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MARKET INSTITUTE
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Trading Essentials of Price

Action Course
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 Contents

➢ Equity Market

➢ Fundamental Analysis

➢ Technical Analysis

➢ Derivative Market

➢ Currency Market

➢ Commodity Market

➢ Intraday Trading

➢ Software Training
NATIONAL LEVEL CMD AWARD : FOR BEST
CUSTOMER SUPPORT
➢ Portfolio Management/ Mutual Fund
 Ruchi Stock Market (Financial Freedom)

Our Franchises in Maharashtra, Haryana, Delhi, Uttarakhand, Gujrat, Rajasthan & Madhya Pradesh

SINCE 75+
95+ 15000+
16000+ 41+ 30 CR
JUNE 2007 WORKING
WORKING STAFF
STAFF TRAINED
TRAINED FRANCHISE PARTNERS ASSET UNDER
HEAD OFFICE-PUNE ALL
ALL OVER
OVER INDIA
INDIA STUDENTS
STUDENTS ALL OVER INDIA MANAGEMENT (AUM)
 Awards, Affiliation

NATIONAL LEVEL CMD AWARD : FOR BEST CUSTOMER

SUPPORT
 Why Stock Market?

➢ To create a Alternate source of income.

➢ To keep pace with inflation.

➢ Most Capital Growth Potential.

➢ Investing Makes Your Money Work for You.

➢ Investing in Stocks is lot easier ‘Now’.

➢ Tax benefits from Government on Stock Investing.

➢ Now a days we don’t have Job security.

NATIONAL LEVEL CMD AWARD : FOR BEST
CUSTOMER SUPPORT ➢ Stock Market is a Business.
 Benefits of Stock Market

Excellent Sole Regulatory

Returns Proprietorship Framework Flexibility
 Ways of Growing Money

Business Real Estate

➢Time req High ➢Time req High
➢Risk High
➢Risk High
➢Liquidity Low ➢Liquidity Very
➢ROI Low Poor
➢ROI Good

Stock Market
Lending Bank/Post ➢ROI Excellent
➢Time req High ➢Time req High ➢Risk Moderate
➢Risk Very High ➢Risk Very Less ➢Liquidity Very High
➢Liquidity Low ➢Liquidity Good
➢ROI Good ➢ROI Very Poor ➢Time req for returns Average
 Robert Kiyosaki’s Cash Flow Quadrant

Passive Income
Active Income

You Have a Job You Own a System

Time = Money People = Money

E B
No Leverage Leverage
Employee Business

Passive Income
Active Income

You Own a Job

s I Money Works for You
More Time = More Money Self- Investor Time = Money
No Leverage Employee
High Leverage
 Asset and Liabilities

During Last Value of RE

Bullet in 2009
36 Years 1.35 lac 625 Shares of Eicher Motor in 2009
The Wealth has Multiplied By Valued Rs.1.35 lac
Now 1 lac Now 2.09 Cr
10000deposited as
FD in Bank in
1980 100 Shares of WIPRO in 1980
FD Gold Silver
18 times
Valued Rs.10000
34 times 28 times
Now 2 lac Now 1500 Cr
Value of Symphony
Sensex Air Cooler in 2009 1
lac 3000 Shares of Symphony in
640 times 2009 valued Rs. 1 lac
Now 0 Now 4 Cr
 RUCHI
RUCHISTOCK
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Equity Market ISO 9001:2015 Certified Institute

 Share Market

Share Market

like other markets, Process of buying and selling of

Share
shares happens in share market through stock
It is part of the ownership in
Company Exchanges like NSE & BSE in India.
NATIONAL LEVEL CMD AWARD : FOR BEST
CUSTOMER SUPPORT
 Need for equity market

➢ Effective Utilization of savings

➢ Promoting Capital creation

➢ Wider Opportunities of investment

➢ Liquidity of investment

➢ Investment safety

➢ Funds for Development Purpose

➢ Indicator of Industrial Development

➢ Barometer of National Economy

Stock Exchanges in India

1875 : BSE established as ‘The Native Share and Stock Brokers Association’

1993 : NSE recognized as Stock Exchange

2003 : MCX & NCDEX commenced Commodity Derivative trading

 Indian Capital Market - Overview

Market Regulator SEBI

Stocks and
Commodities
Depositories Other Mediators
Derivative
Exchanges

NSE, BSE, MCX NSDL, CDSL Stock Brokers, Advisors etc.

NCDEX, etc.
 India Stock Market - SEBI

❖ SEBI - Securities and Exchange Board of India

➢ SEBI was established on April 12, 1992.

➢ Owned by the Govt. of India.

➢ Basic objectives are:-

➢ Protecting the interests of investors in stocks.

➢ Promoting the development of the stock market.

➢ Regulating the stock market.

 Primary & Secondary Market

Primary Market Secondary Market

IPO
Trading
Company To Investor To
Sells Investor Sells Investor

ADR,GDR trading in Foreign Market

 Starting Investment in Capital Market

Accounts Required

Bank Account Trading Account Demat Account

Trading account is required only if you want to buy / sell shares through stock exchange.
 DEMAT Account

What is Demat Account in Hindi - YouTube

 Market Participants

❖ Private Promotors- Adani, Ambani, Tata

❖ Govt of India - Coal India, BPCL,HPCL

❖ FII- Foreign Institutional Investors.

❖ DII- Domestic Institutional Investors.

❖ HNI- High Net-worth Individuals.

❖ PROS- Professional Traders.

❖ RETAIL- Common Public.

 Trading and Settlement

T+1

Trade Settlement Failure to Pay-In

Pay-in and Pay- Close Out

Trading Auction
out
(T) (T2) (T3)
(T1)
 The stock market timings in India

❖ Pre-opening timing :

➢ 9.00 am – 9.08 am. - All orders accepted during this period

➢ 9.08 am – 9.12 am - multilateral order matching technique to determine the final prices.

➢ 9.12 am – 9.15 am. - During this period, no new transaction orders can be placed.

