Home Trading Strategies The Ultimate Stock Trading Course (for Beginners)

The Ultimate Stock Trading Course (for Beginners)

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The Ultimate Stock Trading Course (for Beginners)

okay so welcome to the ultimate stock trading course for beginners so who is this cost for well if you are someone who is totally new to the financial markets want to learn more about stocks how it works then hey this course is for you or maybe you’re a trader drive maybe you treat the Forex or crypto markets but if no idea you know what stock is about and you want to know dive in deeper than hey this course is for you as well or perhaps you’re someone who wants to use the stock markets to help you know generate a not a source of income to help you beat inflation or to just grow your wealth over time then hey this course is for you as well so before I get started my name is Rainer I am the founder of trading with Rainer comm and here’s what I want you to do right now hit that thumbs up button right and subscribe to my youtube channel the link is all below hit that thumbs up subscribe to my youtube channel and this way we never publish a new video you always stay up to date never miss another training from me again sounds good then do it right now hit that thumbs up button and subscribe to my youtube channel the link is below so with that said right let’s begin so have a look at this right this is Apple okay so Apple okay so uh let me speak over here I saw a time when I did this slides right Apple was worth 731 billion but as of today it is a slightly higher you know the stock market goes up and down so this one is a little bit dated but it’s there about seven hundred plus billion market capitalization right this stock so Apple what does it mean to buy a share of Apple after all you want to learn stock trading where you can buy shares what does it mean to buy a share so when you buy a share of a company where is it Apple Facebook Amazon whatever it means that you’re a part owner of the company you might seem some weird what I’m an owner yes you’re an owner but just a very small small minority owner so let me explain so you go down to this web site over here right it’s Phineas Phineas com a very useful website gives you a lot of financial data or stock prices and stuff like that and you see that right now Apple the market cap okay it’s a seven hundred and ninety three billion dollars that is the market capitalization of Apple the value of Apple okay almost 800 billion and right now the price is about 165 dollars so you’re gonna buy one share of Apple all right you need to up 165 dollars and you can see that you know earlier I mentioned that you know when you buy Apple you’re part owner of the company right and you can see that your ownership stick right let’s say you boy you buy one share of Apple right you 165 divided by this market cap which is seven hundred and ninety three point four six billion okay once you divide this right then you know how small your stick in Apple is okay does it make sense so Haran 65 divided by seven hundred ninety three billion dollars that is your stake in Apple if you can you can you know just imagine the kind of you know my newness right then okay let me just just break it down to another way let’s say right let’s say somehow you’re really rich individual right you buy a seven point nine three billion dollars worth of Apple stock in other words right right now you own 10% of Apple shares right just a seven point nine three billion assuming you buy this much of Apple divided by seven hundred ninety three billion which is the market cap which is the total value of Apple you can write ten percent ownership ownership stick in Nepal so that’s what I mean right by when you buy a stock you’re a part owner of the company so you can check out this website fill this right a lot of financial data over here but for now let’s move on all right so let’s stop right you know that when you buy a stock a stock right it’s an ownership in a company so a stock is traded on an exchange right an exchange like the New York Stock Exchange Singapore exchange a London Stock Exchange so depending on you know where you’re from right usually your own country would have an exchange right dedicated to trading stocks so one thing to note is that there are many types of stocks out there do you know and they have stocks that you know focus on energy stocks that are technology related and if you want to break it down right there are pretty much about eleven different sectors that you can look at when trading stocks okay so within this sectors you can further break up the different types of stocks but we will not go you know into too much details generally you need to understand that stocks they are traded across the different sectors and these are the eleven sectors that you know you might want to be aware of Energy Materials industrial consumer discretionary consumer staples healthcare financial information technology telecom utilities and real estate and this isn’t the only way right you kind of you know classify stocks because you can also break them down according to their market cap otherwise known as their market capitalization so you can rank stocks according to how much they are worth like for example Apple you saw earlier about 700 billion dollar company that’s a mega cap we call it a mega cap company latch cap is anything over ten billion dollars meat cap companies between two and ten billion dollars small cap is between three hundred and two billion dollars and micro cap is between fifty and two hundred million dollars and finally Nano capital nano cap right is below fifty million dollars and there’s another one right which I did not edit here it’s called a penny stock right so penny stock is a stock right as trading below $5 they are usually the the micro cap nano k or even sometimes even a small cap stocks so these are what we call a penny stocks right stocks that are really you know trading at a very low price point usually below five dollars okay so these are the different type of stocks right you can classify them as well according to market cap so now why do you want to create stocks okay well there are many reasons why you want to treat stocks maybe because you want to beat inflation right generally from where I’m from Singapore inflation is about three or four percent a year so maybe by trading stocks I could like hey ten percent a year I’m beating inflation right I’m protecting and growing my money and growing my wealth okay also you can you know some people they do trade stocks to earn living to earn a second income right by you know trading stocks on a shorter term timeframe right you know making anywhere from you know 2% 4% 5% a month they trade stops to earn a living so that is possible as well so there are many reasons why you wanna trade stocks and really right you have to ask yourself what is the purpose of this first and foremost right before you dive deeper because as you study later in the course you realize that there are different methods to trade stocks and different methods right have their own pros and cons to it but we’ll get to that later but first and foremost right ask yourself why are you trading stocks you know first and moving on right how to buy a stock so let’s mention right a stock is traded on eggs on an exchange she’s not like Forex where he’s no it’s over-the-counter or forwards weights you in the broker trading within one another no when you trade stocks right when you buy stocks you go through an exchange in just let me illustrate know how it works let’s say you know this is a you right okay you wanna buy stock right you go to your broker let’s call it B and your broker will then link to an exchange so you can see that whenever you you wanna buy a stock goes to your broker and you’re broke on it wrap your order to the exchange and within a few seconds the exchange will a know whether your order is filled or not okay so once the order is confirmed exchange sends the message back to your broker and then instantaneously or at a while later right you will notify you on your trading platform that hey you know your tray is fill so that’s how you buy a stock through a broker in a broker oh then you know can you order to the exchange so you can see that there are many different brokers around the world many different players right let’s call this B this is B and there are other players let’s call it P right other you know other people who trade or buy stocks okay so this gives you this little uh mind man it expands can expend and it really really huge and that’s how you know the stock market works right they go to the broker they buy a share from the egg and then they broke up the broker routes the order to the exchange get a confirmation exchange goes back to the broker and then goes back to the retail like you were me right so this is how you buy a stock by having a broker to execute your trades for you on the exchange of course there are there are times where certain people they have the privilege to just tirely get the order into the exchange right but most of you watching this video right now it’s unlikely that you know you will fall under that category that’s usually for institution right but hey that is possible as well so that’s how generally you buy a stock okay so let’s do a quick recap the more on a stock represents an ownership in a company right number to stock is traded on an exchange rate depending where you’re from can be New York Stock Exchange Singapore Exchange and nowadays right with barriers breaking down right I’m from Singapore I can easily trade where stocks are Philippine stocks or whatsoever it’s it’s not difficult right now adays you know the barrier to entry is very low number three we talked about the different types of stocks right by sectors right where there’s energy industrial and stuff like that or you can actually trade it or classify under the different market cap right meaning you know the size of the stocks how valuable they are there’s a market cap and finally right you buy stocks through a broker and then you will you know put your order to the exchange to let you know whether you know order gets filled or not okay okay so moving on right let’s discuss right on how you can actually profit from stock trading right there are two ways to do it number one buy low and sell high this is something that you probably have heard many times there okay so just a quick example right this is the chart of Apple let’s say you know you buy low and sell high how it will look like is let’s say you buy around here one hundred and fifty five dollars and you sell and let’s say at this highs over here which is about one hundred and seventy-five dollars so the difference between your selling price and your buy price is $20 so you made a profit of $20 per share on Apple okay so that’s a profit of $20 per share on Apple so this means is that you know if you buy hundred shares on Apple your profit would then be two thousand dollars just 20 multiply 100 your profit is two thousand dollars all right so we are talking from a individual share one share basis right but if you are you know creating 500 shares or 1000 shares you just multiply the number of shares accordingly and you know what is your total profit okay so this is just one example another way that you can profit right from stock trading is this you buy high and sell higher so this is a concept that is hardly talked about everybody talks about you know buying low selling high but this right is an even more important concept if you ask me you buy high and sell higher okay it’s not a more important concept but it’s a concept that I know many traders just you know are unaware of it so for this over here right what are you trying to do is that you want to buy high okay so let’s say for example over here I Paul we have a breakout over here at this high so let’s say you buy it about then let’s make things simple you buy $185 and let’s say true enough for Apple did break out and it stay just wrong really and you move all the way up to let’s say again just to make it simple right two hundred dollars over here okay so you buy a hundred and eighty five and you sell 200 again what is the profit just take your selling price minus your