📖 Chapter 1: Introduction to the Stock

Market

🏛️ What is the Stock Market?

The stock market is a platform where people buy and sell shares (also called stocks) of
publicly listed companies.

Think of it like a supermarket, but instead of groceries, people buy and sell
ownership in businesses.

When you buy a stock, you are essentially buying a piece of a company.

📈 Why Companies Use the Stock Market

Companies need money to grow. There are two main ways to raise funds:

1.​ Borrowing (like taking a loan)​

2.​ Issuing shares to the public (called Equity Financing)​

When a company wants to raise money from the public, it does an Initial Public Offering
(IPO) and gets listed on a stock exchange like NSE or BSE.

In return, investors get shares of the company.

🔄 How Stock Trading Works
Stock trading happens in two stages:

1. Primary Market

●​ This is where new shares are offered to the public for the first time through an IPO.​

●​ Money goes directly to the company.​

2. Secondary Market

●​ This is where already listed shares are bought and sold among investors.​

●​ Here, you trade with other investors, not with the company.​

💼 Who Are the Participants?

Participant Role

Retail Investors Common people like you and me

Institutional Investors (FII/DII) Banks, mutual funds, foreign investors

Stock Brokers Middlemen who help you buy/sell (e.g., Zerodha,

Upstox)

SEBI Regulator that ensures fairness

Stock Exchanges Marketplaces (NSE, BSE) where trading happens

🧾 What Are Shares?
Shares represent ownership in a company.

If you own 1% of a company’s shares, you own 1% of that business. If the company
performs well, the value of your shares increases, and you may also receive a dividend
(profit share).

🔁 How Prices Change in the Market

Stock prices change every second because of demand and supply.

●​ If more people want to buy a stock → Price goes up​

●​ If more people want to sell a stock → Price goes down​

This demand-supply is driven by:

●​ Company news​

●​ Earnings reports​

●​ Economic events​

●​ Market sentiment​

📊 Example
Let’s say Tata Motors is trading at ₹500. If many people expect it to grow and start buying,
demand rises and the price may go to ₹520.

If bad news comes, people sell the stock, and price may drop to ₹480.
🛠️ What Do You Need to Start?
To start buying or selling in the stock market:

●​ Open a Demat Account (stores your shares digitally)​

●​ Open a Trading Account (executes buy/sell orders)​

●​ Link your Bank Account for payments​

These services are usually provided together by brokers.

🔐 Stock Market Timings in India

Session Time

Pre-open Market 9:00 AM – 9:15 AM

Regular Trading 9:15 AM – 3:30 PM

Post-Market 3:40 PM – 4:00 PM

📌 Key Terms to Remember
Term Meaning

NSE/BSE National & Bombay Stock Exchange

IPO Initial Public Offering

Demat Electronic account to hold shares

Trading Account Used to buy/sell shares

SEBI Market regulator

FII/DII Foreign/Indian institutional investors

💡 Quick Summary
●​ The stock market allows buying/selling of company ownership (shares).​

●​ Companies raise money through IPOs.​

●​ You trade shares using a Demat & Trading account.​

●​ Price changes are based on demand-supply and news.​

●​ Everyone from individuals to large institutions participates.​

📖 Chapter 2: Types of Financial Markets
🧭 What is a Financial Market?
A financial market is a place (physical or digital) where people trade financial instruments
like:

●​ Stocks​

●​ Bonds​

●​ Commodities​

●​ Currencies​

●​ Derivatives​

These markets help channel money from those who have it (investors) to those
who need it (businesses, governments).

🏦 1. Capital Market
🔹 What it is:
A market where long-term financial securities like stocks and bonds are bought and sold.

🔹 Types of Capital Markets:

Type Description

Primary Market New securities are issued for the first time (e.g.,
IPOs)

Secondary Market Investors buy/sell existing securities (e.g., NSE, BSE)

🔹 Example:
●​ You buy shares of Reliance in an IPO (Primary)​

●​ Later, you sell those shares to another investor on NSE (Secondary)​

💵 2. Money Market
🔹 What it is:
A market for short-term borrowing and lending — typically less than 1 year.

🔹 Participants:
●​ Banks​

●​ Corporations​

●​ Government​

●​ RBI​

🔹 Instruments:
Instrument Maturity Risk Return

Treasury Bills (T-Bills) 91–364 Low Low

days

Commercial Paper (CP) Up to 1 year Moderate Moderate

Certificates of Deposit (CD) Up to 1 year Low Moderate

🔹 Purpose:
To manage short-term liquidity.
⚙️ 3. Derivatives Market
🔹 What it is:
A market for contracts whose value is derived from an underlying asset like stocks, gold,
or indices.

🔹 Instruments:
●​ Futures: Agreement to buy/sell at a future date​

●​ Options: Right (not obligation) to buy/sell at a price in future​

🔹 Example:
You buy a Nifty Futures contract expecting the index to rise.

🔹 Who uses it:

●​ Traders (to speculate)​

●​ Investors (to hedge risks)​

🌾 4. Commodities Market
🔹 What it is:
A place where raw materials like gold, silver, oil, wheat, cotton etc. are traded.

🔹 Exchanges:
●​ MCX (Multi Commodity Exchange)​

●​ NCDEX (National Commodity & Derivatives Exchange)​

🔹 Types:
Type Examples

Hard Commodities Metals, Oil

Soft Commodities Agricultural products (tea, cotton, grains)

🔹 Traders here:
●​ Producers​

●​ Consumers​

●​ Hedgers​

●​ Speculators​

💱 5. Foreign Exchange Market (Forex/FX)

🔹 What it is:
A global market where currencies are traded.

🔹 Features:
●​ Largest market in the world​

●​ Operates 24/5​

●​ High liquidity​

🔹 Example:
You exchange INR for USD, or trade EUR/USD currency pairs for profit.

🪙 6. Cryptocurrency Market (Emerging)

🔹 What it is:
A digital asset market where crypto tokens like Bitcoin, Ethereum, Solana are traded.

