INDEX

∙ Howtoinvestinstockmarketwithlittle money?
∙ Listof highestdividend payingstocks in India ∙
∙ technical analysis
∙ DowPrinciple:
∙ elliotwavetheory
∙ MovingAverage(MA):
∙ Bollinger Bands:
∙ Fibonacci Retracement:
∙ MovingAverageConvergenceandDivergence(MACD):
∙ AverageDirectionalIndex(ADX):
∙ FeaturesofFuturesTrading:
∙ Whyshouldoneinvest?
∙ FeaturesofFuturesTrading:
∙ ChartTypesandPatterns:
∙ Bar chart:
∙ Candlestick Chart:
∙ stock analysis
∙ Howtoanalyzeastockbefore investing:
∙ Howto dofundamental analysisof a stock?
∙ Howtoanalyzestocksfor intraday:
∙ Call option and Put option
∙ intradaytrading tips
∙ basics of stock market
∙ Howtoinvestinsharemarket?
∙ LargeCapStocks:
∙ Small Cap Stocks:
∙ stockmarkettiming
∙ pre-opensession
∙ stockmarketopeninghours
∙ stockmarketclosingtime
Howtoinvestinstockmarketwithlittlemoney?
Manypeoplestopinvestingbecausetheythinkthatalotofmoneyisrequiredto start
investing in the stock market. But this is not true. You can invest only Rs.
You can start with less. 500/- per month. The key to building wealth is to
developgoodhabitssuchasinvestingasmallamountofmoneyregularlyinthe stock
market every month. If you make a habit of investing regularly then you will be
in a very strong financial position in future.

Thequestionmaycomeinyourmindthathowtoenterthestockmarketwith less
money?

There are many ways to start investing with little money and with the help of
online and app based platforms made it very easy, all you have to do is start
somewhere.JustfollowthestepsbelowandlearnhowtoinvestinIndianstock market
with little money:

∙ Decidehowyouwanttoinvestinstocks
∙ Knowyourtargetforinvestment
∙ Openaninvestmentaccounti.e.dematandtradingaccount
∙ Setabudgetforyourstockinvestments
∙ Learn the basics of stock market
∙ Start Investment
Howtoinvestinstockswithlittlemoneyforbeginners?
Herearesometips thatbeginnersshould follow:
Set long term goals:

Before investing you should know about your target and the likely time in
futurethatyoumayneedthefunds.Investinginthestockmarketforalong period can
give good returns.

Makeupforthe deficiency:

Investing regularly requires commitment. You just need to be regular and

consistent.Savingaregularamountcanmakeyouprofitable.Ifyouarenotable to save
within the stipulated time this week, make up for it next week.

Understandyourrisk tolerance:

Risk tolerance is also influenced by one's perception of risk because by

understandingyourrisktolerance,youcanavoidinvestmentsthatarelikelyto worry
you.

controlyouremotions:

When you first start investing in stock market you get emotional and
overwhelmedbecausegoodreturnscanmakeyouhappybutlosingmoneycan hurt.
Learn to never make your investments based on your feelings.

Handle the basics first:

Take the time to learn the basics about the stock market and the individual
securitiesthatmakeupthemarket.Knowledgeandrisktolerancearelinkedas well-
risk comes from not knowing what you are doing.

Diversifyyourinvestments:

Investment diversification protects your money from adverse stock market

conditionsbecausewhenitcomestoinvesting,itisadvisedbyknowledgeable money
managers that investors should invest money in diff erent assets i.e. diversify
their investments. This avoids losing all assets in one market swoop.
bereal:
Neverinvesthopingtoearnquickreturns,itisbettertobepatientandstartyour investment.

InvestinMutualFundsthroughSIP:
MF is a long-term investment that invests in various securities and creates
wealthifinvestedforalongperiod.InvestmentstartsfromjustRs.500per month.
Stockmarkettimings-Knowtheopeningand
closingtimingsof thestock marketin India
Before star tinginvestinginthe stock marketa traderorinvestorshouldbeaware of
several fundamentals. Investing in stocks is a very interesting thing and it is all
about timing. The price of a stock can rise suddenly in a short period of time
and similarly the price can fall in no time. One should keep a constant eye onthe
stocks to take the right decision.

Asaninvestor,youmustbeawareofthestockmarkettimingsindetail.Itvaries from
country to country as there are diff erent time zones. The money market or forex
is a 24-hour market whereas the equity market has a diff erent timing. The stock
market is open only from Monday to Friday and there are other specific days
when the stock market is closed. Unless you know the stock market timings
such as stock market opening hours and stock market closing times,you cannot
eff ectively use your time and money to get better returns from the market.

The trading hours in the stock market are from 9.15 am to 3.30 pm from
MondaytoFriday.Givenbelowarethemarkettimingsfortheequitysegment:

1) Pre-opensession

Order Entry & Modification Open: 09:00 PM

CloseOrderEntry&Modification:09:08PM.

Withthelastoneturningoff atrandom.Thematchingofpre-openordersstarts immediately

after the closing of the pre-open order entry.

2) Stockmarketopeninghours

General/LimitedPhysicalMarketOpen:09:15PM General

/ Limited physical market closed: 15:30

Block Deal Session Timings:
MorningBlockDealWindow:Thiswindowwillworkbetween08:45AMto 09:00
AM.
AfternoonBlockDealWindow:Thiswindowwilloperatebetween02:05PMto 2:20
PM.

3) Theclosing time of thestock market is between15.40 hrs to 16.00 hrs.