buying price and it’s a profit of $15 so if you buy a thousand shares that’s a profit of $15 multiply by a thousand which is fifteen thousand dollars but this time run write you notice that the difference is that you’re actually buying high right you see this over here from the looks of this chart I seen that man you’re buying such a high price when the market is about to reverse okay why are you buying such a high price but here’s the thing about the markets right you never know how high a stock can go so that’s why there’s another way to profit which is to you know buy high and sell higher because the market or I could just as well you know break out and move right even further than your expectations or anyone else so I know right sometimes it seems scary to be buying high but hey you never know right the stock could actually explode higher and become higher so don’t worry about you know the precise entries techniques or window sell will cover all that later later in the course but for now I just want you to understand right the concepts right behind you know profiting in the stock market can buy low sell high or buy high and sell higher moving on right how do you actually calculate your stock trading returns right so there are three ways to do it number one you call it a dollar approach right so this is something that I’ve briefly covered earlier so what you’ll do is just to lit the difference right between your selling price and buying price and the difference is the profit right you’ve made in dollars so again let’s say you buy it one hundred and fifty dollars you sell at two hundred dollars okay so your profit on a stalker is $50 per share so if you buy a thousand shares that profit is fifty thousand dollars just the profit per share multiplied by the number of shares you’ve bought okay so that is your dollar return Nate percentage return right so this one is a little bit different but again really simple stuff so for example let’s say you buy a pole share set hundred dollars okay and you let’s say you sell it at one hundred and fifty dollars so what is your percentage return just calculate your profit divided by your initial share price then you bought so in this case you can see that the profit is $50 per share so just take fifty dollars divided by the initial price of Apple shares that you bought which is hundred and you get a profit of fifty percent simple okay and the last one is what I called our multiple right and this is actually my favorite approach to calculate your returns whether you’re trading forex options or whatever right this is a more objective measure why is that because when you look at a dollar and percentage returns it does not take into consideration your risk poetry okay let me let me say that once again right when you Lee returns based on dollar or percentage it does not complete or determine right the amount of risk that you are taking to achieve those returns so I’ll explain so let’s say you buy Apple shares at hundred dollars okay and let’s say you sell it at UH one hundred and fifty dollars and let’s see for this particular trade of Apple right you’re either going big or going home you tell us stuff they know if Apple drops do you know zero dollars I’ll still hold it so you can see that your entire risk on this trade it’s a full hundred dollars and your profit on this trade is fifty dollars okay this is your full risk and this is your reward so from a risk to reward standpoint from a risk right let’s call it from a risk to reward you can see that you are actually risking okay a dollar to make fifty cents right how do you get it just very simple you just divide this by a hundred differ at least by a hundred and you realize that for that particular trade you’re risking $1 to make fifty cents okay so this from a risk to reward standpoint is well not too attractive if you ask me compared this now to another trader let’s say you know this person is treated now he he in fact he makes a lesser right let’s say again he buy Apple shares a hundred dollars and this time Rana he sell Apple and let’s say only hundred and ten dollars but a difference between this trader now is that instead of risking at $400 compared to trader a now this trader be okay he has a stop loss he has a predetermined price right where he will get out of the apple tree if things goes sour let’s say that that stop loss at that exit price in his mind is $95 okay so now from the looks of theme of things right as yourself what is this percent risk per trade let’s do this together okay this person be his risk per trade is let’s see let’s call the whisper tree is five dollars right hundred dollars the initial buying price minus ninety five dollars which is the price that he’ll get out if it’s wrong the difference is five dollars what is his reward well reward is very simple right a profit write the ending price that is so – is buying price which is ten dollars so the reward is ten dollars so now when you couple it did right from our multiple his risk to reward you can see that he’s risking five dollars to make ten dollars right and if you just keep things simple right you realize that it’s actually he’s actually risking a dollar to make two dollars compare that to the earlier trader who actually made more who made $50 per share right well you look at it from a risk to reward standpoint a person only made for every dollar he risk he made fifty cents who has more trader B here it’s a dollar to make two dollars so which is a better trader which is a better tree if you ask me for more risk to reward standpoint from our multiple standpoint trader B did a better trade so you can look at it from two ways right risking a dollar to make two dollars or you can just call it a multiple of two are when you don’t want to our you know that the person has risk a dollar to make two dollars if someone made a profit of 10 our this means that he risk a dollar to make ten dollars okay so this are the three different ways to calculate your stock returns I find that the our multiple is the most objective measure to calculate your stock returns so let’s do a quick recap number one how to profit from stocks you can either buy low or sell high or even do both and number two we talked about how to actually calculate your stock returns right either through a dollar based approach a percentage approach on the are multiple approach and my favorite is the are multiple approach because it tells you at how much risk you are taking to achieve those returns all right all right so moving on I want to share with you a few common stock trading terminologies that you’ll probably you know come across so if you understand what these means right then hey you can just move on right and don’t have to watch this video but if you have no idea you’re clueless then hey pay attention this is important first things first what is long and short so when you hear traders you know say that hey I’m long or I’m sure it simply means the direction of the tree that they are taking right when someone says he’s long it means that he will make a profit when the stock price goes up so for example let’s say someone says I’m long Apple shares $100 it means he buy Apple shares at Hearne dollars and if Apple shares goes up to a 120 dollars he makes a profit of $20 per share so that is what you mean by going long on the other hand right when the traders is that I’m sure it means that he will make a profit if the stock price goes down so how does this work so when a trader is short what actually happens is that he will borrow shares from the broker so let’s say you know I’m short Apple shares and hundred bucks so I’m gonna borrow $100 worth of share from my broke broker okay I will borrow this hundred dollars worth of and let’s say the stock price of Apple does goes down right let’s say it drops down to $90 okay so what will happen is that since I borrowed this $100 worth of share I need to return back right the share of Apple because I bought one share of Apple money to return back this one share so let’s say I buy this one share of Apple at the open market for $90 returning back to my broker so in this case or in this example you can see that after the transaction is completed I borrow the shares and I return back the share at the end of the day at the end of the day I made a profit of $10 per share okay so this is how short selling works all right you borrow the shares you sell it at the market you collect the proceeds although you will release it right because they did the broker will manage all this transaction right and once you buy back the shares and return it back to your broker you would then you know collect the difference and in this case since the stock price goes down right you make a profit of $10 but what if right the stock price goes up it moves against you right then the loss right will will be a explained right let’s see you again you shot hundred dollars worth of Apple shares and it moves up to $200 this means right you collect hundred dollars up front by borrowing the shares of Apple and then when you need to pay back the shares of Apple you buy it in the open market for 200 bucks so you can see that this is a loss of $100 to you because the price of the stock when against you it went up higher so one thing about short selling is that your losses is technically unlimited because what if the share price of Apple moves up to $500 thousand dollars ten thousand dollars you can see that your losses can you know exceed right your even your initial deposit so short selling is a it’s not it’s a it’s not very common compared to traders way really long but there is this so-called feature available right your broker might offer it so again if you want to dive deeper into short selling this is something that you have to know okay so with that said moving on what is a bit and asked so when you are dealing in stock trading on or futures trading right you will see that a price there’s no one price in the market there’s always two prices well in fact making me more right but basically there are two key prices that you’ve to pay attention to the bit and ask so what this means is that the bid right if you know if you know let’s talk about us furs right the ask is simply right let’s say you want to buy a stock right now okay you have to look at the ask price because that is the price that you have to pay if you wanna buy the stock right now and on the other hand if you want to sell the stock right now you will pay attention to the bit price right this is the price that you can sell right now okay so there’s always two prices in the market all right the ask price and the big price the ask price is the price that if you want to buy the stock that’s a price you have to pay the big price is the price that you can sell right now if you want to sell a stop so this is what we mean by the bit and ask so what is the spread right the spread is simply means right the difference between the bit and ask so let me share with you an example so let’s say again Apple stock side that’s the easiest to talk about right let’s say Apple has the asking price of hundred dollars and 20 cents let’s ask price okay and the bid price is $100 and 10 cents for example so the spread right of Apple right now is 10 cents right the difference between the ask and a bit and that to you my friend is a transaction cost to you this is a cost that you have to incur okay because right now if you think about this if I buy Apple shares right now I gotta pay a her dollars in twenty cents and let’s say that the stock price did move and I want to sell it immediately I can only sell it at a higher or less and tension that is an immediate loss of $0.

10 to you and that is the spread that you have to pay and then and this is not even taking into consideration your Commission’s or fees to the exchange etc this is just a so called a bit of spread a transaction cost that is borne by you the trader okay and one thing to note is their large cap stocks right they are typically more liquid so this means that you can expect a title bit of spread so for example let’s say I’m just giving it hypothetical example again say Apple it’s a large cap stock right so the spread over here what I share with you is let’s say $100 27 is the ask and hundredths win $100 10 10 is the beat so this ask mr.

