CHANAKYA ACADEMY

Stock Market Training Institute

SMB
Stock Market Basics 1
COURCE STRUCTURE :-

Chapter 1 :- Stock Market Basic

Chapter 2 :- Advance Tools and Indicators

Chapter 3 :- Price Action

Chapter 4 :- Future & Options

Financial Market :-
• A financial market is a place where you can trade financial instruments like
Bonds, Mutual Funds, Derivatives, Commodities as well as shares of
companies
• A stock may be bought or sold only if it is listed on an Exchange, India’s stock
exchanges are Bombay Stock Exchanges (BSE) and National stock exchanges
(NSE), A commodity can be bought and sold in Multi-commodity Exchange
(MCX)
• First , Company get listed in primary market through an initial public offering
(IPO), Once listed, the stock issued can be traded by investor in secondary
market,
Stock Exchange
Primary Market IPO
Secondary Market Trading/Investing
Stock Market Players:-
• There are two players in Stock Market
1) Investor
2) Trader
Investing and Trading are two different types of Methods of making profits in
the financial Markets,
• Investors – The goal of an Investor is gradually earn wealth over an extended
period of time through the buying and holding of portfolio of stocks, mutual
funds , Bonds and other instruments,
• Traders - A stock Trader is someone who works for themselves by buying and
selling of stocks, Stock trader typically focus on making profits by taking
advantage of price fluctuation on individual stock and Index in the market,
Basically a Trader who trades and Makes profit in both rising and falling price
Movement,
Types of Financial Markets :-

Financial Market

Equity/Cash Derivatives Commodities Currency

Futures Options Futures Options

Stock Exchanges of India :-
Difference Between Equity and Future
Markets:-
Indian & Global Major Indices:-
Stock Market Players :-
• FII - Foreign Institutional Investors

• DII - Domestic Institutional Investors

• HNI - High Net Worth Individuals

• PROS - Professional Traders

• Retail – Common Public

Forces and Sentiments of Markets :-

Bullish Sentiments Bearish Sentiments

Candlestick :-

Bullish Candlestick Bearish Candlestick

Different types of Charts :-
Types of Trends in Stock Markets :-
UPTREND

DOWNTREND

SIDEWAYS
Websites and Mobiles Applications:-

WEBSITES :-
• NSE.COM
• INVESTING.COM
• MONEYCONTROL.COM

MOBILE APPS :-
• INVESTING
• ET MARKET
• MONEYCONTROL
HOW TO USE INVESTING.COM
 Homepage – www.investing.com

Step -1
Type in URL Step 2
Step 3
Change Flag
Sign Up
to India
LOGIN / SIGN UP :-
Candlestick and Line Charts
Uptrend (Bullish):-
Downtrend (Bearish):-

Lower High

Lower Low
Sideways (Pigs/Indecisive):-

Sideways – Stock stuck in a Range or channel

No Upside or Downside movement seen during Sideways trend
Different Time Frames On Charts:-
• Monthly Chart – Good for long term investors for over 4-5 years investment
period.
• Weekly Chart
• Daily Chart
• Intraday Charts – 5 mins, 15 mins 1 Hour etc
Support and Resistance :-
• Support Trendline : –
- Plot a line joining lows of the trend

• Resistance Trend Line: –

- Plot a line joining highs of the trend

• Trading Range or Channel : –

- Often stocks moves in a channel defined by support and resistance lines,
- Longer and Flattered the trendline greater the effect
- A steep trendline gives significant movement in prices but are short lived, It
shows high volatility,
Support and Resistance Examples :-

Support Trend Line

Support and Resistance Examples :-
Resistance Trend Line
Resistance Becomes Support and Breakout Example :-
Technical Indicators and Tools
Technical Indicators :-
• Important : –
- Volume
- Moving Average
- Candlestick Patterns

• Supporting : –
- MACD (Moving average and Convergence and Divergence)
- Stochastic
- RSI (Relative Strength Index)
Volumes :-
• Volumes : –

- Volume is generally use by Investors, Rarely use by Traders

- It gives Clue to the Intensity of Price move

- High volumes indicates higher Intensity

- Low volume Indicates Consolidation

- Volumes helps to determine false breakout

- It is also the key indicators to determine reversals

Volumes :-

Increase in Volumes with increase

in price is shows Healthy trend
Moving Average :-
- They help to identify Trend or mood of the Market
- They help to determine Buy or Sell Signals as well

