Trading Basics - PDF Notes
1. What is Trading?
Trading is the act of buying and selling assets in financial markets such as stocks, bonds,
commodities, or cryptocurrencies. The goal is to profit from price fluctuations over time. In simple
terms, it's about buying low and selling high.
2. Candlestick Chart Reading
Candlestick charts display the open, high, low, and close prices for a specific time frame. These
charts help to visualize price trends and reversals. There are two main types of candlesticks:
- Bullish (Green): Close > Open
- Bearish (Red): Close < Open
Candlestick Patterns:
1. Doji: Indicates indecision in the market.
2. Hammer: Potential reversal after a downtrend.
3. Engulfing: Strong reversal pattern.
4. Morning/Evening Star: Trend reversal pattern.
3. Live Chart Analysis
Live chart analysis involves studying real-time price movements and using indicators to make
decisions. Key elements for analysis include:
- Trend: Whether the price is going up or down (uptrend or downtrend).
- RSI: The Relative Strength Index helps to identify overbought (above 70) or oversold (below 30)
conditions.
- Volume: Shows the strength of buying or selling pressure.
Always combine multiple indicators to improve trade accuracy.
4. Risk Management
Risk management is crucial in trading. It involves setting stop-loss orders, limiting losses, and not
risking more than 2-5% of your capital on a single trade.