B and your bid a spread is 10 cents a large cap stocks right they are usually more liquid you have a tighter bit of spray but let’s say you deal with a small cap stock they are usually less liquid and you can expect a larger bit us spread and this would be right a higher transaction cost to you so for example a stop of let’s say five dollars and fifty cents right this the ask an example and a bit is $5 so we can see that a bit a sprint now is 50 cents and you have to you know again realize that the more you trade this stock so I’d be you know buying and selling right you have to pay a larger bit ask spread and that will eat up into your returns so this is on something that you must know okay usually the larger cap stocks they are more liquid the tighter the bit are spread and when you’re trading smaller cap stocks right they are less liquid and a bit us spread tends to be wider then the reason is being because there’s just lesser people trading the smaller cap stocks so this is why you know it’s not as liquid there are less orders in the market and that’s why this the spread tends to widen alright so with that said let’s do a super quick recap number one you’ve learned know what is long and short it simply means right what is your trading direction number two what is the beat and ask the beat is the price that you can sell it right now the ask is the price that you can buy it right now and finally we talked about the spread right what is the bid-ask spread and how will lunch kit stocks right then to have a tighter spread and less liquid stocks like you know small cap stocks right they are spread tends to be wider okay now moving on let’s talk about the different types of orders okay so when you are trading stocks there are different types of orders that you can use in the market and I just want to share with you some of the most common ones there is no more to this forward about I’m about to share with you okay but I’m not gonna cover all of them because it’s just a it’s just too extensive but these are the four most popular most common ones that I feel that you should know they are the market order limit other stop order and stop-loss order so let me explain market order what is it right so market order is simply an order right that sends to the market right now immediately right whatever the prevailing ask prices you will buy right now so that’s what we call a market order it means that you want to enter the trade right now so you use a market order so the good thing about market order is that you know for sure that you’ll be in the tree okay guaranteed right you just hit the market order the the broker right would send the order to the exchange and get for you the best possible price so you know for sure you will be in the trade the downside to it is that you have to pay a premium okay because you are willing to you know pay whatever the current prevailing price is so if the stuff is moving pretty fast okay you might have to pay a slightly higher price a premium right at whatever the asking price is currently yes so this is the market order mix is what we call the limit order so limit other is a where you will only get feel on the trade if the price comes to your desired level so let’s say for example again Apple shares all right let’s say the current price of Apple is trading at one hundred and ten dollars and let’s say you know you’d want to be hitting a market order because if to pay a hundred and ten dollars so instead what you want to do is what you could do is place a buy limit order a hundred dollars so what happens is that if if right the price of Apple it declines right to a hundred dollars then that buy limit order will get you feel and Apple shares I mean to buy Apple shares at a hundred dollars so this is what we mean by a limit order you only enter the trade if the market comes to your desired price level so this is good for those of you who you know who trick boobs to pull back right let me know there is a useful function that you can use so the process Daniel you enter at a cheaper price because you don’t have to pay the the prevailing market price you can actually wait for the market to come to a more cheaper price level before you enter the tree the downside to it is that you might miss the move because what if Apple right now is trading at hundred and ten dollars and you have a buy limit at hundred dollars but Apple doesn’t you know decline it moves to 120 130 150 200 500 and you end up missing the move right because you want to enter at a cheaper price so that’s the downside the first downside the second downside is that you are no trading against the current momentum so what this means is there let’s say you know Apple price is set here I know okay let’s say this is again one hundred and ten dollars and you have an order over here at this hundred dollars level so what you’re actually doing is you’re buying a polar is the current momentum is against you it’s against you it’s not necessarily anything bad but this is something that again I just want you to know that you is that you will be entering your trade right when the current momentum is against you okay so that’s so-called a couple of you know cons that you might want to be aware of so that is the limit order the third thing is what we call a stop order so a stop order is useful right when you wanna trade breakup because you will only enter trades as the market moves in your favor so for example okay let’s say that Apple shares has been in range okay let’s say the height of the range is $100 and the loss is let’s say $80 so if you use a stop order right you can put in a stop order and let’s say 105 dollars right over here 105 dollars this means our is dead this means our dead only if Apple shares move up and hits a hundred and five dollars only then will you buy the shares so this is what we call a buy stop buy stop order you only go along right if the share price moves in your favor right and it hits a predetermined level that you you expect okay so if you have a buy stop order 105 dollars you will only buy the shares if Apple reaches 105 if it reach 100 100 and 200 and 304 you will not buy the shares he only buys right when it hits a hundred and five dollars right so this is what we mean by a buy stop order so the pros is that when you are using a stop order a buy stop order for example you are entering your traits with momentum so you can see that this is actually the opposite right of the limit order so when you buy a breakout right let’s say you have a buy order over here you’re buying right as momentum momentum right it’s in your favor the downside to trading with a stop order is that it might be a false breakout so what is a false breakout so the stock price might you know go up go down go up good eye breaks out and it collapse back into the range so you end up you know buying and the highs over here so this could happen right so again I just wonder you know I want you to be aware of it okay so this is the stop order and finally it’s something what we call the stop-loss order possibly the most important order that you use so stop-loss order is a unlike the earlier three orders where it gets you into the tree a stoploss order gets you out of the tree okay you exit the trade if the price goes against you so you can think of this like a defense mechanism right if the stock price goes against you after you hit a certain price level you’re out of the trade so again an example let’s say you buy a you buy Apple share set at this point or maybe it’s a hundred bucks and you have a stop loss order at let’s say $70 so what this means is that if Apple shares it declines right to $70 at this point you will automatically sell Apple shares because your stop-loss is at $70 right so this is a an order right that helps you so called protects your trading account it prevents you from you know getting things out of hand okay it’s a defense mechanism so the process is that you know you cut your losses you get to live another day you don’t have to know lose a huge chunk of capital because your stop-loss know prevents further damage but the cons of it is that you know the market could reverse back in your favor so you know let’s say again market you know goes up okay you buy over here your stop losses your market comes down hit your stop-loss and then continues higher so when it just stopped loss right it could reverse back in your direction so you can see that you know man if I did not use a stop loss right I wouldn’t have taken the loss so that this definitely is gonna hit your mind right but trust me right in the long run it’s for you it’s for your own good because what if what if right the stock price just collapse lower and never recovers so again stop-loss as I’ve said right it’s a defense mechanism it’s not 100% foolproof there will be times where the market hit just stop loss and then it moves back in your favor and that’s simply the cost of trading the cost of doing business okay so stop-loss order is unit in the sense that it’s an order that gets you out of the tree so a recap number one we talked about market order it gets you into the tree it gets you into the market right now you simply buy whatever the asking price is a limit order is order that gets you at a cheaper price you set a determine a price level that you want to enter and if the market declines to their level you’ll enter the trade that’s a limit order a stop order is the opposite of a limit order you only enter the trade if the market moves enough in your favour at whatever price level that you did to me right so a stop order is basically trying to buy a breakout if the price have move so much distance within this period of time your stop order will get you into the tree and finally we talked about stop-loss order is simply an order that gets you out of the trade to protect you and your trading account all right okay so moving on let’s talk about how to analyze a stock so there are two main ways to analyze the stock fundamental analysis and technical analysis so you can think of it as this very fundamental analysis tells you what to buy technical analysis tells you when to buy okay so for now we are focusing on the fundamental aspect don’t worry we will discuss about technical analysis in the later videos but for now let’s begin with fundamental shall we so when you talk about fundamental analysis right it can be broken down into two categories qualitative fundamentals and quantitative fundamentals so here’s the thing about fundamentals right what you are trying to do is to gather insights information right maybe from the economy from the financial statements from the company itself to derive an intrinsic value for the company right this is what fundamental analyst try to do right to derive an intrinsic value of the company and then if the stock price drops below the intrinsic value you buy if the stock price is above the intrinsic value you sell right it pretty much right sums up the role of someone right trying to you know use fundamental analysis in the investment or in their trading so again as mentioned right there are two broad ways to do fundamental analysis qualitative fundamental analysis and quantitative fundamental analysis so let’s have a look at them right in more details so we need talk about qualitative fundamental analysis right these are fundamentals or other information that can be quantified for example disruption right that we are experiencing right now this is qualitative analysis that can be quantified like for example let’s let me give you an example let’s say I have an oil company in right now I’m profit right as you know I send my my guys to dig up oil from the earth let’s say you know there is this new commodity that can replace oil maybe you know there is a less less hazard okay it’s cheaper and it can replace oil right in vehicles in machinery and stuff like that so when this new commodity comes to the market okay you can see that my business is going to suffer because nobody needs oil anymore my stock price is gonna collapse so how do you actually you know so-called quantify this you can right so this is why we call it qualitative analysis this is an insight right that someone can glean from right and realize that no this would be disruptive to the oil stock so maybe they might want to sell the stock or even shorter stocks altogether so this is an example of qualitative fundamental analysis another one could be economic more right like you know what Warren Buffett uh is a term that I think Warren Buffett came up with and economic mode so for example coca-cola they have a strong economy mode they sell sold out they sell Cola but if you want to a challenge against them can be pretty damn difficult right because