[MUSIC] Now let me do a part of this course. In fact, this part is common in almost all trading strategy related courses. This is our disclaimer. Now let me be very honest. We are not doing this just to protect ourselves or with the fear that you may lose money if you trade on this. That is not the purpose why we are doing this. Generally when you do a trading strategy, possibility exists that you may not make money. Because all these trading strategies are based on past events. People have seen particular kind of patterns in the past and based on that, they have found that trading in a particular manner leads to some profits. The best part about training strategies using academic papers is that there is an economic rational for these strategies to exist. To that extent, this is superior when compared to pure data mining based studies. However, situations can change. Circumstances may change. And that may render these trading strategies that we're going to talk about, not so profitable, at some point in time. We have been careful, we have actually tested these trading strategies. We are going to display the results that you will get by using these strategies on India. Mainly in stocks. But then as I told you the circumstances may change so it's important that we tell you that right at the beginning itself what to expect, what not to expect. The main purpose of this course is that the source which is academic papers, research done in academic papers should be used in real markets, that's how it goes. There are good ideas sitting on papers which are published, which are there in the public domain, and there are a lot of people who are looking for ideas. The purpose of this course is to connect these two, we know these two categories, and ensure that trading happens using these ideas. Now, we're going to talk about four to five ideas, doesn't mean that there are only four or five of them. There are many many trading strategies that are available in the public domain, which are published. But at the same time, you should not treat this like some kind of a magic tool which you can just pick up and start making money. That's not the purpose. The main purpose here is education, to equip the learner to understand academic papers and implement them. And while implementing, it's very, very important that you improvise as well, and that is your skill. At the end of the module, I'll also tell you how important this discipline in training. So please do not take this course as an. Before deciding to invest, it's very, very important that you understand your own risk and also do some calculations regarding what is the worst case scenario in this kind of strategies. Again, this worst case scenario is worst case scenario that has happened in the past. In technical terminologies we call it as dualdol, we are going to talk about it in a subsequent module. And then you should ask yourself, do I have the stomach to take this kind of a risk? As I've told you, you want a toss of a fair coin where the expectation is that, on an average it's 50% heads and 50% tails. You may have a situation where three times or four times [COUGH], why not? Even more number of times, you may have heads or tails coming in a row. So three times in a row, you may have a tail coming. Three times in a row, you may have a head, even in a toss of a fair coin. So it doesn't mean that the probabilities have changed but this is a fact of life. So when you actually trade using the trading strategy it is quite possible that there maybe losses and this losses may come at, in the first three instance only, first four instance only. So, you should ask yourself, do you have the appetite to take these kind of loses? One psychologically, and also, actual in terms of money as well. Do you have the funds? Very important. If you don't, you should even not attempt trading using these strategies. Now, what about, we're not investing money, we're not belonging to others or starting a fight. Here of course you are to comply with all the rules and regulations that are applicable to your economic setting. Different countries require, they all have different rules. It is crucial, absolutely crucial, to tell the investor right at the beginning that what he or she's getting in to. I'll tell you why. Now, careful research has shown that lot of times, even though the fund manager is rational, fund manager is acting in the best way possible, it is the pressure of the ultimate investor that leads to inefficient decisions. Suppose, assume, that you collected funds from a naive investor who does not understand this fact that it could be occasional losses. And they invested in vests and you start with the net asset value goes down. Now this investor, being a naive investor, would not have anticipated this. Let's say, this investor has experience of only investing in debt. Now what happens in debt, that you get interest at regular intervals, right. Now people, of course in an economic sense you may lose money in debt. As you may invest in government securities, the chances of losing your principal is very rare. Now suppose you have investors who are used to only investing in debt, [INAUDIBLE] safe securities. [COUGH] Now if they invest with you, in these kinds of strategies, and if they see their value of their money coming down, they may panic. And in this panic, they may withdraw their funds from your, whatever fund you are running. Now that will force you to prematurely close these positions that you've taken up. And at the end of the day, it's going to be a lose-lose for all. So it is important that first of all you understand your risk appetite, secondly if you're collecting funds from anybody else and you're investing on behalf of others it's important that you communicate to others clearly what are the pros and cons of this strategy. Of course you have to talk about positive expected return at least in the past. But at the same time you should inform the investor that there is a possibility of a loss as well. Only if the investor is willing to take that risk, then only you should proceed. In Finance 101 that risk and return go together. Of course the idea of these strategies is that there are superior returns for a unit of risk none otherwise, that what the strategies are. The whole purpose of this disclaimer is to tell you that this course is an educative course, the idea is that you know about this source of trading strategies, and start implementing them. We're not here to assure you a particular rate of return, please do not take this course that way. Treat this as a learning exercise and practice yourself, experiment with some kind of simulated investment strategies at the beginning and then start trading
