BASICS OF STOCK MARKET EXTRA SESSIONS

TOPICS COVERED What is stock market?

What moves a stock's price?
Moving Averages
Pivot Points
What is NSE & BSE? MACD
What is Technical Analysis? Bollinger Bands
What is an Index? 15 Minutes Strategy
Name all Nifty Sectors Gap Theory
What are the various types of markets?
Explain different types of trading styles
Who are various types of Market Participants?
FOREX STRATEGIES
What is Short Selling?

INDEX STRATEGIES
CANDLESTICKS
Tradingview Key Points
Explain Candlesticks
EQUITY STRATEGIES
Explain OHLC of a candle
Explain Candlestick Patterns

RISK MANAGEMENT
What is Risk Per Trade?
PRICE ACTION BASICS Explain Risk Reward Ratio
Explain Type of Trends What is Risk Per Day?
What is your vision for next 12 months?
Explain Support & Resistance
Explain Horizontal Lines with Examples
Explain Price Action Strategy
Explain Trendlines with Examples ADVANCED KEY POINTS
Explain Multiple Timeframe Analysis What is BTST/STBT?
Explain Chart Patterns with Examples What are Commodities?
Explain Breakouts with Examples What is Forex?
Explain Reversals with Examples
Explain Retests with Examples

TRADING SYSTEM
Explain your Trading System
Explain your Trading Plan
Write down Do's & Don'ts
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BASICS OF STOCK MARKET
What is stock market?

The stock market is where investors buy and sell shares of companies. It's a set of exchanges where
companies issue shares and other securities for trading.

What moves a stock's price?

Stock prices change everyday by market forces. By this we mean that share prices change because of supply
and demand. If more people want to buy a stock (demand) than sell it (supply), then the price moves up.
Conversely, if more people wanted to sell a stock than buy it, there would be greater supply than demand,
and the price would fall.
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The National Stock Exchange of India Limited (NSE) is India's largest financial market. Incorporated in
1992, the NSE has developed into a sophisticated, electronic market, which ranked fourth in the world by
equity trading volume. Trading commenced in 1994 with the launch of the wholesale debt market and a
cash market segment shortly thereafter. The National Stock Exchange of India Limited was the first
exchange in India to provide modern, fully automated electronic trading. It was set up by a group of
Indian financial institutions with the goal of bringing greater transparency to the Indian capital market.

The Bombay Stock Exchange (BSE) is the first and largest securities market in India and was established
in 1875 as the Native Share and Stock Brokers' Association. Based in Mumbai, India, the BSE lists close
to 6,000 companies and is one of the largest exchanges in the world, along with the New York Stock
Exchange (NYSE), Nasdaq, London Stock Exchange Group, Japan Exchange Group, and Shanghai Stock
Exchange. The BSE has helped develop India's capital markets, including the retail debt market, and has
helped grow the Indian corporate sector. The BSE is Asia's first stock exchange and also includes an
equities trading platform for small-and-medium enterprises (SME). BSE has diversified into providing
other capital market services including clearing, settlement, and risk management.

What is Technical Analysis?

Technical analysis is a trading discipline employed to evaluate investments and identify trading
opportunities by analyzing statistical trends gathered from trading activity, such as price movement and
volume. Unlike fundamental analysis, which attempts to evaluate a security's value based on business
results such as sales and earnings, technical analysis focuses on the study of price and volume. Technical
analysts believe past trading activity and price changes of a security can be valuable indicators of the
security's future price movements.
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A financial index produces a numeric score based on inputs such as a variety of asset prices. It can be
used to track the performance of a group of assets in a standardized way. Indexes typically measure the
performance of a basket of securities intended to replicate a certain area of the market.

Name all Nifty Sectors

Sector Weight (%)

Financial Services 37

Information Technology 13.66

Oil, Gas & Consumable Fuels 11.35

Fast Moving Consumer Goods 9.3

Automobile and Auto Components 6.05

Healthcare 4.09

Construction 3.71

Metals & Mining 3.84

Consumer Durables 3.24

Telecommunication 2.52

Power 2.21

Construction Materials 1.9

Services 0.78

Chemicals 0.35
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Primary Market
The primary market is also known as the new issue market. It is the market where companies issue shares for the
first time to raise capital. Investors can purchase these shares through Initial Public Offerings (IPOs) and get
ownership in the company.
The shares are issued at a fixed price during the IPO, and the company uses the funds raised from the IPO to
expand the business. The primary market plays a crucial role in the economic growth of the country by facilitating
capital formation and job creation.