🔹 Features:
●​ Decentralized​

●​ Volatile​
 ●​ Not regulated by SEBI (as of now in India)​

🧠 Comparison Table
Market Time Horizon Examples Risk Level

Capital Market Long-term Stocks, Bonds Medium

Money Market Short-term T-Bills, CP, CD Low

Derivatives Short/Med Futures, Options High

Commodities Short/Med Gold, Oil, Wheat Medium

Forex Market Short-term USD/INR, EUR/USD High

Crypto Market Short/Long Bitcoin, Ethereum Very High

📌 Key Takeaways
●​ Capital Markets are for long-term investments like stocks.​

●​ Money Markets deal with short-term debt instruments.​

●​ Derivatives help in hedging and speculation.​

●​ Commodities and Forex offer high liquidity and risk.​

●​ Cryptos are growing but highly volatile and mostly unregulated.​

🧮 Real-Life Use Case:

A company raises ₹100 crores through IPO in the Primary Capital Market.​
Investors trade those shares daily in the Secondary Capital Market.​
A trader uses options (Derivatives Market) to hedge their risk on that stock.​
Meanwhile, banks manage short-term funds via the Money Market, and
international companies exchange currencies in the Forex Market.
📖 Chapter 3: Key Stock Market
Instruments

🧩 What are Stock Market Instruments?

In the stock market, instruments are the various financial products or assets you can
invest in or trade. Each instrument has a unique purpose, risk level, and return potential.

🏛️ 1. Equity Shares (Stocks)

🔹 What are they?
Equity shares represent ownership in a company. When you buy a stock, you become a
shareholder.

🔹 Features:
●​ Voting rights (in some cases)​

●​ Eligible for dividends​

●​ Long-term capital growth​

🔹 Types of Shares:
Type Description

Common Shares Most frequently traded, come with voting rights

Preferred Fixed dividend, limited/no voting rights

Shares

🔹 Example:
Buying 100 shares of TCS at ₹3,000 makes you a part-owner in TCS.

💰 2. Bonds and Debentures

🔹 What are they?
These are debt instruments. You lend money to a company/government and they repay
with interest.

🔹 Bonds vs Debentures:
Bond Debenture

Issued mostly by Issued by companies

government

More secure May or may not be

secured

🔹 Key Terms:
●​ Coupon Rate: Interest paid​

●​ Maturity Date: When the bond expires​

●​ Face Value: Original value of the bond​

🔹 Example:
If you buy a bond worth ₹10,000 with a 6% annual interest, you get ₹600 every year.

📦 3. Mutual Funds
🔹 What is it?
A pool of money collected from multiple investors and managed by a professional fund
manager.

🔹 Types:
 Type What it invests in

Equity Mutual Fund Shares

Debt Mutual Fund Bonds, Debentures

Hybrid Fund Mix of both

Index Fund Replicates an index (like Nifty 50)

🔹 Benefits:
●​ Diversification​

●​ Professional management​

●​ Ideal for beginners​

🔄 4. Exchange-Traded Funds (ETFs)

🔹 What is it?
ETFs are like mutual funds, but they trade on the stock exchange like shares.

🔹 Features:
●​ Low cost​

●​ Real-time pricing​

●​ Can track indexes, gold, sectors​

🔹 Example:
Nippon India Nifty 50 ETF allows you to invest in the Nifty index.
📉 5. Derivatives (Futures & Options)
🔹 What is it?
Financial contracts whose value is based on an underlying asset (stocks, index, gold, etc.)

🔸 A. Futures
●​ Obligation to buy/sell the asset at a future date at a fixed price​

●​ Used for speculation or hedging​

●​ Traded on exchanges​

Example: You buy Nifty Futures at 22,000 thinking the market will go up. If Nifty rises to
22,500, you profit ₹500 per unit.

🔸 B. Options
●​ Right (not obligation) to buy/sell an asset at a certain price before expiry​

●​ Two types:​

○​ Call Option (Right to Buy)​

○​ Put Option (Right to Sell)​

Example: You buy a call option for Reliance at ₹2,500. If the stock rises to ₹2,600, your
option becomes valuable.

🪙 6. Real Estate Investment Trusts (REITs)

🔹 What is it?
REITs allow you to invest in commercial properties (like malls, offices) through the stock
market.

●​ You earn income through rent & property value appreciation​

 ●​ Traded on the exchange like stocks​

🧠 7. Sovereign Gold Bonds (SGBs)

🔹 What is it?
A government-backed way to invest in gold without buying physical gold.

●​ Issued by RBI​

●​ Pays annual interest (~2.5%)​

●​ Can be held in a Demat account​

📌 Summary Table
Instrument Purpose Risk Return Potential Best For

Stocks Ownership High High Long-term growth

Bonds Lending Low Low to moderate Safety & income

Mutual Pooled investment Medium Medium Beginners

Funds

ETFs Index tracking Medium Market-linked Low-cost investing

Derivatives Speculation/Hedgin High High (if skilled) Experienced

g traders

REITs Real estate Moderat Moderate Passive income

e

SGBs Gold investment Low Fixed + gold Safe gold

returns exposure
🧠 Key Takeaways
●​ There are many types of instruments to match your risk appetite and financial
goals.​

●​ Stocks and mutual funds are best for long-term investors.​

●​ Derivatives are risky and suitable for traders with experience.​

●​ Bonds, REITs, and SGBs offer safer and more stable returns.​
📖 Chapter 4: How to Open a Demat and
Trading Account

🧾 What is a Demat & Trading Account?

To trade or invest in the stock market, you need two main accounts:

Account Type Purpose

Demat Account Holds your shares digitally, like a locker

Trading Account Used to buy and sell shares on the stock

exchange

📌 Think of a Demat Account as a locker and the Trading Account as a

shopping cart.

🔄 How It Works Together

1.​ You place a buy order using your Trading Account.​

2.​ Once the trade is completed, the shares are deposited into your Demat Account.​

3.​ When you sell, the shares are debited from your Demat, and money is credited to
your bank.​
🧑‍💻 Step-by-Step: How to Open These Accounts
✅ Step 1: Choose a Stock Broker
You can open both accounts through a stockbroker registered with SEBI.

🔸 Popular Brokers in India:

●​ Zerodha​

●​ Upstox​

●​ Groww​

●​ Angel One​

●​ ICICI Direct​

●​ HDFC Securities​

Discount brokers (like Zerodha, Upstox) offer lower charges and online
platforms.

