TECHNICAL ANALYSIS TRADING COURSE Learn Technical Analysis For Stock Market By Carlos Branco COURSE CONTENT Learn Technical Analysis For Stock Market By Carlos Branco What is a Stock? Stock Price Long or Short What is Leverage Different Analysis How Much Time I Need Read Market Structure and Trends Strategy 1 Strategy 2 Protect Capital 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 1-What is a Stock? A stock is a small part of a company when you own a stock you own a small part of that company. To make money with stocks you have two ways: The first is to buy and sell at a higher price in the future. This practice involves risks but is practiced by millions around the world. Another way to make money is by investing in stocks that pay dividends. Some stocks distribute profits to shareholders. 2 - STOCK PRICE AND MARKET CAP Some newcomers to the stock world tend to look at the price of stocks and think that the price of a stock is related to the value of the company. So if an Apple stock costs 140 USD and an Amazon stock costs 3200 USD does that mean that the Amazon is 20 times bigger than the Apple? Incorrect. In order to know the value of a company in the market, we must do the following: Number of shares outstanding x Price = Market Cap 2 - STOCK PRICE AND MARKET CAP Some newcomers to the stock world tend to look at the price of stocks and think that the price of a stock is related to the value of the company. So if an Apple stock costs 140 USD and an Amazon stock costs 3200 USD does that mean that the Amazon is 20 times bigger than the Apple? Incorrect. 3 - GO LONG OR SHORT In the stock market we can make money when the market is going up or going down. Going LONG means that we are buying shares and intend to sell these shares for a higher value and make money. Example: We buy 3 shares of APPLE at 100 usd We wait and sell these 3 shares for 110 usd Profit 10 usd per share x 3 shares = 30 usd profit 3 - GO LONG OR SHORT Going SHORT means making money from the devaluation of a stock. This despite being a strange concept is possible and works in the following way. Example: You SHORT APPL - 3 Stocks The broker lends you 3 stocks that are immediately sold at market price current. 3 stocks x 100$ per stock = 300 usd You have to buy 3 stocks back when you want to exit your position. Apple shares go down to 90 USD so you close our short position. You buy 3 shares for 270 USD. 300 usd - 270 usd = 30 usd profit 3 - GO LONG OR SHORT Dangers of going SHORT. When you go LONG the worst possible scenario is to lose is 100% of your position if the stock goes to zero. When SHORT it's possible that price double or triple and if that price movement happens fast, sometimes you can even lose more money than you expected. 4 - What is leverage and what are the Risks Leverage is when the broker allows you to have more buying power that you already have. For example some brokers allow you 2x, 3x 10x your capital. Example: You have 10,000$ and you buy 20.000$ of Apple Stock using 2x leverage Stock drops price 50% Broker immediately liquidate your position and your balance now is zero You should avoid to use leverage at all cost because can make massive damage in your account. 5 - DIFFERENCE BETWEEN TECHNICAL ANALYSIS AND FUNDAMENTAL ANALYSIS Fundamental Analysis is idea based on trying to find a disconnection between a company intrinsic value and the current market value. For this, the investor must analyze news, company information directly from financial statements and any other information available. CHARTS ARE NOT IMPORTANT WARREN BUFFET 5 - DIFFERENCE BETWEEN TECHNICAL ANALYSIS AND FUNDAMENTAL ANALYSIS On the other hand, in technical analysis is based only on price and indicators, not taking into account factors related to news or the future of the company The trader who uses technical analysis only tries to use indicators to try to find trends and be part of them, as he believes that the news and the potential value of the stock is already reflected in its price. IN THIS COURSE WE WILL FOCUS ON TECHNICAL ANALYSIS BUT IF YOU YOU WANT YOU CAN TAKE A LOOK AT FUNDAMENTAL ANALYSIS BEFORE OPENING A TRADE TO CONFIRM THAT YOU ARE ON THE RIGHT SIDE OF THE MARKET. 6 - HOW LONG DO I NEED TO LOOK AT THE CHARTS PER DAY There are different types of trading. Day Trading This type of trading may require some attention from the trader as the entry and exit of the trade is done on the same day. As a general rule, you will use timeframes from 15M to 1H. IF YOU WANT TO BE A DAY TRADER MAYBE YOU WILL NEED TO DEDICATE COUPLE HOURS PER DAY TO TRADING 6 - HOW LONG DO I NEED TO LOOK AT THE CHARTS PER DAY Swing Trading This type of trading requires less time from the trader as trades are open for a few days. Swing traders generally use charts from 1h to 4h and sometimes daily for entries and exits. SWING TRADING IS MUCH MORE RELAXED THEN DAY TRADING, ALSO HELPS YOU TO BUILD DISCIPLINE BECAUSE TEACH YOU TO WAIT IDEAL TRADING STYLE IF YOU HAVE A JOB BUT YOU STILL HAVE FREE TIME 6 - HOW LONG DO I NEED TO LOOK AT THE CHARTS PER DAY Position Traders This is the type of trading that requires less time, maybe 1 hour a week or two is enough as trades will be open for weeks or months. POSITION TRADERS ARE ALMOST LIKE INVESTORS, WHEN YOU POSITION TRADE YOU USE WEEKLY OR MONTHLY TIMEFRAME, SOMETIMES DAILY FOR ENTER OR EXIT THIS BRINGS YOU A BIG ADVANTAGE SINCE YOU WILL FALL LESS FOR MARKET MANIPULATIONS. USUALLY SIGNALS GIVEN BY INDICATORS ON BIG TIME FRAMES ARE MUCH STRONGER AND SHOW US BETTER WHAT DIRECTION THE MARKET IS AIMING 7 - READ MARKET STRUCTURE AND TRENDS The stock market like other financial markets moves in waves. The price needs to move this way to be efficient, these waves allow some players to be liquidated, others to exit their positions and others to accumulate new positions. WE RETAIL TRADERS ARE A SMALL FISH IN THIS WORLD OF SHARKS, WE HAVE TO TRY TO CATCH THE WAVES AND WHEN WE ARE WRONG WE TRY TO SURVIVE. Retail 7 - READ MARKET STRUCTURE AND TRENDS When we look at a chart the first thing we can identify is price movement by looking at the candles. My suggestion is to start by marking highs and lows on the chart. 7 - READ MARKET STRUCTURE AND TRENDS Then we can connect the highs and lows using lines, like this we can visually see that the chart is in an uptrend.