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Financial Markets & Trading - Introduction

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Financial Markets & Trading - Introduction

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This is a Presentation by Mr. Omkar Godbole & Mr. Aditya Dasgupta, for the purpose of financial training.

Please do not replicate without proper consent from the team of Total Package Project Associates.

Total Package Project Associates is into Business Auxiliary Services, and facilitates for the main dimensions for new and existing businesses. The following are our main activities :

- Project Financing / Financial Advisory (Equity / Currency Segment)
- IT Infrastructure Development
- Marketing Solutions
- Recruitment / Training & Development
- Operations Strategy (Start Up, Doc ! Project Blueprints)

Disclaimer : Total Package Project Associates is a proprietary concern registered in accordance with Municipal Laws of Mumbai (Maharashtra, India). For more information please mail us on director@totalpackageprojects.com or aditya@totalpackageprojects.com.

This is a Presentation by Mr. Omkar Godbole & Mr. Aditya Dasgupta, for the purpose of financial training.

Please do not replicate without proper consent from the team of Total Package Project Associates.

Total Package Project Associates is into Business Auxiliary Services, and facilitates for the main dimensions for new and existing businesses. The following are our main activities :

- Project Financing / Financial Advisory (Equity / Currency Segment)
- IT Infrastructure Development
- Marketing Solutions
- Recruitment / Training & Development
- Operations Strategy (Start Up, Doc ! Project Blueprints)

Disclaimer : Total Package Project Associates is a proprietary concern registered in accordance with Municipal Laws of Mumbai (Maharashtra, India). For more information please mail us on director@totalpackageprojects.com or aditya@totalpackageprojects.com.

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Financial Markets & Trading - Introduction

