The technical professional

Reading for India · about 4 min

What this cluster is for

Everything before this taught you to analyse an instrument. This cluster is about the 3 things that separate somebody who analyses instruments from somebody who manages money: what the analysis is used for, how much of it you can afford to be wrong about, and who you are allowed to give it to.

The third one sounds like paperwork and it is the most valuable article here.

By the end of this cluster you will be able to:

Say what percentage of your money sits in holdings above their own long-term trend, and whether that matches the market
Group your positions by what would damage all of them at once, which is almost never the sector labels
Compute your total open risk across every position and write it down with a date
Say what your largest single-driver exposure is, which is your real position size
Check, in about 3 minutes and for free, whether the person whose advice you act on is registered
Ask the 1 question that reveals a conflict: how are you paid if I act on this?

The reading order

Three articles. The first says what technicals are for at portfolio level, the second says how much you can afford, and the third says who may give advice to whom.

Technical analysis in portfolio management — inside a professional process, charts are used for exposure, sizing, exits and execution. Selection is usually done another way. Most retail effort goes into the 1 use that transfers worst.
Money management and risk at the portfolio level — 10 positions at 1% risk each are not 10 independent risks. Total the risk, group it by driver, cap the group, and write the de-risking ladder before the drawdown rather than during it.
Ethics and professional standards — what a registered Investment Adviser or Research Analyst may and may not do, why nobody may guarantee a return, what conflicts must be disclosed, and exactly where to look up a registration in India and in the United States.

The checklist

Three exercises, about 30 minutes in total, all on your own account. The third one is the shortest and the most likely to change something.

On your holdings, today (1)

Add a 200-day average to each holding's chart. Mark above or below.
Total the value above, and below, as a percentage of the whole account including cash.
Do the same for your broad index. Compare. If you are positioned against the market, write 1 sentence saying why.
Group holdings by driver: rate-sensitive, single commodity, foreign revenue or currency, domestic consumption, small and illiquid, leveraged.
Write down the largest group as a percentage. That is your real position size.

On your open risk, today (2)

For each position: shares × (current price − written exit price).
Any position with no written exit counts its whole value as risk.
Add them. Divide by total account value including cash. That is portfolio heat. Write it down with the date.
Total the risk inside each driver group. The largest group is the number that describes you.
Write the value held with your single largest broker as a percentage of your investable money.
Write the de-risking ladder and the re-entry condition. Today, while nothing is falling.

Before acting on anybody's advice, every time (3)

Look up the registration yourself on the regulator's own list. In India, SEBI's Investment Adviser and Research Analyst lists. In the United States, adviserinfo.sec.gov and FINRA BrokerCheck.
Read the fee disclosure. In the United States, Form ADV Part 2. In India, the written agreement and the fee terms.
Ask how they are paid if you act. Write down the answer in 1 sentence.
Check whether anybody assessed your circumstances before recommending. If not, it is content, not advice.
Check for any guaranteed or implied return. There is no lawful version of that anywhere.

India and the United States, equally

Every article covers both markets at the same depth, then says what the difference tells you. In this cluster 3 of those sections are directly practical.

The order of protections is reversed. In the United States, an exit rule is the primary protection and position size is the backup, because halts reopen and fractional shares allow exact sizing. In India, position size is primary and the exit is the backup, because a share locked at its price band may have no buyers at all. An Indian reader who learns the American ordering protects themselves in the wrong sequence, and finds out during the one event where it matters.

India regulates the activity. The United States concentrates more on the claim. In India, giving personalised advice on securities for consideration without registration is itself the violation, whatever the quality of the advice. American enforcement more often turns on whether a specific statement was false or a payment undisclosed. So an Indian reader's first check is registration, and its absence settles the question.

SEBI is stricter than the American framework in some specific respects. It caps advisory fees, requires client-level separation of advice from distribution, and has restricted regulated entities from associating with unregistered persons who make performance claims. The United States does not cap advisory fees and permits testimonials and endorsements subject to disclosure. More promotional material with more disclosure, against less material permitted at all.

And the scale of the unregistered problem is specifically Indian. A very large and rapidly grown retail population, a very large audience on video and messaging platforms, and a large volume of paid education sold in many languages. The rules in the 2 countries are broadly comparable in intent. The number of people who will act on unregistered advice before ever hearing that registration exists is not.

A note on what this is not

These lessons are free and they will stay free. They are the text version of the ideas in our video course, written for anybody who cannot spend money on learning right now.

This cluster contains no method for being right more often. It contains a method for measuring what you are actually exposed to, a method for being wrong at a survivable size, and a 3-minute check that tells you whether anybody can be held to account for the advice you are about to act on. Those 3 things decide more outcomes than any indicator in this wiki. The goal is the same one it has always been: fewer people in the 95%.