they have the brand they have the reputation they’ve been in business for a long time so they have a strong economy more all right and this is another aspect of qualitative analysis you can’t really quantify what this economic mode is you know what it is right is their branding their trust they have been business for a long time and the recipe is pretty much you know kept somewhere so secret so debt is an economic mode and that’s another way of you know looking at qualitative analysis or even management it can be you know qualitative aspect as well may be a good management and good CEO comes into you know improve on things improve on the operations reduce experience you know gain new market share in different industrial sectors for example all this is what we call qualitative analysis things that cannot be quantified in numbers and moving on we’re something what we call quantitative analysis so this is fundamentals that can be quantified stuff like you know your assets you know what your assets are your machinery you can quantify all those you can put a value on those assets your liabilities right your revenue your earnings your cash flow these are all stuff that can be quantified and this is why we call it a quantitative analysis so when you deal with quantitative analysis you will see ratios like you know your p/e ratio your price to earnings ratio your PB ratio price to book value price to cash flow and etc so this is what we mean by quantitative analysis so as a recap right there are two types of analysis qualitative and quantitative and I just want to talk a little bit now about a pros and cons between both of this approach so for qualitative fundamental analysis right the the pros of it is that you know if you can so call digest information you can make sense of you know what’s going on in the world in the company you can gain insight that you know not many traders or investors will see and you can’t really make a profit right because you can actually buy a stock below its intrinsic value so that’s the good thing about qualitative analysis the downside to it is that it is difficult I’ll be honest right because there is so much information out there how do you know what’s relevant to the market at this current point in time so you will get analysis paralysis analysis paralysis there’s so much information you do not know which are stuff that you should focus on or which are stuff that is noise in the market so you know those are the pros and cons for qualitative analysis quantitative analysis again the process is that it can be quantified you can actually use quantified data and back test and see whether you know that data actually use you a market beating written in the long run for example right it’s proven their value stocks right stocks that have a low price to book value they tend to outperform the market okay so this means is that if you ran your stocks between those with the highest book value and those of the lowest book value right if you buy the the top tempers top 10 worst stock sir if the lowest price to book value they tend to outperform over the next few years compared to stocks with high price to book value they tend to underperform the market over the next few years so you can see that quantitative analysis the good thing is it can be quantified and can give you an edge in the market so I don’t really need to know or have great insights into a company because using raw price data you can actually know what works and what don’t the downside to quantitative analysis is again similar to qualitative is that sometimes there’s just so much information and is you know very hard to filter out you know what are the stuff out there that matters and what don’t matters okay so again if you ask me right qualitative or quantitative I won’t say this right or wrong but I do know that quantitative fundamental analysis you can do back tests on it and you can know right which are the key matrix right that are worth paying attention to so this is just my my take between qualitative and quantitative analysis alright okay so now let’s talk about you know what are some of the fundamental matrix that you should pay attention to as a trader so based on studying you know momentum stock traders and also if you’ve read a book how to make money in stocks by William J onel you know that stock traders they like to focus on earnings and net income why is that okay so as mentioned earlier when you look at qualitative fundamental analysis right most stock traders they just don’t have the skill to you know analyze the company to know you know what is the noise and what is the signal but one thing that they can do to shortcut right they are so-called screening processes by looking at earnings and net income why if you think about this right a company that’s about to disrupt a sector let’s say you know again back to the example where there is this new element or material that can replace oil if it comes into the market and nobody buys oil anymore and buys this new element because it’s cheaper is better and it’s more efficient and it doesn’t contribute to you know global warming you can be sure that you know people will flock to whichever company that’s producing less called element X and this company will make money right your earnings will increase because they are you know selling or you know what I call it mining for a lot of this new element X earnings will increase net income will increase right if they are able to keep their operation costs low so you can see that earnings and incomes would reflect the fundamental of a company right there you know maybe there are a new innovator they are coming up with something new in the market that is in demand right so that’s one example and example could be let’s say a company has been in decline maybe it lost his competitive edge right he has dropped 90 percent right the stock price has dropped 90 percent from the highs and then new management comes in this new management starts to you know shake things up right fire off the you know underperforming workers it removes underperforming SS and and focus on the stuff that is bringing in revenue and focus on stuff that actually you know helps the company get back its age and to help the company grow now from a qualitative perspective it can be quite difficult to determine whether the new management the new CEO who comes in is able to turn things around but one thing that don’t lie is the earnings and net income okay.

we comes in and earning starts to improve net income starts to improve quarter and quarter your new you can be sure that you know clearly the management is doing something right so when you see earnings is improving net income is improving chances are I’m not saying guarantee because there’s many cases of fraud right but chances are the fundamentals of the company is you know doing okay as well it could be even a turnaround or in a new innovation in the company and whatever the cases are as a stock trader if you want to you know buy stocks right you want to focus on stocks that have improved earnings and net income because this tells you right there’s a good chance that the fundamentals in the company is pretty alright it’s pretty good even okay so earnings and income is what many stock traders they pay attention to they pay attention to how the earnings have increased quarter and quarter or how the earnings have increased year-on-year right both earnings and net income so this for you a stock trader this is something that you want to pay attention to okay so in this section I’ll go into technical analysis for stock trading so one thing to point out is that technical analysis there is a lot of stuff a lot of information out there if you know things like pivot points are as I make the moving average support/resistance trend line trend channels Candlestick payments and much much more and my goal right now over here is not to teach you everything about technical analysis I can do that instead what I’ll do is to focus alright to get you focus on the key areas of technical analysis that matters that’s all I’m going to do right to give you a strong foundation into technical analysis and then from then on if you’re an explorer further you have the tools the knowledge right to you know go about doing it okay so when you’re dealing with technical analysis right let’s say in stock trading right you know that fundamentals they are good right it helps you to filter down the list of stocks that you want to treat right focusing on you know companies with strong or good fundamentals technical analysis on the other hand can help you to time your entries telling you when to buy all right so tell fundamentals tells you what to buy technical analysis can tell you when to buy so when you are dealing with a technical analysis there are three broad categories that I want you to know is what I call the trend the area of value and entry trigger so let’s analyze them right in them so a trend right you’ve probably you know heard of a trend right so what is the trend a trend is simply right on your chart it looks like you know higher highs and higher lows like this okay let me just draw this right higher highs and higher lows so this is what we call an uptrend because you can see that the price right is making higher highs and higher lows and one thing to note is that when we are dealing with technical analysis when a stock is in an uptrend we want to be a buyer because we assume right that there’s a good chance that the stock would continue to train higher so this is a an example of an uptrend so the opposite of an uptrend right it’s a downtrend which looks like this it has lower highs and lower lows so when a stock is in a downtrend right we want to be selling we don’t to be buying because you know again right there’s a good chance that a stock will continue trending lower so one of the important principle that you want to take away is that whenever you want to buy stocks right you want to buy stocks that are at least in an uptrend or at least right don’t buy stocks in the downtrend especially for trading right this is not investing where you know you’re going to hold on for years and years in trading right you are going to enter the markets and you pretty much exit right in a I would say in a shot after a short walk depending on your timeframe but you won’t be holding stocks for a long time so again first fundamental rule of stock trading is again don’t buy stocks in a downtrend and one thing to share with you is that to define a trend right you can use the 200 period moving average right to help you know define the trend so let me share with you an example so the 200 period moving average is just an indicator you can get it on most chatting platform right just select 200 right and over here this black line is what we call the 200 period moving average so I’ve applied this to the daily timeframe on Amazon and you can see that right now the price of Amazon right this is the price or over here this movements this is the price of Amazon it’s above the 200 ma so when you see the prices above the 200 ma right it gives you a bias that hey you know I want to be buying only in this market because the market is in an uptrend okay and vice versa right if the price of right here the price is below the 200 ma then you can conclude that you know the market is weak right and you either want to be selling right or you know hold on to cash you’d want to be buying in a downtrend of course there are exceptions right especially traders who are you know more advanced in their trading methodologies you’re more experienced they can you know buy in a downtrend it can still make money but for you if you are still new to trading this this rule over here I will keep you on the right side of the markets more often than not okay this is not foolproof but hey you know it will keep you on the right side of the markets more often than not okay so this is what I talked about what we’ve discussed right in the Train next thing area of value so you know that train right tells you whether the stock is moving up higher or lower but just because a stock is moving up higher doesn’t mean you you buy immediately okay just because you see oranges in a supermarket that’s that’s are selling right now you don’t buy the oranges immediately because maybe you know the oranges is overpriced maybe the oranges are selling like one orange for ten dollars you don’t buy one orange for ten dollars right because during a sale you can buy maybe three oranges for two dollars so you want weight when the price is an area of value for your oranges and this is the same for trading right you don’t buy just because the stock price is high is in an uptrend no you want it to come