❖ Normal session:

➢ The main trading session for the Indian stock market is from 9.15 am to 3.30 pm.

➢ order matching is used for all trades during this time with prices set to the market's demand and supply.

❖ Post-closing session:

➢ 3.30 pm – 3.40 pm. -The last price of the day is determined by taking an average of the prices traded between 3 and 3.30

➢ 3.40 pm – 4 pm. -Bids for the next day's trade can be placed after the stock market closes- this sort of order is called an
AMO or an After-Market Order
 Brokerage Charges & Taxes

➢ Brokerage fee is a fee charged by Broker to conduct transactions between buyers and sellers.
➢ The broker charges the brokerage fee for services such as sales, and advice on the transaction.

charges Equity delivery Equity intraday F&O - Futures F&O - Options

STT/CTT 0.1% on buy & sell 0.025% on the sell side 0.01% on sell side 0.05% on sell side (on premium)

NSE: 0.00345% NSE: 0.00345%

Transaction charges NSE: 0.002% NSE: 0.053% (on premium)
BSE: 0.00375% BSE: 0.00375%

18% on (brokerage + SEBI charges 18% on (brokerage + SEBI charges 18% on (brokerage + SEBI charges 18% on (brokerage + SEBI charges
GST
+ transaction charges) + transaction charges) + transaction charges) + transaction charges)

SEBI charges ₹10 / crore + GST ₹10 / crore + GST ₹10 / crore + GST ₹10 / crore + GST

Stamp charges 0.015% or ₹1500 / crore on buy side 0.003% or ₹300 / crore on buy side 0.002% or ₹200 / crore on buy side 0.003% or ₹300 / crore on buy side
 What is Nifty and Sensex?

➢ Index is Combine basket of many stocks as stock value changes basket value also vary.

➢ Nifty – Contains 50 diversified stocks of 14 sectors. ➢ Sensex – 30 diversified stocks from 9 Sectors

Nifty calculations Sensex calculations

▪ Base Year is 1996 and base value is 1000 ▪ Base Year is 1978 and base value is 100

▪ Nifty = (Sum of free flow market capital of 50 ▪ Sensex = (Sum of free flow market capital of 30
top performing companies) x Index Factor top performing companies) x Index Factor

▪ Index Factor = 1000 / Market Capital in 1995 ▪ Index Factor = 100 / Market Capital in 1979
 Market Capitalization

➢ It is the market stock price multiplied by the total number of shares held by the public & Promoter.

Total Market Capital = (NO. OF SHARES OF PUBLIC + PROMOTORS SHARES) * SHARE PRICE

Free Float Market Capital = Stock Price x No. of Shares Distributed to Public
Nifty50 Sector wise Weightage
 Market Direction

➢ Bank nifty 36%

➢ IT Index 14%

➢ Reliance 10%

➢ LT 04%

➢ ITC 05%

NIFTY -69% WEIGHTAGE FOR ABOVE SECTORS AND STOCKS

What Are GLOBAL INDICES?
 Small Cap, Mid Cap & Large Cap

❖ In Stocks, differentiation on basis of the total ‘Free Float Market Capital’ is done and they are

❖ divided into following three types :-

Large Cap • Above Rs.20000 Cr – Reliance, HDFCBANK,SBI

Mid Cap • 5000 to 20000 Cr – IIFL Finance, Raymond, Ceat,

Small Cap • Up to 5000 Cr - JUSTDAIL, Borosil, CSB Bank

 Commonly used Jargons

➢ Bull Market (Bullish)

➢ Bear Market (Bearish)

➢ Trend

➢ Face Value

➢ Issue Price

➢ Market Value

➢ Book Value

➢ Upper and Lower Circuit

 Commonly used Jargons

➢ Volume

➢ Square off

➢ Intraday position

❖ Market Segment :-

➢ Equity Market (CM)

➢ Futures and Options (FO)

➢ Currency Derivatives

➢ Commodity Derivatives
 Corporate actions -Dividend

➢ Dividends are portions of profits made by the company.

➢ Dividends are paid on a per-share basis.

➢ It is not mandatory to pay dividends every year.

➢ If the company feels that instead of paying dividends to shareholders

➢ They are better off utilizing the same cash to fund a new project for a better future.

➢ When the stock goes ex-dividend, usually, the stock drops to the extent of dividends paid.
 Corporate actions –Stock Split

➢ This means is quite literally – the stocks that you hold are split!

➢ Similar to a bonus issue, a stock split, the number of shares held Increases.

➢ in a stock split, the face value changes.

➢ If the stock’s face value is Rs.10, and there is a 1:2 stock split, then the face value will change to Rs.5.

➢ If you owned one share before the split, you would now own two shares after the split.

➢ Like a bonus issue, a stock split encourages more retail participation by reducing the value per share.

➢ The dates (announcement date, ex-date, record date, etc.) are similar to dividend and bonus issues.
 Corporate actions -Bonus Issue

➢ A bonus issue is a stock dividend allotted by the company to reward the shareholders

➢ The bonus shares are issued out of the reserves of the company.

➢ The shareholders receive these free shares against shares they currently hold.

➢ These allotments typically come in a fixed ratio of 1:1, 2:1, 3:1, etc.

➢ If the ratio is 2:1, the existing shareholders get two additional shares for every share they hold.

➢ Companies issue bonus shares to encourage retail participation

➢ The bonus announcement date, ex-bonus date, and record date are similar to the dividend issue.
 Corporate actions – Right Issue

➢ The idea behind a rights issue is to raise fresh capital.

➢ Instead of going public, the company approaches its existing shareholders.

➢ rights issue is a way by which a listed company can raise additional capital.

➢ The rights issue could indicate promising new development in the company.

➢ The shareholders can subscribe to the rights issue in the proportion of their shareholding

➢ Rights are often transferable.

➢ allowing the holder to sell them on the open market.

➢ A rights issue is different from a bonus issue as one is paying money to acquire shares.
 Corporate actions – Buyback of Shares

➢ A buyback is company’s method to invest in itself by buying shares from other investors in the market.