✅ Step 2: Submit KYC Documents

You’ll need to submit:

●​ PAN Card​

●​ Aadhaar Card​

●​ Bank Account details (cancelled cheque/passbook)​

●​ Signature (on white paper)​

●​ Photograph (passport size)​

🛡️ Your details are verified under Know Your Customer (KYC) norms.
✅ Step 3: Complete eKYC & IPV
●​ Most brokers allow online eKYC using Aadhaar OTP-based verification.​

●​ IPV (In-Person Verification) is often done via video call or recording a video.​

✅ Step 4: Sign Documents

●​ Some brokers use eSign with Aadhaar OTP.​

●​ You agree to terms & conditions, risk disclosure, etc.​

✅ Step 5: Account Activation

Once verified:

●​ You’ll get Demat & Trading account numbers.​

●​ Login credentials are sent to your email/SMS.​

●​ You can now trade using their web or mobile app.​

🏦 How to Link Your Bank Account

You must link your savings bank account to:

●​ Transfer funds to the trading account​

●​ Receive profits/dividends​

Most platforms allow:

●​ Net Banking​

●​ UPI AutoPay​

●​ IMPS/NEFT/RTGS​
📲 Platforms for Trading
Platform Type Example Features

Web App Kite (Zerodha), Groww Full trading interface

Mobile App Upstox Pro, Angel One Trade anytime,

anywhere

Desktop Nest Trader, Zerodha For advanced users

Software Pi

💸 Charges Involved
Charge Type Amount (approx.) Notes

Account Opening Fee ₹0 – ₹500 One-time

AMC (Annual Maintenance) ₹0 – ₹300 Yearly fee for Demat

Brokerage ₹0 to ₹20 per trade Discount brokers are

cheaper

Transaction Charges 0.00345% to 0.01% By exchange

STT, GST, Stamp Duty As per government Mandatory taxes

📌 Important Terms
Term Meaning

DP (Depository Your broker (e.g., Zerodha) who connects you to the

Participant) depository

NSDL/CDSL Government-backed depositories storing shares

BO ID Beneficiary Owner ID – your unique Demat number

TPIN A PIN required to authorize sell orders in some brokers

🔐 Safety Tips
●​ Use strong passwords and 2FA (Two-Factor Authentication)​

●​ Never share login credentials​

●​ Monitor your holdings regularly​

●​ Use TPIN authorization (adds extra security when selling)​

🧠 Quick Summary
●​ A Demat account stores your shares, a Trading account buys/sells them.​

●​ You can open both online through brokers like Zerodha, Upstox, Groww, etc.​

●​ You must complete KYC with PAN, Aadhaar, and a bank account.​

●​ Choose brokers wisely based on cost, ease of use, and service.​

📖 Chapter 5: Understanding Stock
Exchanges – NSE & BSE

🏛️ What is a Stock Exchange?

A stock exchange is an organized marketplace where:

●​ Buyers and sellers trade financial securities such as shares, bonds, derivatives,
etc.​

●​ Trades are regulated, transparent, and recorded electronically.​

📌 It ensures that investors can buy and sell securities safely and fairly.

🇮🇳 Stock Exchanges in India

India has two main stock exchanges:

Stock Full Form Established

Exchange

BSE Bombay Stock Exchange 1875

NSE National Stock Exchange 1992

📍 1. Bombay Stock Exchange (BSE)
🔹 Overview:
●​ Oldest stock exchange in Asia​

●​ Located in Mumbai​

●​ Over 5,000+ listed companies​

●​ BSE Index: SENSEX (Sensitive Index)​

🔹 Key Features:
Feature Description

Sensex Top 30 companies across key

sectors

BOLT BSE's online trading system

International Reach Recognized globally

🔹 Example:
If you buy 10 shares of Infosys on BSE at ₹1,500, BSE matches your order and executes the
trade electronically.

📍 2. National Stock Exchange (NSE)

🔹 Overview:
●​ Largest stock exchange in India by trading volume​

●​ Also located in Mumbai​

●​ Around 2,000+ companies listed​

 ●​ NSE Index: NIFTY 50​

🔹 Key Features:
Feature Description

NIFTY 50 Tracks performance of 50 top companies

NEAT System Fully automated screen-based trading

Most liquid Highly used for intraday and F&O trading

🔹 Example:
If you trade Reliance Futures on NSE, the order goes through NSE’s NEAT platform and is
processed within seconds.

📊 Key Indices of NSE & BSE

Exchang Index Name Meaning
e

BSE Sensex 30 large-cap companies

NSE Nifty 50 50 diversified companies

BSE BSE Midcap / Smallcap Mid- and small-sized

companies

NSE Nifty Bank / Nifty IT Sector-specific performance

🔄 How Do Stock Exchanges Work?
1.​ Company lists its shares (IPO)​

2.​ Investors buy/sell shares via brokers​

3.​ Exchange matches buy & sell orders​

4.​ Trade is executed and settled​

5.​ Shares are credited to buyer’s Demat account within T+1 day (Trade day + 1)​

🧾 Note: All trades in India are now settled on a T+1 basis, meaning faster
ownership transfer.

👨‍💻 Participants in the Stock Exchange

Participant Role

Investors/Trader Buy and sell securities

s

Stock Brokers Act as intermediaries (e.g., Zerodha,

Upstox)

SEBI Regulator ensuring fairness

Depositories Store shares (NSDL, CDSL)

Clearing Houses Ensure trade settlement and funds

movement
🛡️ Role of SEBI (Securities and Exchange Board of
India)
●​ Regulates both NSE and BSE​

●​ Ensures fair play, transparency, and investor protection​

●​ Monitors insider trading and frauds​

●​ Approves IPOs and broker licenses​

🧠 Difference Between NSE & BSE

Factor NSE BSE

Founded 1992 1875

Index Nifty 50 Sensex

No. of Listed Companies ~2,000 ~5,000

Trading Volume Higher Lower

Preferred By Traders Long-term investors

Tech Platform NEAT BOLT

💡 Real-Life Example
Ravi wants to buy TCS shares. He checks the price on both NSE and BSE.​
If NSE shows ₹3,200 and BSE shows ₹3,202, he might choose NSE for the
 cheaper price.​
Once bought, his shares are stored in his Demat account, and the trade is
recorded by the exchange.

📌 Summary
●​ BSE is the oldest exchange, while NSE is the most actively traded.​

●​ Both are regulated by SEBI and operate digitally.​

●​ Major indices: Sensex (BSE) and Nifty 50 (NSE).​

●​ Exchanges act as a platform for safe and efficient trading.​

📖 Chapter 6: What is an IPO (Initial
Public Offering)?

🏢 What is an IPO?
An IPO (Initial Public Offering) is the process by which a private company becomes
public by offering its shares to the general public for the first time.

📌 IPO = A company inviting the public to invest and become shareholders.

🔍 Why Do Companies Launch IPOs?

Reason Explanation

Raise Capital For growth, expansion, or paying debt

Brand Value Listing improves credibility and visibility

Liquidity Founders & early investors can sell

shares

Transparency Required to follow SEBI’s rules, boosting

trust

🧩 Example:
Let’s say XYZ Pvt. Ltd. wants to grow its business. It needs ₹500 crore.​
It decides to go public by offering 5 crore shares at ₹100 each in an IPO.
🔄 Steps in an IPO Process
✅ Step 1: Company Prepares
●​ Audits and legal checks​

●​ Appoints merchant bankers (investment banks) to manage IPO​

✅ Step 2: Draft Red Herring Prospectus (DRHP)

●​ The company files a DRHP with SEBI​

●​ Contains:​

○​ Company background​

○​ Financials​

○​ Risks​

○​ Use of funds​

📖 You can read the DRHP before investing.