to an area of value before you consider buying okay and it’s the same for trading so how do you sort of you know define what is there you in trading so these are a few techniques that you can use support and resistance trendline moving average right finding this tree they are there are pretty easy to understand and use there are more out there again but I would say this tree really is more than enough to get you started so let me explain know what are these different tools that you can use so support right you can think of support as a floor right where the price have difficulty you know going under like a like a floor so you can see that over here okay I want you to think of this floor as a wooden floor means it can provide some support right to push the price higher but it’s made of wood so wood can also break so don’t think they know just because the price is coming to an area of support you will definitely bounce know you know wood wood can break it’s not titanium it’s not metal right it can break so that is how I want you to think of support so in this case right you can see that over here we have an area of support over here price bounced once rallied higher came back down under bounced a second time and really higher so you can see that support is an area it’s not a fine line on your chart so this depicts it pretty clearly you can see that over here this this whole area is an area of support it’s not just one line even though I draw it as a line because that’s my preference but you have to treat it as an area meaning that the price could come in to an area of support and then bounce off away it could come deeper into the area of support and then reverse from there that is possible as well so remember support is an area on your chart treated like a piece of in a wooden plane okay the second thing that I want to share is a trend line so trend line is like support right like supporting resistance but the difference is that support is horizontal a trend line is what I call this diagonal okay so trend line is diagonal so you can see that again it’s an area this is the area over here and notice the price bounds here are the second bounds here and attack bounds over here okay so this is again a trend line when you want to buy stock again you buy when the price is near an area of support you want to buy it right when the price is near the upward trend line right because this represents an area of value on your chance and the last thing to share is a moving average okay so you know that there are many types of moving average out there like for example earlier I share with you the 200 period moving average how we can help you define the long term trend however you know that’s not the only moving average you can use against the 20 50 or 100 and all this different moving every type they help you uh they have different purposes like for example I like to use the 50 ma okay which is what you see over here to help you to help me define an area of values so you can see that for this particular chart of my ki the daily time frame the price tends do you know bounce of the 50 amino repeatedly for over the last few times so needless to say right if the trend is very strong it may not retrace back towards the 50 ma somebody might just bounce off the 10 or 20 ma you know continue trading higher if the trend is a healthy trend like what you are seeing right now right where the pull backs are more obvious it tends to find support and a 50 ma and if the trend is let’s say not very strong prettier it’s just weaker right you can even pull back to the hundred or 200 ma okay so again moving average is another training technique that you can use to be to define your area of value so one thing to note is that let’s say for example the stock right now it’s let’s say it’s trading and this highs over here okay you okay let me just give it an example how about the stock is at this highs over here let’s say the stock previously it has respected the 50 MA and now it just breaks out higher and got this slight price rejection at this point you don’t necessarily want to be buying over here why is that because remember you want to buy in an uptrend and from an area of value right now the price is not at this area of value which is at this 50 ma over here so it’s much better right to be patient and let the price come to you come to an area of value and then you look to enter your tray so now the question is you know when exactly do you enter the Train right let’s say the market is in in an uptrend it’s an area of value do you just buy it immediately no right because you can actually use something what I call an entry trigger to time your entry so entry trigger right I find a candlestick patterns they are very useful for this purpose okay and you can use you know reversal candlestick patterns like the hammer engulfing better and bullish engulfing bearish engulfing and shooting star and stuff like that so if you do understand right I’m just going to know run you through quickly write about candlestick patterns right and these are different reversal candlestick patterns which I find it is useful to know for your trading so how do you read it candlestick pattern so candlestick pattern right is a recap right it’s useful for an entry trigger to help you time your entry and to read a candlestick pattern is that you would usually see you know two types of candles it’s green or red so if the candle is green right this over here is the opening price okay and this over here is the closing price so this means the market the price open at this level when all the way up higher this is the high for the day for example let’s say you’re looking at the daily timeframe this is a high of the day and then finally closing near the highs over here you can see this lower shadow this is called the wick lower wick all right this tells you the low of the day or the low of the candle okay so these are there are only four things to known the high the open the high of the candle and the low of the candle so when you look at a bearish candle is the opposite right the open right now is on top okay and the close is below that’s why it’s very right because the the price right has actually closed lower for the day so now this candle is great color again this is the high of the day and this is the low of the day so this is how you read candlestick pattern and moving on right there are many differences I mean many different type of candlestick patterns out there but I find that a few that a wolf knowing rise for example the hammer and shooting star so let me just explain to you right so again this is a green candle okay you can see that the price opens over here right the open for green candle right bullish candle the open is always below the close so this is where the price open and when they open right notice that there is this long lower wick over here so what it tells you is that during the day the sellers actually came in and pushed the price down all the way down lower to this point somehow we know they couldn’t push the price lower anymore and a bias came in to control okay they’re on right steroids right and push the price up all the way up higher and finally closing near the highs over here so what does this tell you this tells you that hey no buyers last opinion right they have managed to you know take control from the sellers and push the price up closing above the open so this is a sign of strength I’m telling you that the buyers are in control and that’s why you get a candlestick pattern like this which what we call a hammer and hammer so on the other hand right a shooting star a shooting star is just the opposite of a hammer you can see that again this is candle is a it’s bearish is rate so the open is here right when the market open buyers to control push the price up higher up to the heights of this this this this day over here suddenly the sellers you know say eh that’s enough that’s enough I’m coming in and it’s pump they smash the price lower all the way down to the lows over here and finally closing near the lows so this is the open this is the close this is the low and this is the high so again a shooting star if you read this right this is a sign of weakness because it tells you that the buyers can no longer in control the sellers are in control and that’s why they can you know push the price lower for the day okay so this is hammer and shooting star another couple of candlestick patterns that you should know right it’s now what we call the bullish engulfing and bearish engulfing so it’s very similar to him when shooting start just at this time around it’s in the form of two candlestick patterns right there are two candlestick patterns to Candlestick patterns whereas earlier you just saw it’s just one individual candlestick pattern but the message behind it is pretty much the same if you look at this one over here is what we call the bullish engulfing pattern right sell us to control and close near the lows over here right it opens here and close near the lows the next candle bias open near the lows and took control and push the price all the way up higher closing right even above right the prior candle high over here right this is a sign of strength right showing any sellers to control it push down the price lowering and suddenly the other buyers came in push the price up higher and finally closing near the highs so this is a sign of strength as it tells you that the buyers are in control on the other hand right bearish engulfing pattern is just the opposite right buyers on this first candle they are in control this is the opening price they come up all the way up higher and close near the hinds of the day remember what is this is the high of the day and this is the low of the day then the subsequent candle disc and over here the sellers the open near the highs and suddenly suddenly I don’t know where they find a strain right maybe you know it took too much creating steroids and protein shake pum rightly smash the price lower and finally closing near the low of the day so this tells you that now the sellers are in control and this is what we call a bearish engulfing pattern okay so you can call the hammer shooting star bullish engulfing bearish engulfing as you know reversal candlestick patterns because they sort of you know help you time know market reversals or market turning points okay but you don’t just want to blindly trade them just because you see a bearish engulfing doesn’t mean you shot does it doesn’t mean you see a bullish engulfing you buy me nearly no you don’t do that right you want to use a few technical tools together right to increase the author of your trade working out which is what we’re going to discuss right now so I want to introduce to you what I call the teh framework okay so this is a framework matter I came up with so again we’re just gonna combine what you’ve learned so far number one is the trend so you recall earlier if the price is above the 200 period moving average chances are is in an uptrend and you wanna have a long bias meaning you want to be buying the stock only you don’t want to sell the stock okay if the market is above thee 200 MA similarly if the price is below the 200 period moving average you wanna have a shot bias and if you cannot shot right at least you don’t want to be buying when the price is below the 200 period moving average okay so this gives you a bias to know whether you should be buying or whether I should stay on the sidelines meaning you know you still stay out of the markets okay because short selling is something that is more advanced not all of you can you know short sell the stock market so again just just know where I’m coming from second name area of value we mentioned earlier just because the stock is in an uptrend doesn’t mean you want to buy just because they’re oranges selling in the supermarket doesn’t mean you buy that orange right it’s one orange for $10 $100 I even buy her Ella I wouldn’t buy I’m a cheapskate on a bayou in is you know two for three dollars one for five I mean five for one dollar maybe even I mean two for treaters I’m three for two dollars or maybe five for dollar I’ll buy when it’s it’s cheap when it’s a when it’s a value to me okay because a not only a huge fan of orange right so it has to be a value price before I buy those oranges and it’s the same for trading you don’t buy it just because the market is in an uptrend just because the price is high you wanna buy it when it’s trading from an area of value and area of value can be defined as you know support resistance moving average trendline right stuff that we’ve covered earlier and then right then the last thing that we want to look at this entry trigger we want to look right at