➢ Buybacks reduce the number of shares outstanding in the market.

❖ There could be many reasons why corporates choose to buy back shares…

➢ Improve the profitability on a per-share basis

➢ To consolidate their stake in the company.

➢ To prevent other companies from taking over.

➢ To show the confidence of the promoters about their company.

➢ To support the share price from declining in the markets.

 Key events and Their Impact on Markets

➢ Monetary Policy

➢ Inflation

➢ The Wholesale Price Index (WPI) and Consumer Price Index (CPI).

➢ Index of Industrial Production (IIP)

➢ Purchasing Managers Index (PMI)

➢ Budget

➢ Corporate Earnings Announcement

➢ Non Financial events

 Stop loss & Target

➢ A stop-loss is designed to limit an investor's loss on a security position.

➢ Stop loss to sell stock at market price when it goes down limit price.

➢ Setting a stop-loss order for 2% below the price at which you bought

the stock will limit your loss to 2%.

➢ At Trigger Price order is released in Market.

➢ Trigger price will be 0.1/0.2 above limit price.

Long & Short Positions

❖ Long Position:
➢ We create long position when we
have bullish view.
➢ We create short position when we
have bearish view.
 Types of Traders

❖ Types of Traders ❖ Trading

➢ Investment ➢ Taking high risk for high return.
➢ Trading ➢ Planned game for very short period.
➢ Gambling ➢ Based on Intelligence.

❖ Investments ❖Gambling
➢ Buying for Long Term. ➢ Taking high risk of enjoyment
➢ Dividend income. ➢ Blind trading
➢ Long term Capital Gain. ➢ Greed and Panic
 Types of Traders

❖ Swing Traders
The Swing Traders are the patience-players in the game of Stock Trading, holds few weeks.
❖ Buy and Hold Trader (Breakout stock)
The approach is simple – buy a reputed stock on Fundamental analysis or Price Pattern Stocks and hold
it long-term.
----------------------------------------------------------------------------------------------------------------------------------------------------
❖ Day Trader
➢ Most Stock Traders follows a bullish or a bearish attitude while predicting what a stock’s performance
would be.
❖ Scalp Trader (Scalper)
the Scalp Traders like to keep Stock Trading a less complicated process.
they follow trends, and charts and stats, but typically like to take decisions on instincts.
 Types of Order

❖ Market order
➢ A market order is an order to buy or sell a stock at the current market price.
❖ Limit order
➢ To avoid buying or selling a stock at a price higher or lower than you wanted.
❖ Stop loss order
➢ A stop loss order is order placed to sell a stock when it reaches the trigger price.
❖ After Market Order (AMO)
➢ AMO is used for placing orders post the market hours for the next day trading.
❖ Order Life :-
➢ Day Orders :- orders given to your broker that hold during the trading day.
➢ BNPL(Buy now and pay later): Buy now and pay later with 18% interest.
 Types Of Analysis

Fundamental Analysis Technical Analysis

Finds reasons for the stock prices to move up or down Assumes that the stock price factors in everything

Reasons follow later

 RUCHI
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Fundamental Analysis is must because

“Stock Market has no CTRL+Z”
Analysis
 Fundamental Analysis

❖ Fundamental Analysis

➢ Fundamental analysis is a method of evaluating a Stock by trying to measure its Intrinsic Value.

➢ By studying its Economic, Financial and other Qualitative and Quantitative Factors.

➢ Fundamental Analysts go to study all the Macroeconomic and Microeconomic factors.

➢ As far as the short term is considered, the Fundamental Analysis cannot be used.

➢ we can’t estimate the time using fundamental analysis.

➢ Technical Analysis is the best approach when it comes to the Short Term trading.

➢ We use Technical analysis for short-term and Fundamental analysis for Long-term
 Fundamental Analysis includes

❖ Economic Analysis:-

➢ business cycle, Monetary policy, Inflation, GDP Growth,

Unemployment.

❖ Industry Analysis:-

➢ Demand – Supply Relationship, Cost Structure & Quality Structure.

❖ Company Analysis:-

➢ Excepted Earnings, Dividends, Funds Position.

 Two Approaches for Fundamental Analysis

❖ Top-down approach:-
➢ The investor first analysis and forecast the economical factors which is followed by industry and companies.

❖ Bottom-up approach:-

❖ The investor first analysis and forecast the companies and micro economical factors .
Fundamental Analysis
 Fundamental Analysis

❖ On basis of the Current Market Price they can be categorized as follows:-

➢ Under-Valued :-

➢ It means that the CMP of the stock is still less than its intrinsic value.

➢ Investors always prefers Under –Valued stocks

➢ as there is still chances of that stock to rise and investors can make profit out of it.

➢ Over -Valued :-

➢ It means that the CMP of the stock is greater than its intrinsic value.

➢ Investors do not prefers Over –Valued stocks.

➢ as there is chances of that stock to fall below its intrinsic value as the supply has increased.
 Fundamental Analysis- Qualitative Tools

❖ Fundamental Analysis Qualitative Tools :-

➢ Business Model

➢ Management

➢ Corporate Governance

➢ Transparency and Stakeholders Rights

➢ Market Share

➢ Industry Growth
 Quantitative Tools

❖ Company analysis broadly focuses on

➢ Balance Sheet

➢ Current Assets & Liabilities

➢ The Current Ratio

➢ Financial Position- Book Value

 Fundamental Analysis- Financial Ratio

❖Fundamental Analysis Quantitative Tools :-

➢Earnings Per Share

➢Profit to Earning Ratio (P/E Ratio)

➢Dividend Yield Ratio

➢Price to Book Ratio

➢Debt to equity Ratio

➢Book Value

➢ROE

➢ROCE
 RUCHI
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Technical
Analysis ISO 9001:2015 Certified Institute
 Types Of Analysis

❖ Fundamental Analysis:

➢ Based on the study of economic factors.

❖ Technical Analysis:

➢ Study of price action through charts and price history.