Secondary Market

The secondary market, also known as the stock exchange, is where stocks and securities are traded after their
initial public offering. The primary function of the secondary market is to provide a platform for buying and
selling securities that are already issued.
The stock exchange enables investors to purchase and sell securities at market-determined prices. The secondary
market is an essential element of the economy as it provides liquidity to investors who have invested in stocks.

Equity Market

The equity market is the market for trading in equity shares of listed companies. Equity shares represent
ownership in the company and provide investors with the potential for long-term capital appreciation and dividend
income. The equity market is an attractive investment option for investors who are looking for capital appreciation
in the long run.

Derivatives Market

The derivatives market provides investors with the opportunity to trade in financial instruments such as futures
and options. Futures and options are contracts that allow investors to buy or sell an underlying asset at a future
date at a predetermined price. The derivatives market is an essential component of the financial market, as it
provides investors with a mechanism to manage risk and hedge against price volatility.

Commodity Market

The commodity market is a platform for trading in commodities such as gold, silver, crude oil, and agricultural
products. The commodity market provides a platform for producers and consumers to hedge against price
volatility in the market. It is also an attractive investment option for investors who want to diversify their portfolio
and invest in physical assets.

Debt Market

The debt market is a platform for trading in fixed-income securities such as bonds and debentures. These
securities offer fixed returns to investors and are an attractive investment option for investors who are risk-averse.
The debt market is also an essential component of the financial market as it provides companies with an
alternative source of funding for their business operations.

Mutual Fund Market

The mutual fund market is a platform for investing in professionally managed portfolios of stocks, bonds, and
other securities. Mutual funds offer investors with the benefit of diversification and professional management.
They also provide investors with the option of investing in different asset classes such as equity, debt, and gold.
SME Exchange

The SME Exchange is a specialized platform for small and medium enterprises to raise capital from the public
through IPOs. It provides an opportunity for small and medium-sized companies to list their shares on the stock
exchange and raise capital to fund their business operations.

Explain different types of trading styles

1. Intraday Trading:
This is the most common type of trading practiced in the stock market by traders. Intraday trading refers to same–
day trading. The traders have to sell and buy or buy and sell their stocks in the same day before the market closes.
This style can also be referred to as “squaring off the trade”. It is one of the most aggressive types of trading for
ones seeking higher ROIs than any other formats.

2. Swing Trading:
This is a type of short-term trading that typically lasts between 2 days to 2 weeks. Swing trading is a good option
when one wants to invest in stock or options. Technical traders and chartists who like to observe short-term price
momentum using technical tools fall into this category. The capital required here is larger than in day trading due
to more margins in overnight trades.

3.Arbitrage Trading:
Arbitrage trading is a style which takes advantage of price differences in two or more markets or exchanges. This
is reserved only for prime trading firms with a huge network as this doesn’t need many analytical skills but needs
more network speed.

4.Positional Trading:
This is a long term trading strategy. Positional traders ignore short term fluctuations in the market as they believe
their long term vision settles things out. Traders are always on the lookout for big game changers within the
company to get them their desired returns, hence holding period isn’t the most important concern.

5.Options Strategies:
Options trading require an objective and mathematical type of thinking. Since strategizing is a difficult ball game,
one might require a bit of practice and time to become good at making their own strategies and implementing
them. In India, there are very few options traders, mostly due to lack of awareness and sufficient knowledge.
6.Trade using Technical Analysis:
Stock market technical analysis is important to any strategy of trading. Use of stock technical analysis tools may
give you a better insight in the near changes in demand and supply of the stock market. Having technical analysis
as a skill helps traders become successful day traders, positional or even swing traders.

7.Money Flow Based Trading:

Money flow based trading depends on open interest analysis, promoter deals, stake sales, gross delivery data, FII
inflows and DII flows in and out of stocks. Such data is essential to identify upcoming trends in the market. If you
have a penchant for analysing money flows, this is the right type of trading strategy for you.

