Stock Analysis is the source of Knowledge – based on fundamental & technical analysis.
Fundamental analysis deals the study of a company, its quantitative & qualitative data, Informs us about the past. Useful for a strong hand.
Technical analysis focusses on the market & indicates market action – Number buying & selling; demand & supply and price & volume..Useful for retail traders.
TA is based on Input and hence realtime; it is powerful & transparent. Markets discounts every news in the market.
Tools used for TA are Line Charts, Bar Charts & Candle Sticks chart.
Dow Theory will show the market behaviour and its price patterns and hence good for positional trading. Normally a 2 year’s data is analysed.
GAP analysis is a sign of strength.
Candle Sticks are indicative & good for weekly or intraday trading.
Technical indicators are made made like moving average, RSI, etc
Dow Theory – Good to identify the Trend, Demand & Supply thru price & volume over a period of 2 to 3 months and not for Intraday. People will buy only when they see a value in the company.
In DT, we have to identify the High Bottom, High Top, Lower Top & Lower Bottom, then check the sequence to understand if a stock is bullish or bearish.
A HB & HB indicates sequence of Bulls & a LT & LB indicates sequence of Bears but these have to be confirmed with volume always.
Equity shares are normally spot settlements at traded price.
Futures are contracts with a future expiry date & comes with rights & obligations on both the buyer & seller. They are cheaper & exchanges collect a caution deposit. Due to MTM method, profits r realised every day.
Options are future contracts with an expiry date; comes with rights but no obligation to buyer.
SPACE OUT !!!