What is Tradevesting?

Trading with Investor’s Mindset

In 2021, I started investing as a value investor in Indian Stock Market by choosing robust businesses that were undervalued and holding onto them. During 2022, I noticed the market wasn’t moving much, and my portfolio was stagnant. I saw that many of my chosen stocks were trading within a specific range.

I decided to try something new: selling half of my investment when the stock price was hit the upper range and buying it back when the price dropped to lower range. My thinking was that even if I was wrong about the price range, I would still be invested in a solid company, so I could hold onto it. By doing this with even half of my stocks, I could make good gains in a flat market.

This approach marked the start of “Tradevesting.” Later, I began using more trading techniques with my selection of strong companies to improve my results.

The idea is simple: choose strong companies that are undervalued and use proven trading strategies to trade them. I don’t use stop-losses because I pick solid businesses, so if a trade goes wrong, I just hold the investment.

While you can grow your wealth as a value investor, Tradevesting offers some unique advantages:

• Expecting a nearly regular cash flow
• Getting frequent feedback on your strategies
• Making good use of flat and cyclical markets
• Reducing risk by taking profits regularly
• Staying engaged with the market through active management
• Improving decision-making skills with regular analysis
• Increasing flexibility to respond quickly to market changes
• Potentially enhancing overall portfolio returns

Here are a few key principles I follow as a Tradevestor:

• Don’t trade based on tips; build your own conviction.
• Don’t trade with borrowed money.
• Don’t use money you’ll need in the next three years.
• Don’t invest more than 4–5% of your total portfolio in one opportunity.
• There’s no need for a stop-loss in tradevesting; focus on choosing the right stocks instead.
• Always follow the process: study the industry, analyze the business, understand the fundamentals, assess valuations, and then look at technicals before making any tradevestment.
• Always have an exit strategy planned when you enter a tradevestment.

However, the tradevesting approach has some drawbacks. You might miss out on:

• Getting huge returns from multi-bagger stocks.
• Opportunities in high-growth stocks.
• Benefiting from momentum stocks.

In conclusion, Tradevesting combines the best of value investing and trading strategies to maximize gains. By choosing strong, undervalued companies and trading them using well-tested methods, we can navigate even a flat market effectively. The key is to avoid risky behaviors, such as following tips or using borrowed money, and to stick to a disciplined process of research and analysis. With careful planning and a clear exit strategy, tradevesting can be a powerful way to grow investments.

If you loved this story, please feel free to check my other articles on this topic here: https://ankit-rathi.github.io/tradevesting/

Ankit Rathi is a data techie and weekend tradevestor. His interest lies primarily in building end-to-end data applications/products and making money in stock market using Tradevesting methodology.