You can execute all your trades at the right time only if you know the opening
andclosingtimesofthestockmarket.Thetimingoftheopeningandclosingof the stock
market is of great importance as it is the time when the share price is high or
low. The open price is the stock price at the market opening and the
closingpriceatthemarketclose.Thehighandlowpriceofasharereferstothe highest
level and lowest level that the stock attains in a day. Although the market closes
by 3.30 pm, some brokerages allow you to place trade orders for the next day
through AMOs (after market orders), even after market hours.

As an investor you must also be aware of the stock market holidays so as to

capitalize on the opportunity at the right time and in the right way. On Diwali,
every year there is a special session called Muhurta session for business. As
mobile trading apps have become very popular these days, you can trade from
anywherewithoutanydifficulty.Youcaneasilyexecutetradeorderslikebuyor sell
shares through your smartphone during market hours or you can take the help of
equity advisors to execute your trade orders.
Intraday trading tips
What is meant by trading in the stock market?

Most of us are hesitant to trade in the stock market. And this is mainly due to
unnecessaryfearsanddoubts.Inthisarticle,letus knowhowtodotradingfirst, especially
intraday trading in stock market and also best intraday trading tips.
Tradingreferstotheactofeitherbuyingorsellingsharesanditisusuallydone to make
profits in a very short period of time unlike an investor who stays invested in
the stock market for a very long time. All trade transactions take place on the
exchange and the broker acts as an intermediary between you on the exchange.

Whydoessomeonedobusiness?
Shares are sold by companies to the general public in the absence of capital.
Traders buy and sell shares in the secondary market. Markets go up and down
and so do stocks. What most traders follow when trading is "Buy low and sell
high". Buying shares at a lower price and later selling them at a higher price
makes a profit. Speculation is what drives the market. For example, if a trader
thinksthatforsomereasonthepriceofhisstockmayrise,hebuysthatstockat a lower
price and when the actual news about the stock is out, the stock will be priced
higher. sells on. in on demand.

A trader has to carefully observe the markets to make the right decision with
regardtobuying,sellingorholdingastock.Asaninvestor,oneismoreinclined to
analyze the company by knowing the EPS, PE ratio, stability of the business
etc. Whereas a trader pays more attention to the technical aspects of the
company. There are technical charts based on minute, hour etc which will let
you understand how the stock price moves.

Some people take up business as their profession while some do it as their part
time passion. Loss and profit are part of the business; Hence one has to trade
withconfidencebackedbygoodstrategies.Themarketreactstovariousfactors such
as economic data, political uncertainty, trade wars etc. and traders capitalize on
these trends to make profits. cs either give high returns or give negative returns.
Whataredefensivestocks?
Defensive stocks are not aff ected by the performance of the economy. They
provide regular dividend income. These stocks help you keep your investments
safeduringthetimesofrecession.Ifyouareaveryconservativeinvestorwhose main
priority is safety, you may choose to invest in defensive stocks. You cannot
expect exceptional returns from defensive stocks as they only act as safe haven
stocks. If you are a newcomer to the market, you can start investing in these
stocks at an early stage as the volatility is low and these stocks will not give you
sleepless nights. Defensive stocks give steady returns at all times irrespective of
the performance of the economy.

Aninvestor'sportfolioshouldcontainamixofbothcyclicalanddefensive stocks and

only this will help reduce risk and minimize losses.

Who can do business?

Anyone can trade and generally risk takersprefertotraderatherthaninvestasit is
usually done for wealth creationwithalongtermoutlook.Thosewhowantto get
regular income or security ofcapitaldonotventureintobusiness.Duetothe high
risk, the returns in trading are also high. Don't worry about makingmistakes
while trading. Because with time these mistakes will make you an expert.

Whatdoyouneedtodobusiness?
To trade in the stock market, you need a demat and trading account. This
account can be easily opened online with any SEBI registered broker or
depository participant. is the one that stores your shares in electronic format,
andyoucantransfermoneyfromyourbankaccounttoyourtradingaccountto buy the
shares. Usually the settlement i.e. crediting the shares or money and debiting
the shares or money happens in 2 days, hence it is called T+2 settlement.
Importantassumptionsoneshouldknowwhiletrading:

1. Price discount everything:

This meansthatthemarketpriceo fastockreflectsvariousinformationlike political

news, macro and microeconomic data etc.
2. PriceMovesin Trends:

Thestockpricewillnotsuddenlyriseprecariously;It usuallyfollowsthesame
pattern.

3. Historyrepeatsitself:

Sincemarketsaredrivenbyfearorgreed,patternsofstockprice movement
usually repeat.
Howtominimizelosseswhile trading?
Stop loss isoneofthestrategiesthatshouldbeusedwhiletrading.Thiswill help
you reduce your losses. With this strategy,yourstockissoldifitdrops below a
level that will make your losses even higher.

Let us discuss in detail about Intraday Trading

Tips 1. Build a proper strategy:
Trading is done to make quick profits based on the price fluctuations. Trade in
thestockonlyafterknowingtheamountyoucanusefortradingandtheamount of loss
you can take. Don't have herd mentality and take all decisions only after proper
research

2. Risk Management:

Usestoplossandothermethodsthathelpyoumanagerisk.Withoutthese strategies,
your losses could be higher.
3. Stay Updated:

Keepyourselfupdatedwithmarkettrends,techniques,etc.Developthehabitof
reading a lot on trading. To be a smart and successful trader it is necessary to
constantly read and stay updated.

4. Don'tFocusonMoney Alone:

Ifyouareeitherafraidoflosingmoneyoraretoogreedytomakemoney,you will be a
loser. Focus on the right strategies that will help you get profit by minimizing
the risk.

