Table of Contents
Stock Market How to Getting started in Investment or trading?
The first module’s goal is to provide you with a fast hands-on introduction to the stock markets.
We have carefully selected ideas you need to know, especially if you are completely new to markets, as part of our effort to expose you to the stock markets.
It’s a positive sign if you have a lot of unresolved questions at this point. As we go on to subsequent modules, you’ll be able to locate your answers.
You may have had a taste of stock markets in our other articles and are ready to learn more!
Practice of Financial Modeling for Investment involves Fundamental analysis, technical analysis, derivatives, trading methods, risk management etc.. If you’re new to the markets, you might be wondering where each of these subjects fits into the big picture. Allow me to pose a simple question to you in order to assist you gain perspective that is to create a database of high-quality market-related teaching materials.
What is the single most significant factor for market success?
Isn’t it simple to define market success? You are successful if you continuously make money, and you are not successful if you do not! So, if you were to respond to this question for me, you’re likely to consider risk management and discipline.
What is POV (Point of View) of the Market?
While other qualities are unquestionably important, creating a point of view is far more powerful and crucial (POV).
The technique of generating a sense of direction on a stock or the markets in general is known as point of view.
If you believe the stock will rise, your point of view is bullish, and you will buy the stock.
Similarly, if your point of view is bearish and you believe a stock is heading down, you would be a stock seller.
How do you actually come up with a point of view?
How can you know if a stock is rising or falling? To form a point of view, one must first adopt a methodical strategy to market analysis.
There are a few approaches you can use to figure out/analyze what’s going on.
To give you a taste, here’s an example of a trader’s thought process when establishing a POV (whether to buy or sell stocks) based on a certain style of analysis:
POV based on Financial analysis like:
- The quarterly figures appear to be remarkable.
- The company has claimed a 25% increase in top-line revenue and a 15% increase in bottom-line revenue.
- The company’s outlook appears to be bright as well.
With all of the fundamentals in place, the stock appears to be positive; hence, it is a buy.
POV based on TA?
With the MACD indicator turning bullish and a bullish engulfing candlestick formation, the stock’s short-term sentiment appears to be good; thus, the stocks are a buy.
POV based on QA?
The stock’s price has recently risen.
There is barely a 1% probability that the PE will exceed the third standard deviation.
As a result, it is prudent to predict a mean reversion; thus, the stock is a sell.
What is the view from the outside?
As a result of the expert on TV recommending a purchase on the stock, the stock is a buy.
The point of view you take should always be based on your own analysis rather than an outsider’s, as taking action based on an outside opinion is frequently regretted.
What happens after you’ve developed a POV?
It is the first thing they do is trade point of view? This is where the market’s intricacy begins to show.
If the point of view is bullish, you have the option of doing one of the following:
- In the spot market, purchase the stock if positive or options
- In the spot market, if bearish then sell that is vice versa of above.