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ECL Learnings.pptx

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ECL Learnings.pptx

  1. 1. ECL Learnings Introduction Session
  2. 2. People’s requirement understanding Day1
  3. 3. ECL Learnings 1. Basics Introduction & History of market functioning 2. Candle understanding & different Patterns 3. Basics and advance technical tools for stock movement understanding 4. How to create intra-day, long duration strategies using different indicators 5. Basics of F&O market 6. Analysis of F&O data 7. Selection of option chain for trading 8. Risk mitigation strategy for for intraday or short duration traders 9. How to hedge loss making trades. 10. Analysis of nifty and bank-nifty weekly data. 11. When to trade what to trade and when to stay out of market 12. Psychology stability of mind for entering market. 13. Difference between commodity market and equity market 14. How to take trades in commodity market 15. Building own strategies on real time tools. 16. How to select stocks in pre-market & post market 17. Live market trade analysis and profit bookings (Risk Reward analysis) 18. Buddy program for 1 month to make you comfortable in taking own decisions. 19. Creating community culture for peer learning. n Session Additional Topics 1. Global Indices and their co-relation with Indian Stock Market 2. Analysis of Futures Data 3. F&O Strategies Day1
  4. 4. History of Equity Market ❖ Trading was started by Japanese commodity sellers ❖ First Listed market was started in Amsterdam and Dutch East india company was first listed , listed in 1611 ❖ Trading strategies started by “Ichimoku Sanjin” in Japan - 1930, Strategy Published in 1960 ❖ Bombay stock exchange was recognized in 1857, Phiroze Jeejeebhoy Towers at Dalal Street,Bombay - Founder Premchand Roychand ❖ CMC ltd developed electronic trading platform in 1995 and the they switched entire business in 50 working days Day2
  5. 5. Functioning of Market Most Commonly used Terminologies in market ❖ Share market: Anywhere you can buy or sell shares ❖ Stock exchange: This is a specific facility where stocks are listed for sale/purchase ❖ Stock: Stock is a general term used to refer to a certificate indicating ownership in a company. ❖ Share: A share is a stock certificate of a particular company. ❖ Bull market: When stock prices in a market are generally rising, it is called a bull market. ❖ Bear market: The exact opposite of a bull market is a bear market – when the stock prices in the market are generally falling it is called a bear market. ❖ Order: It is a show of intent to buy or sell shares in a given price range ❖ Bid: Your bid is the amount that you are willing to pay for a share ❖ Ask: Ask is the price at which you are willing to sell a share. ❖ Market order: An order to sell/buy shares at the market price is called a market order. ❖ Day order: An order that is good only till the end of the trading day is called a "day order" ❖ Good-till-cancelled order ❖ Liquidity: Liquidity refers to how easily a stock can be sold off ❖ Trading volume: The number of shares being traded on a given day is called trading volumes Day2
  6. 6. Functioning of Market How Market Operates Day2
  7. 7. Functioning of Market Discussion on Different Brokers and offerings Day2
  8. 8. Functioning of Market How Market Operates Day2
  9. 9. Functioning of Market How Market Operates Day2
  10. 10. Functioning of Market How Market Operates Day2
  11. 11. Candlesticks How to read a candle Day2
  12. 12. Candlesticks Mostly used Patterns Day2
  13. 13. Candlesticks Day2
  14. 14. Candlesticks Reversal Patterns Day2
  15. 15. Candlesticks Day2
  16. 16. Candlesticks Mostly used Patterns Best way to remember is Just remember any one And apply the same with Opposite color
  17. 17. Chart trading patterns Difference between seeing charts Movements
  18. 18. Chart trading patterns Difference between seeing charts Movements
  19. 19. Chart trading patterns Major Patterns used in Markets 1. Ascending Triangle
  20. 20. Chart trading patterns Major Patterns used in Markets 2. Descending Triangle
  21. 21. Chart trading patterns Major Patterns used in Markets 3. Symmetrical Triangle
  22. 22. Chart trading patterns Major Patterns used in Markets 3. Pennant Pattern
  23. 23. Chart trading patterns Major Patterns used in Markets 3. Pennant Pattern ❖ A Pennant pattern is a continuation chart pattern, seen when a security experiences a large upward or downward movement, followed by a brief consolidation, before continuing to move in the same direction ❖ A Pennant pattern has to be preceded by a strong up or down move that resembles a flagpole. If there isn’t a flagpole, then it's a triangle and not a Pennant. ❖ A Pennant tends to form a shallow retracement (typically less than 38% of the flagpole). A deep retracement is indicative of a triangle rather than a Pennant. ❖ A Pennant is characterized by the continuation of the upward or downward trend.
