Starter's Kit:
Financial Markets:
Farmer's marketplace:
Farmer -> Seller -> Vegetables, Fruits
Consumer -> Buyer -> Vegetables, Fruits
Product : Fish,
product : Financial Securities (Any type of fin. intstrument - FDs, Bonds, Stocks,
Crypto, Currency,F&O)
Product
- Stocks/ Shares of Companies
Equity Market
Equity - Ownership
9:15am to 3:30 pm
- Fixed-income Market/ Bond Market / Debt/Credit market
Fixed Deposit (FDs)
- Interest rate - 7%
1L => 1.07L
- Safe
- Taxable
Bonds
Government Security Bonds (G-sec)
- NHAI
- Interest rate - 9-10%
- Safest
- Tax-free
https://www.thefixedincome.com/
Corporate Bonds
- Interest rate - 11-12%
- Safe
- Taxable
www.wintwealth.com
-> Currency Pairs (USD, INR, EURO
Forex Market
24 Hrs * 5 (Mon - Fri)
$5Trillion
Crypto Market (Crypto currencies)
4 year cycle - Bull run & bear run
ETH, MANA, SAND, MATIC, GALA, FLOK, FILE
Binance ; Delta Exchange
24 Hrs * 7 (Sat & Sun)
Futures & Option (F&O) - Derivatives
99% of traders lose money in derivatives
Equity - stock market
Avg loss - 1-2% (2000Rs)
Avg gain - 3-5% per trade (3000-5000)
Good gain - 10-15% (10,000 -15,000)
F&O
Avg loss - 8-10% loss (10,000Rs)
Avg gain - 20-30% wins (20k-30k)
Good gain - 100%-200% (1L)
85% accuracy (9/10)
- 8 consecutive losses
1L -> 2L -> 3L -> 5L -> 9L => lost in all in weeks
Stock market:
Basket - Portfolio - personal collection of stock
Supermarket - Stock Exchange
Nifty 50 - top 50 companies by market cap
Market Capitilization (Market cap.)
- Market value of a company
= Total number of shares * Stock price
https://www.screener.in/
Large Cap: (Blue-chip)
If the market cap is greater 30,000Cr
- Established companies
- Safe investments
- ~returns 15% p.a
- Wealth Preservation
Aggressive Stocks : Wealth Creation
Mid Cap:
- Market cap is between 5000Cr and 30,000Cr
- Riskier
- Growing companies
- ~returns 25% p.a
Small Cap:
- Market cap is less than 5000Cr
- Riskiest
- Small companies
- ~returns 35% p.a
Age profiling
18-35 years - High risk apettite: Wealth Creation
70% - Mid & Small cap ; 30% - Large Cap
50+years - Low risk apettite : Wealth preservation
70% - Fixed-income market/ Bonds
30% - Stock Market ( 70% - Large Cap; 30% - Mid & Small)
Large cap - safe
Myth #1 - Any fundamentally good stock will always go up in price
Rule- 80-50:
Any stock that has moved up well, there's a 80% chance that will crash by 50% from
the
top.
There's a 50% chance that it will crash by 80% from the top (Small cap)
Myth #2 - Timing the market is impossible, don't try it
Commercial , Investment Bankers - JP morgan, Insurance , Brokerage ,
financial industry - Timing the markets
- When to enter to exit.
How does the price move up or move down?
Buyers vs Sellers
Buyers -> Buying pressure -> Demand -> Makes the price go up -> Bulls
Seller -> Selling pressure -> Supply -> Make the price go down -> Bears
Bulls vs Bears
Bull Markets
- 100% returns 1year ; 50-60% -2nd retunrs
- Avg duration 2.5 years
vs Bear MArket
- 20% crashes - 50% crashes
- avg duration - 9 months
Passive Investor:
- Buy Nifty 50 Index Funds
UTI mutual fund
Moderatly Passive Investor:
1L
25% - UTI Nifty 50 Index Fund (Large cap)
25% - PGIM India Midcap Opportunity FUnd (Mid cap)
25% - Quant Small cap Fund
15% - US Markets
5% - Vanguard S&P 500 ETF
5% - iShares Semiconductors ETF
5% - Invesco Global CleanEnergy
10% - Crypto
[ETH, MANA, SAND, MATIC, FILE,SHIBA INU]
ETFs vs Mutual funds
- ETF - Exchange Traded Fund
- Mutual funds - buy through mutual brokers
The Big Short
The wolf of wall street
The margin call
Active Investing / Positional Trading / Momentum Investing
Fundamental Analysis:
- Understanding the fundemental or book of company
https://trendlyne.com/features/
3 Step:
1. Theme: EV, AI, waste management, Infrastructure, Railways, Defence , Gaming,
Real estate, Steel, Space, AgriTech, VR & AR, Healthcare
INfra
2. Sectors: Railways, Cement, Steel, Connectivity
3. Stocks
trendlyne.com
Durability - Financial Strength
Valuation
Under valued or Overvalued
Market price - Stock price
Book value - Real value of company
Rs 50 per share ; Real value - Rs 100 per share
Market value < Real Value - undervalued
Market value > Real Value - overvalued
Warren Buffet - Value Investors
Only buy undervalued
Momentum - if it's moving up now or not
Hedge Fund / Trading Firm
- Research Team & Trading Team
Trading Team - Technical Analysis - Price to enter; price to exit; Risk involved
Technical Analysis:
Reading the charts & timing it
Different styles of traders use different time frames
Positional Traders / Long term trader
1Hr of research every month
Buy & hold for 6months - 2 years
Time Frame : 1 Week TF ; 1Day
Swing Traders
1Hr research per week
Buy and hold for 1-2 weeks
Time Frame : 1D/ 4H TF
Intraday Traders
Buy & exit on same day
1Hr/ day
Time frame : 30m/15m -; 5mins
Positional Trading: Momentum Investing
Buy & Hold strategy till trend reverses
- Cut your losers short and let your winners win
Risk Management
-> Invest only 10-15% per stock
-> At least 6-10 stocks [ 20 max ]
2-3 of them may go in a small loss
2-3 will be decent gains
2-3 will be insane gains
-> Max Stop-loss (SL) - 8%
10k -> Rs 800
1L
10% loss - 90k -> To get back to 1L -> 11% gain
20% loss - 80k - 1L => 25% gain
50% loss - 50k x2- 1L => 100% gain
90% loss - 900% gains to get back your money
-> Only invest in to confirmed uptrends
-> Never invest into downtrending stocks
-> Two ways to enter:
Buy during the High breakout
Buy during the dip when higher lows are formed
Buy the dip is valid for uptrending stocks.
Confirmed uptrend:
3 layer confirmation
HH_HL_HH
LH_LL_LH
theta fuel