✅ Step 3: SEBI Approval
●​ SEBI reviews DRHP​

●​ Once approved, the IPO gets scheduled​

📅 IPO Timeline (for Investors)
Day Activity

Day 1 IPO Opens – You can apply

Day 3 IPO Closes

Day 4 Allotment Finalized

Day 6 Shares Credited to Demat

Day 7 Listing on NSE/BSE (you can sell)

🛒 How to Apply for an IPO

1. Through your Broker’s App (e.g., Zerodha, Upstox, Groww)

Steps:

1.​ Open your broker app​

2.​ Go to “IPO” section​

3.​ Select the company IPO​

4.​ Enter lot size and bid price​

5.​ Enter UPI ID and approve request​

2. Through Banks (ASBA)

●​ ASBA = Application Supported by Blocked Amount​

 ●​ Apply via Net Banking (ICICI, HDFC, SBI, etc.)​

●​ Your money is only blocked, not deducted unless allotted​

📊 IPO Terms You Must Know

Term Meaning

Price Band Range in which investors can bid (e.g., ₹95–₹100)

Lot Size Minimum shares you must apply for (e.g., 1 lot = 100
shares)

Issue Size Total value of the IPO (e.g., ₹2,000 crore)

Oversubscriptio More demand than shares available

n

Allotment Shares are distributed to investors after closing

Listing First trading day of the stock on NSE/BSE

💰 How is the Listing Price Decided?

●​ Based on demand and supply​

●​ If IPO is oversubscribed, the listing price may be higher​

●​ If demand is low, it may list below the issue price (called listing loss)​
🧠 Example IPO Journey
1.​ Company: Mamaearth​

2.​ Issue Price: ₹324​

3.​ Oversubscribed 7x​

4.​ Listed at ₹330 → Small listing gain​

5.​ Investors can sell on the listing day or hold long-term​

⚠️ Risks of Investing in IPOs

Risk Explanation

Overvaluation Price may be too high

Listing Loss May list below issue price

Limited Info New company = less historical data

Speculation People may invest just to sell on listing day

🧠 Tips for IPO Investors

●​ Read the DRHP before applying​

●​ Apply only if you believe in the company’s business​

●​ Use UPI or ASBA for smooth application​

●​ Avoid herd mentality; assess fundamentals​

 ●​ Don’t blindly chase every IPO – research matters​

📌 Summary
●​ IPO is the first public sale of company shares.​

●​ You can apply via broker app or bank (ASBA).​

●​ Know the price band, lot size, and listing date.​

●​ IPOs can give good returns, but carry risks.​

📖 Chapter 7: Market Participants – Who
Trades in the Stock Market?

🧑‍🤝‍🧑 Who Are the Market Participants?

The stock market is like a giant marketplace, and it includes many types of participants —
each with different goals, sizes, and trading styles.

Let’s explore them:

1️⃣ Retail Investors

👤 Who Are They?
●​ Individual investors like you and me.​

●​ Trade in small amounts using online broker platforms (Zerodha, Groww, etc.)​

🎯 Goal:
●​ Wealth creation​

●​ Long-term investing​

●​ Occasional short-term trading​

📌 Example:
Riya buys 10 shares of Infosys to hold for 2 years using Groww app.
2️⃣ High Net-Worth Individuals (HNIs)
💼 Who Are They?
●​ Individuals with large amounts of capital​

●​ Apply for IPOs in the HNI category​

●​ May have personal financial advisors or portfolio managers​

💰 Goal:
●​ Higher returns​

●​ Tax planning​

●​ Diversified asset allocation​

📌 Example:
An HNI invests ₹20 lakhs in a midcap stock expecting high returns in 3 years.

3️⃣ Institutional Investors

These are organizations that trade in huge volumes and influence the market.

🔹 a. Domestic Institutional Investors (DIIs)

🏢 Who Are They?
●​ Indian-based institutions such as:​

○​ Mutual Funds (e.g., SBI, HDFC AMC)​

○​ Insurance Companies (e.g., LIC)​

○​ Pension Funds​
🎯 Goal:
●​ Invest public funds responsibly and earn steady returns​

🔹 b. Foreign Institutional Investors (FIIs) / FPIs

🌍 Who Are They?
●​ Overseas investors or funds​

○​ Hedge Funds​

○​ Foreign Mutual Funds​

○​ Sovereign Wealth Funds​

🎯 Goal:
●​ Tap into India’s growth​

●​ Diversify global portfolios​

💡 Note:
●​ FIIs can drive the market up or down significantly due to the large volume of funds
they control.​

4️⃣ Traders
⚡ Who Are They?
●​ Individuals or firms who buy and sell stocks frequently to profit from price
movements.​
🧠 Types of Traders:
Type Time Frame Strategy

Intraday Traders Same day Profit from small moves

Swing Traders Few days to Ride trends

weeks

Scalpers Minutes Quick micro profits

Positional Weeks to months Hold with stop-loss & targets

Traders

🎯 Focus: Quick profits, not long-term holding.

5️⃣ Brokers and Sub-brokers

🧑‍💼 Who Are They?
●​ Registered intermediaries who execute trades on behalf of investors.​

📱 Example Platforms:
●​ Zerodha, Upstox, Angel One​

💼 Sub-brokers:
●​ Local agents working under bigger brokers​

6️⃣ Market Makers

🔄 Who Are They?
●​ Entities (often appointed by exchanges) that ensure liquidity by always offering to
buy and sell a stock.​

📌 They help reduce volatility and make trading smoother.

7️⃣ Jobbers/ Arbitrageurs
📉 Jobbers:
●​ Trade for themselves (not clients), aiming for quick profits​

●​ Typically work on small price differences​

🔁 Arbitrageurs:
●​ Take advantage of price differences in different markets​

○​ Example: Buy on NSE at ₹100, sell on BSE at ₹101​

8️⃣ SEBI (The Watchdog)

🛡️ Role:
●​ SEBI doesn’t trade but is a participant by regulation​

●​ Keeps all other players in check​

●​ Ensures fair play, investor protection, and transparency​

📊 Summary Table
Participant Role Example

Retail Investors Small trades for personal gain You, Me

HNIs Large capital individual investors Businessmen

DIIs Domestic institutions LIC, HDFC MF

FIIs/FPIs Foreign funds BlackRock, Vanguard

Traders Short-term profit seekers Intraday traders

Brokers Facilitate trades Zerodha, Upstox

Market Makers Add liquidity Assigned by
exchange

SEBI Regulator Ensures fair trading

🧠 Final Thoughts
●​ The stock market is like a game of chess, with various players having different goals
and power.​

●​ Understanding who is trading and why can help you interpret market movements
better.​

●​ When FIIs buy, the market often goes up. When they sell, it can fall.​
📖 Chapter 8: Types of Orders – Market,
Limit, Stop Loss, and More

🛒 What is an "Order" in Stock Trading?