 Strategies used by Investors

➢ Trading based on World markets.

➢ Heavy Dependence on Tips / Rumors.

➢ Investments based on News in papers & business TV channels.

Have these strategies regularly made

money for YOU???
 Things you should know…

❖ Things you should know…

➢ Which stock?

➢ At what price?

➢ Target ?

➢ Stop Loss ?

➢ Time frame ?
 Market cycle

Distribution

Mass Participation

Panic selling by Masses

Participation of a Select few

Accumulation
Technical Analysis

DOW THEORY
 History

➢ In 1900 A.D Mr. Charles Dow developed a theory now known as the “Dow Theory”.

➢ Mr. Charles Dow is known as the Father of Modern Day Technical Analysis.

➢ Price Discounts Everything

Buy on Info

Sell on News
Candles

Japanese Candlesticks
Japanese Candlestick
Price Fields
 Types Of Charts

➢ Line Charts

➢ Bar Charts

➢ Japanese Candlestick Charts

 Line Charts

➢ For plotting a Line Chart only 1 price field can be used, preferably Close

Orient Green Power Company Ltd

Orient Green Power Company Ltd
Bar Charts
Candlestick Charts
Green = Buying / Red = Selling
Technical Analysis

TRENDS
 What is a Trend?

Direction in which the Markets move

 Trends - In terms of Direction

H4
Higher Tops

H3

H2

L4
H1
L3

L2 Higher Bottoms
L1 Uptrend – Higher Tops, Higher Bottoms
Up Trend
 Trends - In terms of Direction

H1

H2 Lower Tops

H3
L1
H4
L2

Lower Bottoms L3

L4

Downtrend – Lower Bottoms, Lower Tops

Down Trend
 Sideways Trend

Sideways – Moving within a Short Band

Sideways Trend
Trend Lines

Trend Lines
 Support & Resistance

Resistance

Support: Resistance:

A support level is a A resistance level is a

level on the price level on the price
chart from which the chart from which the
stock price starts stock price starts
moving up moving down

Support
Resistance Line
Horizontal Line
Volume

VOLUMES
 Volume - Overview

➢ Important element of Technical Analysis.

➢ Volumes provide a clue to the strength of the given price move.

➢ Low Volumes – Indecisive Or Consolidation Phase.

➢ High Volumes – Market Tops & market bottoms due to panic selling.
Role of Volumes – Trend to stay intact
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DERIVATIVE Analysis is must because

“Stock Market has no CTRL+Z”
MARKET
What is Derivatives?
 What is Derivatives?

➢ Derivatives are financial contracts that derive their value from an Underlying asset ( Share Price)

➢ Underlaying Asset could be stocks, indices, commodities, currencies.

➢ These financial instruments help you make profits, By betting on the future value of the underlying asset.

➢ So, their value is derived from that of the underlying asset, Therefore, they are called ‘Derivatives’.

❖ Derivative Instruments

Forward contract

Future contract

Options

Swap
 Derivatives – Future & Options

❖ Future contract

➢ Speculation :
➢View Bullish : Buy Futures - Long Position.
➢View Bearish : Sell Futures -Short Position.

❖ Options Contract

➢ Speculation :
➢View Bullish : Buy Call - Long Position.

➢View Bearish : Buy Put - Short Position.

 Benefits of Derivatives

➢ Mr. Suresh wants to buy 1000 shares of XYZ stock.

➢Now he has two segments to trade this view –
▪ Equity Market
▪ Derivative Market.
➢Considering the buying price to be 200 and the target price to be 300 and margin in futures to be 10%
 Benefits of Derivatives

Investment is Less
 Benefits of Derivatives

Let’s Get Equipped For This 2nd

Generation Market
Future Market
 Future Contract

❖ A futures contract is an agreement between two parties – a buyer and a seller – wherein the former
agrees to purchase from the latter, a fixed number of shares or an index at a specific time in the future
for a pre-determined price.

▪ Stock Futures Trading (Dealing with shares @ 200 Shares)

▪ Commodity Futures Trading ( Dealing with Gold, Silver, Crude oil, Natural gas)

▪ Index Future Trading (Dealing with Stock market Index- Nifty, Fin Nifty, Bank nifty, IT )

▪ Currency Future Trading (Dealing with International currency ..USD, GBP, JPY,EUR)
 Futures Lot Size

➢ Lot size : Each Contract has specified number of stocks which is called as lot.

➢ Lot size is decided by the exchange.

➢ It depends upon the price of Share price Value.

➢ Value of one lot size is around 5 Lakhs at present.

➢ If stock price is low, lot size is large and vice versa.

➢ The exchange review the lot size once in every six months

➢ Revise the lot size by giving an advance notice of at least two weeks to the market.
 Futures Expiry

❖ Three Futures contracts are available for trading in Indian Market

➢ Current Month.
➢ Middle Month.

➢ Far Month

❖ Example : During OCT 2023 Month :

➢ OCT 2023 - Current Month - 26/10/2023 – Thursday
➢ NOV 2023 - Mid Month - 30/11/2023 – Thursday
➢ DEC 2023 - Far Month - 28/12/2023 – Thursday
 Margin

❖ Margin money has to be deposited for taking position in F&O.

➢ Margin money is collected to ensure that no default on payment by contract holders.

➢SPAN Margins : For holding Intraday position.

➢Exposure Margins : For holding a position.

➢ Volatility Margin : Exchange may ask for more margin depending on volatility.

➢ Additional Margin ( MTM) : When position goes into loss.

➢ Margin Calls- if position in loss 50%.

➢ Auto square off by exchange.

 Mark to Market ( MTM)

➢ Gains and losses are settled by cash everyday based on closing price.

➢ Gains and losses are adjusted against margin money deposited called as MTM

Day 1
Purchase Rate = 600*1000 lot size
Future Close = 620*1000
Credit = Rs.20,000 (MTM*)

Day 2
Purchase Rate / Brought Forward Rate = 620*1000
Futures Close / Carried Forward Rate = 610*1000
Debit = Rs.10,000 (MTM*).