8.Trade Driven by Events:

Event-based trading takes advantage of a corporate event that has occurred or is about to occur. It seeks to exploit
the changes in the market prices at times of mergers and acquisition, bankruptcy, earnings call and so on. This
trading style requires technical analysis skills to understand how such changes affect the market before an event
takes place.
9.High Frequency Trading:
High frequency trading is all about speed. Investment banks, institutional traders, hedge funds etc. make use of
high speed computers to transact huge orders at high speeds. Since everything is computer based, there is no room
for analysis and only quick calls for execution. This type of trading is not advised to individuals, but if you are
interested, you may start your own fund or join a fund as its programmer.

10.Quantitative Trading:
Quantitative trading is based on quantitative analysis. It is a very sophisticated area of Quant Finance. Many
people from a statistical or mathematical background find their niche using computer analysis and number
crunching. An interested person needs to have good programming and mathematical skills. It is advised that you
research this style extensively before adopting it.
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Who are various types of Market Participants?

Retail Traders

Retail traders are people like you and me who invest from our homes, using our laptops, judging the market from
the news or by using different services. These are traders who invest individually.

High Net Worth Investors

The second are the High Net worth Investors who deploy big sums of capital. These are people who study better
and go deeper into technical analysis, have better fundamentals and have access to better information. They invest
in crores of rupees.

Institutional investors

This third category of Institutional investors, the big companies are of two kinds.

1. Foreign Institutional Investors - or the FII. These are companies outside of India.
2. Domestic Institutional Investors - or DII.
There could be many foreign companies like the Canada Pension Fund, government companies or Mutual Funds
or AMCs. These companies invest in our stock market. Even companies outside of India. Similarly, there is also
LIC, which everyone knows is the biggest Domestic Institutional Institution of India.

What is Short Selling?

Short selling happens when an investor sells shares that he does not own at the time of a trade. In a short sale, a
trader borrows shares from the owner with the help of a brokerage and sells it at market price with the hope that
prices will fall. When prices drop, the short seller buys the shares and books a profit. To know what is short
selling, it is necessary to understand that it is practiced by seasoned traders and investors and is based on
speculation that the price of shares will drop before they are returned to the owner. Short selling has a high risk to
reward ratio as it is capable of earning profit as well as incurring huge losses.
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Trading view Key Points

1.) Real-Time Market Data:

TradingView provides up-to-the-minute market data, ensuring traders can access the most current information,
including price quotes, volume, and indicators. This real-time data empowers traders to respond promptly to market
movements, maximizing their profit potential.

2.) Intuitive Charting Tools:

One of the highlights of TradingView is its advanced and user-friendly charting tools. Traders can customize their
charts with various technical indicators, drawing tools, and overlays, aiding them in easily performing in-depth
technical analysis.

3.) Social Networking for Traders:

TradingView social networking feature allows traders to interact with a vast community of like-minded individuals.
Users can share trading ideas, strategies, and analyses, fostering a collaborative learning environment.

4.) Accessible Anywhere, Anytime:

As a web-based platform, TradingView is accessible from any device with an internet connection. Whether you prefer
a desktop computer, tablet, or smartphone, you can trade and monitor the markets at your convenience.

5.) Paper Trading:

TradingView offers a paper trading feature for beginners that enables users to practice trading strategies without risking
real money. This virtual trading environment allows traders to gain confidence before venturing into live trading.

6.) Comprehensive Market Coverage:

TradingView covers various financial markets, including stocks, cryptocurrencies, forex, indices, and commodities.
This diverse coverage ensures that traders can access multiple trading opportunities.

Explain Candlesticks
A candlestick is a type of price chart used in technical analysis that displays the high, low, open, and closing
prices of a security for a specific period. It originated from Japanese rice merchants and traders to track market
prices and daily momentum hundreds of years before becoming popularized in the United States. The wide part
of the candlestick is called the "real body" and tells investors whether the closing price was higher or lower than
the opening price (black/red if the stock closed lower, white/green if the stock closed higher).
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An OHLC chart is a type of bar chart that shows open, high, low, and closing prices for each period. OHLC
charts are useful since they show the four major data points over a period, with the closing price being
considered the most important by many traders.