the price and tell us then oh hey you know the buyers are now in control and now is it a safer time to enter the trade that’s how you know candlestick patterns can help you right where it shows you patterns like the hammer the bullish engulfing pattern it tells you that now the buyers have stepped in right and there’s a good chance the market could reverse higher so this is the TAFE remote combining this tree right and you can actually have you know tradable right or trading opportunities are that you can trade off using technical analysis so here’s an example okay so you can see over here the price above the 200 ma so should you be buying or selling but I hope you say bye-bye yeah buying right you’ll be buying okay so now the price is above the 200 ma you should be buying do you buy it over here do you buy it over here or do you buy it over here I think we not see it’s something about training from an area of value that’s right area of value so where is an area of value on the chart so from the looks of it right you can see it over here previous support sorry previous resistance now turned support and now become support and the price came into this area of support it’s great we have the uptrend we have an area of support the 13 we’re looking for to tell us that the buyers are now in control I think this looks like a bullish engulfing pattern yeah let’s take a bullish engulfing pattern hey hey heaven right uptrend area of value and a bullish reversal candlestick pattern so this right it’s a it’s a trading opportunity that you can take advantage off you can buy on the next candles open your stop-loss could go a distance below this low right and and you know hopefully you’re right the market moves right in your favor from this at this entry point so we’re not gonna discuss too much about you know where to take profits and stuff like that because this is really just the beginners introduction to stop trading but I hope I gave you a good understanding a foundation right to know when to buy a stock okay so this is one example of the teh framework another one over here you can see that again the price now above the 200 ma should you be buying or selling selling selling know buying right that’s right buying so where is the area of value in this case we notice that right hey this trend line seems to be an area of value right market bounce off here second time and on the turret em right it bounced up any for me hammer so look at this candlestick pattern notice the price over here open and this are the lows okay the below the low of the prior day came all the way down lower and then the sellers you know say hey that’s enough right that’s enough and it pushed the price all the way up higher closing near this highs of the day on top of it you’re trading or you’re buying in an uptrend and from this area of value on this trend line support okay so you can see that in this case right yep the market that did went higher from here so one thing to share is that all the chance that I’m sharing with you right now they are cherry-pick I repeat they are cherry picks I’ve purposely picked those chance right that show see you winning trades because I find it it’s easier to explain a concept but when you’re trading in the live market right trust me there will be losers yes there will be losers right so I want you to prepare for it alright so the all these examples right it’s just to let you understand the concept easily right versus it’s much easier to explain but when you’re trading life okay however when you’re people are trading right there will be losses no matter how fantastic your analysis is no matter how good the fundamentals how good the technicals they will still be losses embrace it but don’t worry in the later section we will talk about risk management all right so let you know when you have a loss right it’s not the end of the world you know right so that’s uh that’s later for now I still want to know share with you more examples right of this at a framework because it’s it’s powerful so let’s have a look okay and at a framework so this is the chart of Google or I can see over here Google and let’s see let me find it okay so you can see that again right this time round not this day if I just zoom only though the 200ma now X as an area of value so prior to this right I say they know the 50 ma you know can X and every available in this case right the trend of this this stock right it’s uh it’s not as strong right so it tends to find support right at this 200 ma 200 ma here and here as well again the concept still the same right stock is in an uptrend it’s in an area of value and then what what are we looking for what are we looking for well we can look for a candlestick pattern right as an entry trigger to enter the trade so in this case we have something what we call in this case right it’s again this is something like a hammer price right here now lower bias to control and close near the highs over here now I can enter the knicks candle open over here right and go long meaning you buy the stock another opportunity over here i price came down from this hammer right this hammer and this 200 ma and an area of value in this case it might be a losing trade again this is a good example of a losing trade as the price just you know continuing lower the right might stop here and then reverse from here so this is really the reality of trading no matter how good the setup is right there will be losses okay so let’s have a look at an another example how about this see us gee okay weekly timeframe so this time around I just pull out a 50 ma okay so notice over here this is the chat of cos t wholesale cop is the weekly timeframe and again right it doesn’t matter what time frame you’re trading with the weekly daily the 15 minutes right the concepts right stuff can be applied the same so in this case like Costco Wholesale cop can see that it’s been respecting me 50 ma right if I pull out the 200 ma I can guarantee you that the price is above the 200 ma as well alright so just get out of 200 ma notice that the price is above the 200 ma so you wanna be a buyer so now we’re it’s an area of value to trade from okay so area of value could be the fifty week moving average prices you know bounce once twice thrice four times and let’s say right you you miss this move over here and over here you are this huge spike over here again this is a bullish reversal right price open near the open-ended lows okay came down at this point and around 117 dollars at one point before the biased finally stepped in push price and close near the highs over here so you can see this is a huge huge right bullish reversal candlestick pattern you may or may not trade it right but in this case I’d the market the price did went higher from here but this is a very huge a bullish reversal candlestick pattern gained the concepts it’s the same trend area of value entry trigger let’s have a look at one more show is something that is a familiar with us Facebook okay uh Facebook okay in this case are again the price above the 200 ma let’s say you know it bounced off the 50 ma quite a number of times here one twice and over here three times that’s the time so over here I can see that how the candlestick pattern is useful to have you time your entries that notice over here right there really isn’t any valid entry trigger right this is not a hammer or a bullish engulfing this over here is not necessarily a bullish engulfing that is move a piercing pattern I would say this canned over here right is the closest to a bullish engulfing by right theoretically a bullish engulfing issued the low so I should be below the prior candle lows somewhere here in any income the previous candle and enclosed near the highs right I’ll say this is the closest because again the range of the candle is large showing new conviction from the bias right in this case I would say this would be the closest to a bullish engulfing although it’s not really right a textbook bullish engulfing but if you can read price action right you know that over here this one is a sign of strength we have volatility contraction meaning the market went quiet for a while and on this candle boom right buyers came into control and you know closed near the highs over here right so anyway this is a an example of a normally a textbook example but showing you that from an area of value right and then waiting for a candlestick reversal candlestick pattern to cool long sometimes you may not get the exact textbook set up for example and that’s where your price action reading of the markets would come into play all right another one I would say is more straightforward would be this one over here so this one over here a price okay so one thing to share again right the 50 ma the area of value it’s never aligned on your chart it’s always an area so you can see it over here it pretty much breached below the 50 ma and then on this can no form a hammer and then close back above the 50 ma right giving you a bullish hammer to go along to buy okay so this is another point I want to share with you right there your area of value in a chart it’s always an area so I hope this this gives you a few examples art of the Tay framework that I’ve just shared with you so as a recap right here’s what you’ve learned so far we have you know covered quite a bit number one we talked about a trend right you want to be buying in an uptrend and selling in a downtrend if you can’t sell in downtrend you cannot show at least you know don’t buy in a downtrend stay in cash number two we spoke about area of value right you to want to buy just because the stock is in an uptrend you want it to come to an area of value okay one thing to mention is that for me personally I don’t always treat from any in the area of value and sometimes I do treat breakouts but that is another topic altogether but for you for you right now for starters right now say it’s much you know it’s better to be trading from an area value right buying it when things are cheap and area value can be in the form of support and resistance moving average trendline right we share quite a number of examples earlier the tutting is entry trigger right using candlestick patterns right to help you time your entry to show you that you know when the buyers are now in control or the sellers are now in control alright so candlestick patterns gives you clues right to let you know who is in control and finally alright we combine all this three different so-called principles if you wanna call it right this three different aspect of technical analysis and develop it into at a framework that you can use to find trading opportunities in the stock markets okay now let’s move on so in this section I want to discuss about risk management for stock trading all right this is an important concept doesn’t matter whether you’re trading stocks Forex futures bonds or whatsoever risk management is paramount for trader or a speculator or whatever it’s paramount and let me explain to you know why risk management is so important right because you can have a profitable trading system that makes money otherwise known as an H but if you do not have proper risk management it doesn’t matter you’re still gonna blow up your trading account and let me prove it to you so let’s assume right that there is this trading system right it wins 50 percent of the time with an average of a one to two risk reward ratio what does risk reward ratio means is that for every dollar that you risk right in the long run on average right you will get back to dollars in profit so if let’s say you risk $100 right your profit right in the long run is $200 so that’s a risk reward ratio of a one to two meaning that you know for every dollar you rece you get back two dollars in short and let’s see that there are two traders right John and Sally John is aggressive traders go big or go kind of trader and he risk 50% of his account on each trip whereas Elish is more conservative and she only risk 1 percent of her account on his trade so let’s say you know they both have a let’s say to keep things simple 100k account so what this means is that John right whenever you put on a trader he would put 50% of this amount which is $50,000 and risk for each trade means if the trade hits the stop loss he’s down $50,000 whereas le she risk 1% of her account on each trait so this means 1% of 100k which is a thousand dollars so this means if a trade hits Sally stop-loss right she loses a thousand dollars and let’s say hypothetically right the the next ten trades the outcome of this outcome loose loose loose win-win loose loose win-win-win so it’s again half of them are losers half of them are winners and now john since he risk 50% of his account on each