5. Don't Panic:

Neverbeafraidofloss.Lossispartoftradingandyoushouldanalyzeyour mistakes
instead of exiting the market

6. Focusonsome stocks:

Donottradetoomanystocksatonce.Assuchyoushouldcheckthetechnical charts of
each stock to understand the fluctuations in their prices.
7. Booking Benefits:

Wheneveryoureachyourtarget,youmustbookprofits;Neverbegreedy.

8. Choose High Liquidity Stocks:

Youshouldchooseonlythosestockswhicharetradedinhighvolume.

9. UseTechnicalCharts:

Asatrader,yous houldusetechnicalchartsonaminuteorhourlybasistoknow how the

stock is moving.

10. ControlYourEmotions:

Emotionscanleadyoutomakebaddecisionswhiletrading.Takedecisions based on
logic.

11. Don't trade only on rumours

Yourdecisionsshouldbebackedbyproperresearchandfacts.Youwilllose money
by acting on the basis of rumours.

12. Self-tradeusingMobileTradingPlatforms:

Youcantradeanytimeandfromanywhereusingmobiletradingapps.Thisis
thesmartestwaytodobusiness.Youdonotneedtodependonbrokersallthe time for
any business transaction. With the mobile trading platform, you can place buy
or sell orders and monitor your portfolio anytime.

13. KeepLearning:

Developahabitofreadingmoreabouttradingstrategies,freeintradaytips,etc. to
become an expert trader.

14. GiveEnoughTime:

Tradingrequiresconstantresearchandsmartdecisionmaking.Appropriatetime
should be given for this purpose otherwise it will end in loss.

15. IntradayStock Tips:

Therearemanywebsitesthatprovidefreeintradaytradingtips.Theseshouldbe read to
take the right step.
Call option and Put option
Derivatives are mainly used for hedging purpose and let us read about option
contract which is a type of derivative in this article. People enter into options
contracts primarily to reduce risk. The option contract gives the buyer the right
tobuyorselltheunderlyingassetataspecificprice.Butthereisnocompulsion attached
to it. The option contract seller has the obligation to buy or sell the
underlyingassetaspertheoptioncontractbuyer'sdecision.Thereare2typesof
options, call options and put options. Let us go through the diff erence between
call option and put option in detail in this article. Before this you should know
some terms like strike price, spot price, premium, expiry date.
StrikePrice:Thepriceatwhichthecontractisexecutedbetweenthebuyerand seller
of the contract is the strike price.

SpotPrice:Thepriceatwhichtheassettradesin thecashmarket.Thatis,the current

market price.

Premium:Thisistheamountthatthebuyerofthecontracthastopaytothe seller of
the contract.

ExpiryDate:Thisisthelastdateoftheoptionscontractbeforewhichthe option buyer

can exercise his option to buy or sell the underlying asset.

ContractCycle:Generally,thecontractcycleisof3monthswhichendsonthe last
Thursday of the particular contract month.

Call option
There are always two parties to a contract and in this case it is a call option
buyer and a call option seller. A call option buyer has the right to buy the
underlying asset at a specified price. But he has no obligation whereas the call
optionsellerhastheobligationtosellthecontractasperthecalloptionbuyer's
decision.Wewillunderstandthisinasimplewaywithanexample.Mr.Abuys a call
option contract from Mr. B in which the strike price of the particular
underlying asset is Rs. 500. If the spot value of the particular asset is Rs. 1000,
then Mr. A would like to buy the property from Mr. B and sell it in the market
at Rs. 1000 thereby making a profit of Rs. 500. But if the spot price becomes
Rs. 800, Mr. A will buy particular property from the market instead of Mr. B.
The call buyer has to pay the premium to the call seller. The call buyer has to
suff erlimitedlossashislossislimitedtothepremiumpaidbyhimbutincase of call
seller the loss is unlimited.

Enter options

Like with a call option, there are two parties, a put buyer and a put seller. The
put option buyer has the right to sell the underlying asset while the put option
seller has the obligation to buy it. In the case of a put option buyer, the loss is
limited to the premium while the put option seller can suff er an unlimited loss.
Let us see it with an example. Mr. Ajay feels that the price of a particular stock
willgodownandhencebuysaputoptioncontract.HepaysthepremiumtoMr. Kumar,
the put option seller and buys the contract. If he had entered into a contract at
Rs. 1000 but the spot price of the stock is Rs. 700. In this situation, Mr. Ajay
will sell the contract to the put option seller for Rs. 1000 and earn a profit of Rs.

Insimplewords,calloptionbuyersandputoptionsellersarebullishwhereas put
option buyers and call option sellers are bearish. Understanding options trading
is not that difficult and you can gradually learn it by reading several books and
starting to use options strategies. Hope you have understood the diff erence
between call and put by reading this article.
Stock analysis

Investing in the stock market is one of the best ways to achieve your financial
goals.Withoutsavingorinvestingneitherwecanfaceanyfinancialemergency, nor
can we meet our educational needs, medical needs of self and family.
Althoughtherearemanyproductsavailableintheworldofstocks,letuslearn about
equity investing in this article. Strategies for choosing the right stock should be
employed before investing in stocks. Stock analysis gives a clear picture about
the financial position of the company, its growth potential and many other
essential things which will help you in choosing the right stock.
Howtoanalyzeastockbeforeinvesting:
We should invest in the shares of the company only after doing thorough
research. There are 2 ways to analyze a stock; By technical and fundamental
analysis. First, let us delve into technical analysis of stock trends. The future
price of a stock is predicted using past price movement. Price charts based on
theparticulartimeframeareusedtounderstandhowthestockwillmoveinthe
future.Timechartscanbediff erentsuchas15minutechart,hourlychart,daily chart,
etc. There are some assumptions in terms of technical analysis of the stock
market.