Total Credit for the Trade – Rs 10,000/- *MTM – Mark To Market

Brokerage charged ONLY on trades
Benefits of Derivatives
 Market-wide Position Limit

❖ Total number of contracts open is monitored by exchanges and limit is set by the exchange.

➢ Market wide position limit 80 % to 95 % for F & O Stocks.

➢ When Open Interest reaches 95% of market capital, no more new contracts are allowed to be traded.

➢ Stock comes under ban period & Existing contracts can be traded.

➢ When open interest comes below 80%, again new contracts can be traded.

➢ Limits are set for each broker 20 %. & Limit for individual trader 5%.

➢ This is done to prevent manipulation of market, excessive speculation and creation of bubble.
 Futures Trading Strategies –Long Future

❖ Example: BALKRISIND spot at 800. Future at 810.

➢ You have firm view that Future will go to 850 in current series.
➢ Then, you will buy Future contract of the same at 810. Let’s see how your payoff will look like.
P/L
870 60
Long Future
860 50
80
850 40
840 30 60

830 20 40
820 10 20
810 0
0
800 -10 740 760 780 800 820 840 860 880
-20
790 -20
780 -30 -40

770 -40 -60

760 -50 -80
750 -60
 Futures Trading Strategies- Short Future

❖ Example: BALKRISIND spot at 800. Future at 810. You have firm

➢ view that Future will go to 760 in current series.
➢ Then, you will Sell Future contract of the same at 810. Let’s see how your payoff will look like.0
P/L
870 -60 Short Future
860 -50 80
850 -40 60
840 -30 40
830 -20
20
820 -10
0
810 0
740 760 780 800 820 840 860 880
800 10 -20
790 20
40-
780 30 60
770 40
80
760 50
750 60
 IF FUTURES HAS BEEN DIGESTED,
LET’S SEE SOME OPTIONS CONTRACTS
TYPES OF OPTIONS
❑ Call Options

❑ Put Options
 Options Contract

❖Buyer / Holder of Option – party buying the option.

➢ Seller / Writer of Option – party selling the option.

➢Call Option –

➢ buyer has the option to buy or not, has right to buy if he wishes and writer has obligation to sell.

➢ Put Option –

➢buyer has the option to sell or not, has right to sell if he wishes and writer has the obligation to buy.
 Options Basics

❖ Specific asset in option contract :

➢ Stock - Stock option (@200 stocks)

➢ Index - Index option ( Nifty, Bank Nifty, Fin nifty, Mid cap, Sensex)

➢ Specific price is called the Strike Price

➢ Last Thursday of the month (Stock + Index options)

➢ Every Monday –Midcap Nifty, Tuesday- Fin nifty/ Wednesday- Bank Nifty, Nifty-Thursday &

Sensex Expiry on Friday.

 Options Basics – Strike Price

➢Strike price is pre decided for the contracts by exchange.

➢Strike prices are available at regular intervals.

➢Minimum 5 strike prices above and 5 strike price below the spot price are available

➢Strike price which is equal to the spot is called ATM. - At The Money ( ATM).

➢Total 11 contracts are available. One At the money.

➢Minimum 5 In the Money ( ITM)

➢and 5 Out of the Money (OTM) contracts will be available.

 Market going Up!

Ex: Nifty Spot 17900

▪ Option Type : Call

▪ Maturity : This month
▪ Strike : 17900

▪ Premium : 160

▪ Option : Buyer
 Payoff diagram of Buyer

Call Option: Buying, Strike: 17900, Premium:160, Maturity: Current Month

P/L Long Call

17300 -160
500
17400 -160
17500 -160 400

17600 -160 300

17700 -160
200
17800 -160
17900 -160 100

18000 -60 0
18100 40 10 200 104 00 106 00 108 00 110 00 112 00 114 00 116
00
-100
18200 140
18300 240 -200
18400 340
18500 440
Unlimited Profit & Limited Loss BEP: 18060
Market going Down!

Ex: Nifty Spot 17900

▪ Option Type : Put

▪ Maturity : This month
▪ Strike : 17900

▪ Premium : 122

▪ Option : Buyer
 Payoff diagram of Put Buyer

Put Option: Buying, Strike: 17900, Premium:122, Maturity: Current Month

P/L Long Put

17300 478
600
17400 378
17500 278 500

17600 178 400

17700 78 300
17800 -22 200
17900 -122
100
18000 -122
18100 -122 0
10 200 104 00 106 00 108 00 110 00 112 00 114 00 11600
18200 -122 -100
18300 -122 -200
18400 -122
18500 -122 Unlimited Profit & Limited Loss BEP: 17778
 Options Benefits

But 90% options Buyer lose Money

 ITM, OTM & ATM Options

NIFTY Expiry: SPOT: 17500 NIFTY Expiry: SPOT: 17500

CALL OPTION 30 Dec 2021 PUT OPTION 30 Dec 2021
STRIKE STATUS OPTION INTRINSIC TIME STRIKE STATUS OPTION INTRINSIC TIME
PRICE PRICE VALUE VALUE PRICE PRICE VALUE VALUE
17200 ITM 330 300 30 17200 OTM 30 0 30
17300 ITM 240 200 40 17300 OTM 40 0 40
17400 ITM 160 100 60 17400 OTM 60 0 60
17500 ATM 80 0 80 17500 ATM 80 0 80
17600 OTM 60 0 60 17600 ITM 160 100 60
17700 OTM 40 0 40 17700 ITM 240 200 40
17800 OTM 30 0 30 17800 ITM 330 300 30

ITM ATM OTM

INTRINSIC VALUE YES NO NO

TIME VALUE YES YES YES

Main Greeks
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“Learn every day, but especially from the experiences of others.

Commodity It’s CHEAPER!!!”

Market RuchistockmarketInstitute
 What is Commodity ?

❖Commodity :

➢ Any Natural real thing that have value & that can be bought & Sold.

➢ A commodity is a basic good used as input in the production of goods.