Explain Candlestick Patterns

Candlestick patterns are technical trading tools that have been used for centuries to predict price direction.
Candlestick charts are a technical tool that packs data for multiple time frames into single price bars. This makes
them more useful than traditional open, high, low, and close (OHLC) bars or simple lines that connect the dots of
closing prices. Candlesticks build patterns that may predict price direction once completed. Proper color
coding adds depth to this colorful technical tool, which dates back to 18th-century Japanese rice traders.

Traditionally, candlesticks are best used on a daily basis, the idea being that each candle captures a full day’s
worth of news, data, and price action. This suggests that candles are more useful to longer-term or swing traders.

Most importantly, each candle tells a story. When looking at a candle, it’s best viewed as a contest between
buyers and sellers. A light candle (green or white are typical default displays) means the buyers have won the
day, while a dark candle (red or black) means the sellers have dominated. But what happens between the open
and the close, and the battle between buyers and sellers, is what makes candlesticks so attractive as a charting
tool.
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PRICE ACTION BASICS

Explain Type of Trends

• Uptrend
An uptrend is formed when a stock price of a trade is rising in value. When the market begins, several
traders take advantage of an uptrend and enter a long position to reach high price levels.

• Downtrend
A trader can see a downtrend when the stock price is falling in value. In the case of a downtrend, trend
traders make their way and enter a short position, i.e., when the price is going down to the lowest
possible point.

• Sideways trend
The sideways trend is formed when the market remains static, i.e., the stock price neither reaches the
highest or lowest price points.

Explain Support & Resistance

• Support occurs where a downtrend is expected to pause due to a concentration of demand.

• Resistance occurs where an uptrend is expected to pause temporarily, due to a concentration of supply.
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Explain Horizontal Lines with Examples

• A horizontal line is commonly used in technical analysis to mark areas of support or resistance.
• A horizontal line runs parallel to the x-axis.
• In technical analysis, the horizontal line is typically drawn along a swing high, or a series of them, where
each high in the series stopped at a similar level. The same concept applies to swing lows.

Explain Price Action Strategy

Price action trading is a strategy that uses movements in price to estimate the potential movements in the market.
Price Action Traders try to identify trends using actual prices and not moving averages (as is the case with
technical analysis).
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Explain Trendlines with Examples

The trendline is among the most important tools used by technical analysts. Instead of looking at past business
performance or other fundamentals, technical analysts look for trends in price action. A trendline helps technical
analysts determine the current direction in market prices. Technical analysts believe the trend is your friend, and
identifying this trend is the first step in the process of making a good trade.
To create a trendline, an analyst must have at least two points on a price chart. Some analysts like to use different
time frames such as one minute or five minutes. Others look at daily charts or weekly charts. Some analysts put
aside time altogether, choosing to view trends based on tick intervals rather than intervals of time. What makes
trendlines so universal in usage and appeal is they can be used to help identify trends regardless of the time period,
time frame or interval used.

Explain Multiple Timeframe Analysis

Multiple time-frame analysis involves monitoring the same currency pair across different frequencies (or time
compressions). While there is no real limit as to how many frequencies can be monitored or which specific ones
to choose, there are general guidelines that most practitioners will follow.

Typically, using three different periods gives a broad enough reading on the market, while using fewer than this
can result in a considerable loss of data, and using more typically provides redundant analysis. When choosing
the three time frequencies, a simple strategy can be to follow a "rule of four." This means that a medium-term
period should first be determined and it should represent a standard as to how long the average trade is held.
From there, a shorter term time frame should be chosen and it should be at least one-fourth the intermediate
period (for example, a 15-minute chart for the short-term time frame and 60-minute chart for the medium or
intermediate time frame). Through the same calculation, the long-term time frame should be at least four times
greater than the intermediate one (so, keeping with the previous example, the 240-minute or four-hour chart
would round out the three time frequencies).

It is imperative to select the correct time frame when choosing the range of the three periods. Clearly, a long-
term trader who holds positions for months will find little use for a 15-minute, 60-minute and 240-minute
combination. At the same time, a day trader who holds positions for hours and rarely longer than a day would
find little advantage in daily, weekly and monthly arrangements. This is not to say that the long-term trader
would not benefit from keeping an eye on the 240-minute chart or the short-term trader from keeping a daily
chart in the repertoire, but these should come at the extremes rather than anchoring the entire range.
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Explain Chart Patterns with Examples

Head and shoulders

Head and shoulders is a chart pattern in which a large peak has a slightly smaller peak on either side of it. Traders

look at head and shoulders patterns to predict a bullish-to-bearish reversal.