MarketEverythingDiscounts:

It simply means that all the information about the stock, investor sentiment,
inflationandallotherfactorsarealreadyembeddedinthepriceofthestock.

Pricesmovein trend:

Thestockpricealwaysmovesinthedirectionofthetrend.

Historyrepeatsitself:

Intechnicalanalysis,pricemovementispredictedbasedonchartpatternsandit is
assumed that market participants always react in the same way to similar events
that are likely to occur in the future as well.

Howtoanalyzestocksfor intraday:

Thereareseveralparametersandstrategiesonemustknowwhilegetting
involved in intraday trading. Let us know about them in detail. Liquid
Stock:

Liquidity is the main factor that you should keep in mind while buying stocks
for intraday trading. You should buy liquid stocks in which even if you buy a
higherquantity,thepricewillnotbeaff ected.Liquidstocksarethosewhichcan be
easily sold and converted into cash.

Don'tbe too greedy:

When you are a day trader, you must know clearly when to enter and when to
exitastock.Onceyoumakeaprofit,youhavetoexitthestock.Timingisvery important
thing in case of intraday.
Do not trade only on rumours:

Trade only those stocks that follow a strong trend. The main objective of any
traderistominimizelossesandprotectprofits.Sotakeadisciplinedapproach. Don't
buy shares just on the basis of news or rumours. Do a proper research before
every decision.

Howtodofundamentalanalysisofastock?

The intrinsic value of a stock can be ascertained through fundamental analysis.

An investor can understand whether a stock is undervalued or overvalued. For
thispurpose,youshouldreadthecompany'sannualreport,balancesheet,profit and
loss account, especially any news related to the company or sector.
FundamentalanalysislooksatvariousfactorsofastocklikePEratio,EPS,etc.
Dividend Yield, etc. A company with heavy debt should be avoided. You
should be aware of the background and management of the company and the
factors that will have a great impact on the company. It is the responsibility of
every investor to evaluate a company based on technical and fundamental
analysis before making a decision on a stock.
Basics of stock market

Have you ever wondered what are shares and stock market? Let us learn the
basics of stock market in this section. Each of us has defined goals in life and
thereisatimelimitbywhichwehavetoachievethesegoals.Forexample,you may
plan to study abroad, buy a car, build a house, etc. To achieve these, you
needtohaveaproperfinancialplan.BythisImeaninvestinghasbecomeyour habit.
Financial assets or stock markets provide high returns and hence start investing
at a young age and do it regularly for a long period of time.

You can invest in the stock market for short term or long term as per your
requirement.Dependingonyourriskappetite,ageanddependency,youcanbe a
trader or investor in the stock market. Since markets are always associated
with risk, you need to read carefully. Today the various investment options in
the Indian stock market are Equity, Mutual Funds, SIP, IPO, Bonds,
Debentures, Derivatives, Commodity, Currency etc.
Howtoinvestinsharemarket?
DematandTradingAccounts:

Sowhatdoyouneedtodotoinvestinthestockmarket?Firstly,openanonline demat
and trading account with a broker and link your bank account with it.
Demat account opening is a very simple and easy process. Once you have your
dematandtradingaccount,youcanstartinvestingintheIndianstockmarket.It is
essential for you to be familiar with stock exchanges and their functions.
Stock exchange is the place where the buying and selling of shares takes place.
Stock exchanges are regulated by SEBI (Securities and Exchange Board of
India).India's2importantstockexchangesareNSE(NationalStockExchange) and
BSE (Bombay Stock Exchange).

∙ As per your goals, choose specific financial assets for investment. India is
the one stop destination for all your needs. If you are more concerned about
regularincomeandconservationofcapital,youcanoptfordebtinstruments
likebonds.Ifyouwantcapitalgrowthandarewillingtotake

therisk,thenequityistheoneforyou.Beforeinvestinginastock,doa thorough
study of the company, its financial position, future growth prospects, etc.
What you need to do below to achieve your goals: ∙ Define your life goals
∙ Learnaboutfinancialassets
∙ Choosetherelevantpropertyasperyour requirement
∙ Startinvestingregularly
∙ Fulfillyourgoals

Hopeyouhavegotabasicideaofstockmarketandhencenowitistimeto understand
diff erent financial instruments.

TypesofStockstoInvestintheStockMarket

Whenyoubuyashare,youcanbeacommonshareholderorapreferred shareholder
depending on the ownership.
Asacommonshareholder,youareallowedtovoteatshareholdermeetingsand you
are eligible to receive dividends. If the company you invested in goes
bankrupt, you will receive part of the liquidation proceeds only after all
creditors and preferred shareholders have been paid.

Asapreferredshareholder,youmaynothavevotingrights.Butyouwillgetthe
dividend before the common shareholder gets it.

Dependingonthemarketcapitalization,youcaninvestinlargecap,midcapand
smallcap stocks. Market capitalization = share price * number of shares
outstanding

Outstanding shares are shares that can be bought and sold in the public
markets. I will explain it with an example. Suppose a company A has 100
outstandingsharesandthesharepriceisRs.20,thenthemarketcapitalization of the
company will be 20*100=Rs. 2000

LargeCapStocks:

These companies are well established andhaveastrongpresenceinthemarket.

Companies like TCS, Infosys and Wipro fall inthiscategory.Investinginthese
companies is less risky.