  1. 1.  Financial Markets & Trading An Introduction Omkar Godbole | Aditya Dasgupta
  2. 2.  1. Allows transfers of funds from person or business without investment opportunities to one who has them 2. Improves economic efficiency Function of Financial Markets
  3. 3.   Debt and Equity Markets  Primary and Secondary Markets  Investment Banks underwrite securities in primary markets  Brokers and dealers work in secondary markets  Exchanges and Over-the-Counter (OTC) Markets  Money and Capital Markets  Money markets deal in short-term debt instruments  Capital markets deal in longer-term debt and equity instruments Structure of Financial Markets
  4. 4. Trading Markets
  5. 5.   Macroeconomics Analysis  Industry Analysis  Equity Valuation Model (Dividend Discount Model- DDM)  Financial Statement Analysis Fundamental Analysis
  6. 6.   Global Economy Analysis – affects export, price competition and profits – exchange rate: purchasing power and earnings  Domestic Economy – The ability to forecast the macroeconomy can translate into great investment performance – outperform other analysts to earn extra profits Many variables can affect economy Macroeconomics Analysis
  7. 7.   Select a good industry to invest. It is difficult for a firm to do well in a troubled industry  Standard Industry Classification (SIC) code  Value line Investment Survey - reports 1700 firms in 90 industries  Two factors that determine the sensitivity of a firm’s earnings to business conditions: business risk & financial risk Industry Analysis
  8. 8.   Dividend Discount Model (DDM) V0= (D1+P1)/(1+k) = D1/(1+k) + D2/(1+k)2 ...+ Dn/(1+k)n  constant growth assumption V0 = D1/(1+k) + D1(1+g)/(1+k)2 +D1(1+g)2 /(1+k)3 + ... = D1/(k-g) or k = expected return Equity Valuation Model
  9. 9.   Preparation of Source/Use Fund Statement  Ratio Analysis – Performance Analysis – Du Pont Analysis Financial Statement Analysis
  10. 10.  Macro Trading - 24th March 2014
  11. 11.   Dow Theory  Trend lines  Indicators  Elliot Wave Analysis Technical Analysis
  12. 12.   A standard Candlestick chart contains a series of multiple individual candlestick data points, that displays the high, low, opening and closing prices for a security for a single day  The wide part of the candlestick is called the "real body" and tells investors whether the closing price was higher or lower than the opening price  The candlestick's shadows show the day's high and lows and how they compare to the open and close Japanese Candlestick
  13. 13.  Candlestick Chart
  14. 14. Technical Indicators  Indicators  Technical Indicator is a result of mathematical calculations based on indications of price and/or volume. The values obtained are used to forecast probable price changes
  15. 15.   Volumes  Accumulation/Distribution   Money Flow Index   On Balance Volume   Price and Volume Trend   Volume Rate of Change  Trends Indicators  Average Directional Movement Index   Accumulation Swing Index   Bollinger Bands   Commodity Channel Index   Mass Index   Moving Average   Pivot Points Support and Resistance Lines   Parabolic SAR   Standard Deviation   ZigZag   Williams` Accumulation/Distribution Cont..
  16. 16.  Cont..
  17. 17.   Ralph Nelson Elliott developed the Elliott Wave Theory in the late 1920s by discovering that stock markets, thought to behave in a somewhat chaotic manner, in fact traded in repetitive cycles. Elliot Wave Theory
  18. 18.   The Elliott Wave Theory is interpreted as follows:  Every action is followed by a reaction.  Five waves move in the direction of the main trend followed by three corrective waves (a 5-3 move).  A 5-3 move completes a cycle.  This 5-3 move then becomes two subdivisions of the next higher 5-3 wave.  The underlying 5-3 pattern remains constant, though the time span of each may vary. Elliot Wave Interpretation
  19. 19.  The Elliott Wave Theory assigns a series of categories to the waves from largest to smallest. They are:  Grand Super cycle  Super cycle  Cycle  Primary  Intermediate  Minor  Minute  Minuette  Sub-Minuette Wave Categories
  20. 20.  Elliot Wave Chart
  21. 21.   RISK is the possibility of loss  Risk management is to direct and control the possibility of loss. The activities of a risk manager are to measure risk and to increase and decrease risk by buying and selling stock. Risk Management – Money and Trade Management
  22. 22.   Diversify your portfolio  Equity  Debt  Commodities  Foreign Exchange  Some examples  Buy Gold, Yen, Pharmacy stocks as a hedge against Inflation, stock market crash  Buy Banking, Infrastructure and IT stocks in boom  Only way to beat inflation – Buy Agriculture commodities Minimize Risk by Diversification
  23. 23.  Legendary Trader Paul Tudor Jones trading style and beliefs  Contrarian attempt to buy and sell turning points. Keeps trying the single trade idea until he changes his mind, fundamentally. Otherwise, he keeps cutting his position size down. Then he trades the smallest amount when his trading is at its worst.  Considers himself as a premier market opportunist. When he develops an idea, he pursues it from a very-low-risk standpoint until he has been proven wrong repeatedly, or until he changes his viewpoint.  Swing trader, the best money is made at the market turns. Has missed a lot of meat in the middle, but catches a lot of tops and bottoms.  Spends his day making himself happy and relaxed. Gets out if a losing position is making him uncomfortable. Nothing’s better than a fresh start. Key is to play great defense, not great offense.  Never average losers. Decreases his trading size when he is doing poorly, increase when he is trading well.  He has mental stops. If it hits that number, he is out no matter what. He uses not only price stops, but time stops.  Monitors the whole portfolio equity (risk) in real time.  He believes prices move first and fundamentals come second.  He doesn’t care about mistakes made 3 seconds ago, but what he is going to do from the next moment on.  Don't be a hero. Don't have an ego. Always question yourself and your ability. Don't ever feel that you are very good. The second you do, you are dead. Trade Management and Psychology of Trader
  24. 24.  Trading Plan from Goldenwire.com
  25. 25.   A trading system is simply a group of specific rules, or parameters, that determine entry and exit points for a given equity. These points, known as signals, are often marked on a chart in real time and prompt the immediate execution of a trade  Often, two or more of these forms of indicators will be combined in the creation of a rule. For example, the MA crossover system uses two moving average parameters, the long-term and the short-term, to create a rule  “Buy when the short-term crosses above the long term, and sell when the opposite is true.“ Trading System
  26. 26.  Trading on trend lines and moving averages – 7th Jan 2014
  27. 27.  A sample technical trade Buy GBP/USD– 22nd Jan 2014
  28. 28.  Technical Trade Outcome
  29. 29.  Merits  It takes all emotion out of trading  It can save a lot of time  It's easy if you let others do it for you De-Merits  Trading systems are complex  You must be able to make realistic assumptions and effectively employ the system  Development can be a time-consuming task Trading Plan Merits and Demerits
  30. 30.  We all at And We’re Done !! Thank You for Your Valuable Time !!

Notes de l'éditeur

  • Make the distinction between primary and secondary markets.
  • Firms raise funds only at Primary offer stage, but the secondary markets give the primary markets liquidity and therefore increases the value.
    1.Debt Markets
    Short-term (maturity < 1 year) Money Market
    Long-term (maturity > 1 year) Capital Market
    2.Equity Markets
    Common stocks
    1.Primary Market
    New security issues sold to initial buyers
    2.Secondary Market
    Securities previously issued are bought and sold
    1.Exchanges
    Trades conducted in central locations (e.g., New York Stock Exchange)
    2.Over-the-Counter Markets
    Dealers at different locations buy and sell

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