trade can see that you know over here loose and loose right by here he has essentially wiped up on the second trick because he risk 50% of his account on each trip so let’s just give John a big fat X so sorry to all the John’s out there nothing against you just a common name that I decided to go with how about cellie okay so cellie let’s have a look right so loose loose loose right so his minus 1% minus 1% minus 1% win-win right so you know again when she wins right she gets an average of a one to two risk reward ratio so if he wins she makes two times the initial result is positive two percent plus two plus two again here minus 1 minus 1 minus 1 minus 1 then win-win-win right so let’s do it here plus 2 plus 2 plus 2 so as for sale you write what is the net outcome for her what’s the net profit that she made well if you calculated right you know that she is up a positive return of 5% and compare that with John who blew up his trading account you can see that clearly right having power a profitable trading system is not the only part of the equation you still must take into account your risk management because as I’ve just shared with you a profitable trading system without proper risk management will still cause you to lose in the long run so risk management is paramount and in this case writes Ellie who risk 1% risk on each trade right end up you know making a positive return over time so now the question is how do you we know put on your traits such that if the trade hit just stop loss you lose not more than 1% of your trading account how do you do that ok so I’m I’m gonna show you how to do it it’s very simple this is a spreadsheet that you know I I develop myself you can just Google stock trading position sizing calculator and you probably can find something similar so what you’ll do is that I get most of this calculators perform in the same way you just put in what is your your cap it all so let’s assume with 100k okay and your risk is 1% okay let’s say you wanna buy a stock and you will identify what is the entry price that you’re gonna buy the stock and what price will you buy so let’s say we keep things simple you buy $100 and let’s say and a stop by your stop-loss right for the trick is that dollars so what this will do is that you will see that this value over here is the risk dollar this simply is a function of this 1% Monte I mean one percent of a hundred thousand this gives you a thousand dollars over here how about the number of shares there is 50 how do you get this value of 50 again very simple you just take this are thousand dollars divided by 20 dollars why 20 dollars because there’s a difference between your buy price and your stop loss level right I repeat right the difference between your entry price and your stop loss level that is twenty dollars so you take your risk amount right the notional amount divided by these twenty dollars it gives you the number of shares which is 50 okay and what this means is that if you put on the trade set your by point and her dollars stop loss at eighty dollars you buy 50 shares you put in a 50 number of shares and if the trade hits your stop loss you will lose a thousand dollars on the trade which is equivalent to the one percent risk of your initial capital okay so there’s one a couple of things that I want to point out right so your number of shares that you buy it’s it’s it’s never fixed yeah it’s dependent on on a couple of things number one the title your stop loss right meaning let’s see now instead of any dollar stop-loss we have a $90 stop-loss so this means your buy price and your stop loss level now it’s only ten dollars so the title your stop loss right the higher the number of shares you can buy while you still keep your risk constant okay and likewise if you increase the size of your stop loss well let’s see now it’s a $50 notice that you only can buy 20 shares at this point in time okay so the number of shares that you buy is a function of the size of your stop loss the wider it is the less than a number of years you can buy the tighter it is right the more the number of shares that you can buy all right and still while keeping your risk constant over here needless to say if you increase your risk money if you reach like you know like John fifty percent right you can buy more shares right by the same time right you risk losing 50 percent of your account in this case okay so this is a very simple stop position sizing calculator you can google it all right and I’ve just pretty much shared with you the formula and how it works right play around with the figures right and you’re pretty much you know understand how risk management works in stocks okay so with that said let’s do a quick recap shall we my suggestion is again right if you are getting involved in trading right try not to risk more than one percent of your trading capital as per the example I just shared with you earlier right so most traders are usually between the realm of you know one two percent but obviously just stick with one percent if you can really like point five percent go hit right because the smaller your losses right the lesser you paid tuition fees right to the market second thing to notice that the tighter your stop-loss right the larger you can put on your position size the more the number of shares you can buy while still keeping your risk constant and that’s finally right the larger your stop-loss right the smaller the number of shares that you must buy right to keep your risk constant okay so with that said right I’ll see you in the next section okay so you’ve learned a lot so far right we’ve covered do you know the basics of stock trading what is a stock we talk about fundamental analysis technical analysis risk management and I know right there’s a lot to swallow at this point in time so I just want to know kind of piece the puzzles together so you can see the big picture right of what we are trying to accomplish over here so let me just do it right by showing with you a trick example right a simulated trick example okay so let’s say this is the chart of Coca Cola let’s assume that you know Coca Cola it’s a fundamentally strong company in reality earnings is improving revenue is speaking in a least estimate on your end you know all the good stuff is coming out of coca-cola so that is a good piece of fundamental and there is a stock never you want to focus on next thing we look at a technical all right so we look at coca-cola and we notice that this market I think it’s in an uptrend right let me just now pull out the 200ma and see whether the price is above it so as you know right we can define the long-term trend using the 200ma if the price is above the 200 ma we want to be to be a buyer if the price is below it we want to be a seller or a listen or just stay in cash so in this case coca-cola is above the me and if you recall right just because the price is in an uptrend doesn’t mean we buy immediately why is that and what’s the second thing that we look for is right can you remember what’s the second thing so first thing is trend okay train we know is up price above 200m a second T is the area of value we want to buy when the price is it in a real value and in this case if you notice right prices bounced off the 200 ma once twice and now it’s here for a time and not only that right if you notice from a market structure perspective this is a resistance resistance resistance resistance resistance and when the price breaks out of resistance it tends to come back and become previous resistance become support right that’s a some additional technical analysis tidbit for you if you you if you’re unaware right whenever price breaks above resistance it tends to retest previous resistance which will become support and if price breaks below the pot right that level of support that area of support will become resistance so in this case right clearly the price is also at an area of value and now the third thing entry trigger do we have an entry trigger that tells us that hey you know the buyers are stepping in right about to push price higher so if you look carefully right over here we have a bullish reversal pattern rioting is a call a piercing pattern where you can see that the bias with the candle open near the lows of the days by stepped in push the price higher closing at the highs of the day almost the ice okay so this is a sign of strength from the bias so we have three things or four things or more and fundamentals are good number two train is up number three from an area of value at number four we have a strong bullish reversal pattern telling us that you don’t hate buyers are in control and a price could possibly hit higher but if you recall earlier risk management is important right because you can have a profitable trading system or strategy but without proper risk management right you could still you know loose in the long run so now the question is how do you put on a trade such that if the trade saw was such that if the trade you know goes against you you only lose a fraction of your trading capital or 1% of your trading capital so how many shares of coca-cola do you buy okay so before we can answer that question right we have to ask ourselves where is our entry point all right to keep things simple let’s say our entry point is at forty seven dollars and let’s say we have a stop loss at forty-five dollars so with that in mind just pull out your position sizing calculator can google it so it’s there’s a lot of free ones out there let’s say again you have a capital of one hundred thousand dollars and again you’re conservative you risk one percent by price forty seven dollars stop-loss forty five dollars so in this case you can buy five hundred shares of coca-cola okay and if the price hits forty five dollars if it hits your stop-loss right you will lose a thousand dollars on the trade which is one percent of your trading account okay so you can see that over here coca-cola you can buy it forty seven dollars which is this just get out the tool over here forty seven dollars change this to green and I’ll put this on in red ok red color okay so you can see over here this is my entry price right about forty seven let me just adjust it forty seven this over here is my stop loss at forty-five I’m not gonna be you know this right so you could get it right this is the entry point this is the stop loss okay so this is how you actually know kind of piece the puzzles together right from looking at you know a technicals risk management and then you know position sizing such that you don’t blow up your trading account so one aspect that I’ve not really covered as your exits where do you exit your trade so now this is a very broad topic we can you know discuss this until the cows come home right right so but generally right you want to exit your trade right let’s say you’re a swing trader right where you just want to capture one swing in the market just you know that one move so one move right as a swing trader what you want to do is to exit your trade right where there is potential selling pressure or where potential selling pressure could come in and push the price lower so you’re not yourself where on this chart right would selling pressure come in and push the price lower so if you ask me right again I I like to reference the market structure I would say that this is a possible level and this one over here because this one video could possibly become previous upon right they could resistance something that I just covered earlier and this over here just said no obvious resistance level is smack into the $50 price range so if you ask me a possible level that you want to consider taking profits could be this is your first level and this would be a second level to consider okay so this is how you can go about you know exiting your traits of course this is just one approach right as from a swing trading approach you can adopt a trend following approach as well where you try to you know write trends in the market but again it’s not within the scope of this video to cover it if you want to learn more I can point you to some relevant resources towards the end of this video but for now right for now I hope you have a good example right off how you can actually know take the knowledge that you have learned so far right and apply to your own stock trading okay so first do it on demo paper trade first alright once you’re confident right and then you can take it to the life markets alright so with that sit let’s move on by the way if you are enjoying the content so far hit the thumbs up button if you don’t enjoy it hit the thumbs up button anyway because my name is Reina too so moving on in this section right we’ll be discussing about the different types