Mid Cap Stocks:

Thesecompanieshavehugegrowthpotentialandarerelativelyriskyas compared to
large cap companies.

Small Cap Stocks:

Startupsfallunderthiscategoryandarehighlyriskyascomparedtotheabove two. On
the upside, they can become a smashing success overnight.

ThenextessentialaspectthatyoushouldknowisIPO(InitialPublicOff ering). A
company raises money from the public through an IPO. It sells its shares in
order to bring in capital for its future growth. Your yield is higher when you
invest in a stock because of the power of compounding. In simple words, the
share price you are holding today is Rs. 100, it can double or triple if you hold
the shares for a long time.
Whyshouldoneinvest?
Investment is important to meet one's financial goals and protect against
unforeseen expenses. It is a process in which the saved income of an individual
oragroupofpersonsisusedinsuchawayastoensurethegenerationoffurther income.

Itisalwaysadvisabletoclassifyyourinvestmentsonthebasisoftimeperiod
(short/medium/long). One should invest early, regularly and preferably for a
long period.

Whatarethevariousoptionsavailableforinvestment?

Thevariousinvestmentoptionscanbebroadlyclassifiedintotwocategories:

1. Physicalassetswhichincluderealestate,gold,jewellery,commodities etc.

2. FinancialAssetslikeBankDeposits,PostOfficeSavings,Insurance,PPF,
EPF, Equity, Derivatives, Bonds, Debentures, Currencies etc.

Physical assets can be accessed in a number of ways including traditional

physicalholdings,futurescontracts,de-matforms,ETFs,etc.,whilefinancial assets
can be held or given to financial institutions such as banks, insurance
companies and post offices. It stands for market exposure in respect of
investments in equity, derivatives, currency, commodity and bond markets.
Eachmethodofholdinghasitsadvantagesanddisadvantagesbutwithsomany options
available, investors of all types should be able to find a product that matches
their need.

PhysicalHolding:

Thisformofholdingisilliquidandiscapableofyieldinggoodpriceduring
downtrends.
forwardcontract:

Thisformofholdingoff ersthebenefitsofleverageandthesamebenefitsas physical

holdings. In addition, futures contracts have several advantages including
liquidity and ease of entering and exiting the market. Option contract:
Optionsmaybeabetterandlessriskywaytoaccessthemarket,butcanalsobe more
complex and require more study to understand the elements of volatility and the
diff erent strike moves. Options allow for similar leveraged benefits like futures
contracts and enable users to better define their risks.

exchangetraded funds:

ETFs are more or less similartostocksthatcanbeaccessedthroughanequity

trading account. An ETF is apapertransactionthatcannotbeconvertedintoa
physical one.
WhyChooseStockBrokingFirm?
Getting support in managing investmentsiscriticalforsuccessfulreturns.This is
where the role of a stock broking firmcomesintoplay.Investorscanbenefit in
many ways by using the services of a stock broking firm.

Basedonprofessionalresearchreports,astockbrokingfirmcanoff erexpert advice

on how to invest, grow, manage and maintain your investments.

Record keeping is one of the benefits off ered by stock broking firms. Firms
maintainrecordsofbusinessconfirmations,statements,year-endtaxreporting
details, deposits, withdrawals and other activities.

Youcangetpersonalizedandprofessionalservicesbygettingassociatedwitha
reputed broking house.

Apartfromequities,brokingfirmsoff erotherinvestmentopportunities.These
include mutual funds, bonds, options, etc.

Derivatives
GettingafairideaonthefundamentalsofStockMarketsandEquityandDebt
Instruments, let us now focus on some comprehensive study in Financial
Markets.
Derivatives

Aderivativeisafinancialproductwhosevalueisderivedfromunderlyingassets. The
underlying assets can be equities, indices, currencies, commodities, bonds,
etc.Derivativesproductswereinitiallydevelopedashedginginstrumentsagainst
fluctuations in commodity prices. Financial derivatives came into existence after
1970 due to increasing volatility in financial markets and since then, financial
derivatives have become very popular and they account for two-thirds of total
transactions. Investors in the financial markets are broadly classified based on
the timing of their investments.
Derivatives are basically hedging and trading instruments. Being a margin
basedtradinginstrument,itoff ersgoodleverageopportunitieswhichultimately
gives rise to speculations.

A futures contract gives the right to buy or sell the underlying at a specified
priceandonorbeforeaspecifieddate.Bothpartiestoafuturescontractmust exercise
the contract unless they are deliverable on or before the settlement date.

FeaturesofFuturesTrading:
Totakeaposition,aninitialmarginamountofthecontractvalueisrequired, which is
determined by the Exchange on the basis of Span plus Exposure Margin.

Themark-to-marketprofit/losswillbeadjustedonadaily basis.

Thepositionsarerequiredtobesettledbythelasttradingdayofthecontract, failing
which the exchange will close those positions.
Indexfuturesconsistoftheunderlyingindex.

The contracts of diff erent maturities available for trading are called current
month(1month),nearmonth(2months)andfarmonth(3months)contracts. The
month in which the contract expires is called the contract month.

alternative

It gives the buyer the right to buy or sell the underlying without any liability.
Whereas the buyer of an option pays the premium and thus receives the right to
exercisehisoption,thesellerorwriterofanoptionreceivestheoptionpremium and
thus acquires the asset if the buyer exercises his rights. obliged to buy/sell.
Whereasa"calloption"givesthebuyertheright,butnottheobligation,tobuy the
underlying asset at a given price before a future date, a "put option" gives
thebuyertherightbutnottheobligationtoselltheunderlyingasset.gives.ata fixed
price in the future.

