How in the world do I do combo movements in fighting games?

I dunno if this just applies to U Marvel vs Capcom 3, or any fighting game, but you know how combos say for example, "down, right, down-right, punch," do I:

1. Rotate the joystick in those directions and press the button, or
2. Press down, return to center. Press right, return to center. Press right down, return to center and attack?

This has been boggling the heck outta me.