➢ The most common commodities as below :-

E.g. Non Agri -Commodity :-Gold, Silver, Crude, Natural gas, Copper etc.

Agri -Commodity :- Sugar, Soya bean, Cotton etc.

More than 100 commodities are traded in the Indian Commodity futures markets.
 What is Commodity ?

❖ Commodity Trading :-

Buying & Selling of Commodities on Exchange platform in an organized electronic format by depositing a pre-

defined margin, to take advantage of daily price volatility.

➢ Spot Market :- Mandis, Market yard.

➢ Future Market :- Commodity Exchanges.

Global Vs. Indian Commodity Market

International Markets

Currency

Commodity

Equity
Global Vs. Indian Commodity Market

Indian Markets

Equity

Commodity

Currency
 International Commodity Market

➢New York Mercantile Exchange (NYMEX)

- Petroleum and metal products.

➢London Metal Exchange ( LME)

- Metal products.

➢MCX Stock Exchange Limited

-Crudeoil, Natural gas, Gold, Silver, Copper.

➢NSE Stock Exchange Limited

- Crude oil, Natural gas, Gold.

 Market Timing and Margin

➢ Monday to Friday 9.00 am to 11.30 from April to November.

➢ Monday to Friday 9.00 am to 11.55 from November to April.

➢ MCX works 9.00 am to 5pm and 5pm to 11.55pm.

➢ Most of Indian Equity Exchange Holidays MCX works at 5pm to 11.30 / 11.55pm.

➢ Clients participating in equity can also participate in commodities from 9am.

➢ In major Commodities, margin requirement is 7 – 20 %.

 Non-Agri Commodities

Non - Agro

Precious Metals Base Metals Energy

Gold Copper Nickel Crude Oil Natural Gas

Silver Zinc Lead

Aluminum
 Commodity Specification

Commodity Lot Size Rate on Screen Tick Size Profit or Loss / Tick Expiry
Gold 1 Kg Rs. / 10 Gms Rs. 1 Rs. 100 5th of Month
Gold Mini 100 Gms Rs. / 10 Gms Rs. 1 Rs. 10 5th of Month
Silver 30 Kg Rs. / Kg Rs. 1 Rs. 30 5th of Month
Silver Mini 5 Kg Rs. / Kg Rs. 1 Rs. 5 Last day of Month
Silver Micro 1 Kg Rs. / Kg Rs. 1 Rs. 1 Last day of Month
Copper 2500kg Rs. / Kg Rs. 0.05 Rs. 125 Last day of Month
ZincMini 1000kg Rs. / Kg Rs. 0.05 Rs. 50 Last day of Month
Aluminiummini 1000kg Rs. / Kg Rs. 0.05 Rs. 50 Last day of Month
Leadmini 1000kg Rs. / Kg Rs. 0.05 Rs. 50 Last day of Month
Natural Gas 1250 mmbtu Rs. / 1mmbtu Rs. 0.10 Rs. 125 25th of Month
Natural Gas Mini 250 mmbtu Rs. / 1mmbtu Rs. 0.10 Rs. 25 25th of Month
Crude oil Mini 10 BBL Rs. / BBL Rs. 1 Rs. 10 19th of Month
Crude oil 100 BBL Rs. / BBL Rs. 1 Rs. 100 19th of Month
 MCX Inventory

▪ Everyday Timing : 1:30pm or 2:30pm depending on daylight saving

Copper, Lead, Zinc, Aluminium, Nickel

▪ Curdeoil : Wednesday 8:00pm

▪ Natural Gas : Thursday 8:00pm

▪ Websites

▪ www.investing.com
 RUCHI
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Currency “Learn every day, but especially from the experiences of others.
It’s CHEAPER!!!”
Market
 What is Currency ?

➢ Currency trading is the act of buying and selling international currencies.

➢ The currency (FOREX) market is the biggest and the fastest growing market in the world.

➢ Its daily turnover is more than $ 5.2 trillion.

➢ which is 100 times greater than the NASDAQ daily turnover.

➢ Only 2.5% Margin need for Currency Trading.

➢ No scope for Manipulation.

➢ Volatility Controlled by RBI.

 Currency Market in India

➢ RBI took in 1978 to allow banks to undertake intra-day trading in foreign exchange.

➢ In India, currency derivative trading started in 2008 on NSE.

➢ Only $55 Billion i.e., small amount of trading Transactions are done in INR related Pairs

➢ Out of total turnover of Forex market, only 1% trading is done in INR Pairs.

➢ Out of this $55 Billion Transactions, $50 Billion worth transaction happens in USD/INR only.
 Know The Difference…

• EQUITY F&O • COMMODITY • CURRENCY

COMMODITY
• Time :: • Time :: • Time ::

CURRENCY
EQUITY F&O

• 9.15AM To 3.30PM • 9.00AM To • 9.00AM To 5PM

11.30/11.55PM
• Expiry Date::
• Last Thursday of the • Expiry Date:: • Expiry Date::
Month • Various Dates • 2 Business Days
before last working
• Settlement:: • Settlement:: day of the month
• Cash Settled • Delivery in Gold,
Silver • Settlement::
• Other Cash Settled • Cash Settled
 Why Currency Market?

Moderate
Volatility
Easy to
Understand Less Margin

Alternate Asset
Class

Less Cost of
Hedging Tool
Transaction
 Why Currency Market?