Buying call and put options requires a premium to be paid and the trader has to
be exposed to risk limited to the size of the premium paid whereas to sell/write
optionsamarginhastobepaidandissubjecttoexposuretothefuturesmarket. have to
be exposed to the same risk.

style of options

Europeanoptionscanonlybeexercisedi.e.deliverycanbetakenbythebuyer of the
option on the expiration date of the contract.

Americanoptionscanbeexercisedi.e.,deliverycanbetakenbythebuyerat any time

on or before the expiry date.

Contract Cycle:

Thecontractcycleistheperiodoverwhichacontracttrades.Indexfutures contracts
on NSE have expiry cycles of one month, two months and three months.

Option Strategies

Atraderhavingalong/bullishdirectionalviewontheunderlyingcanbuya call
option or write a short put option. Similarly, a trader who has a short/bearish
directional view on the underlying can sort/write a call option or long/buy a
put option.

In addition, we have combination strategies which are very useful when the
marketoutlookismoderatelybullish/bearish,rangeboundoruncertainandthe
objective is to reduce the overall payout of the option premium. Instruments
include bull and bear call-put spread, strangle, straddle, butterfly, covered and
protective call and put etc.
Hedging:

Hedgingisastrategytoreducetheriskinherentin investing.

Estimate:

Itisatradingstrategywiththeaimofmakingprofitinashortperiodoftime with the

fluctuating prices.

AdvantagesofDerivatives:

Hedging:It helps to hedgeagainst future price uncertainties

Leverage:Sincethemarginrequiredisverylow,itallowsforhighertrading risk

PotentialReturns:Anyonecanmakemoney,regardlessofmarketconditions

Takinglongpositions:Thisgivesatimeperiodofupto3monthsasagainst1-3 days
off ered in other margin products
Sharemarket tips

Diff erentinvestorsenterthestockmarketwithdiff erentinvestmentgoals.Some

expect quick and high returns and some for long term investments and a strong
balancedportfolio.However,everyinvestorshouldfollowcertainstockmarket tips
during the investment journey to protect against volatility.
Hereisalistofthebeststockmarkettipswerecommend:
∙ aiming
∙ Understand risk tolerance
∙ Choosethe right stock
∙ Takecontrolofemotions
∙ Understand the basics
∙ Diversifyinvestments
ShareMarketTip:SetGoals

One of the best investment tips is to invest with a goal. Before starting any
investment, it is highly recommended to tie it to a short term or long term goal.
Itgivesbetterclarityabouttheinvestmenttenure,targetamountetc.Ifyouneed
investmentreturnsintheshortterm,youcanconsiderotherinvestmentavenues.
However, if you have a long investment horizon, investing in equities can give
you the best returns.

StockMarketTip:UnderstandRiskTolerance

Considering the volatility of the stock market, it is advisable to first understand

yourrisktoleranceforanyinvestment.Risktoleranceisanimportantpartofthe
investingjourneyandvariesfrominvestortoinvestor.Itisessentiallytheability to
tolerate market volatility and its eff ects on the value of an investment. An
investor's low risk tolerance depends on either loss appetite or ability to tolerate
anxiety during highly volatile markets. Low-risk investors often get nervous
about selling their securities at the wrong time.

StockMarketTip:ChoosetheRightStock

One should avoid investing in penny stocks and any stock based on word of
mouth. Rather one should invest in stocks based on research and strong
performanceofthecompany.Anotheraddedbenefitofthisstockmarkettipis

thatcompanieswithstrongperformancecanhandlemarketvolatilitybetterand have
stronger potential for better return on investment in the long run.
StockMarketTip:ControlYourEmotions

One of the biggest hurdles in the way of investing in the stock market is the
inability of investors to control their emotions while making decisions. The
overall market performance and prices of companies reflect investor sentiment
intheshortterm.Thisoftenleadstoherdmentality,whereaninvestor'sdecision is
heavily influenced by the actions of other investors, rather than analyzing the
situation to make a logical decision. Experts recommend investing in stocks
when you have reasons to expect the stock to outperform in the future and make
sure you aim to exit the investment. In other words, a buy and sell strategy is
one of the most import stock market tactics.
ShareMarketTip:Understandthe Basics

Before investing in any investment instrument, it is very important to take the

time to understand its basics. Generally, investors avoid understanding the
basicsofthestockmarket,itsfunctionsandstrategies,oravoidreadingresearch
reports or performance reports of companies before investing in them, as they
involve complex number language and technical terminology. However, what
investors fail to understand is that an eff ort put into understanding the
terminology and strategies at once can help in making wise and informed
decisions, which can result in better returns.

StockMarketTip:DiversifyInvesting

While all investors take utmost care to diversify investments across various
investment instruments and maintain a balanced portfolio, investors often
overlooktheimportanceofdiversifyingequityinvestments.Diversifyingequity
investment implies investing in diff erent sectors and industries. A diversified
portfolio can better manage the eff ects of swings because often a downtrend in
one sector causes an uptrend for another.

