A Few Trading Resources
Yesterday, as I wrote a post about a recent trading strategy, I got a message from @oflyhigh regarding trading education. I realized, I haven't posted anything on trading education for a very long time, if ever. I have read a lot of books on the subject over the years and now mostly rely on resources from the internet. Although I must say, for a beginner, a few basic books goes a very long way.
Here I am going to assume, the word "trading" as it relates to the stock market. The two main ways to analyze individual stocks are called:
- Fundamental Analysis
- Technical Analysis
Generated with AI ∙ September 24, 2024 at 3:57 PM
Fundamental Analysis is mostly applicable to stock market of individual stocks, while Technical Analysis is a price/volume action of any tradable instrument and can be applied to any market, including crypto.
Fundamental Analysis of Stocks: A Deep Dive
Fundamental analysis is a method used to evaluate the intrinsic value of a company by examining its financial statements, industry trends, and economic conditions. This approach focuses on understanding the underlying health and potential of a company, rather than relying solely on market fluctuations.
Key financial statements analyzed in fundamental analysis include the income statement, balance sheet, and cash flow statement. These documents provide insights into a company's profitability, financial position, and cash generation capabilities. By studying these statements, investors can assess factors such as revenue growth, expense management, debt levels, and cash flow efficiency.
Beyond financial statements, fundamental analysis also considers qualitative factors such as a company's management team, competitive advantage, industry trends, and economic outlook. A strong management team can significantly influence a company's success, while a competitive advantage, such as a patented technology or strong brand recognition, can provide a sustainable edge in the marketplace. Understanding industry trends and economic conditions can help investors assess the potential risks and opportunities facing a company.
Technical Analysis of Stocks: Charting the Future
Technical analysis is a method used to predict future stock price movements based on the historical price action and trading volume. It involves studying charts and patterns to identify trends, support and resistance levels, and other technical indicators that can signal potential buying or selling opportunities.
Technical analysts believe that market prices reflect all available information, including fundamental factors. Therefore, they focus on analyzing price patterns and trends, rather than relying on detailed financial analysis. Common technical indicators used include moving averages, relative strength index (RSI), Bollinger Bands, and MACD.
price is always right
By studying charts and technical indicators, investors can identify potential entry and exit points, manage risk, and make informed trading decisions. However, it's important to note that technical analysis is not foolproof and should be used in conjunction with other forms of analysis, such as fundamental analysis.
There are no Silver Bullets
I must convey the disclaimer here that there is no silver bullet in terms of success in the financial market, there is no holy grail. No one can chart the "future" althrough we say we do. I know I have written a heading earlier. The reason sometimes it becomes possible, is because of the herd mentality. We make it possible. If lots of traders follows the same principle, with a common directional goal, that tend to happen. That said, always remember:
Price have no memory, it can't think
Okay, with that out of the way, let us talk about a few books. In fact, since there are overwhelming amount of books out there, I will mention only two. It is not that they are the best, but they are certainly easy read. One based mostly on fundamental analysis (it is a bit of a mix), and the other on technical analysis.
I know the title of O'Neil's book is cheesy, but trust me it is a good book for beginners, and nothing out there can compete with the simplicity of that book. The first edition of "How to Make Money in Stocks" by William J. O'Neil was published in 1988, and I can tell you it did stand the test of time and is still relevant. Carter's book is more modern and talks a lot about how to deal with your life if you do decide to trade for a living.
Internet Resources
These days, majority of the resources of stock market analysis are available online, a lot of them are for free (with annoying ads). Here are a few of my go to resources, if someone asks a question:
- Technical Analysis Details: Nothing beats Stockcharts.com Chartschool
- For Chart analysis and visualization: Nothing beats TradingView
- For general maket vizualization and screens: Finviz
Ads are getting annoying though in all these websites, but each of them have a subscription service with a free trial. I don't have any of the paid version, because, I have thinkorswim for many years through my brokerage and you don't really need anything else if you have it.
Thats about it! Happy trading.
It definitely needs a strong heart to control emotions, and be firm to bear the losses and learn from it. I felt it is stressful as well, so never got into it.
It depends how you approach it. Detachment with money helps. As Sri Krishna said to Arjun:
कर्मण्येवाधिकारस्ते मा फलेषु कदाचन।
मा कर्मफलहेतुर्भूर्मा ते सङ्गोऽस्त्वकर्मणि॥ २-४७
Following this all I can do is to follow a process and do my work honestly. If my process is right and my effort is honest, I need not worry about results.
That's the best advice anyone can have, applicable to all areas of life.
By the way, I was to your city Kolkata.
Nice! Business or pleasure? I am heading to New Delhi next Tuesday. Will be in Kolkata for a couple of days during the following weekend. Business trip for me.
Personal trip, my son had a Table Tennis event there. Hope your trip goes well, wish you a happy journey.
Mai bhe investment krne laga hu , honestly Etna sab kuch to pata nahi hai. Bas to be safe index mai or large cap me he invest krta hu. Kabhe kabhe IPO mai bhe kismat ajma leta hu. 😬 Aap bhe krte ho kya Indian stocks mai investment?
Indian stock me nahi, US market jaida achha hai mere liye.
AAP lage roho munnabhai! :) hoga jorur!
He hee , jesa aap kahe. Aab wese yha se bhe hai option us stocks mai investment krne ke lea. Thanks good day. Umeed hai kabhe apka uttarakhand Ane ka mauka hua to mulakaat hoge 🤗🙏👋
Thank you for sharing, I benefited a lot.
I will try to find time to read these two books and improve my trading level. Thank you again.
You are welcome. Both are easy reads.
If you like video learning, the summary of the O'Neil book is presented here
Crypto trading is dominated by whales, stoploss hunting the retailers I feel like, I've read in to trading a lot and I think I can say I can do TA on charts but stopped trading and just went to hodl, buying every month and putting limit buy orders using TA, never tried other assets though
TA doesn’t guarantee profit, it just lowers the probability of loss. If you do 100 trades following TA perfectly 60% of them will be winners and 40% of them will be losers. That is in fact an excellent outcome!
I'd like to get some seed money sometime and write a bot to do some trading for me. I don't really have the money or the skills...
Hard to do even for skilled people to write a successful trading bot.
I figured I would just use AI when I finally have the funds....
Don’t you think if it’s that easy all the developers will be rich. Do you think that they would have worked for Splinterlands, or hive or Leo?? Just asking for a friend :)
Maybe I will get lucky though!
Ha ha ha! Luck is not a strategy:)
That's what the unlucky people say... :)
🎉 Upvoted 🎉
👏 Keep Up the good work on Hive ♦️ 👏
❤️ @bhattg suggested sagarkothari88 to upvote your post ❤️
Tried trading on Coinbase for a few months, but basically broke even using TA. Didn't seem worth it especially considering added tax reporting burden.
Thx for the tools :)