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    'The Profitable Trader - Part 1'
    'The Profitable Trader - Part 1'
    'The Profitable Trader - Part 1'
    Ebook72 pages37 minutes

    'The Profitable Trader - Part 1'

    By Nitin Singla

    ()

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    About this ebook

    This book covers the fundamental concepts of trading that every trader should be familiar with. Often, traders overlook or underestimate the importance of these basic principles. In addition to learning Technical Analysis, the book emphasizes how traders should appro

    LanguageEnglish
    PublisherBlueRose Publishers
    Release dateNov 5, 2024
    ISBN9789367835210
    'The Profitable Trader - Part 1'

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      Book preview

      'The Profitable Trader - Part 1' - Nitin Singla

      Introduction

      Overview of the stock market

      A stock market, equity market, or share market is the aggregation of buyers and sellers of stocks (also called shares). In other words, the stock market is a platform where investors buy and sell shares of publicly traded companies. It serves as a crucial component of the global economy, facilitating capital allocation and providing companies with access to funding.

      Key Concepts

      1. Stocks: Ownership stakes in a company. When you buy a share, you own a small piece of that company.

      2. Exchanges: Places where stocks are bought and sold, such as the New York Stock Exchange (NYSE) or NSE (National Stock Exchange) for India. A stock exchange is an exchange (or bourse) where stockbrokers and traders can buy and sell shares (equity stock), bonds, and other securities. Many large companies have their stocks listed on a stock exchange.

      3. Indices: Benchmarks that track the performance of a group of stocks, like the S&P 500, Nifty 50, Bank Nifty, CNXIT, others.

      4. Market Capitalization: The total market value of a company's outstanding shares, indicating its size.

      5. Bull and Bear Markets: A bull market indicates rising prices and investor confidence, while a bear market signifies falling prices and pessimism. While a lot of times, a user is confused whether it’s a bull market or bear market. It can be bull market checking on a particular timeframe and can appear to be a bear market on a different timeframe. Always, analyse on higher timeframe first before analysing on smaller timeframe.

      As we discussed earlier, the stock market is an electronic marketplace. Buyers and sellers electronically express their points of view in terms of trade.

      For example, consider the current situation of Infosys. When writing this, Infosys faces a management succession issue, and most of the company’s senior-level executives are resigning. The leadership vacuum is weighing down the company’s reputation heavily. As a result, the stock price dropped to Rs.3,000 from Rs.3,500.

      Assume there are two traders - A and B.

      A’s view on Infosys - The stock price will go down further because the company will find it challenging to find a new CEO. If A trades from his point of view, he should be a seller of the Infosys stock.

      However, B views the same situation differently and has a different point of view.

      According to her, the stock price of Infosys has overreacted to the succession issue, and soon the company will find a great leader. The stock price will eventually move up.

      If B trades from her point of view, she should be a buyer of the Infosys stock.

      So, at, Rs.3000, A will be a seller, and B will be a buyer in Infosys.

      Now both A and B will place orders to sell and buy the stocks respectively through their respective stockbrokers. The stockbroker routes it to the stock exchange. The stock exchange must ensure that these two orders are matched and that the trade is executed. This is the primary job of the stock market - to facilitate the transactions between different market participants.

      A stock market is where market participants can access any publicly listed company and trade from their

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