∙ worthdoing
∙ AlwaysgivepreferencetoSEBIandStockExchangeregistered
market intermediaries
∙ Ensureclearcommunicationwithyouragent,broker orintermediary.∙
Read all the documents carefully before investing.
∙ Checkthecompany'screditworthiness,managementandotherimportant
information before ordering.
∙ Bewareofstocksshowingrapidvolatility.
∙ Makeinvestmentdecisionswithproperresearchand analysis.
Not Doable:

∙ Donotdealwithunregisteredbrokers,sub-brokers,intermediaries.∙
Donotblindlyrelyonherdmentality,mediareportsorspeculations.∙ Do
not sign/submit any document without clearly understanding the
terms and conditions of the same.
∙ Don'tcopyinvestmentdecisions.
∙ Don'tinvestaccordingtoemotions.
∙ Don'twaitandtime market.
Listofhighest dividendpaying stocksin India:
Investment is a must for a secure future in this volatile world. You probably
knowthatifyouinvestinacompanyforalongperiodoftime,youwillgethigh returns.
But apart from this, what other benefits do you get from investing in a
company?Dividend,bonus,rightsissueetcareotherbenefitsthatyoucanavail.
Youcanbuysharesofacompanyandsellitaftermanyyearswhenyoufeelitis the right
time and it also depends on your needs and life-long goals. Before you
startinvestinginacompany,doathoroughstudyofthecompany.Togetaclear picture
of the financial position of the company, analyze its balance sheet, its future
growth prospects etc.

Youhavetobecarefulinchoosingtherightcompany.Itisessentialtomonitor the
company in order to make the right investment decisions. There are many
factors that can aff ect a share price. It is very important to stay updated with
whatever happens in me. As the company grows, the value of the stock also
increases. In this article, you will be able to understand about dividend. You
have to invest in stocks with high dividend yield so that you can benefit
regularly through receiving dividends from the company.

What is a Dividend?
Dividendisthecashdistributedbyacompanytoitsshareholdersfromitsprofit income.
The company may also decide to reinvest its profits in the business
withoutprovidingdividends.Dividendsaredecidedbytheboardofdirectorsof the
company and have to be approved by the shareholders. Dividends are paid
quarterly or annually.

dividendyield:

Dividendyieldistheratioofdividendspaidpersharetothecurrentmarket price.

DividendYield=CashDividendperShare/MarketValueofShare*100
Record date and prior date:

Acompanythatpaysregulardividendsisafinanciallysoundcompany.Other terms
you should know are record date and prior date. Record Date - The
shareholdersholdingsharesinthecompanyonthisparticulardateareeligible for
dividend payment. Ex-dividend date – This is usually one day before the
record date. If you buy shares on or after the X date, you will not get the
dividend.
dividendpayoutratio:

It is the percentage of net income distributed to shareholders as dividends. It is

notwisetoinvestinacompanywhosedividendpayoutratioismorethan100% as the
business will become unstable in the long run.

Now,let'slookatthestocksthatpaythehighest dividends.

Technicalanalysis
Itisrelatedtotherepresentationofdemandandsupplywhichtechnicians believe is
reflected in terms of price patterns.

Itexaminespastpriceandvolumedata(whichisreflectedinchartpatterns)to predict
future price movements.

Along with chart patterns, technicians also look at the performance of key
technicalindicatorstodeterminetheprevailingmarkettrendorpotentialtrend
reversal.
Technicalanalysisisbasedonthefollowingassumptions;
1. MarketDiscountsEverything

2. Pricemovesintrends

3. History repeats itself

Fundamental analysis takes a relatively long-term approach because the data

they analyze is released over a longer period of time. Financial statements are
filedquarterlyandthechangeinearningspersharedoesnothappenonadaily basis
like price and volume.

Technicalanalysisisofshorterdurationinnatureascomparedtofundamental
analysis. In general, technical analysis is used for trading whereas
fundamental analysis is used for investing.

technical equipment:

RelativeStrengthIndex(RSI):

Itiscalculatedbytakingtheaverageoftheup-closesduring'n'periodsand dividing by
the average of the down-closes during the last 'n' days.

RSI = 100-100/(1+Rs)

ThepriceusuallyreachesoverboughtlevelswhentheRSIrisesabove70and reaches
oversold when it drops below 30.

AverageDirectionalIndex(ADX):

Itisatrendlineindicatorusedtomeasurethestrengthofthecurrenttrend.Itis a
combination of measures of two price movements; Positive Directional
Indicator (+DI) and Negative Directional Indicator (-DI). +DI measures the
strength of the upward trend while -DI measures the strength of the downward
trend. These two measures are also plotted along the ADX line. Measured on a
scale between 0 and 100, a reading below 20 signals a weak trend, while a
reading above 40 signals a strong trend.
Bollinger Bands:

Itconsistsofamovingaverageanda2S.D.chartedonelineaboveandone line below

the moving average. symbolically,

20DMA +2 SD= UpperBand; 20dma -2 sd= lower band.

Thus,accordingtotheBollingerBandstheory,priceswillremainwithina certain
range, which is determined by recent price action.

The upper band usually indicates that the market has reached overbought
territory and therefore there is a potential for a downward reversal in price,
whilethelowerbandindicatesthemarkethasreachedoversoldterritoryand therefore
a potential upward reversal.

MovingAverage(MA):

Itistheaveragepriceforagivenperiod.Itiscalledmovingaveragebecauseit shows
the latest average following the same time measurement.

Moving averages are used by combining two averages from diff erent time
frames:inwhich,abuysignalisdetectedwhentheshorttermmovingaverage crosses
above the long term moving average or vice versa.

MovingAverageConvergenceandDivergence(MACD):

Itmeasuresthedegreeofvolatilitybetweentwoexponentialmovingaverages.
Ideally, between a 12-day short-term EMA and a 26-day long-term EMA.

Togeneratebuy/sellsignals,9daysEMAiscalculatedonMACD. symbolically,

MACD=ShortTermEMA(12)-LongTermEMA(26)

MACDcrossesabove/belowthetrendlinewhichsuggeststhebeginningorend of the
trend.
Fibonacci Retracement:

It is used to determine how far and back the price has moved from the
underlying trend. Retracement levels are; 38.2%, 50% and 61.8%. A Fibonacci
seriesisasequenceofnumbersstartingfromzeroandplacedinsuchawaythat the
value of any number in the series is the sum of the previous two numbers.

