Stock market or investing needs some strategies, which someone can develop or they can copy from someone. These strategies will make sure thar you are on a right path as well as you are disciplined. Now this strategies can be anything, like investing only in Index Fund or Investing in ETF, or simple trading strategies. And it's not that you have to apply only one strategy, you can have multiple strategies which cab help you to achieve different goals.
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But the problem is people jump to strategies without actually back testing it. Sometimes there is strategies which gives quite less than the market Index and spending time or money on it doesn't make sense. Even if you have back tested, it doesn't guarantee that you will get those returns in the future too. So future testing or basically continue investing on the strategies for some time before quitting it.
For example, when I started the ETF ki dukan startegy, the back tested results gave around 15 to 20% which is actually a great returns as compared to the index. But since I have been using it for tha last 1.8 months, I have only got around 9% which is again less than the index. So even though I have been spending my time in that strategy I am not able to beat the index. So does it mean should I quit this startegy.
Probably not, because 1.8 months is quite less to actually find the difference. We have to give atleast 3 to 5 years of time to the staregy because by that time the market has seen the full ups and downs. But even after that if you are getting less returns, you can quit the staregy.
Also one startegy should not have more than 10% of your capital deployed at the testing phase. This is because what if you will get less returns and more capital is deployed. Your total portfolio returns will come down and that's why having 10% is good enough capital to get started.
