Invest Function

Stock Market - Training Material

Use the below link to Open an Account (if you don’t have One with Zerodha - The
discount broker):

https://zerodha.com/open-account?c=ZMPMQU

This document Contains all the Information that you need to know about Stock Market,
Reference Video Links has been Provided at the Appropriate Place for you to give a live
experience of Trading.

I assume that You are beginner with Zero Knowledge in Stock Market, and My Aim is to
Make you understand all the concepts in the Stock Market and Make you trade
Independently.

So Let’s Get Started !

Most question That People Ask Me:

Sir, How much money needed for Trading and How Much I can earn Everyday ?

My Response:

If you see, in stock market there are 1000 stocks ranging from Prices of Rs.20 Paisa to
Rs.73,000 Per share

Price of one MRF share is = Rs.73000

Price of One Sbi Share is = Rs.300

Price of KSS Limited is = 20 Paisa

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Eg 1:

So, If you have Rs.3000, You can buy 10 Shares of SBI Limited In CNC mode,

Total Quantity = {Money that you have/Price of a share} = (3000/300) = 10

In Intrady using leverage of 14X - You can buy (14*10) = 140 Shares of Sbi

Eg: 2

So, If you have Rs.10, You can buy 50 Shares of KSS Limited, (50 shares * 20 Paisa =
Rs.10)

So let’s say You bought 50 Shares of KSS, so if price of KSS changes to 40 Paise, The
money Rs.10 You invested becomes Rs.20, This is how it works.

Entry Tip:

Following are the possible entry scenarios:

Case 1.

Check if Stock is Moved higher in Pre market session.

If yes, Stock which opened higher - Will have a single Large Green candle (Sudden up
move) at 9.15 , if that is the case, Short the stock

Case 2:

If the stock is at its resistance, it may break and make higher highs or 80% of the time it
will move down

support and resistance - check video in Best practices document Row - 10 under
technical indicator section

Case 3:

Wait for half hour and see the stock trend up/down and take position accordingly
Invest Function ​Best Practices

Case 4:

Don't trade in the morning hours, Watch the stock and take position after 1 pm in the
afternoon, Most stock exhibits movement

Case 5:

If you are a beginner or Continoulsy loosing money, use RSI indicator as mentioned
already and do paper trading for 2 days to test if the stocks is moving as per RSI
indicator videos below

check video in Best practices document Row - 9 under technical indicator section

Module 1
S.No Description Reference Answer

1. If you are a beginner in Stock Market First

Task that you need to To is to Watch the
Video given at the Right Side:

Below are the Topics Covered as part of the

Video:

-Introduction to Stock Market Indices - NSE Check this Video: Jump to

(NIFTY) , BSE Second 0:40 Seconds Directly
-Introduction to Zerodha and Its Benefits
-Overview of Types of Investments and
Trading (Explanation) https://youtu.be/xa5rkOc4Vg
-Equity Investment 8
-Intraday trading
-Futures Trading
-Options Trading

-Web Interface Explanation Using Kite Web

Application
-Buy
-Sell
-Market Depth
-(Bids & Offers)
-Dashboard
-Orderbook
-Holdings
-Positions
-Funds
-Q-Backoffice
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-Types of Orders and Placing Orders

Benefits
-CNC Orders
-MIS Order
-Market Order
-Limit Order
-Bracket Order
-Cover Order
-After Market Order

-Equity Settlement Cycle

-BTST (Buy today and Sell
Tomorrow)Advantages

-Technical Indicators
-RSI Indicator
-MADC
-Volume Chart
-Candle Overview
-Support and Resistance
-Chart intervals

-Brokerage Calculator
-Explanation
-Usage for different scenarios

-Margin Calculator
-Explanation
-Different scenarios

2. Before planning to buy (Going long) any

stock for a particular day, As a first step
login to ​www.nseindia.com​ and see the
Index value.

The Index value must be positive, It would be

very favorable it it is > or = +0.25%

The reason for this is the Nifty index Beta

value is always 1.

All the stocks has some beta value which

has a co-orelation with Beta of indices.
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If beta of stock SBI is 1.7% and if the nifty

moves up by 1% for a particular day then SBI
tends to move 0.7%.

Some stocks would also have negative value

and if the indices falls, the stocks tends to
raise,It would be the other way round.

3. Executing an Order: https://youtu.be/7Z6vyarYI1E

Now, let’s understand -

How to Place a Bracket Order - (BO)

Note: Bracket Order can only be used for

Intraday Trading , For Equity Investment you
can’t use BO as it get’s squared off at 3.20
PM by Zerodha, Rs.20 Is taken if Zerodha
Squares off, If you square off before 3.20,
Rs.20 Is not Taken

4. Now, let’s understand - https://youtu.be/Tc5eIZUCHXU

How to Place a Cover Order - (CO)

Note: CoverOrder can only be used for

Intraday Trading , For Equity Investment you
can’t use CO as it get’s squared off at 3.20
PM by Zerodha, Rs.20 Is taken if Zerodha
Squares off, If you square off before 3.20,
Rs.20 Is not Taken

5. How to Place Stop Loss​ - Check this Video https://youtu.be/S4aJmjwgnlg

Stop loss is Very Important in Stock Market,

6. What is ​Disclosed Quantity​ While placing an https://youtu.be/TEhkS2hWspU

Order

7. Brokerage Calculator: https://youtu.be/Pe6ajLttD1I

Helps to identify how much tax and

brokerage goes to the Government and
Zerodha, It shows for all Types of Trading
Invest Function ​Best Practices

and Investing

8. Margin Calculator: https://youtu.be/l_jpdtuxeJM

Helps to identify how much leverage you can

use for trading.