An order is your instruction to the stock exchange via your broker to buy or sell a security
(like a stock).

📌 Think of it as saying: “I want to buy 10 shares of TCS at ₹3,200.”

Different types of orders help you control how and when a trade is executed.

🔄 Common Types of Orders

1️⃣ Market Order
📌 Meaning:
Buy or sell immediately at the best available price in the market.

✅ Use When:
You want to enter or exit quickly, no matter the exact price.

📊 Example:
●​ You place a market order to buy Infosys.​

●​ The current price is ₹1,500.​

●​ Your order gets executed at ₹1,500 (or nearby, depending on liquidity).​

⚠️ Risk:
In volatile markets, the price may differ from what you expect due to slippage.

2️⃣ Limit Order

📌 Meaning:
Buy or sell at a specific price or better.

●​ Buy Limit: At or below a certain price.​

●​ Sell Limit: At or above a certain price.​

✅ Use When:
You want price control and are okay waiting.

📊 Example:
●​ You place a Buy Limit Order for Reliance at ₹2,400.​

●​ If the price drops to ₹2,400 or below, your order is executed.​

●​ If it stays above ₹2,400, your order remains pending.​

3️⃣ Stop Loss (SL) Order

📌 Meaning:
Used to limit losses if the price moves against your trade.

●​ Set a trigger price: When the stock hits this price, a market or limit order is placed.​

✅ Use When:
You already have a position and want to exit automatically to prevent further loss.
🧠 Two Types:
Type Meaning

SL Order Stop loss limit order (trigger + price)

SL-M Order Stop loss market order (only trigger price)

📊 Example (Sell Stop Loss):

●​ You bought TCS at ₹3,200​

●​ You want to limit your loss if it falls​

●​ Set SL-M order: Trigger ₹3,150​

●​ If TCS falls to ₹3,150 → system places a market sell order​

4️⃣ Cover Order (CO)

🔐 Meaning:
A type of intraday order that combines a market/limit entry + mandatory stop-loss.

✅ Benefit:
●​ Lower margin requirement​

●​ Higher safety with risk control​

⚠️ You cannot modify once placed

5️⃣ Bracket Order (BO) (advanced)
📦 Meaning:
You set entry price, target price, and stop loss in one order.
✅ Ideal For:
Traders who want to define everything in advance.

📊 Example:
●​ Buy at ₹500​

●​ Target ₹520​

●​ Stop loss ₹490​

All 3 are executed automatically by the system.

🧠 BO & CO are only for intraday traders and not available on all platforms
now (some disabled after 2020).

6️⃣ GTT (Good Till Triggered)

📌 Meaning:
Your order remains active until a specific condition is met.

✅ Use When:
You want to buy/sell at a specific price, even days later.

📊 Example:
●​ You want to buy HDFC at ₹2,300 but it’s ₹2,400 today.​

●​ Set a GTT Buy Limit at ₹2,300.​

●​ Whenever HDFC hits ₹2,300 — today or next month — your order triggers.​

🚨 GTT is available on Zerodha, Upstox, Groww, etc.

7️⃣ After Market Order (AMO)
🌙 Meaning:
You can place an order after market hours, which gets sent once the market opens.

✅ Good For:
People who are busy during the day.

⏰ Timings:
●​ NSE/BSE market hours: 9:15 AM – 3:30 PM​

●​ AMO allowed before or after these hours, depending on broker​

📌 Summary Table of Order Types

Order Type When to Use Key Feature

Market Order Immediate entry/exit No price control

Limit Order Specific price target Trade only at your chosen price

Stop Loss Risk management Auto-sell when price hits trigger

(SL)

Cover Order Intraday + stop loss Lower margin

Bracket Order Entry + Target + SL All-in-one intraday setup

GTT Order Long-term price tracking Triggers even after days/weeks

AMO Trade outside hours Good for busy users

📘 Tips for Beginners

●​ Use limit orders to avoid price shocks.​

●​ Always place a stop loss while trading.​

●​ Use GTT to track stocks without watching the market all day.​
​
📖 Chapter 9: Types of Stock Market
Instruments

The stock market offers various financial instruments to invest or trade in. Knowing these
helps you choose what suits your goals and risk appetite.

1️⃣ Equity Shares (Stocks)

●​ Represent ownership in a company.​

●​ When you buy shares, you become a part-owner.​

●​ Shareholders can earn money via:​

○​ Capital gains: Sell shares at a higher price than purchase.​

○​ Dividends: Company’s profit share distributed to shareholders.​

●​ Example: Buying 10 shares of Tata Motors.​

2️⃣ Debentures and Bonds

●​ Debentures are loans taken by companies from investors.​

●​ Investors earn fixed interest called coupons.​

●​ Bonds are similar but usually issued by governments or corporations.​

●​ Less risky than stocks but lower returns.​

●​ Example: Government bonds, corporate bonds.​

3️⃣ Mutual Funds
●​ A pool of money from many investors, managed by professional fund managers.​

●​ Invest in a diversified portfolio: stocks, bonds, money market instruments.​

●​ Types:​

○​ Equity funds: Mainly stocks​

○​ Debt funds: Bonds and loans​

○​ Hybrid funds: Mix of equity and debt​

●​ Easy for beginners to diversify with small amounts.​

4️⃣ Derivatives
●​ Financial contracts whose value is derived from an underlying asset (stocks, indices,
commodities).​

●​ Types:​

○​ Futures: Agreement to buy/sell at a future date at a predetermined price.​

○​ Options: Right but not obligation to buy/sell by a specific date.​

●​ Used for hedging or speculation.​

●​ High risk, suitable for experienced traders.​

5️⃣ Exchange-Traded Funds (ETFs)

●​ Like mutual funds but traded on stock exchanges like shares.​

●​ Track an index (e.g., Nifty 50 ETF tracks the Nifty index).​

●​ Lower fees, instant liquidity.​

6️⃣ Currency and Commodity Trading
●​ Trading in foreign currencies (Forex) or commodities (gold, oil).​

●​ Available on specialized exchanges.​

●​ Requires understanding of global markets.​

7️⃣ Initial Public Offerings (IPOs)