Typically, the first and third peak will be smaller than the second, but they will all fall back to the same level of

support, otherwise known as the ‘neckline’. Once the third peak has fallen back to the level of support, it is likely

that it will breakout into a bearish downtrend.

Double top

A double top is another pattern that traders use to highlight trend reversals. Typically, an asset’s price will

experience a peak, before retracing back to a level of support. It will then climb up once more before reversing

back more permanently against the prevailing trend.

Double bottom

A double bottom chart pattern indicates a period of selling, causing an asset’s price to drop below a level of

support. It will then rise to a level of resistance, before dropping again. Finally, the trend will reverse and begin an

upward motion as the market becomes more bullish. A double bottom is a bullish reversal pattern, because it

signifies the end of a downtrend and a shift towards an uptrend.

Rounding bottom

A rounding bottom chart pattern can signify a continuation or a reversal. For instance, during an uptrend an asset’s

price may fall back slightly before rising once more. This would be a bullish continuation.
An example of a bullish reversal rounding bottom – shown below – would be if an asset’s price was in a

downward trend and a rounding bottom formed before the trend reversed and entered a bullish uptrend.

Traders will seek to capitalise on this pattern by buying halfway around the bottom, at the low point, and

capitalising on the continuation once it breaks above a level of resistance.

Cup and handle

The cup and handle pattern is a bullish continuation pattern that is used to show a period of bearish market

sentiment before the overall trend finally continues in a bullish motion. The cup appears similar to a rounding

bottom chart pattern, and the handle is similar to a wedge pattern – which is explained in the next section.

Following the rounding bottom, the price of an asset will likely enter a temporary retracement, which is known as

the handle because this retracement is confined to two parallel lines on the price graph. The asset will eventually

reverse out of the handle and continue with the overall bullish trend.
Wedges

Wedges form as an asset’s price movements tighten between two sloping trend lines. There are two types of

wedge: rising and falling.A rising wedge is represented by a trend line caught between two upwardly slanted lines

of support and resistance. In this case the line of support is steeper than the resistance line. This pattern generally

signals that an asset’s price will eventually decline more permanently – which is demonstrated when it breaks

through the support level.

A falling wedge occurs between two downwardly sloping levels. In this case the line of resistance is steeper than

the support. A falling wedge is usually indicative that an asset’s price will rise and break through the level of

resistance, as shown in the example below.

Both rising and falling wedges are reversal patterns, with rising wedges representing a bearish market and falling

wedges being more typical of a bullish market.

Pennant or flags

Pennant patterns, or flags, are created after an asset experiences a period of upward movement, followed by a

consolidation. Generally, there will be a significant increase during the early stages of the trend, before it enters

into a series of smaller upward and downward movements.

Pennants can be either bullish or bearish, and they can represent a continuation or a reversal. The above chart is an

example of a bullish continuation. In this respect, pennants can be a form of bilateral pattern because they show

either continuations or reversals.

While a pennant may seem similar to a wedge pattern or a triangle pattern – explained in the next sections – it is

important to note that wedges are narrower than pennants or triangles. Also, wedges differ from pennants because

a wedge is always ascending or descending, while a pennant is always horizontal.

Ascending triangle

The ascending triangle is a bullish continuation pattern which signifies the continuation of an uptrend. Ascending

triangles can be drawn onto charts by placing a horizontal line along the swing highs – the resistance – and then

drawing an ascending trend line along the swing lows – the support.
Ascending triangles often have two or more identical peak highs which allow for the horizontal line to be drawn.

The trend line signifies the overall uptrend of the pattern, while the horizontal line indicates the historic level of

resistance for that particular asset.

Descending triangle

In contrast, a descending triangle signifies a bearish continuation of a downtrend. Typically, a trader will enter a

short position during a descending triangle – possibly with CFDs – in an attempt to profit from a falling market.
Descending triangles generally shift lower and break through the support because they are indicative of a market

dominated by sellers, meaning that successively lower peaks are likely to be prevalent and unlikely to reverse.

Descending triangles can be identified from a horizontal line of support and a downward-sloping line of

resistance. Eventually, the trend will break through the support and the downtrend will continue.

