1. What Are Stocks?
- A stock/share is ownership of a small part of a company.
- Investors earn money in two main ways:
- 💰 Price Appreciation: Buy low, sell high.
- 📊 Dividends: company pays part of profits to shareholders.
2. Risks in Stock Investing
- Prices can fall due to market risk.
- In bankruptcy, shareholders are last to be paid (after lenders).
- High volatility = short-term losses possible.
📊 Fundamental Analysis (FA) – Evaluating Companies
✅ Advantages of FA
✔ In-depth company insights (financials, management, brand, industry).
✔ Best for long-term value investing.
✔ Identifies undervalued/strong companies.
✔ Considers qualitative and quantitative factors.
✔ Works across asset classes (stocks, bonds, commodities).
❌ Disadvantages of FA
✖ Time-consuming (requires deep study).
✖ Not effective for short-term trading.
✖ Market may ignore fundamentals in the short run.
✖ Risk of interpretation bias.
✖ Too much data = information overload.
📈 Technical Analysis (TA) – Reading Market Trends
✅ Advantages of TA
✔ Fast, real-time decisions (ideal for traders).
✔ Visual & simple (charts, candlesticks, trends).
✔ Built-in risk management (stop-loss, take-profit).
✔ Captures psychology of fear & greed.
✔ Works across stocks, forex, crypto, commodities.
❌ Disadvantages of TA
✖ False signals from market noise.
✖ Different traders interpret charts differently.
✖ Ignores company fundamentals.
✖ Too many indicators → confusion.
🔄 FA + TA Combined Approach
- FA = What to Buy (strong companies).
- TA = When to Buy/Sell (best timing).
✅ Balanced approach for both long-term & short-term.
⚠ Challenge = Need to learn both deeply.
🔍 Core Concepts of Technical Analysis
1. What is TA?
- Focuses only on price & volume.
- Predicts future moves using past behavior.
2. Philosophy of TA
✔ Price Discounts Everything – All info is in price.
✔ Prices Move in Trends – Uptrend, downtrend, sideways.
✔ History Repeats – Market psychology creates patterns.
3. Key Components
- 📌 Price Action – Raw moves without indicators.
- 📌 Chart Patterns – Head & shoulders, double top/bottom.
- 📌 Indicators – RSI, MACD, Moving Averages.
- 📌 Volume – Confirms strength of move.
- 📌 Entry/Exit Strategies – When to act.
📉 Essential Tools & Indicators
📊 Price Charts
- Candlestick (most popular)
- Bar Charts
- Line Charts
📌 Key Concepts
- Support/Resistance – Price floors & ceilings.
- Trendlines – Show direction of trend.
📈 Volume Indicators
- Volume Bars
- On-Balance Volume (OBV)
- Volume Profile
⚡ Momentum Indicators
- RSI (overbought/oversold).
- MACD (trend confirmation).
📊 Price–Volume Relationship & Trend Signals
| Price Movement | Volume Behavior | Interpretation (Trend Signal) |
|---|---|---|
| ⬆ Price Up | ⬆ Volume Up | Bullish Confirmation → Strong uptrend, healthy rally |
| ⬆ Price Up | ⬇ Volume Down | Weak Uptrend → Possible reversal soon |
| ⬇ Price Down | ⬆ Volume Up | Bearish Confirmation → Strong downtrend, heavy selling |
| ⬇ Price Down | ⬇ Volume Down | Weak Downtrend → Sellers losing strength, bottom possible |
| ➡ Sideways Price | ⬆ Volume Up | Accumulation/Distribution → Possible breakout ahead |
| ⬆ Breakout (Price Up) | ⬆ Surge in Volume | Valid Bullish Breakout |
| ⬇ Breakdown (Price Down) | ⬆ Surge in Volume | Valid Bearish Breakdown |
| 🔄 Price Up | ⬇ Volume + RSI Divergence | Bearish Divergence → Reversal warning |
| 🔄 Price Down | ⬇ Volume + RSI Divergence | Bullish Divergence → Reversal signal |
🧠 Market Psychology & Trading Strategies
Market Behavior
- Prices move with fear & greed cycles.
- Risk-on (optimism, buying) vs Risk-off (fear, selling).
Entry Strategies
✔ Trend Following (buy in uptrend, sell in downtrend).
✔ Breakouts (price crosses key levels with volume).
✔ Reversal Patterns (double bottoms/tops, candlesticks).
✔ Momentum Trading (RSI/MACD signals).
Exit Strategies
✔ Stop-Loss (limit risk).
✔ Profit Targets (book profits early).
✔ Trailing Stops (lock in gains).
✔ Divergence Exits (RSI/MACD warning).
✔ Trendline Breaks (exit when trend weakens).
💡 Key Takeaways (Day 1)
- Stocks = Ownership → Earn via price rise or dividends.
- FA = What to Buy (long-term value).
- TA = When to Buy/Sell (timing).
- Best = Combine FA + TA.
- Price + Volume = Foundation of TA.
- Bullish/Bearish trends confirmed by volume.
- Divergences signal reversals.
- Market psychology = fear & greed cycles.
- Always use risk management (stop-loss, position sizing).
- History repeats – patterns reappear.
✅ Now the guide flows Stock Basics → FA → TA → Core TA Concepts → Tools → Price-Volume Trends (with bullish, bearish, reversal, divergence) → Psychology → Strategies → Takeaways.