❖ Margin Requirement :-

➢ Margin for Delivery in Equity - 100%

➢ Margin for Intraday in Equity - 20 %

➢ Margin for FNO - 15-20%

➢ Margin For Commodity - 5-15 %

➢ Margin for Currency - 1.5 - 2.5%

 Major Currency…

❖ We generally trade in the following 7 currency pairs

➢ USDINR
US $ - ₹
➢ EURINR

➢ GBPINR
Euro - ₹
➢ JPYINR

➢ EURUSD
Pound - ₹
Pound - ₹
➢ GBPUSD

➢ USDJPY Yen - ₹
 Product Specification

Symbol USDINR EURINR GBPINR JPYINR

Unit of trading 1 Unit denotes 1000 $ 1 Unit denotes 1000 € 1 Unit denotes 1000 £ 1 Unit denotes 100000 ¥

Underlying The exchange rate in INR for US The exchange rate in INR for The exchange rate in INR for Pound The exchange rate in INR for Japanese
Dollars Euro Sterling Yen

Tick size 0.25 paisa or INR 0.0025 0.25 paisa or INR 0.0025 0.25 paisa or INR 0.0025 0.25 paisa or INR 0.0025 (The Quote
will be for 100 JPY)

Trading hours 9:00 a.m. to 5:00 p.m. (Monday- Friday)

Contract trading cycle 12 month trading cycle

Last trading day Two working days prior to the last business day of the expiry month at 12:30 noon

Settlement Daily settlement: T + 1

Final settlement: T + 2

Mode of settlement Cash settled in INR

Daily settlement price(DSP) Calculated on the basis of the last half an hour weighted average price

Final settlement As per RBI reference rate (comes on daily basis between 12 - 12.30 pm)
 Product Specification

SYMBOL EURUSD GBPUSD USDJPY

INSTRUMENT TYPE FUTCUR FUTCUR FUTCUR

UNIT OF TRADING 1 - 1 unit denotes 1000 EURO. 1 - 1 unit denotes 1000 GBP. 1 - 1 unit denotes 1000 USD.

The contract would be quote in JPY. The

The contract would be quote in USD. The The contract would be quote in USD. The
UNDERLYING / ORDER QUOTATION outstanding positions would be in USD
outstanding positions would be in EURO terms outstanding positions would be in GBP terms
terms

TICK SIZE 0.0001 0.0001 0.01

TRADING HOURS Monday to Friday 9:00 a.m. to 5.00 p.m. IST

CONTRACT TRADING CYCLE 12 serial monthly contracts.

EXPIRY/LAST TRADING DAY The last trading day for the contracts shall be two working days prior to the last working day of the expiry month at 12:30 pm

Theoretical price on the 1st day of the contract.

BASE PRICE
On all other days, DSP of the contract.

MODE OF SETTLEMENT Cash settled in Indian Rupees

 Dollar Index

• Dollar Index & Currency has direct relationship.

 Some Facts on Currency…

➢ Lower Volatility –Average Daily (0.30%) & Monthly (2%).

➢ Daily Movement – 25 paisa to 30 paisa.

➢ Monthly Movement – 80 paisa to 1.25 rs.

➢ Volatility Protection by RBI.

➢ Global asset class – No scope for price manipulation.

➢ Lower Margins (2%) as compared to Equity.

➢ Higher Return on investments.

 Conclusion…

➢ Lower volatility

➢ Lower margins

➢ Higher Return on investments

➢ Volatility protection by Reserve Bank of India

➢ Options Writing

➢ Need of your portfolio

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“Super trader “Trading is not a GAME be SERIOUS”

Transformation” RuchistockmarketInstitute
 Topic

➢ Why Price Action is Important?

➢ What is Demand & Supply?

➢ Understanding Demand & Supply?

➢ Candlestick , Zones & Multiple Time frame Analysis.

➢ Identify Zone , Curve & Trend Analysis

➢ Boosters

➢ Position Sizing

➢ Risk Management

➢ Results of Strategies.

➢ Tool Setup & Stock Scanners

 Benefits of Price Action

➢ Know How Demand & Supply works.

➢ No need to Remember Technical Chart Patterns.

➢ Read Charts exactly like PRO-Traders reads it.

➢ No need to Depend on Indicators.

➢ No need to Depend on Advisory Services.

➢ Predict Exit Entry & Exit.

➢Identify potential reversals and profitable trading opportunities.

 Why 90% Traders lose Money?

➢ 90% of traders lose 90% of their money in 90 days"😱😱😱

➢ That's right, statistics show that 90% of people who start trading lose the majority of their money in less

than 3 months.

➢ If you are a new or struggling trader, I'm sure you'll find this course useful to become a successful

Trader. Let's get into it .

➢ Both FUNDAMENTAL and TECHNICAL methods are designed backward.

➢ Both FUNDAMENTAL and TECHNICAL makes you

BUY at EXPENSIVE PRICE

SELL at CHEAP PRICE

 Why 90% Traders lose Money?

Trading

Fundamental Analysis Technical Analysis

TREND IS YOUR FRIEND

Fundamentally Strong Company –BUY Up Trend–BUY

Fundamentally Weak Company – SELL Down Trend– SELL

Over 90% Traders LOSE Money

Why 90% Traders lose Money?
Why 90% Traders lose Money?
 Why Demand and Supply Trading?

➢ If you’re interested in learning a powerful trading approach that can help you.

➢ To Identify potential reversals and profitable trading opportunities.

➢ Our course is designed to provide you with understanding of the Demand and Supply Trading.

➢ You will learn how to identify demand and supply zones across different time frames.

➢ You will gain valuable insights into how to identify potential trading opportunities.

➢ we will provide real-world examples and case studies.

➢ Life Time Support as Mentor and min 15 Profitable Trades in Nifty Options & Commodity.
 What is Demand and Supply?

Buying at Demand Zone

➢ Professional notes buying from

Demand Zone.

➢ Professional buying orders

waiting at Demand Zone.

➢ Novice see’s price increasing so

buying at High.

➢Novice closes position at demand

zone in frustration.

➢.
 What is Demand and Supply?

Selling at Supply Zone

➢ Professional notes Selling from

Supply Zone.

➢ Professional selling orders

waiting at Supply Zone.

➢ Novice see’s price falling so

selling at Low in demand zone.

➢Novice closes position at supply

zone in frustration.

