Basic of Stock market
Rohit Shingade
GOLDEN RULES OF TRADING
Write Down your Trading Strategy
Listen to the Charts, Not the News
Trend is your Friend
Cut Short your Losses, Let your Profits Run
Learn from your Mistakes
GOLDEN RULES OF TRADING
Cut Short your Losses, Let your Profits Run
MAJOR STOCK EXCHANGES
NSE = National Stock Exchange (We will trade in NSE) (More volume)
Listed more than 2000 plus Companies NSE
Index - NIFTY 50 ( Top 50Company)
BSE = Bombay Stock Exchange (Ignore)
Listed more than 6000 plus Companies BSE
Index - SENSEX ( Top 30 Company)
Regulatory body
Regulatory body - SEBI ( Security exchange board of India )
TIMING
TIMING -
Equity / Derivatives - 9 To 4
Commodity - 9 To 11.55
currency - 9 To 5
Trading
terminal
Zerodha
Upstox
Fyers etc.
❖ DEMAT ACCOUNT - It is dematerialized to remove paperwork, that is why now
wehave a DEMATACCOUNT
TRADING METHOD
INTRADAY - Buy and sell in the same day before Market close (3:20)
DELIVERY - Short term ( 1 to 7 days)
Long term (more than 7 days)
BTST ( Buy today sell tomorrow )
CHARTING PLATFORM
Charting platform
Trading view
Investing.com
Types of chart
Market/Securities Cycle
Main stages of market cycle
Accumulation Phase (Sideways)
Advancing Phase (Uptrend)
Distribution Phase (Sideways)
Declining Phase (Downtrend)
Types of trend
Types of trend
Downtrend
Types of trend
Sideways
Basics of Candlestick
Basics of candles
Basics of candles
Types of Candlestick patterns
Marubozu Candle Stick
Marubozu Candle Stick
Hammer
A “hammer” is a candlestick with a small body (a small range from open to close), a long wick
protruding below the body, and little to no wick above.
How traders use ‘Bullish Hammer’ Candle
Trend reversal is confirmed if the next candle after the ‘Bullish Hammer’ closes above the
closing price of the hammer.
If the previous few candles are moving downwards and a ‘Hammer’ candle is formed, it’s
usually considered to be a sign of bottoming out.
Hammers can be used in combination with trend lines and other technical indicators to confirm
the trend reversal.
Hanging Man Candle Pattern
Hanging Man’ candle is similar to the ‘Hammer‘ in shape, but when it appears during an uptrend it’s
called ‘Hanging Man’.
How traders use ‘Hanging Man’ Candle
If the previous few candles were moving
upwards and a ‘Hanging Man’ candle is
formed, it’s considered to be a sign of
topping out.
Traders wait for the next candle to confirm a
possible change in trend. If the next candle
after the ‘Hanging Man’ closes below the
closing price, then the trend reversal is
partially confirmed.
By itself, the ‘Hanging Man’ does not confirm
a trend reversal. When it’s used in
combination with trend lines and other
technical indicators, a trend reversal can be
confirmed with more certainty.
Shooting star
A shooting star is a bearish candlestick with a long upper shadow, little or no lower shadow, and a
small real body near the low of the day. It appears after an uptrend
Inverted Hammer Candlestick Pattern
Inverted Hammer is a single candle which appears when a stock is in a downtrend. It’s an important
candle because it can potentially reverse the entire trend – from downtrend to uptrend.
That is why it is called a ‘bullish reversal’ candlestick pattern.
Once the ‘inverted hammer’ candle is formed on the chart – the trader waits for the next candle. If the next
candle is red and the price falls below the ‘inverted hammer’, the pattern has failed. No trades should be
taken.
If the next candle is green and the price goes higher – the trader waits till the price goes above the high of
the ‘inverted hammer’.
This confirms that the buyers are in control and the price could go higher.
Spinning Top Candle Stick Pattern
A ‘Spinning Top’ is a single candle stick pattern, which forms when there is indecision. Both the buyers and
sellers were active in the stock, but both could not take control. ‘Spinning Top’ has significance if it appears
during a trend.
Doji Candle Stick
A doji candlestick forms when a security's open
and close are virtually equal for the given time
period and generally signals a reversal pattern
for technical analysts.
In Japanese, "doji" means blunder or mistake,
referring to the rarity of having the open and
close price be exactly the same.
Doji Star: is a standard Doji, with the same opening and closing prices. The upper and lower tails of the candles are
of normal length. This Doji occurs when the market does not have very strong fluctuations.
Long-legged Doji: has an upper and lower tail that is longer than the standard pattern. This type occurs when the
market has strong fluctuations. Only when prices continuously change direction and increase or decrease within a
large amplitude can a Long-legged Doji be created.
Dragonfly Doji: has a very long lower tail, but (almost) no upper tail. Opening price = Closing price = Highest price.
