall trading account because your money only grows over a period of time whenyou're either into large cap, mid cap, or let's say even a small cap space. So 40% of my money again, goes into longer form of trading. Whenit comes to mid cap and small cap space. Now only 10% of my money goes into something like short-term and swing trading. And rest of it always goes into longer form of trading and investing. Now what retail traders or big nose usually do is that in short-term and swing trading, they allocate 90% of their capital and they allocate just 10% or let's say 0% capital in longer form of trading or investing. This is again, a huge mistake in the market. Majority of your money has to be in longerform of trading or investment because that is when your account will grow over a period of time. If 90% of your money is only in short term and swing trading accounts, then you will periodically make some money. But in the end, your account just won't grow.This is the truth in the market. And only experience teaches you this, for those of you whoare channeling members, please note that the strongest sectors and stocks update will be coming out in the community section this week,please keep your notifications on.
Take notes of 200DMA
Now the sixth important step in growinga small trading account is to always take notes of the 200 day moving average. This is the ultimate trendindicator do not ignore this. There are three things that 200DMA will help you with. Number one, it will help you identifylong-term trend. Number two. It will help you prevent some financialdisasters that you'll make in the market. And number three, it will help you time the marketwhen it comes to long-term trend. Whenever the price is above200 day, moving average, just pause the video and readeverything I've written here. This is very important. So whenever the price is abovethe 200 day moving average, it means the long-term trend is upand do not think about short selling. This is a huge mistake and will takeyou years behind when it comes to your overall account growth. So learn tobelieve in the 200 day moving average, a lot of people say this does not work, but it is mainly because theyhave not done their homework. So 200 DMA is the ultimate truth.When it comes to print reading, always trust this. The second important point is about financial disasters. Now, let me tell you, if you go backand check your trading journal, you'll find you have bought so many stocks that were below 200 day moving average. This is nothing but a making of a massive financial disaster for you always avoid this. Remember even someone like Paul Tudor Jones, who's a billionaire trader and investor always believes in 200 DMA. So who are you and I to question this? So stop believing in all the nonsense that goes on in a lot of mediums where 200 DMS criticized, this is the ultimate trend indicator. And I always begin here when it comes to sector or stock analysis. The third important point is that itis always told that you cannot time. The market 200 DMS again,will help you here. If you just plot 200 DME on sectors and stocks, you'll realize that there are some keypoints that this indicator identifies when it comes to timing the marketand it is entirely possible. So pay attention to 200 DMS.This will save you many a times, and this is one of the main indicators that will help you to grow a small trading account in the market.
Identify the correction and differentiate it from a crash
Now, the seventh important point here is to identify a correction and differentiate it from a crash. Now, the moment market falls 3% or more. You'll start hearing theword crash quite often. This is the biggest trap for a beginner trader investor who has just zero to two years of experience because every correction remember is not a crash in the market. Every correction actually is an opportunity to go long in the market. And this is how you should think I'vecovered this concept in many blogs. I always teach you how to handle correction in the market. These are just shakeout patternsthat develop on a consistent basis. And once you learn how to identify this, this is when your account will start growing exponentially. There's just a obsession with this word.Whenever the market falls three, 4%, you'll see this word crash floating around on all mediums, avoid this trap and pay attention from now on that every correction is not a crash. In fact, it is an opportunity to go long in the market. Now, the important point in growing a small trading account is to understand the risk reward cycle. Now pay attention here. This is very important in the last video I've already you, that these are the four stages in the market. This is accumulation. This is mock-up. This is distribution,and this is marked down phase. Now what typically happens is that at the beginning of the cycle, a retail trader investor, mostly a beginner traderdoes not take maximum risk. He's too conservative. And he waits for the entire cycle to play out. And this is where he starts taking a lot of positions, especially in the futures and options market. And then the down cycle begins. So this is where he loses most of his capital. As you gain experience in the market. When the price is moving into amock-up phase stage two structure, this is where you should be taking maximum risk because a lot of people are scared here. Fear is gripping in the market and people just don't take positions. And this is where you need to write theentire trend with the positions you've taken as the cycle matures,you need to adjust the risk. This is where when thedistribution happens in the market, you need to have minimum risks. The mug down phase whereprice starts moving lower. This is where you need to learn to sit out. I cannot tell you the importance of this risk reward cycle. When it comes to growing a small trading account, this is something I've followed consistently overthe years and has given me amazing results. You have to identify when the stage two is beginning in the market, that is a mock-up phase, and this is where you need to take risks based on your account size. Now, the next important point with respect to growing a small trading account is to learn to identify which asset class you need to target in which phase. So when the price is in the mock-up phase, where prices heading higher, you need to be in stocks because this is where the returns are higher, and stocks can do amazing things for your trading account. But when the overall cycle turns,bearish and stocks start heading lower, this is where you need to switch to something like fixed return instruments, fixed deposits, savings, account liquid B's recurring deposits. These are the instruments that you need to use in stage four that is marked down phase. You can also look into gold because usually when the equity markets don't do well, it is gold that moves higher. And this is where you can earn extra return on your trading account. So when it comes to understanding the asset allocation, pay attention here in the accumulation phase, this is when you needto get into equities.
Because when the stage two starts in the market, you should be fully invested in your trading and investment account to take benefit of the entire train cycle. As you gain experience, you can use equities and even FNO to make use of a phase where price simply trends higher. You need to be watchful of the distribution phase, because this is where you need to go into profit protection mode and zero leverage in the market. I cannot tell you how many people lose money here, because by the time the bull market is maturing. A lot of new people get in the market and they move towards FNO and lose a lot of money. And in the fourth stage,when the price is moving lower, be watchful about your asset allocation, because you can protect your money from ETF, fixed deposits, recurring deposits, and even something like gold. Ifyou're a seasoned trader investor, if you become over a period of time,you can also short sell in this phase, using futures and options to maximize your risk and reward. So there are three things that you haveto understand when you want to grow a small trading account. Number one,your initial capital will matter. The second important point you need to understand is that in order to reap the benefits of compounding your monthly contribution back to your trading account will also matter a lot. Therefore, keep getting better at whatyou do in terms of job, save more money and keep adding back to the initial capital. This is when compounding will start working big time in your favor and your growth will be a lot more faster. The third important point is in terms of mindset, always understand that long-term trendis the ultimate truth in the market, and you need to believe in this and stop looking at every month market correction as a crash, see this asan opportunity and use this to grow. So essentially growing a small account is a combination of what I taught you here and what I covered in this first part, where I explain a lot ofthings about personal finance. What I recommend now is that headback to this video again, watch it, and then come back to the current videoand watch this entire video. Again, these two parts will actually help you think in the right direction and we'll shorten up your learning curve to a large extent, kindly consider hitting the lightbutton and sharing this video. If you find the content useful,have a great weekend ahead, guys, take care and be safe.
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