Eg: If you have Rs.1000 using leverage you

can buy upto Stocks worth of Rs.20000 and
Trade.

All the leverage like 14X, 20X , 3X are

different for different stocks.

Module 2
Technical Indicators

9. RSI - Indicator Part 1:

Very Very Important Indicator, https://youtu.be/QjqPKLuFT5w

Confirm Profit If you use this indicator Part 2:

https://youtu.be/gDTYB1xClbo

10. Support and Resistance Level

https://youtu.be/4r8GMod3FeQ
These can be used for Investing Purpose

11. Pre Market Session: https://youtu.be/L3Judi8gIAM

What happens in Pre Market Session

12. Buy Sell using Some Fundamentals https://youtu.be/2ZutnEQJxpM

13. Shorting a Stock https://youtu.be/iLkPPnx9fqE

14. Single Candlestick Pattern https://youtu.be/jQEPTpe-OMs

15. Bullish Engulfing pattern https://youtu.be/0GUCf0BlIIA

16. Bearish Engulfing Pattern https://youtu.be/QPuM4GBav2A

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17. Bullish Marabozu Technical Analysis https://youtu.be/wkOESx4GJUY

18. Hammer Formation Technical Analysis https://youtu.be/xiBQszYEdew

19. Shooting Star Formation https://youtu.be/8oXvM9r5Wl8

20. Spinning Top Technical Analysis Zerodha https://youtu.be/OcoiKz50nmE

21. Stocks in Lower and Upper Circuits https://youtu.be/olDJicbLaXI

https://youtu.be/bbqs4UKzdFE

22. How to Identify sureshot calls https://youtu.be/scax2Lln7pI

23. What is Bank Nifty in Stock Market - https://youtu.be/40kad3pERfw

Part 1

24. What is Bank Nifty in Stock Market - https://youtu.be/xhaoovq1dXk

Part 2

25. Keeping Alerts for Share Price https://youtu.be/MPk3u9iDeq8

Module 3
26. Very Important before Investing in a Stock https://youtu.be/RNVkltAw0pM

Part 1

27. Very Important before Investing in a Stock https://youtu.be/G9t7QfsLeZA

Part 2

28. Position Conversion for Not Losing Money https://youtu.be/J6hcWWN7asA

29. Who decides the Stock Market Prices https://youtu.be/wJ3DBO6dR38

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Module 4
29. Futures Trading https://www.youtube.com/watc
h?v=S7G-pPPzSjg&list=PLm2M
Owz8vuk1FQQz5JSA3tJwsIf3L
hIce

30. Option Trading https://www.youtube.com/watc

h?v=bLxBXaMVntU&list=PLm2
MOwz8vuk2MOmJPFCce4AKtd
dW90lX8

Some general market principles:

-Big upmoves happen from the lowest point

-Big falls happen from the highest point

-The markets are always over-bought and over-sold

-Trade what you see. Not what you think. Don't try and reason an already built up
scenario in your head. Instead try and do what the stock is asking you to do

-A stock will always test a crucial level before deciding what to do next

-Usually in a trending upmove, until a crucial resistance in reached, the stock reaches
there by opening gap down and closing at the highest point. Once this resistance level is
broken, the stock opens gap-up and moves to new levels above

-Usually in a trending downmove, until a crucial support is reached, the stock reaches
there by opening gap up abd closing at the lowest point of the day. Once this support is
broken, the stock open gap-down and moves to new levels below.
-Look for reversal patterns. The real ones

Time saving tricks

Invest Function ​Best Practices

Whenever you are planning to monitor a particular stock and want to know the quarterly
results , dividend announcement, 52 week high, lows etc.

Go to ​www.google.com/alerts​ and set you alert preferences like the below, so google will
do the search and delivers it to your inbox

You can also set preferences like as it happens , once a day, choose the region India

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#27 Key terms in share market that you should know:

Invest Function ​Best Practices

Intraday:​ When you buy and sell the share on the same day, then it is called intraday trading.
Here the shares are not purchased for investing, but to get profits by harnessing the movement
in the market.

Delivery:​ When you buy a share and hold it for more than one day, then it is called delivery. It
doesn’t matter whether you sell it tomorrow, after 1 week, 6 months or 5 years. If you hold the
stock for more than one day, then it is called delivery.