●​ As explained in Chapter 6, IPOs are the first-time sale of company shares to the
public.​

●​ Investors can participate to buy shares at issue price.​

Summary Table of Instruments

Instrument Risk Return Suitable For Notes

Equity Shares High High Long-term Ownership +

investors Dividends

Debentures/Bonds Low to Fixed Conservative Fixed interest income

Medium investors

Mutual Funds Varies Medium Beginners, Managed by

diversified professionals

Derivatives Very High Very Experienced Speculation/Hedging

High traders

ETFs Medium Medium Investors seeking Trades like stocks

liquidity

Currency/Commodi High High Traders Requires global

ty knowledge

IPOs Medium to Variable Investors seeking First-time listing

High early entry
Final Thoughts
●​ Choose instruments based on your risk appetite and investment horizon.​

●​ Diversify across instruments to manage risk.​

●​ Understand each instrument before investing.​

📖 Chapter 10: How to Read Stock
Market Charts & Technical Analysis
Basics

📊 What is a Stock Market Chart?

A stock market chart is a graphical representation of a stock’s price movements over time.

It helps traders and investors:

●​ Analyze past price trends​

●​ Predict future price movements​

●​ Decide when to buy or sell​

Types of Stock Charts

Chart Type Description Use

Line Chart Connects closing prices over time Simple trend overview

Bar Chart Shows open, high, low, close (OHLC) Detailed price info
prices

Candlestick Like bar chart but visually clearer with Popular for pattern
Chart color coding recognition
🔍 Understanding Candlestick Charts
Each candlestick shows price action for a specific time (1 day, 5 mins, etc.)

Parts of a candlestick:

●​ Body: Difference between opening and closing price​

●​ Wicks (Shadows): High and low price during the time period​

●​ Color:​

○​ Green (or white): Close price higher than open (bullish)​

○​ Red (or black): Close price lower than open (bearish)​

📈 Basic Candlestick Patterns

●​ Bullish Engulfing: Small red candle followed by larger green candle → possible
price rise​

●​ Bearish Engulfing: Small green candle followed by larger red candle → possible
price drop​

●​ Doji: Open and close prices almost equal → market indecision​

●​ Hammer: Small body, long lower wick → possible reversal from downtrend​

🛠️ Technical Analysis Tools

1. Support and Resistance

●​ Support: Price level where buying is strong enough to stop price falling​

●​ Resistance: Price level where selling pressure stops price rising​

2. Trend Lines

●​ Connect highs or lows to identify price direction: Uptrend, Downtrend, Sideways​

3. Moving Averages (MA)

●​ Average price over a period (e.g., 50-day MA)​

●​ Helps smooth price data and identify trend direction​

4. Volume

●​ Number of shares traded during a period​

●​ Confirms strength of price movements​

📅 Time Frames in Charts

●​ Intraday charts: 1 min, 5 min, 15 min intervals (used by day traders)​

●​ Daily charts: Each candle = 1 day (used by swing/positional traders)​

●​ Weekly/Monthly charts: Long-term trend analysis​

📌 Summary
●​ Charts are vital for timing your trades.​

●​ Candlestick charts are most popular for spotting patterns.​

●​ Combine price action with volume and indicators for better analysis.​

●​ Practice reading charts regularly for better decision-making.​

📖 Chapter 11: Fundamental Analysis –
Understanding Company Financials

🔍 What is Fundamental Analysis?

Fundamental Analysis is the study of a company’s financial health and business
environment to determine the intrinsic value of its stock.

The goal: To find whether a stock is undervalued or overvalued compared to its market
price.

🧾 Key Financial Statements

1️⃣ Balance Sheet

●​ Snapshot of a company’s financial position at a point in time.​

●​ Shows:​

○​ Assets: What the company owns (cash, inventory, property)​

○​ Liabilities: What the company owes (loans, bills)​

○​ Equity: Shareholders’ funds (assets minus liabilities)​

2️⃣ Income Statement (Profit & Loss Statement)

●​ Shows company’s revenues, expenses, and profit/loss over a period (quarter or

year).​

●​ Important terms:​
 ○​ Revenue: Total sales​

○​ Expenses: Costs incurred​

○​ Net Profit: Revenue minus expenses​

3️⃣ Cash Flow Statement

●​ Tracks the inflow and outflow of cash.​

●​ Divided into:​

○​ Operating activities: Cash from core business​

○​ Investing activities: Buying/selling assets​

○​ Financing activities: Borrowing/repaying loans​

📊 Important Financial Ratios

1. Price to Earnings Ratio (P/E Ratio)

●​ Formula: Market Price per Share / Earnings per Share (EPS)​

●​ Indicates how much investors are willing to pay for each rupee earned.​

●​ High P/E: Growth expectations; Low P/E: Possibly undervalued or poor growth.​

2. Debt to Equity Ratio

●​ Measures the company’s financial leverage.​

●​ Formula: Total Debt / Shareholders’ Equity​

●​ Lower ratio means less risk.​

3. Return on Equity (ROE)

●​ Shows how efficiently a company uses equity to generate profit.​

●​ Formula: Net Income / Shareholders’ Equity​

4. Dividend Yield

●​ Shows return via dividends.​

●​ Formula: Annual Dividend per Share / Market Price per Share​

🏦 Qualitative Factors
●​ Management quality: Leadership and track record​

●​ Industry position: Market share and competition​

●​ Economic conditions: Impact of macroeconomic factors​

●​ Regulatory environment: Policies affecting business​

📌 Summary
●​ Fundamental analysis helps find true value beyond market hype.​

●​ Combine financial ratios with qualitative assessment.​

●​ Use it for long-term investing decisions.​

📖 Chapter 12: Risk Management in
Trading and Investing

⚠️ Why is Risk Management Important?

Trading and investing in the stock market involve uncertainties. Risk management helps
you protect your capital from large losses and keep your investments safe.