The Fibonacci sequence is as follows:

0, 1, 1, 2, 3, 5, 8, 13, 21, 34, 55, 89, 144, 233, 377, 610…

Takealookatthefollowing:

233 = 144 + 89

144 = 89 + 55

89 = 55 +34

InterestingFeaturesofFibonacciSeries:

Divideanynumberintheseriesbythepreviousnumber;Theratioisalways around
1.618.

Forexample:

610/377 = 1.618

377/233 = 1.618

233/144 = 1.618
A ratio of 1.618 is considered the Golden Ratio, also known as the Phi. Further
intheratioproperties,onecanobtainremarkablestabilitywhenanumberinthe
Fibonacci series is divided by the number immediately following it. For
example:

89/144 = 0.618

144/233 = 0.618

377/610 = 0.618
AsimilarconsistencycanbefoundwhenanynumberintheFibonacciseriesis
dividedbyanumbergreaterthantwoplaces. For

example:

13/34 = 0.382

21/55 = 0.382

34/89 = 0.382

0.382whenexpressed asa percentageis 38.2%

Also,whenanumberintheFibonacciseriesisdividedbyanumberthatis3 places up,

it has continuity.

Forexample:

13/55 = 0.236

21/89 = 0.236

34/144 = 0.236

55/233 = 0.236

0.236whenexpressed asa percentageis 23.6%.

These retracement levels provide a good opportunity for traders to enter new
positions in the direction of the trend. The Fibonacci ratios i.e. 61.8%, 50%,
38.2%, and 23.6% help traders to identify the potential range of retracements.
TraderscanusetheselevelstocreatenewpositionsToenteratrendorplacea stop loss
against the current position.

Toenteratrendorplaceastoplossagainstthecurrent position.

DowPrinciple:

It states that securities market performance is influenced by three cyclical

trends,theprimarybeingalong-termtrendormovethatconfirmsabullorbear market,
a secondary or intermediate trend that is short-term deviation from the
underlying trend, and a short-term or tertiary trend. There is a reason. Daily
fluctuations in any direction.
TheDowTheoryisusedtoindicatetrendandreversalinthemarketaswellas in
individual security. The basic principle is that there is a positive correlation
between the trend and volume of traded stocks.

ElliotWaveTheory:
Elliotiansclassifypricemovementsintopatternedwavesthatindicatefuture price
targets and reversals.

Wavesthatmovewiththetrendarecalledimpulsivewavesin5primaryand3
secondary trends. The motion of eight waves comprises one complete wave
cycle.

Once the sequence is complete, the pattern repeats in a larger and smaller
versionofthesameoriginalpattern.Thesameistrueforbearmarketsinwhich the
pattern is reversal, followed by a three-wave rally followed by a five-wave
decline.

ThekeytoElliottWavesistobeabletofindthewavereferenceinquestion.

Elliotians use the Fibonacci series to predict the up and down of the waves.It
statesthatsecuritiesmarketperformanceisinfluencedbythreecyclicaltrends, the
primary being a long-term trend or move that confirms a bull or bear
market,asecondaryorintermediatetrendthatisshort-termdeviationfromthe

underlyingtrend,andashort-termortertiarytrend.Thereisareason.Daily
fluctuations in any direction.

TheDowTheoryisusedtoindicatetrendandreversalinthemarketaswellas in
individual security. The basic principle is that there is a positive correlation
between the trend and volume of traded stocks.

ElliotWaveTheory:

Elliotiansclassifypricemovementsintopatternedwavesthatindicatefuture price
targets and reversals.
Wavesthatmovewiththetrendarecalledimpulsivewavesin5primaryand3
secondarytrends.Themotionofeightwavescomprisesonecompletewave cycle.

Once the sequence is complete, the pattern repeats in a larger and smaller
versionofthesameoriginalpattern.Thesameistrueforbearmarketsinwhich the
pattern is reversal, followed by a three-wave rally followed by a five-wave
decline.

ThekeytoElliottWavesistobeabletofindthewavereferenceinquestion. Elliotians

use the Fibonacci series to predict the up and down of the waves. Chart

Types and Patterns:

Thereare four main types of charts used by traders; Bar chart, candlestick chart
andlinechart.

Bar chart:

Bar charts have all four price components including open, high, low and close.
Onabarchart,theopeningpriceisshownasadashtotheleftoftheverticalbar while the
closing price is shown as a dash to the left of the vertical bar.

Candlestick Chart:

A candlestick chart is similar to a bar chart but has more visual information.
Therearetwodiff erentcolorsofcandleswithemptycandlerepresentingbullish while
filled candle representing bearish.

Itrepresentsonlytheclosingpricesofthestockoveraspecifiedperiodoftime. The line

is formed by connecting the closing price in a given time frame.

Linechartsdonotprovidevisualinformationontradingrangessuchashigh, low and

opening prices.

However,theclosingpriceisoftenconsideredthemostimportantpriceforthe day.
 DISCLAIMER
The reader of this publication assumes responsibility for the use of
the qinformation in this book. The author and the publisher assume
no responsibility or liability whatsoever , on the behalf of the reader
of this publication. While efforts have been made to verify
information and use accurate information, neither the author nor the
publisher make any warranties with respect to errors, inaccuracies, or
omissions.

Note :- Do not rely on anyone's advice or tips to trade in the stock

market, you can work with the help of your financial advisor.