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TRADING PINNACLE

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HOW TO BECOME A PROFITABLE TRADER

TRADINGPINNACLE.IN
 COURSE CURRICULUM

1 Preschool

Chapter 1
What is capital market?
Which market are traded in capital
market?
What is traded in capital market?
Buying and selling topic?
Size and liquidity of all market?
The different ways to trade?

Chapter 2
How do you trade?
Know when to buy and sell?
What are pips lot and shares?
Lingos?
Types of orders?
Demo trade your way to success?
Can you get rich by trading?

TRADINGPINNACLE.IN
 COURSE CURRICULUM

1 Preschool

Chapter 3
When can you trade?
Trading sessions of different country?
Trading sessions of different market?
Best times of day to trade?
Best Days of the week to trade?

Chapter 4
Who trades?
Market structure?
Market players?
Know your market history (stocks)?

Chapter 5
Which market to trade and why?
Merits and Demerits between all
markets?

TRADINGPINNACLE.IN
 COURSE CURRICULUM

1 Preschool

Chapter 6
Margin Trading?
Trading scenarios
Relationship between margin and
leverage
Margin Jargon cheat sheet
How to avoid Margin Call

TRADINGPINNACLE.IN
 PRESCHOOL-CHAPTER I

1 What is capital market?

Capital market is a market where buyers

and sellers engage in trade of financial
securities like bonds, stocks, etc. The
buying/selling is undertaken by participants
such as individuals and institutions.

There are two types of capital market:

Primary Market
Secondary Market
 PRESCHOOL-CHAPTER I

Primary Market

The primary market is a new issue market;

it solely deals with the issues of new
securities. A place where trading of
securities is done for the first time. The
main objective is capital formation for
government, institutions, companies, etc.
also known as Initial Public Offer (IPO).
Now, let us have a look at the functions of
primary market:

Origination: Origination is referred to as

examine, evaluate, and process new
project proposals in the primary
market. It begins prior to an issue is
present in the market. It is done with
the help of commercial bankers.
 PRESCHOOL-CHAPTER I

Underwriting: For ensuring the success

of new issue there is a need for
underwriting firms. These are the ones
who guarantee minimum subscription.
In case, the issue remains unsold the
underwriters have to buy. But if the
issues are completely subscribed then
there will be no liability left for them.
Distribution: For the success of issue,
brokers and dealers are given job
distribution who directly contact with
investors.

Secondary Market

The secondary market is a place where

trading takes place for existing securities. It
is known as stock exchange or stock
market. Here the securities are bought and
sold by the investors. Now, let us have a
look at the functions of secondary market:
 PRESCHOOL-CHAPTER I

Regular information about the value of

security
Offers liquidity to the investors for their
assets
Continuous and active trading
Provide a Market Place

Buying and selling topic?

When you place a trade, you are either
‘buying’ or ‘selling’ a financial instrument.
There are buyers and sellers in every
market.

When you open a ‘buy’ position, you are

essentially buying an asset from the
market. And when you close your position,
you ‘sell’ it back to the market. Buyers – also
known as bulls – believe an asset’s value is
likely to rise. Sellers – or bears – generally
think its value is set to fall.
PRESCHOOL-CHAPTER I

Size and liquidity of all market?

 PRESCHOOL-CHAPTER I

Size and liquidity of all market?

Forex Market

The different ways to trade?

Day Trading:
This form of trade involves purchasing and selling
stocks in a single day. In the case of day trading,
individuals hold stocks for a few minutes or hours. A
trader involved in such trade needs to close his/her
transactions prior to the day’s market closure. It is
popular for capitalising on small-scale fluctuations in
NAV of stocks.
 PRESCHOOL-CHAPTER II

The different ways to trade?

Day Trading:
Day trading requires proficiency in market matters, a
thorough understanding of market volatility, and
keen sense regarding the up and down in stock
values. Therefore, it is performed mostly by
experienced investors or traders.

Scalping:

It is also known as micro-trading. Scalping and day-

trading are both subsets of intraday trading.
Scalping involves reaping small profits repeatedly
ranging from a dozen to a hundred profits in a single
market day.

However, every transaction does not yield profits,

and in some cases a trader’s gross losses might
exceed the gains. The holding period of securities, in
this case, is shorter compared to day-trading, i.e.
individuals hold stocks spanning a maximum of a
few minutes.
 PRESCHOOL-CHAPTER II

The different ways to trade?