of trading methods as a stock trader right there are different ways to skin a cat you can be a day trader swing trader or a position trader so let me explain to you right what at this type of different trading methods and the pros and cons right to each first and foremost right day trading so day trading you’re usually trading right below the one hour time frame possibly the five or fifteen minutes time frame and your goal as a day trader is to capture the intraday volatility right most stocks are I think we pretty much move about you know two three percent a day so as a day trader you are trying to capture this you know intraday move of the stock and you usually exit your positions right by the end of the day right before that the market closed you would exit your position so there’s no so called overnight risk for a day trader so the pros of a day trader is that you can actually you know be profitable on most months right if you’re good at it you have an a train you can make money on most months even though generate a full-time income or a career out of trading the downside to it is that you know day trading it’s stressful it requires lots of screen time and the opportunity cost is high really high because you know you spend so much time day trading and if you don’t make it right the opportunity cost right it’s possibly five figures or more because you could possibly be working elsewhere a full time job making maybe four thousand a month fried if you for a year that’s like almost like what 48 fifty thousand so if you go into day trading and after one year you don’t make it you can see that your opportunity cost is you know easily five figures so bear this in mind okay so this is day trading and you know what you can expect moving on swing trading so student trading typically you operate between the one hour and a daily timeframe okay the role as a swing trader is that you just want to capture one move in the market so let me explain so for example let’s say the market it’s in the inner range okay and market swings up and swings down so it’s a swing trader you possibly look to buy near the lows of the range and as the market hits up higher you exit right before the highs of this resistance so you can see that in essence right as a swing trader you’re just trying to capture this one piece of the move over here so this is just an example in the range market similarly if the market is trending you just capture that one you know one wave of the trend okay so that’s what I mean by one move in the market so the pros of swing trading is that you know it’s less stressful you don’t need much screen time because you are trading off the higher time frames but the downside to it is there chances are right because of your lesser frequency of treitz you won’t make money on most months right if you’re good possibly you can make money on most quarters and another downside is that you will not be able to write trends right because there’s a swing trader you’re just capturing one move in the market let’s say you know if the move you know it breaks out higher right you’re already off the trade so you know that’s a downside net you know you won’t be able to write a trend okay and finally right position trading so position trading is the I would say is the longest form of trading is where you are largely trading off the daily in a weekly time frame and your goal as a position trader is to write trends in the market right basically just to illustrate right so we know the market let’s say it’s in a range okay breaks out starts to train they reverse right so it’s a position trader your goal is to capture this meat of the move rightly the the meat that the butt of the trend right that’s what position trader tries to do so the process that you know is least stressful doesn’t require much screen time because you know you’re trading really the higher time frame the daily and a weekly timeframe and how often does you know one candle pain right for a daily timeframe every one day you get one new bar for a weekly timeframe everyone knew we could get one new bar so you can see that really there’s really not much thing to do besides you know sitting on your hands for a position trader the cons is that you need patience you need a lot of patience because you know it takes time to see results right position trading you would have the least number of trades because you know trading opportunities don’t always come okay and naturally you need more time to see results for a position trader so with that said right let’s do a quick recap right to the different trading methodologies that I’ve just covered day trading you’re looking to capture the intraday trend operating below the one hour time frame your trades usually last for a day or less swing trading you operate between the 1-hour and the daily timeframe anyway in between your traits usually lasts a few days maybe sometimes a few weeks and last one is position trading usually operates if on the daily timeframe and higher your trades right to will last usually weeks or even months or even you capture the really long term trends can be even years right so this are the three broad pace trading methodologies that’s out there okay and with that said right let’s move on okay so we have come a long way in this stock trading course and before I end right I just want to share with you a few stock trading tips to get you started in your stock trading career the first thing that I have for you is don’t chase the markets right doesn’t matter whether you’re trading stocks forex or futures right as a trader as new trader right there is always this legend you write to chase the market where you know the market breaks up higher the candle is so big it’s so bullish and you you want to buy it because you think that man right it’s going up forever right and if only I can just catch a piece of the move right that’s what you probably you know think and trust me whenever you see this type of price action where the market is hugely bullish right candles are big right that’s usually the worst time to enter the tree so that’s what I mean by don’t chase the markets so if you want me to give you a visual illustration it would be something like this muck it’s see it’s a range it breaks out higher like this like this you know goes up here now you’re tempted to buy and this highs over here because you know the market is so bullish the candle is so Green right it has to go up some more then you you think yourself man I’ll just you know get one small piece of the move that’s all I ask for and trust me when you buy over here that’s usually when the market collapse maybe the that’s a pullback or a reverse completely so really I first tip I have for you is that don’t chase the market really okay second thing I have for you is start small so I don’t know how much money you’re gonna start with right maybe you have a $50,000 to speculate in the markets and my suggestion is don’t risk that fool $50,000 I mean when you trade stocks right you don’t need $50,000 to get started I think nowadays with the different types of broker out there right mind you know letting you buy one or two shares or even your commission free treats right you can start with as small as like me ten thousand dollars or even five thousand dollars a cow so start small don’t risk your full risk capital because at the start if I make plenty of mistakes maybe instead of buying you hit sell maybe you buy the wrong stock here to buy a say Apple AAPL enemy buy another stock symbol which is may be called a ap you miss out the L so really start small make as many mistakes as possible it’s totally fine right when you ride a bicycle you’re gonna fall a few times when you trade stocks you’re gonna make mistakes you’re gonna lose money and it’s done same thing so if you start small right your tuition fees it’s kept small right why do you want to you know pay say for example ten thousand dollars for trading lesson when you can actually paid that same lesson for like maybe three or four hundred dollars so start small so your tuition fees is kept small and you know you have more money later on right to scale up your account when you’re confident and when you’re ready thirteen risk management first so as you start in your trading journey right you will be overwhelmed trust me I’ll be lying if I say they know if the trading a symbol no you will be overwhelmed there is a lot of information out there and you’re probably will you know hop from one trading system to the mix maybe you tried a trading swing trading position trading mean reversion trend-following momentum trading you try everything and anything but the one thing that you must not be glad it’s a risk management right you can try all the fancy systems that you want out there right till your heart content but remember your risk management comes first because thing about this right if you have proper risk management in place no matter what trading strategies that you trade or even if flops it fills it profits right you will not blow up your trading account because each trait that you risk right is only 1% or smaller right so each trick even if you lose right it’s just a loss of 1% to your trading account it’s not something that will destroy you you can still leave to you know treat another day so no matter what right emphasize on risk management first if you wanna explore the different trading systems and methods out there feel free to go hit but don’t forget your risk management comes first play good defense right like Paul Tudor Jones sit right you know I’m not sure what’s the exact lines but you know trading is all about playing good defense good defense and good defense so don’t forget that and the last thing on the share is that you know look at what the index is doing so for example let’s say you are trading dear stocks in the S&P 500 it would make sense to track right what is the trend right on the S&P 500 kind of to serve as a trend filter for you to know whether you should be buying or you know staying in cash so if you think about this right there’s the same right a raising tiger and a rising tide raises all boats and it’s pretty much the same for trading if the stock market the broad-based index is in an uptrend chances are stocks will be in an uptrend if the broad-based index like the S&P 500 is a downtrend is in a recession more often than not right more stocks will be in a downtrend so one way to do kind of know improve your trading results right is to you know trade along the path of least resistance look at what the broad-based index is do it right and then trip in the same direction of it so one tip that I have for you is that if the SMP 500 is above the 200-day moving average then you look to be a buyer looking to buy stocks if the SMB 500 is below the 200-day moving average then you stay on to cash you don’t buy stocks at all because you know the strength or rather the trend of the SMP 500 right it’s not up right it’s maybe it’s in a downtrend or as you know he’s choppy whatever the case is right in the 200m it can serve as a filter for you to know whether you should be buying stocks or holding in cash okay so these are the four tips that I have for you there’s a lot more right but really there’s no point trying to overwhelm you I would say these are the four one of the most important ones that I hope you know you take away from this entire stock trading course all right I know it’s a lot that has been covered feel free to you know go through the little lessons and materials if you need to and really right for those of you who now want to you know learn more about my trading methodology my approach right you what you can do is go down to my website over here trading with Rainer calm right this is my website and on this website this blog I pretty much share everything I know about trading right so for example we spoke about trend following earlier how do you actually write the trends in stock this guy over here will teach you how to do it right the ultimate trend following guy it’s free just click this orange button and I’ll send it to your email address for free and for those of you who want to learn more about technical analysis price action support resistance you know candlestick patterns then this guide over here the ultimate guide to price action trading is for you just click this orange button over here and I’ll send it to your email address for free as well okay so it has been a great time I’ve enjoyed right producing this stock trading course for beginners so if any feedback questions just leave it below and I’ll do my best to help so we then say I wish you good luck and good trading I’ll talk to you soon you

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