Bull market:​ This is a term used to describe the scenario of the market. A bull market is when
the share prices are rising and the public is optimistic that the share price will continue to rise.

Bear Market:​ When the share prices are falling and the public is pessimistic about the stock
market, then it's a bear market. The public is fearful and thinks that the market will continue to
fall and hence, selling increases in this market.

Bid: ​The bid price represents the maximum price that the buyer/buyers are willing to give to buy
a share.

Ask:​ This is the minimum price that the seller/sellers are willing to receive to sell their shares.

Bid-Ask spread:​ This is the difference between the ‘bid’ and ‘ask’ price of a share. Basically, its
the difference between the highest price that the buyers are willing to buy a share and the
lowest price that the sellers are willing to sell their shares.

Limit Order: ​Limit order means to buy/sell a share with a limit price. If you want to buy/sell a
share at a given price, then you place a limit order. For example, if the current market price of
‘Tata motors’ is Rs 425, however you want to buy it at Rs 420, then you need to place a limit
order. When the market price of Tata motos falls to Rs 420, then the order is executed.

Market order:​ When you want to buy/sell a share at the current market price, then you need to
place a market order. For example, if the market price of ‘Tata Motors’ is Rs 425 and you are
ready to buy the share at the same price, then you place a market order. Here, the order is
executed instantaneously.

Good till cancellation (GTC) order:​ This order can be placed when an investor is willing to
buy/sell the shares at a specific price and the order remains active till it is executed or canceled.

Day order: ​This order can be placed when an investor is willing to buy/sell shares on a
particular day and the order gets automatically canceled if not fulfilled on that day.

Trading volume:​ It is the total number of shares being traded at a particular period of time.
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Volatility:​ It means how fast a stock price moves up or down. A lower volatility means that the
share’s value does not fluctuate dramatically.

Liquidity:​ Liquidity means how easily you can buy/sell a share without affecting the share price.
A highly liquid share means that it can easily be bought or sold. A low liquid stock means that
the buyers/sellers are hard to find.

Short selling:​ It is a practice where the trader sells share first (which he doesn’t even own at
that time) and hope that the price of that share starts falling. He will make a profit by buying
back those shares at the lower price. Overall, both selling and buying are done here, however,
it’s sequence is opposite to the regular transactions to get the profit of the falling share prices.

Going long: ​This is buying the shares in expectations that the share price is going to increase.
When a trader say I am "Going long..." or "Go long”, it indicates his interest in buying a
particular share.

Average down:​ This is an approach that investors use to buy more shares when the share
price starts falling. This results in an overall lower average price for that share. For example, you
bought a stock at Rs 100. Then the stock price starts falling. You bought the stock again at Rs
80 and Rs 60. Hence, the average price of your investment will be lower i.e. Rs 80. This is the
approach used in averaging down.

Market capitalization:​ It refers to the total rupee value of the company’s share. It is calculated
by multiplying the total number of shares by its present market share price. It is used to define
large cap, mid cap or small cap companies based on their market capitalization.

Public float (free float): ​Public float or free float represents the portion of shares of a company
that is in the hands of public investors.

IPO:​ When a privately listed company offers its sharers first time to the public to enter in the
share market, then it is called initial public offering.

Blue chip stocks:​ These are the stocks of those reputed companies who are in the market for
a very long time, financially strong and have a good track record of consistent growth and
returns in the past many years. Their stocks have low risk compared to mid cap and small cap
stocks.

Broker: ​A stockbroker is an individual/organization who is a registered member of the stock

exchange and are given license to participate in the securities market in place of its clients.
Stockbrokers can directly buy & sell stocks in the share market on behalf of their clients and
charge a commission for this service.
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Portfolio:​ A stock portfolio is grouping all the stocks that you are holding. A portfolio shows the
different stocks and their quantities that you are holding. It’s important to build a good portfolio
to maintain risk-reward in the stock market.

Stock Exchange:​ Just like a vegetable market, exchanges act as a market where the stock
buyers connect with stock sellers. There are two big stock exchanges in India- Bombay stock
exchange (BSE) and National stock exchange (NSE).

Dividend:​ Whenever a company (whose shares you are holding) is in profit, the company can
either reinvest the profit or distribute the amount among its shareholders. This share of the profit
that you get from the company is called dividend.

Companies may or may not give dividends to its shareholders depending on its needs. If it's
growing fast, it might re-invest the profit in its expansion. However, if it has enough cash, the
company will distribute it among its shareholders.

Margin: ​Trading on margin means borrowing money from your stock brokers to purchase stock.
It allows the traders to buy more stocks than you’d normally be able to.

Index:​ Since there are thousands of company listed on a stock exchange, hence it's really hard
to track every single stock to evaluate the market performance at a time. Therefore, a smaller
sample is taken which is the representative of the whole market. This small sample is called
Index and it helps in the measurement of the value of a section of the stock market. The index is
computed from the prices of selected stocks.

Sensex ​is the index of BSE and consists of 30 large companies from BSE. Nifty is the index of
NSE and consists of 50 large companies from NSE.

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