Scalping:
This feature allows for the frequency of transactions.
Similar to day-trading, scalping requires market
experience, proficiency, awareness of market
fluctuations, and prompt transactions.

Swing Trading:
This style of stock market trading is used to
capitalise on the short-term stock trends and
patterns. Swing trading is used to earn gains from
stock within a few days of purchasing it; ideally one
to seven days. Traders technically analyse the stocks
to gauge the movement patterns they are following
for proper execution of their investment objectives.

Momentum Trading:
In case of momentum trading, a trader exploits a
stock’s momentum, i.e. a substantial value
movement of stock, either upwards or downwards.
A trader tries to capitalise on such momentum by
identifying the stocks that are either breaking out or
will break out.
 PRESCHOOL-CHAPTER II

The different ways to trade?

Momentum Trading:
In case of upward momentum, the trader sells the
stocks he/she is holding, thus yielding higher than
average returns. In case of downward movement,
the trader purchases a considerable volume of
stocks to sell when its price increases.

Position Trading:
Position traders hold securities for months aiming to
capitalise on the long-term potential of stocks rather
than short-term price movements. This style of trade
is ideal for individuals who are not market
professionals or regular participants of the market.

What are pips, lot and shares?

Shares are units of equity ownership interest in a

corporation that exist as a financial asset providing
for an equal distribution in any residual profits, if
any are declared, in the form of dividends.
 PRESCHOOL-CHAPTER II

What are pips, lot and shares?

Shares - are units of equity ownership interest in a

corporation that exist as a financial asset providing
for an equal distribution in any residual profits, if
any are declared, in the form of dividends.

PIPS - The unit of measurement to express the

change in value between two currencies is called a
“pip.”
If EUR/USD moves from 1.1050 to 1.1051, that .0001
USD rise in value is ONE PIP.
A pip is usually the last decimal place of a price
quote.
Most pairs go out to 4 decimal places, but there are
some exceptions like Japanese yen pairs (they go out
to two decimal places).For example, for EUR/USD, it
is 0.0001, and for USD/JPY, it is 0.01.
 PRESCHOOL-CHAPTER II

What are pips, lot and shares?

Lots - Forex is commonly traded in specific amounts

called lots, or basically the number of currency units
you will buy or sell.
The standard size for a lot is 100,000 units of
currency, and now, there are also mini, micro, and
nano lot sizes that are 10,000, 1,000, and 100 units.

LOT NUMBER OF UNITS

Standard - 100,000
Mini - 10,000
Micro - 1,000
Nano - 100
 PRESCHOOL-CHAPTER II

Types of orders?

Orders fall into two buckets:

Market order: an order instantly executed

against a price that your broker has provided.
Pending order: an order to be executed at a
later time at the price you specify.
Market Orders

Buy
Sell
A market order is an order to buy or sell at the
best available price.
For example, the bid price for EUR/USD is
currently at 1.2140 and the ask price is at
1.2142.
If you wanted to buy EUR/USD at market, then it
would be sold to you at the price of 1.2142.

You would click buy and your trading platform

would instantly execute a buy order at that
(hopefully) exact price.
 PRESCHOOL-CHAPTER II

Types of orders?

Limit Orders
A limit order is an order placed to either buy
below the market or sell above the market at a
certain price.

This is an order to buy or sell once the market

reaches the “limit price”.

You place a “Buy Limit” order to buy at or

below a specified price.
You place a “Sell Limit” order to sell at a
specified price or better.
 PRESCHOOL-CHAPTER II

Types of orders?
Stop Entry Order
A stop order “stops” an order from executing
until price reaches a stop price.

You would use a stop order when you want to

buy only after price rises to the stop price or
sell only after the price falls to the stop price.

A stop entry order is an order placed to buy

above the market or sell below the market at a
certain price.

You place a “Buy Stop” order to buy at a

price above the market price, and it is
triggered when the market price touches or
goes through the Buy Stop price.
You place a “Sell Stop” order to sell when a
specified price is reached.
PRESCHOOL-CHAPTER II

Types of orders?
Stop Entry Order
 PRESCHOOL-CHAPTER III

Trading sessions of different

country?
There are three major forex trading sessions
which comprise the 24-hour market: the
London session, the US session and the Asian
session. Each major geographic market center
can exhibit vastly unique traits and tendencies
that can allow traders to effectively execute
strategies at any time.