➢.
Candle Stick Patterns
 Candle Stick Patterns

Price Moves Higher Price Moves Lower

At the price level where At the price level where
Demand Supply
Exceeded Exceeded
Supply. Demand.
And Buyer Buy at the higher And Seller Sell at the
prices. Lower prices.
 Strategy is Useful

➢Equity Trading

➢Index Options - Nifty & Bank Nifty

➢Commodity- Crude oil, Natural Gas

➢Currency Trading
 Candle Sticks

Japanese candlesticks are made up of bodies and wicks.

Upper Wick Upper Wick

High High

Close Open

Open Close

Low Low

Lower Wick Lower Wick

 Candle Types- Boring & Exciting

✓ Some candle denotes Selling or Buying of orders while other are not showing.

❖ Boring Candles:

➢ They shows that transactions are happening in a range thus Demand & supply is in balance.

➢ and orders are potentially being accumulated / distributed by the big boys- Operators (Pause

Period).

❖ Exciting Candles:

➢ they imply importance between demand & supply thus price starts moving either up or down.

➢ Our Demand and Supply Levels will be identified by using Boring and Exciting Candles.
 Candle Types- Boring & Exciting

To Qualify a Candle as Boring or Exciting we compare the Candle’s Body Range (Open to Close)
with 50% of Candle Range (high to low)
Boring Candle
Exciting Candle

Candle with Body Range > = 50% of Candle Range Candle with Body Range < = 50% of Candle Range

High High
Close
Open

Open Close

50% 50%
Close Open
Open Close

Low Low
Candle Types- Boring & Exciting
 Formation of Demand Zone

DBR RBR

RALLY

RALLY Demand
DROP Origin of imbalance
BASE
Demand
Origin of imbalance

BASE RALLY
Action to take at Demand Zones DBR
 Formation of Supply Zone

RBD DBD
BASE

DROP
Supply
Origin of imbalance
BASE
RALLY
Supply
Origin of imbalance
DROP

DROP
Action to take at Demand Zones RBD
Zone Components
Leg In –Base –Leg Out
Leg In –Base –Leg Out
 Zone Components

Summary : Zone is made up of 3 components Leg In, Base and Leg Out

Basing will always be Boring Candles/Pause.

Leg In and Leg Out will always be Exciting Candles.

Zone Rules
 Rules for Zones

We use two lines to Mark a Zone

DBR RBD
Terminology
Proximal - Closest to the current price
Distal - Farthest from the current price
Distal
Supply Above Current
Zone Price

Proximal RBR DBD

Current Price

Proximal
Demand Below Current
Zone Price

Distal
 Demand Zone Rules

Rules For Demand Zone Line Placement

DBR RBR

Proximal Line - Highest Body in Basing Proximal Line - Highest Body in Basing

Distal Line - Lowest low in DBR Distal Line - Lowest low in RBR excluding Leg in
 Supply Zone Rules

Rules For Supply Zone Line Placement

DBD
RBD

Proximal Line - Lowest Body in Basing Proximal Line - Lowest Body in Basing

Distal Line - Highest High in RBD Distal Line - Highest High in DBD excluding Leg in
Zone Rules
Steps to Identify Demand Zone

➢ Start with Current Market Price.

➢ Without cutting through candle, look down and left until you

find boring candle. (Because we have applied boring candle

indicator in this example all blue candles are boring).

➢ Identify Leg-In and Leg-Out.

➢ Identify the pattern.

➢ Draw Proximal and Distal Line

Steps to Identify Supply Zone

➢ Start with Current Market Price.

➢ Without cutting through candle, look up and left until

you find boring candle. (Because we have applied

boring candle indicator in this example all blue candles

are boring).

➢ Identify Leg-In and Leg-Out.

➢ Identify the pattern.

➢ Draw Proximal and Distal Line

Multiple Time Frames
 Multiple Time Frame

Different Time-Frame for Different Purpose

1. Weekly Income Trade (WIT) - Trade that can be last up to few Weeks.

2. Daily Income Trade (DIT) - Trade that can be last up to few Days.

3. Hourly Income Trade (HIT) - Trade that can be last up to few Hours.
 Multiple Time Frame

Min. 3 Frames will be use for Analysis

1. Higher Time Frame (HTF) - Use for access the Demand & Supply / Curve analysis.

2. Intermediate Time Frame (ITF) - Use to access the Trend.

3. Lower Time Frame (LTF) - Use to identify Demand & Supply for Entry & Exit.
 Multiple Time Frame Analysis

Trader’s should Always understand the overall Market Environment and not just one Time -Frame
HTF
ITF LTF
Purpose (Zone& Curve
(Trend) (Entry & Exit)
Analysis)

Weekly Income
Weekly Daily 60 Mins.

Daily Income
Daily 60 Mins. 15 Mins.

Hourly Income
Hourly 15 Mins. 5 Mins.
Curve Analysis
 Curve Analysis

➢ Nearest and Fresh Demand & Supply Zone divided into 3 parts from Proximal to Proximal line.

➢ Curve analysis helps us know :- When to be in BULLISH or BEARISH mode.

➢ Since when price has moved too far up it is not smart to be Buyer.

➢ And when price has moved too far down it is not smart to be a Seller.

➢ Curve analysis helps to enter at perfect place.

Curve Analysis

Very High of the Curve

High of the Curve

Equilibrium

Low of the Curve

Very Low of the Curve

Curve Analysis
 Curve Analysis

Very High of the Curve

Would you like

High of the Curve to be a BUYER?

Equilibrium

Would you like

Low of the Curve to be a SELLER?

Very Low of the Curve

Action Grid
 ACTION GRID

What Action to take and when to take

HTF Zone Supply Demand

ITF Trend Down Trend Sideways Up Trend Down Trend Sideways Up Trend

Very high of
SHORT SHORT SHORT NO ACTION NO ACTION NO ACTION
Curve

High of Curve SHORT SHORT SHORT NO ACTION NO ACTION NO ACTION

LTF Equilibrium SHORT NO ACTION NO ACTION NO ACTION NO ACTION LONG

Low of Curve NO ACTION NO ACTION NO ACTION LONG LONG LONG

Very Low of
NO ACTION NO ACTION NO ACTION LONG LONG LONG
Curve