Symmetrical triangle

The symmetrical triangle pattern can be either bullish or bearish, depending on the market. In either case, it is

normally a continuation pattern, which means the market will usually continue in the same direction as the overall

trend once the pattern has formed.

Symmetrical triangles form when the price converges with a series of lower peaks and higher troughs. In the

example below, the overall trend is bearish, but the symmetrical triangle shows us that there has been a brief

period of upward reversals.

However, if there is no clear trend before the triangle pattern forms, the market could break out in either direction.

This makes symmetrical triangles a bilateral pattern – meaning they are best used in volatile markets where there

is no clear indication of which way an asset’s price might move. An example of a bilateral symmetrical triangle

can be seen below.

 Explain Breakouts with Examples

A breakout refers to when the price of an asset moves above a resistance area, or moves below a support area.
Breakouts indicate the potential for the price to start trending in the breakout direction. For example, a breakout
to the upside from a chart pattern could indicate the price will start trending higher. Breakouts that occur on
high volume (relative to normal volume) show greater conviction which means the price is more likely to trend
in that direction.
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Explain Reversals with Examples

A reversal is a change in the price direction of an asset. A reversal can occur to the upside or downside.
Following an uptrend, a reversal would be to the downside. Following a downtrend, a reversal would be to the
upside. Reversals are based on overall price direction and are not typically based on one or two periods/bars on a
chart.

Certain indicators, such a moving average, oscillator, or channel, may help in isolating trends as well as spotting
reversals. Reversals may be compared with breakouts.

Explain Retests with Examples

A retest refers to a situation where the price of an asset, after breaking a key support or resistance level, returns to
test that level again before continuing in the direction of the breakout.
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EXTRA SESSIONS
Moving Averages
In finance, a moving average (MA) is a stock indicator commonly used in technical analysis. The reason for
calculating the moving average of a stock is to help smooth out the price data by creating a constantly
updated average price.

By calculating the moving average, the impacts of random, short-term fluctuations on the price of a stock over a
specified time frame are mitigated. Simple moving averages (SMAs) use a simple arithmetic average of prices
over some timespan, while exponential moving averages (EMAs) place greater weight on more recent prices than
older ones over the time period.

Pivot Points
Pivot points are an intraday indicator for trading futures, commodities, and stocks. Unlike moving averages
or oscillators, they are static and remain at the same prices throughout the day. This means traders can use the
levels to help plan out their trading in advance.

For example, traders know that if the price falls below the pivot point they will likely be shorting early in the
session. Conversely, if the price is above the pivot point, they will be buying. S1, S2, R1, and R2 can be used as
target prices for such trades, as well as stop-loss levels.

Combining pivot points with other trend indicators is common practice with traders. A pivot point that also
overlaps or converges with a 50-period or 200-period moving average (MA), or Fibonacci extension level,
becomes a stronger support/resistance level.
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Moving average convergence/divergence (MACD, or MAC-D) is a trend-following momentum indicator that

shows the relationship between two exponential moving averages (EMAs) of a security’s price. The MACD line
is calculated by subtracting the 26-period EMA from the 12-period EMA.

The result of that calculation is the MACD line. A nine-day EMA of the MACD line is called the signal line,
which is then plotted on top of the MACD line, which can function as a trigger for buy or sell signals. Traders
may buy the security when the MACD line crosses above the signal line and sell—or short—the security when
the MACD line crosses below the signal line. MACD indicators can be interpreted in several ways, but the more
common methods are crossovers, divergences, and rapid rises/falls.

MACD is often displayed with a histogram (see the chart below) that graphs the distance between MACD and its
signal line. If MACD is above the signal line, the histogram will be above the MACD’s baseline, or zero line. If
MACD is below its signal line, the histogram will be below the MACD’s baseline. Traders use the MACD’s
histogram to identify when bullish or bearish momentum is high—and possibly for overbought/oversold signals.