  24. 24. Chart trading patterns Major Patterns used in Markets 3. Pennant Pattern
  25. 25. Chart trading patterns Major Patterns used in Markets 3. Pennant Pattern
  26. 26. Chart trading patterns Major Patterns used in Markets 4. Flag Pattern
  27. 27. Chart trading patterns Major Patterns used in Markets 5. Wedge Pattern
  28. 28. Chart trading patterns Major Patterns used in Markets 5. Double Bottom Pattern
  29. 29. Chart trading patterns Major Patterns used in Markets 5. Double Top Pattern
  30. 30. Chart trading patterns Major Patterns used in Markets 5. Head and shoulder Pattern
  31. 31. Chart trading patterns Major Patterns used in Markets 5. Cup and handle Pattern
  32. 32. Chart trading patterns Major Patterns used in Markets 5. Cup and handle Pattern
  33. 33. Technical Indicators ?? 1. Trend indicators (lagging) analyze whether a market is moving up, down, or sideways over time. 2. Mean reversion indicators (lagging) measure how far a price swing will stretch before a counter impulse triggers a retracement. 3. Relative strength indicators (leading) measure oscillations in buying and selling pressure. 4. Momentum indicators (leading) evaluate the speed of price change over time. 5. Volume indicators (leading or lagging) tally up trades and quantify whether bulls or bear are in control.
  34. 34. Important Technical Indicators 1. Moving Averages : Gives the historical avgs of the price movements Duration Where to use ? When to trade ? Market 5,9,15 For Intraday trading When 9 days crosses 15 Commodity + Equity 26,52 For 2-3 days trading When 15 days crosses 26 Equity 100,200,364 For Medium term investments Equity
  35. 35. Important Technical Indicators 2. Exponential Moving Averages : Gives the historical avgs of the price movements with weightage of previously closed prices. How it works : ❖ Calculate the SMA (Period Values / Number of Periods) ❖ Multiplier = (2 / (Time periods + 1) ) ❖ EMA = {Close - EMA(previous day)} x multiplier + EMA(previous day). Imp: It is generally used for swing trading. 20 days crossing 50 days EMA is best for trading
  36. 36. Important Technical Indicators 3. Bollinger Band : Bollinger Bands are a type of price envelope (Price envelopes define upper and lower price range levels.) Bollinger Bands are envelopes plotted at a standard deviation level above and below a simple moving average of the price. Because the distance of the bands is based on standard deviation, they adjust to volatility swings in the underlying price. Bollinger Bands use 2 parameters, Period and Standard Deviations, StdDev. The default values are 20 for period, and 2 for standard deviations, although you may customize the combinations. Bollinger bands help determine whether prices are high or low on a relative basis. They are used in pairs, both upper and lower bands and in conjunction with a moving average. Further, the pair of bands is not intended to be used on its own. Use the pair to confirm signals given with other indicators.
  37. 37. Important Technical Indicators 3. Bollinger Band : Bollinger Bands are a type of price envelope (Price envelopes define upper and lower price range levels.) Bollinger Bands are envelopes plotted at a standard deviation level above and below a simple moving average of the price. Because the distance of the bands is based on standard deviation, they adjust to volatility swings in the underlying price. Bollinger Bands use 2 parameters, Period and Standard Deviations, StdDev. The default values are 20 for period, and 2 for standard deviations, although you may customize the combinations. Bollinger bands help determine whether prices are high or low on a relative basis. They are used in pairs, both upper and lower bands and in conjunction with a moving average. Further, the pair of bands is not intended to be used on its own. Use the pair to confirm signals given with other indicators.
  38. 38. Important Technical Indicators 3. Bollinger Band :
  39. 39. Important Technical Indicators 3. Bollinger Band :
  40. 40. Important Technical Indicators 4. MACD: Moving Average Convergence/Divergence An approximated MACD can be calculated by subtracting the value of a 26 period Exponential Moving Average (EMA) from a 12 period EMA. The shorter EMA is constantly converging toward, and diverging away from, the longer EMA. This causes MACD to oscillate around the zero level. A signal line is created with a 9 period EMA of the MACD line. The standard setting for MACD is the difference between the 12- and 26-period EMAs. Chartists looking for more sensitivity may try a shorter short-term moving average and a longer long-term moving average. MACD(5,35,5) is more sensitive than MACD(12,26,9) and might be better suited for weekly charts. Signal Line : 9-day EMA of the MACD series.