Looking at the Japanese candlestick chart, they are very much like a dragonfly. This Doji pattern shows the
dominance of the sellers when the candlestick closes. When appearing at the end of a downtrend, the Dragonfly
Doji can be a bullish signal in the market.
Gravestone Doji: has a very long upper tail, but (almost) no lower tail. Opening price = Closing price = Lowest
price. On the chart, they are very similar to a gravestone and show the dominance of the sellers when the
candlestick closes. When appearing at the end of an uptrend, the Gravestone Doji can be a bearish signal in the
market.
Doji Candle Stick
Identify the doji??
Bullish Engulfing Candlestick Pattern
Characteristics of a bullish engulfing pattern:
Strong green candle that ‘engulfs’ the prior red
candle body (disregard the wicks)
Occurs at the bottom of a downward trend
Stronger signals are provided when the red
candle is a doji, or when subsequent candles
close above the high of the bullish candle.
What does it tell traders?
Trend reversal to the upside (bullish reversal)
Selling pressure losing momentum at this key
level.
Advantages of trading with the bullish engulfing
candle:
Easy to identify
Attractive entry levels can be obtained after
receiving confirmation of the bullish reversal.
Bearish Engulfing Candlestick Pattern
Characteristics of a bullish engulfing pattern:
Strong green candle that ‘engulfs’ the prior red
candle body (disregard the wicks)
Occurs at the bottom of a downward trend
Stronger signals are provided when the red candle
is a doji, or when subsequent candles close above
the high of the bullish candle.
What does it tell traders?
Trend reversal to the upside (bullish reversal)
Selling pressure losing momentum at this key level.
Advantages of trading with the bullish engulfing
candle:
Easy to identify
Attractive entry levels can be obtained after
receiving confirmation of the bullish reversal.
HARAMI CANDLE
BULLISH HARAMI CANDLESTICK PATTERN
There is a clear downtrend.
A Bullish Hammer appears before the Bullish
Harami and provides the first clue that the market
may be about to reverse.
The bullish candle is no more than 25% the length
of the previous candle.
The bullish candle opens and closes within the
length of the previous candle.
The RSI provides an indication that the market is
oversold. This could mean that downward
momentum is bottoming but traders should wait
for the RSI to cross back over the 30 line for
confirmation.
HARAMI CANDLE
Bearish Harami :
Identify existing uptrend.
Look for signals that momentum is
slowing/reversing (stochastic oscillators, bearish
moving average crossover, or subsequent
bearish candle formations).
Ensure that the body of the small red candle
measures no more that 25% of the previous
bullish candle. Stocks will gap down, showing
the red candle mid-way down the previous
candle. The gap is likely not found in forex
candlesticks as they will mostly open at the
same level as the prior candle’s close or very
close to it.
Observe that the entire bearish candle is
enclosed within the length of the previous
bullish candle’s body.
Look for confluence with the use of supporting
indicators, key levels of resistance or other
supporting evidence to support the trade.
MORNING STAR CANDLESTICK
Establish an existing downtrend: The market should be
exhibiting lower highs and lower lows.
Large bearish candle: The large bearish candle is the result
of large selling pressure and a continuation of the existing
downtrend. At this point traders should only be looking for
short trades as there is no evidence of a reversal yet.
Small bearish/bullish candle: The second candle is a small
candle - sometimes a Doji candle - that presents the first
sign of a fatigued downtrend. Often this candle gaps
lower as it makes a lower low. It does not matter if the
candle is bearish or bullish as the main takeaway here is
that the market is somewhat undecided.
Large bullish candle: The first real sign of new buying
pressure is revealed in this candle. In non forex markets,
this candle gaps up from the close of the previous candle
and signals the start of a new uptrend.
Subsequent price action: After a successful reversal,
traders will observe higher highs and higher lows but
should always manage the risk of a failed move through
the use of well-placed stops.
EVENING STAR CANDLESTICK
Establish an existing uptrend: The market should be
exhibiting higher highs and higher lows.
Large bullish candle: The large bullish candle is the result
of large buying pressure and a continuation of the
existing uptrend. At this point traders should only be
looking for long trades as there is no evidence of a
reversal yet.
Small bearish/bullish candle: The second candle is a
small candle - sometimes a Doji candle - that presents
the first sign of a fatigued uptrend. Often this candle
gaps higher as it makes a higher high. It does not matter
if the candle is bearish or bullish as the main takeaway
here is that the market is somewhat undecided.
Large bearish candle: The first real sign of new selling
pressure is revealed in this candle. In non-forex markets,
this candle gaps down from the close of the previous
candle and signals the start of a new downtrend.
Subsequent price action: After a successful reversal,
traders will observe lower highs and lower lows but
should always manage the risk of a failed move through
the use of well-placed stops.
NIFTY 50 STOCKS & weightage
Stock relation with Nifty Index
BANKNIFTY STOCKS AND WEITAGE
Stock relation with Bank Nifty Index
END OF SESSION