🛡️ Key Principles of Risk Management

1️⃣ Never Risk More Than You Can Afford to Lose

●​ Decide a fixed percentage of your capital to risk per trade (e.g., 1-2%).​

●​ Protects your overall portfolio from huge drawdowns.​

2️⃣ Use Stop Loss Orders

●​ Always place a stop loss to limit your losses.​

●​ Automatically exit trades if the price moves against you.​

3️⃣ Position Sizing

●​ Decide the number of shares or contracts to trade based on your risk per trade
and stop loss distance.​

●​ Larger stops require smaller position sizes and vice versa.​

4️⃣ Diversify Your Portfolio

●​ Don’t put all your money in one stock or sector.​

●​ Spread your investments to reduce risk.​

5️⃣ Maintain Risk-Reward Ratio

●​ Risk-Reward = Potential profit / Potential loss​

●​ Aim for trades with at least 2:1 or 3:1 risk-reward.​

●​ Ensures profits outweigh losses in the long term.​

6️⃣ Keep Emotions in Check

●​ Avoid emotional trading driven by fear or greed.​

●​ Follow your trading plan strictly.​

7️⃣ Regularly Review and Adjust

●​ Monitor your trades and portfolio.​

●​ Adjust stop losses and positions as needed.​

🧰 Tools for Risk Management
Tool Description

Stop Loss Order Automatic exit to limit loss

Trailing Stop Loss Moves stop loss with price movement to lock profits

Hedging Using derivatives or other assets to offset risk

Position Sizing Helps calculate trade size based on risk

Calculator

📌 Summary
●​ Risk management is the cornerstone of successful trading.​

●​ Always protect your capital first.​

●​ Combine risk controls with good trading strategies.​

📖 Chapter 13: Developing a Trading
Plan and Trading Psychology

📋 What is a Trading Plan?

A trading plan is a detailed strategy you follow when trading, including:

●​ Entry and exit rules​

●​ Risk management​

●​ Position sizing​

●​ Market conditions​

●​ Goals and review process​

Having a plan helps avoid emotional decisions and keeps you disciplined.

📝 Elements of a Good Trading Plan

1.​ Define Your Trading Goals​

○​ What do you want to achieve? (e.g., consistent profits, learning, growth)​

2.​ Choose Your Markets and Instruments​

○​ Decide which stocks, indices, or commodities to trade.​

3.​ Entry and Exit Criteria​

○​ When will you buy or sell? Use technical/fundamental signals.

 4.​ Risk Management Rules​

○​ How much will you risk per trade?​

○​ Stop loss and profit target.​

5.​ Position Sizing​

○​ How many shares or lots per trade?​

6.​ Trading Routine​

○​ When will you analyze and trade? (time of day, days)​

7.​ Record Keeping​

○​ Maintain a trade journal: dates, prices, reasons, results.​

8.​ Review and Adapt​

○​ Regularly analyze past trades and improve your plan.​

🧠 Importance of Trading Psychology

What is Trading Psychology?

●​ It’s the emotional and mental state affecting decision-making.​

●​ Fear, greed, hope, and impatience often impact trades.​

Common Psychological Challenges

Emotion Effect How to Manage

Fear Avoiding good trades or exiting too Stick to plan, practice

early

Greed Overtrading, risking too much Set profit targets, take breaks
Overconfidenc Ignoring rules, taking big risks Review past losses, stay
e humble

Impatience Jumping in/out too soon Wait for signals, be disciplined

🧘 Tips for Strong Trading Psychology

●​ Stay calm: Use meditation, breaks.​

●​ Be patient: Wait for the right setup.​

●​ Accept losses: Losses are part of trading.​

●​ Focus on process: Not just profits.​

●​ Maintain discipline: Follow your plan no matter what.​

📌 Summary
●​ A solid trading plan improves consistency.​

●​ Understanding your psychology prevents emotional mistakes.​

●​ Both are key to long-term success in trading.​

📖 Chapter 14: Advanced Technical
Indicators and Strategies

📈 What are Technical Indicators?

Technical indicators are mathematical calculations based on historical price, volume, or open
interest data, helping traders identify trends, momentum, volatility, and potential reversal
points.

They are tools to supplement price action and improve trade decisions.

🔍 Popular Advanced Indicators

1️⃣ Relative Strength Index (RSI)

●​ Measures speed and change of price movements.​

●​ Scale: 0 to 100.​

●​ Overbought if above 70 → possible price drop.​

●​ Oversold if below 30 → possible price rise.​

2️⃣ Moving Average Convergence Divergence (MACD)

●​ Shows relationship between two moving averages (typically 12-day and 26-day
EMA).​

●​ Consists of MACD line, Signal line, and Histogram.​

●​ Buy signal when MACD crosses above Signal line.​

●​ Sell signal when MACD crosses below Signal line.​

3️⃣ Bollinger Bands

●​ Plots a moving average with two standard deviation bands above and below.​

●​ Bands widen during high volatility and narrow during low volatility.​

●​ Price touching upper band: Overbought.​

●​ Price touching lower band: Oversold.​

4️⃣ Fibonacci Retracement

●​ Horizontal lines indicating potential support and resistance levels.​

●​ Calculated based on Fibonacci ratios (23.6%, 38.2%, 50%, 61.8%, 100%).​

●​ Used to predict possible reversal points during corrections.​

5️⃣ Average True Range (ATR)

●​ Measures market volatility.​

●​ High ATR means high volatility, low ATR means low volatility.​

●​ Helps set stop loss levels.​

🛠️ Combining Indicators – Strategies

●​ Use RSI + MACD to confirm momentum and trend strength.​

●​ Use Bollinger Bands + ATR to understand volatility and potential breakout.​

●​ Use Fibonacci Retracement for identifying entry and exit points in trending markets.​
📚 Example Strategy: RSI + Moving Average Crossover
●​ Buy when RSI < 30 (oversold) and short-term MA crosses above long-term MA.​

●​ Sell when RSI > 70 (overbought) and short-term MA crosses below long-term MA.​

⚠️ Important Notes
●​ No indicator is perfect; always use in conjunction with price action and volume.​

●​ Avoid "indicator overload" — focus on a few tools you understand well.​

●​ Backtest your strategy before applying real money.​

📌 Summary
●​ Advanced indicators help refine trading signals.​

●​ Combining multiple indicators improves accuracy.​

●​ Practice and experience are essential to use them effectively.​

📖 Chapter 15: Building Your Own
Trading Strategy

🛠️ Why Build Your Own Strategy?