  41. 41. Important Technical Indicators 4. MACD: Moving Average Convergence/Divergence
  42. 42. Important Technical Indicators 4. MACD: Moving Average Convergence/Divergence
  43. 43. Important Technical Indicators 5. RSI: Relative strength Indicator ● The relative strength index (RSI) is a momentum indicator ● Measures the magnitude of recent price changes to evaluate overbought or oversold conditions ● The RSI is displayed as an oscillator (a line graph that moves between two extremes) and can have a reading from 0 to 100. ● An asset is usually considered overbought when the RSI is above 70% and oversold when it is below 30%. ● Calculation =100−[ 100 (1+ (Previous Avg gain *13)+current Gain) - ((Previous Avg gain*13)+current Loss​)
  44. 44. Important Technical Indicators 5. RSI: Relative strength Indicator
  45. 45. Important Technical Indicators 5. RSI: Relative strength Indicator
  46. 46. Important Technical Indicators 6. Cross overs ● A crossover refers to an instance where an indicator and a price, or multiple indicators, overlap and cross one another. ● Crossovers are used in technical analysis to confirm patterns and trends such as reversals and breakouts, generating buy or sell signals accordingly. ● Moving average crossovers are common, including the death cross and golden cross. ● Crossovers indicating a moving average are generally the cause of breakouts and breakdowns. ● Moving averages can determine a change in the price trend based on the crossover
  47. 47. Important Technical Indicators 6. Cross overs : Golden Crossover ● Occurs when a short-term moving average crosses over a major long-term moving average to the upside ● Signaling a definitive upward turn in a market. ● There are three stages to a golden cross: ❖ A downtrend that eventually ends as selling is depleted ❖ A second stage where the shorter moving average crosses up through the longer moving average ❖ Finally, the continuing uptrend, hopefully leading to higher prices
  48. 48. Important Technical Indicators 6. Cross overs : Golden Crossover
  49. 49. Important Technical Indicators 6. Cross overs : Death Crossover ❖ Conversely, a similar downside moving average crossover constitutes the death cross and is understood to signal a decisive downturn in a market. ❖ The death cross occurs when the short term average trends down and crosses the long-term average, basically going in the opposite direction of the golden cross.
  50. 50. Important Technical Indicators 7. Divergence ❖ Divergence is when the price of an asset is moving in the opposite direction of a technical indicator such as an oscillator, or is moving contrary to other data. ❖ Divergence warns that the current price trend may be weakening, and in some cases may lead to the price changing direction. ❖ There is positive and negative divergence. ❖ Positive divergence indicates a move higher in the price of the asset is possible. ❖ Negative divergence signals that a move lower in the asset is possible.
  51. 51. Important Technical Indicators 7. Divergence
  52. 52. Important Technical Indicators 8. Ichimoku Cloud : One stop Solution ● Versatile indicator that defines support and resistance, identifies trend direction, gauges momentum and provides trading signals ● Four of the five plots within the Ichimoku Cloud are based on the average of the high and low over a given period of time ● Tenkan-sen (Conversion Line): (9-period high + 9-period low)/2)) ● Kijun-sen (Base Line): (26-period high + 26-period low)/2)) ● Senkou Span A (Leading Span A): (Conversion Line + Base Line)/2)) ● This is the midpoint between the Conversion Line and the Base Line. The Leading Span A forms one of the two cloud boundaries. It is referred to as "Leading" because it is plotted 26 periods in the future and forms the faster cloud boundary.
  53. 53. Important Technical Indicators 8. Ichimoku Cloud : One stop Solution ● Senkou Span B (Leading Span B): (52-period high + 52-period low)/2)) ● On the daily chart, this line is the midpoint of the 52-day high-low range, which is a little less than 3 months. The default calculation setting is 52 periods, but can be adjusted. This value is plotted 26 periods in the future and forms the slower cloud boundary. ● Chikou Span (Lagging Span): Close plotted 26 days in the past The Conversion Line (blue) is the fastest and most sensitive line. Notice that it follows price action the closest. The Base Line (red) trails the faster Conversion Line, but follows price action pretty well. The relationship between the Conversion Line and Base Line is similar to the relationship between a 9-day moving average and 26-day moving average. The 9-day is faster and more closely follows the price plot
  54. 54. Important Technical Indicators 8. Ichimoku Cloud : One stop Solution
  55. 55. Important Technical Indicators 8. Ichimoku Cloud : One stop Solution ❖ The trend is up when prices are above the cloud, down when prices are below the cloud and flat when prices are in the cloud. ❖ the uptrend is strengthened when the Leading Span A (green cloud line) is rising and above the Leading Span B (red cloud line). This situation produces a green cloud ❖ Conversely, a downtrend is reinforced when the Leading Span A (green cloud line) is falling and below the Leading Span B (red cloud line).This situation produces a red cloud ❖ The cloud is shifted forward 26 days, it also provides a glimpse of future support or resistance. ❖ Negative divergence signals that a move lower in the asset is possible.
  56. 56. Important Technical Indicators 8. Ichimoku Cloud : Trend Understanding
  57. 57. Important Technical Indicators 8. Ichimoku Cloud : Trend Understanding
  58. 58. Important Technical Indicators 8. Ichimoku Cloud : Conversion & Signal
  59. 59. Important Technical Indicators 8. Ichimoku Cloud : Conversion & Signal
  60. 60. Important Technical Indicators 8. Ichimoku Cloud : Price & Base Line
  61. 61. Important Technical Indicators 8. Ichimoku Cloud : Price & Base Line
  62. 62. Important Technical Indicators 8. Ichimoku Cloud : RSI trading
  63. 63. Important Technical Indicators 8. Ichimoku Cloud : Summary Bullish Signals: ● Price moves above cloud (trend) ● Cloud turns from red to green (ebb-flow within trend) ● Price Moves above the Base Line (momentum) ● Conversion Line moves above Base Line (momentum) Bearish Signals: ● Price moves below cloud (trend) ● Cloud turns from green to red (ebb-flow within trend) ● Price Moves below Base Line (momentum) ● Conversion Line moves below Base Line (momentum)

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