How to Pick best stocks?

Check the Debt of Particular company. 

Then Analyse with Fundamental Analysis and Technical Analysis

Reading Financial news

Use Software like investing.com, tradingview etc

Stock perform well when it is above 200 MA on daily charts 

When RSI is above 60, then stocks is perform well in weekly charts

HAPPY INVESTING & HAPPY TRADING

How to check if stock is overvalued or undervalued?

 The most important formula to understand the valuation of company i.e. Price to Earning Ratio

The profit of the company should ideally decide, whether you should invest in the company or not.

If the profits are increasing, more people would be interested invested  in the company, this would increase the demand for the company, eventually the share price.

If the profits are falling, people would like to sell their shares, this would eventually increase the supply and low demand, results in fall in the share price.

The share price should ideally move in relation with earning:

PE Ratio:- Price per share divided by Earning per share

In an ideal world, share price should move with the earnings.

That does not happen in real world, sometimes the price goes much above even though the earnings are not too high, this would be due to multiple reasons like macro environment, Govt Policy, Lot of Inflow money, Expectations of better earnings in future and sometimes without any reasons.

First, check the PE ratio of the company last 3 years

• Identify the median PE
• Then compare the current PE with median PE
• If the current PE is morethan the median PE, then company is overvalued.
• If the current PE is lessthan the median PE, then company is undervalued.

Secondly, you need to look a PE of the Industry. For example, if Infosys is trading at PE of 25 then what is the PE ratio of IT industry.

There should not be too much of difference if companies at par.

You can see the median PE in screener.in 

Happy Trading & Happy Investing

Flow charts of Rising Returns

Derivatives is too risky. In my point of view Don't do Derivatives Trading. Derivatives means Futures, Options, Forwards and swaps. 

In stocks Large cap companies allocation is more preferable.

Happy Trading & Happy Investing

How to use MACD Indicators Technical Analysis of Stocks?

Moving Average Convergence Divergence (MACD) is the indicator.

MACD is calculated as follows:

1. Calculate Average of 12th day EMA
2. Calculate Average of 26th day EMA
3. Subtract the 12th day EMA and 26th day EMA, this is called MACD line.
4. Calculate the 9 period SMA from MACD line, this is called signal line.

The difference between Signal and MACD line, this represented histogram.

When the blue line crosses red from below and values of MACD are negative, then you buy.

When the blue line crosses red from above and values of MACD are positive, then you sell.

Happy Trading & Happy Investing

4 P's is to invest in Stock Market.

 Planning - It requires a lot of research, understanding and most importantly planning. If you don't have a plan, don't have a goal then the probability of you achieving it goes significantly down.

Persistence - Sticking to your investment strategy needs a great degree of persistence and this characteristic makes sure that you are always on the winning side.

Performance - The performance of the portfolio has to be in-check all the time. The portfolio return should compared with the appropriate benchmark index and the performance has to be analysed regularly.

Patience - Patience is not just needed to hold stocks but also to pick the right stocks at right valuation and at the right time. The profit making investor waits for the best trades.

Happy Trading & Happy Investing

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What Makes Stock Prices Go Up & Down? 📊

There are many factors that determine whether stock prices rise or fall. 

These include 

• the media
• the opinions of well-known investors
• natural disasters
• political and social unrest, risk, supply and demand
• and the lack of or abundance of suitable alternatives
• over buy off or sell off means when many buyers come and sellers are not much then prices rise..and when sellers are much and buyers not much then prices will be fall.

The compilation of these factors, plus all relevant information that has been disseminated, creates a certain type of sentiment (i.e. bullish and bearish) and a corresponding number of buyers and sellers. If there are more sellers than buyers, stock prices will tend to fall. Conversely, when there are more buyers than sellers, stock prices tend to rise.

Happy Trading & Happy Investing 

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Derivatives (Futures and Options) Trading

Futures and Options (F&O)

These are the contracts signed by two parties in the share market.

Futures 
 A future is a right to obligation of buy or sell an underlying stock at a predetermined price and deliverable at predetermined time.

Options
Options are right without an obligation to buy or sell equity.
Options is done in two ways:

• Call option
• Put option

A Call option means right to buy. It is an contract that gives the buyer right to buy the underlying assets at strike price at any time up to the expiration date.

A Put option means right to sell. It is an contract that gives the buyer the right to sell underlying assets at strike price at any time up to the expiration date.

Now, I want to tell what is Strike Price:

A Strike price means where the derivative contracts can be bought or sold. For example, In call options the strike price means where the security can be purchased by option holder.

And In put options the strike price is the price in which security can be sold.

Happy Investing & Happy Trading 

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