WHAT ARE THE MAIN FOREX

TRADING SESSIONS?
Asian session (Tokyo)
European session (London)
US session (New York)
 PRESCHOOL-CHAPTER III

Trading sessions of different

country?
Forex Market is Open 24-hours per day
globally, Forex markets span five days a week
(Monday through Friday).

Indian Stocks Timing

The stock market timings in India for normal
trading in the equity market is between 9:15
am to 03:30 pm, Monday to Friday, without any
lunch or tea break. This means that you can
buy or sell your stocks on BSE or NSE at any
time between this time period.

Indian stock market timings for

trade is divided into three segments
 PRESCHOOL-CHAPTER III

The best hours for trading in

the Forex market
The best hours for trading in the Forex market,
in most cases, are during the London and US
session overlap. The markets are full of active
participants during these hours and the
currencies really move. For the most part, even
the largest fundamental news come out at
these times. Trading during these hours is your
best chance to get in while the market is
making decisive moves and it will be your best
chance to score quick profits.

A very attractive period to trade is from 1am to

3am EST. At that time, Asian markets are
closing, overlapping with the waking up
European markets, which offers good trade
opportunities. The same goes for the 7pm to
10pm EST time period, when the Australian and
Asian markets overlap.
 PRESCHOOL-CHAPTER IV

Market structure?
Market structure is simply support and
resistance on your charts, swing highs, and
lows.These are levels on your chart attracts the
most attention.Because traders all over the
world can see them!And this is where they base
all of their trading positions.Like looking to
enter the breakout, and looking to place their
stop loss at this obvious level.And how you can
combine candlestick patterns with market
structure is that you are basically looking to
enter your trades after strong price
rejection.Because this is where traders do get
trapped.
PRESCHOOL-CHAPTER IV

Market players?

Commercial and Investment Banks

Central Banks
Businesses and Corporations
Fund Managers, Hedge Funds, and
Sovereign Wealth Funds
Internet-based Trading Platforms
Online Retail Broker-Dealers
 PRESCHOOL-CHAPTER V

Stock Trading vs. Forex Trading

Stock trading involves buying and selling shares

of individual companies, whereas forex trading
involves exchanging – buying and selling
simultaneously – cash minted by two different
countries. This means that the mechanisms
underlying these two forms of trading are very
different and can be advantageous under
different situations. Stock trading is best when
markets are rising, since low liquidity makes it
difficult to short sell in falling markets. Forex
trading, on the other hand, can be lucrative in
any scenario since every trade involves both
buying and selling and liquidity is high.
PRESCHOOL-CHAPTER V

Stock Trading vs. Forex Trading

PRESCHOOL-CHAPTER V

Stock Trading vs. Forex Trading

PRESCHOOL-CHAPTER V

Stock Trading vs. Forex Trading

 PRESCHOOL-CHAPTER VI

Margin Trading?

Margin trading is a method of trading assets

using funds provided by a third party. When
compared to regular trading accounts, margin
accounts allow traders to access greater sums
of capital, allowing them to leverage their
positions. Essentially, margin trading amplifies
trading results so that traders are able to
realize larger profits on successful trades. This
ability to expand trading results makes margin
trading especially popular in low-volatility
markets, particularly the international Forex
market. Still, margin trading is also used in
stock, commodity, and cryptocurrency markets.
 PRESCHOOL-CHAPTER VI

Relationship between margin

and leverage
You use margin to create leverage.
Leverage is the increased “trading power” that
is available when using a margin account.

Leverage allows you to trade positions LARGER

than the amount of money in your trading
account.
Leverage is expressed as a ratio. Leverage is
the ratio between the amount of money you
really have and the amount of money you can
trade.
It is usually expressed with an “X:1” format.
For example, if you wanted to trade 1 standard
lot of USD/JPY without margin, you would need
$100,000 in your account.
But with a Margin Requirement of just 1%, you
would only have to deposit $1,000 in your
account.
The leverage provided for this trade would be
100:1.
PRESCHOOL-CHAPTER VI

How to avoid Margin Call

Try not to use up your entire Margin Buying

Power.
Avoid a concentrated portfolio by
diversifying your positions.
Avoid trading on margin in highly volatile
securities.
Constantly monitor your account