Bollinger Bands

• Bollinger Bands is a technical analysis tool to generate oversold or overbought signals and was developed
by John Bollinger.
• Three lines compose Bollinger Bands: A simple moving average, or the middle band, and an upper and
lower band.
• The upper and lower bands are typically 2 standard deviations +/- from a 20-day simple moving average
and can be modified.
• When the price continually touches the upper Bollinger Band, it can indicate an overbought signal.
• If the price continually touches the lower band it can indicate an oversold signal.
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First Entry:
Reversal Entry:
Gap Theory
There are many ways to take advantage of these gaps, with a few strategies more popular than others. Some
traders will buy when fundamental or technical factors favor a gap on the next trading day. For example, they’ll
buy a stock after hours when a positive earnings report is released, hoping for a gap up on the following trading
day, if it hasn’t already happened in after-hours trading. Traders might also buy or sell into highly liquid
or illiquid positions at the beginning of a price movement, hoping for a good fill and a continued trend. For
example, they may buy a stock when it is gapping up very quickly on low liquidity and there is no significant
resistance overhead.

Some traders will fade gaps in the opposite direction once a high or low point has been determined (often
through other forms of technical analysis). For example, if a stock gaps up on some speculative report,
experienced traders may fade the gap by shorting the stock. Lastly, traders might buy when the price level
reaches the prior support after the gap has been filled. An example of this strategy is outlined below.

Here are the key things you will want to remember when trading gaps:

• Once a stock has started to fill the gap, it will rarely stop, because there is often no immediate support or
resistance.
• Exhaustion gaps and continuation gaps predict the price moving in two different directions—be sure you
correctly classify the gap that you are going to play.
• Retail investors usually exhibit irrational exuberance; however, institutional investors and algorithmic
systems may play along to help their portfolios, so be careful when using this indicator and wait for the
price to start to break before taking a position.
• Be sure to watch the volume. High volume should be present in breakaway gaps, while low volume
should occur in exhaustion gaps.
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FOREX STRATEGIES

Entry Rules

When the price breaks out near the 200 EMA on a 15-minutetimeframe, we can take the trade using one of these
two cases:
Pullback Trading at EMA: If the pair breaks out or breaks down and then returns to the EMA, we can initiate
a long or short trade from there.
FOREX STRATEGIES Date :

a. New High or New Low: If the price breaks out and forms a new high/low without
returning to the EMA fora pullback entry, we will take entry based on the new high/low
breakout.
1. After finding an entry using one of the two methods mentioned above, check the difference
between the polarityof the currency pairs using the strength meter. If the difference is 3 or
greater, then we can take the trade.

2. For instance, if we find a long entry in USDJPY, we need to check the polarity of USD and JPY
using the currency meter.If the polarity of USD is 4 and the polarity of JPY is 1, then the
difference between the two is 3, and we can take the trade.
3. Risk to Reward will be minimum 1:2 where Stoploss can beplaced below moving average or
price action zone or breakout/breakdown candle.
4. Target – 1:2 RRR
5. Shift SL to Breakeven after 50% target is achieved
6. Once we reach 90% of our target, we will use the 9 EMAindicator to trail our position.
7. If the ADX indicator is rising from below the 20 level after we enter the trade, we will trail our
position with the 9 EMAindicator once we achieve a 1:2 target.
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RISK MANAGEMENT
What is Risk Per Trade?

Risk management helps cut down losses. It can also help protect traders' accounts from losing all of its money.
The risk occurs when traders suffer losses. If the risk can be managed, traders can open themselves up to making
money in the market.

It is an essential but often overlooked prerequisite to successful active trading. After all, a trader who has
generated substantial profits can lose it all in just one or two bad trades without a proper risk management
strategy.

Explain Risk Reward Ratio

The risk-reward ratio is a measure of potential profit to potential loss for a given investment or project. A higher
risk-reward ratio is generally preferable because it offers the potential for a greater return on investment without
undue risk-taking. A ratio that is too high indicates that an investment could be overly risky. However, a ratio
that is too low should be met with suspicion. Investors should consider their risk tolerance and investment goals
when determining the appropriate ratio for their portfolio. Diversifying investments, the use of protective put
options, and using stop-loss orders can help optimize your risk-return profile.
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Risk per trade should always be a small percentage of your total capital. A good starting percentage could be 2%
of your available trading capital. So, for example, if you have $5000 in your account, the maximum loss
allowable should be no more than 2%. With these parameters, your maximum loss would be $100 per trade. A
2% loss per trade would mean you can be wrong 50 times in a row before you wipe out your account. This is an
unlikely scenario if you have a proper system for stacking the odds in your favor.

What is your vision for next 12 months?