●​ Trading strategies help you trade consistently.​

●​ A personalized strategy suits your style, goals, and risk tolerance.​

●​ Avoids emotional and impulsive decisions.​

Steps to Build Your Trading Strategy

1️⃣ Define Your Trading Style

●​ Day Trading: Buy and sell within the same day.​

●​ Swing Trading: Hold for days to weeks.​

●​ Position Trading: Hold for months or years.​

2️⃣ Select Markets and Instruments

●​ Decide which stocks, indices, commodities, or currencies to trade.​

●​ Stick to a few to master their behavior.​

3️⃣ Choose Your Timeframe

 ●​ Match with your style: intraday (minutes), swing (daily), position (weekly/monthly).​

4️⃣ Develop Entry and Exit Rules

●​ Use technical indicators, chart patterns, or fundamental data.​

●​ Specify exact signals for buy/sell.​

●​ Example: Buy when RSI < 30 and price closes above 50-day moving average.​

5️⃣ Set Risk Management Parameters

●​ Maximum % risk per trade (e.g., 1-2%)​

●​ Stop loss and take profit targets​

●​ Position size calculation​

6️⃣ Test Your Strategy

●​ Backtest on historical data.​

●​ Paper trade in real-time without risking money.​

●​ Refine based on results.​

7️⃣ Keep a Trading Journal

●​ Record trade details: entry, exit, reasons, profit/loss.​

●​ Analyze mistakes and successes regularly.​

8️⃣ Stick to Your Plan

●​ Follow rules strictly.​

●​ Avoid emotional overrides.​

●​ Review and adjust periodically.​

Example Simple Trading Strategy

Criteria Action

RSI < 30 Consider buying

Price above 50-day MA Confirm trend

Volume increasing Confirm momentum

Stop loss: 2% below entry Risk control

Target profit: 4% above Profit booking

Final Tips
●​ Keep strategies simple at first.​

●​ Avoid chasing “perfect” setups.​

●​ Consistency and discipline matter more than complexity.​

●​ Always be ready to learn and adapt.​

📖 Chapter 16: Tools and Platforms for
Trading

🛠️ Why Use Trading Tools and Platforms?

●​ Tools help analyze markets quickly and accurately.​

●​ Trading platforms let you place orders and manage trades efficiently.​

●​ Choosing the right tools and platform improves your trading experience and success.​

🔎 Essential Trading Tools

1️⃣ Charting Software

●​ Visualizes price movements and technical indicators.​

●​ Popular options: TradingView, MetaTrader, Zerodha Kite.​

●​ Look for user-friendly interface and customizability.​

2️⃣ Stock Screeners

●​ Filters stocks based on criteria like price, volume, P/E ratio.​

●​ Helps find potential trading opportunities.​

●​ Examples: Finviz, Screener.in, Moneycontrol.​

3️⃣ News and Alerts

 ●​ Stay updated with market-moving news.​

●​ Use apps or websites that send real-time alerts.​

●​ Examples: Bloomberg, Reuters, Economic Times.​

4️⃣ Brokerage Platform

●​ Where you execute buy and sell orders.​

●​ Should offer:​

○​ Low brokerage fees​

○​ Fast order execution​

○​ Research and analysis tools​

●​ Popular brokers: Zerodha, Upstox, ICICI Direct.​

5️⃣ Trading Journal Apps

●​ Track your trades and analyze performance.​

●​ Helps in learning from mistakes.​

●​ Examples: Edgewonk, TraderVue, Excel templates.​

📱 Mobile vs Desktop Platforms

●​ Mobile Apps: Convenient, trade on the go.​

●​ Desktop Platforms: More powerful tools and charting features.​

🖥️ Features to Look For in a Trading Platform

 Feature Importance

Real-time data Crucial for timely decisions

User-friendly UI Easier navigation

Charting tools For technical analysis

Order types Market, limit, stop loss

Customer Quick issue resolution

support

Security Protects your funds/data

📌 Summary
●​ Use charting and screening tools to identify opportunities.​

●​ Choose a reliable broker platform with good features.​

●​ Keep updated with market news.​

●​ Track your trades for continuous improvement.​

📖 Chapter 17: Common Mistakes to
Avoid in Trading

❌ Mistake 1: Lack of a Trading Plan

●​ Trading without a clear plan leads to emotional decisions.​

●​ Always prepare your entry, exit, and risk rules before trading.​

❌ Mistake 2: Overtrading
●​ Trading too frequently increases costs and errors.​

●​ Stick to quality setups instead of chasing every move.​

❌ Mistake 3: Ignoring Risk Management

●​ Not using stop losses or risking too much capital can cause huge losses.​

●​ Always limit risk per trade and use stop loss orders.​

❌ Mistake 4: Letting Emotions Rule

●​ Fear and greed cause premature exits or holding losing trades.​

●​ Maintain discipline and follow your trading plan.​

❌ Mistake 5: Chasing Losses

 ●​ Trying to recover losses quickly often results in bigger losses.​

●​ Accept losses calmly and stick to your strategy.​

❌ Mistake 6: Ignoring Market Trends

●​ Trading against strong trends without confirmation is risky.​

●​ Follow the trend or wait for clear reversal signals.​

❌ Mistake 7: Over-Reliance on Indicators

●​ Using too many or blindly trusting indicators can confuse decision-making.​

●​ Use a few trusted indicators along with price action.​

❌ Mistake 8: Poor Record Keeping

●​ Not maintaining a trade journal limits learning.​

●​ Track your trades to identify what works and what doesn’t.​

❌ Mistake 9: Unrealistic Expectations

●​ Expecting quick, huge profits leads to risky trades.​

●​ Trading is a skill developed over time; be patient.​

❌ Mistake 10: Neglecting Continuous Learning

 ●​ Markets evolve; strategies must adapt.​

●​ Keep studying and improving your knowledge.​

📌 Summary
Avoid these mistakes to protect your capital and increase chances of long-term success.
Discipline, education, and patience are your best trading allies.
📖 Chapter 18: Glossary of Stock Market
Terms

📈 Ask Price
The lowest price a seller is willing to accept for a stock.

📉 Bid Price
The highest price a buyer is willing to pay for a stock.

🔄 Volume
The number of shares traded during a specific period.

💹 Market Capitalization (Market Cap)

Total market value of a company’s outstanding shares (Price × Number of Shares).

📊 Dividend
A portion of company profits paid to shareholders.

📈 Bull Market
A market characterized by rising prices.

📉 Bear Market
A market characterized by falling prices.

🕰️ Day Trading
Buying and selling stocks within the same trading day.

🕰️ Swing Trading
Holding stocks for several days or weeks to profit from short-term price movements.

🧾 IPO (Initial Public Offering)

When a company offers shares to the public for the first time.

📉 Stop Loss
An order to sell a stock automatically when it reaches a certain price to limit losses.

📈 Limit Order
An order to buy or sell a stock at a specified price or better.

📉 Market Order
An order to buy or sell a stock immediately at the current market price.

🔄 Liquidity
How easily a stock can be bought or sold without affecting its price.

📉 P/E Ratio (Price to Earnings Ratio)

Stock price divided by earnings per share; indicates valuation.

📈 EPS (Earnings Per Share)

Net profit divided by the number of outstanding shares.

📉 Resistance
A price level where selling pressure tends to stop the price from rising further.

📈 Support
A price level where buying interest tends to stop the price from falling further.

🔄 Moving Average
Average price of a stock over a specific period, smoothing out price data.