• Simple Moving Average (SMA) : –

- SMA use by Investor
- It’s a simple average of past closing prices
- E.g – 30 SMA is nothing but the average of last 30 days of closing prices,

• Exponential Moving Average : –

- EMA use by Trader
- Present close X 0.09 + Last day Moving Average X 0.91
- Typically used for short term averages which is 5,13,26,50
- More weight is given to latest data
Moving Average :-

50 EMA

100 EMA
Moving Average :-

50 EMA Crossover with 100 EMA

It was a sell signal

Price Taking Resistance of

100 and 50 EMA

50 EMA

100 EMA
JAPANESE CANDLESTICKS
Candlestick Patterns :-
• Japanese Candlesticks are a technical analysis tool that traders use to chart and
analyze the price movement of securities. The concept of candlestick charting
was developed by Munehisa Homma, a Japanese rice trader. During routine
trading, Homma discovered that the rice market was influenced by the emotions
of traders, while still acknowledging the effect of demand and supply on the
price of rice,
• Body of each candle represents distance between opening and closing prices,
• A candlestick represents data for specific period
• The upper wick and lower tail mark high and low for the day respectively

• Bullish :- If closing price is higher than opening price,

• Bearish :- If closing price is lower than opening price,
Candlestick Components:-

Bullish Candlestick Bearish Candlestick

Candlestick Patterns:-
• Bullish Patterns
- Plain Bullish Candle
- Bullish Piercing
- Bullish Engulf
- Hammer (Good at bottom of downtrend)
- Morning Star

• Bearish Patterns
- Plain Bearish Candle
- Bearish Piercing
- Bearish Engulf
- Inverted Hammer (Good at top of Uptrend)
- Evening Star

• Neutral Patterns
- Doji
- Spinning top
- Harami (Mother Candle)
Bullish Piercing:-

Bullish Piercing
Candle Taking Median of Previous Candle

High

Low
Bullish Engulf :-

High
Bullish Engulf
Low (Candle Engulfing Previous Candle)
Hammer:-

Hammer at Bottom or Support is

Bullish signal
Morning Star:-

• Morning Star
• Downtrend , First Candle Bearish
• Second Candle Neutral or Hammer
• Third Candle Bullish Engulf or Piercing first Bearish Candle
Bearish Piercing:-
High
Median
Low

Bearish Piercing
Candle Taking Median of Previous Candle
Bearish Engulf:-

High
Bearish Engulf
Candle Engulfing previous Candles
Low
Inverted Hammer:-

Inverted Hammer at Top or

Resistance is Bearish Signal
Evening Star:-

Evening Star
Uptrend First Bullish Candle
Second Candle Neutral or Inverted Hammer
Third Candle Bearish Engulf or Piercing
Doji:-
Doji
(Neutral Candle)
Candle has no body
Open & Close almost same
Spinning Top:-
Spinning Top
(Neutral Candle)
Candle has small body
Looks like spinning top
Harami:-

Harami

Harami
Chart Patterns:-
• A chart pattern is a pattern within a chart when prices are graphed. In stock markets
trading, chart pattern studies play a large role during technical analysis. When data is
plotted there is usually a pattern which naturally occurs and repeats over a period. Chart
patterns are used as either reversal or continuation signals.

• Charts patterns are mainly categorized in to Continuation patterns and Reversal Patterns

• Charts patterns helps you to Identify reversal

• Charts patterns helps you to Entry, Exit, and Target

Traditional Chart Pattern:-
Included in this type are the most common patterns which have been introduced to chartists for more than a
hundred years. Below is a list of the most commonly used traditional chart patterns

• Bearish Reversal Patterns

1.Double Top
2.Head and Shoulders

• Bullish Reversal Patterns

1.Double Bottom
2.Cup and Handle
3.Inverted Head & Shoulder
4.Cup with Handle
BEARISH REVERSAL CHART PATTERN
Head & Shoulder (Bearish Reversal):-

T Breakdown of Neckline

Neckline T
Double Top(Bearish Reversal):-
BULLISH REVERSAL CHART PATTERN
Inverted Head & Shoulder(Bullish Reversal):-

Neckline

Breakout of Neckline
Double Bottom(Bullish Reversal):-