To be a successful trader gained with good knowledge about market, and gain my capital minimize loss maximize
profits.
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ADVANCED KEY POINTS
What is BTST/STBT?

BTST Trading is an unconventional procedure that helps traders deal with BTST shares in the stock market and
take advantage of their short-term volatility. BTST in the stock market allows traders to sell out shares bought but
not yet received in the traders Demat account.
The conventional trading procedure or the T+2 process ensures that the shares are credited to the traders' Demat
account after T+2 days, where T signifies the day of trading, which means that there is a time gap between the
trading and the actual arrival of the shares to the trader. Due to this significant difference, many traders find BTST
trading better than intraday trading.

What are Commodities?

A commodity is a basic good used in commerce that is interchangeable with other goods of the same type.
Commodities are most often used as inputs in the production of other goods or services. Thus, the term usually
refers to a raw material used to manufacture finished goods. A product, on the other hand, is the finished good
sold to consumers.

The quality of a given commodity may differ slightly, but it is essentially uniform across producers. When they
are traded on an exchange, commodities must also meet specified minimum standards, also known as a basis
grade.
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The foreign exchange market is where currencies are traded. This international market's most unique aspect is
that it lacks a central marketplace. Instead, currency trading is conducted electronically over the counter (OTC).
This means that all transactions occur via computer networks among traders worldwide rather than on one
centralized exchange.

The market is open 24 hours a day, five and a half days a week. Currencies are traded worldwide in the major
financial centers of Frankfurt, Hong Kong, London, New York, Paris, Singapore, Sydney, Tokyo, and Zurich—
across almost every time zone. This means the forex market begins in Tokyo and Hong Kong when the U.S.
trading day ends. As such, the forex market can be highly active at any time, with price quotes changing
constantly.
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TRADING SYSTEM
Explain your Trading System

❖ Trading System [Manages a trader]:

1) Good Mood [Opportunity vs Sleepy/Family/Holiday/Travelling]

2) Homework

3) Read Do's & Don’ts (Will be discussed in detail in next class)

4) Trading Plan [Manages your trades]

SRPSQT -
SCRIPT/REASON/PLAN/STOPLOSS/QUANTITY/TIME/TARGET

Script - Stock

Reason - Fitting a strategy

Plan - How you will execute the tradeStoploss -

Logical

• Equity: 0.5% is ideal stoploss) (0.8% still ok)

• Nifty: 40-60 Points

• Bank Nifty: 120-140 Points

• Forex: 30-40 Pips

Crypto: 1:2 RRR
Quantity – Position sizing
Target – 1:2/Pivots/Price Action Levels/Logical Levels

5) Write Live Thoughts (During Trading)

6) Closing (Analyze journal thoughts Daily/Weekly & solveproblems)

(Read important point)(Ask

Questions)

❖ Trading System helps to manage a trader

❖ Trading Plan helps to manage your trades
 ❖ Choosing not to trade is also a trading decision
❖ Amateurs can never make money in the market
❖ Your goal as a new trader is to take notes from the market Journal

Explain your Trading Plan

❖ TradingPlan:
SRPSQT

S - SCRIPT(Stock/Commodity/Forex/Index)

R - REASON (There must always be a genuine reason to enter atrade)

P - PLAN (Prepare for both sides while doing homework)S - STOP LOSS

(It is compulsory & must be logical)

Q - QUANTITY (Position sizing is very important)

T - Target

(You have to know your target. Take minimum 1:1.5)

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Don’ts

1. No entry Outside SRPSQT.

2. Never be confident, fearful.
3. Stop lookin PnL, Focus on charts
4. End target
5. Fear
6. Regret – Slow poison
7. Travel and trade (no)
8. Overtrading is Sin
9. Stop doing No SL trading
10. Revenge Trading
11. Ego –me factor
12. Quit –don’t , take a break
13. Blame – nobody
14. Average(losing trade)

Do’s
1. Big Profit –small profit—breakeven—small loss --/--big loss (cut big losses)
2. Hold your Winners Long, Cut your losers fast.
3. Be updated(current affairs).
4. Trading process
5. All time frames
6. Journal –review weekly.
7. Be Neutral bias
8. Win size>Win rate
9. Read books
10. Have patience
11. Keep your trading life private
12. Accept SL emotionally.
13. Bless your losses ( losses →donation)
14. Belief test