Forum Posts

Kush Malpani
May 29, 2022
In GIFT Forum
Technical indicators are heuristic or pattern-based signals produced by the price, volume, and/or open interest of a security or contract used by traders who follow technical analysis. By analyzing historical data, technical analysts use indicators to predict future price movements. So here are the four different categories of technical indicators: • Trend Indicators. • Momentum Indicators. • Volatility Indicators. • Volume Indicators. A technical indicator is a series of data points that are derived by applying a formula to the price data of a security. Price data includes any combination of the open, high, low, or close over a period of time. Some indicators may use only the closing prices, while others incorporate volume and open interest into their formulas. The price data is entered into the formula and a data point is produced. For example, the average of 3 closing prices is one data point [ (41+43+43) / 3 = 42.33 ]. Simple math even a 4th grader can do, this is an example of the moving average indicators used by traders widely. The variable in this entire system is the timeframe, in which traders choose to trade in. One trader could take the crossing over the 200 SMA as a buy signal in a weekly timeframe, by another trader, using daily timeframes to trade, would miss this crossover entirely. This is, however, different from the Exponential Moving Average. An exponential moving average is a type of moving average that places a greater weight and significance on the most recent data points. The exponential moving average is also referred to as the exponentially weighted moving average, giving more importance to things like Volume and recent movements. However, one data point does not offer much information and does not make for a useful indicator. A series of data points over a period of time is required to create valid reference points to enable analysis. By creating a time series of data points, a comparison can be made between present and past levels. For analysis purposes, technical indicators are usually shown in a graphical form above or below a security's price chart. Once shown in graphical form, an indicator can then be compared with the corresponding price chart of the security. Sometimes indicators are plotted on top of the price plot for a more direct comparison. Momentum indicators Momentum indicators are technical analysis tools used to determine the strength or weakness of a stock's price. Momentum measures the rate of the rise or fall of stock prices. Common momentum indicators include the relative strength index (RSI) and moving average convergence divergence (MACD). Now, momentum indicators have been proven to be the more reliable lot of technical indicators. The RSI (Relative Strength Index) takes into account Oversold and overbought levels, giving investors a broader perspective on buy and sell decisions. An Overall Conclusion Technical analysis is about probability and likelihoods, not guarantees. If an indicator works more often than not, even though it does not work all the time, it can still be effective at generating profits.
0
0
10
Kush Malpani
Apr 06, 2022
In GIFT Forum
The term derivative refers to a type of financial contract whose value is dependent on an underlying asset, group of assets, or benchmark. A derivative is set between two or more parties that can trade on an exchange or over-the-counter (OTC). These contracts can be used to trade any number of assets and carry their own risks. Derivatives are sometimes criticized for being a form of legalized gambling and for leading to destabilizing speculation, although these points can generally be refuted. Derivatives are typically priced by forming a hedge involving the underlying asset and a derivative such that the combination must pay the risk-free rate and do so for only one derivative price. Value is derived from the value of one or more underlying, which can be commodities, precious metals, currency, bonds, stocks, stocks indices, etc. The four most common examples of derivative instruments are Forwards, Futures, Options and Swaps. Futures and options Futures are derivative financial contracts that obligate the parties to transact an asset at a predetermined future date and price. The buyer must purchase or the seller must sell the underlying asset at the set price, regardless of the current market price at the expiration date. Originally, such trading was carried on through open outcry and the use of hand signals in trading pits, located in financial hubs such as New York, Chicago, and London. Throughout the 21st century, like most other markets, futures exchanges have become mostly electronic. Futures contracts can be made or "created" as long as open interest is increased, unlike other securities that are issued. The size of futures markets (which usually increase when the stock market outlook is uncertain) is larger than that of commodity markets, and are a key part of the financial system. The term option refers to a financial instrument that is based on the value of underlying securities such as stocks. An options contract offers the buyer the opportunity to buy or sell—depending on the type of contract they hold— the underlying asset. Unlike futures, the holder is not required to buy or sell the asset if they decide against it. Each contract will have a specific expiration date by which the holder must exercise their option. The stated price on an option is known as the strike price. Options are typically bought and sold through online or retail brokers.
0
0
34
Kush Malpani
Mar 09, 2022
In GIFT Forum
How does News affect stock prices? With the in-depth study of the stock market, the impact of news media on stock prices has gradually been paid attention to. Commonly, we see political announcements, social schemes and protests and majorly individual company earning reports, have a major impact on stock prices. Not only that, big picture economic factors like inflation and GDP data as well, have a direct correlation to markets. Positive news will normally cause individuals to buy stocks. Good earnings reports, an announcement of a new product, a corporate acquisition, and positive economic indicators all translate into buying pressure and an increase in stock prices. A company's stock prices tend to observe short-term movement with impactful news, hype, and events occurring in the company. Any reported information related to the release of new products or services by a company, the speculated increase in the value of their shares and profits, and positive news and financial reports are one such driven factor behind stock price influence. Any downward revisions to future sales, earnings, cash flow, and more could lead to concerns over the stock's future value. Downward revisions or developments that decrease future value expectations can be a fundamental reason why a stock might fall alongside good news. Over the long term, optimistic global news attracts permanent inflows and has a stronger impact on returns. Interestingly, the impact of global news sentiment is found to be four times stronger in global “bear" markets than in global “bull" markets, suggesting that investors are more sensitive to the news tone during global market downturns. The 'Uncertainty' factor News doesn’t affect the stock market. People’s reaction to the news affects the stock market. The same news may have very different reactions, depending on expectations, market conditions and prevailing sentiment levels. For example, a company’s earnings announcement. A company may announce record earnings, so one might assume that its stock would go up due to heavy buying. But while it was a record, perhaps it was not as good as people expected, in which case the stock would go down due to heavy selling. So is the news important? Yes, but only in how it compared to expectations, and how people reacted. One would think, that positive news would 10 out of 10 times have a similar impact on the companies prices, spiking it. However, this is not always the case. This is because of a concept we like to call ‘Pricing in’. This concept will be covered in detail in later articles. Stay tuned! Thank you for reading GIFT’s article. Be sure to read our weekly newsletter, and we hope to bring you more interesting and engaging content every week! Next week’s article will delve deeper into the stock market, and the mechanisms by which stock prices are decided. To be informed when our next newsletter and article is out, subscribe to us by using the ‘Join Us’ page on our website. GIFT yourself financial literacy today
0
0
23
Kush Malpani
Nov 14, 2021
In GIFT Forum
By Veer Jhaveri What is Technical Analysis? Often referred to skeptics as ‘stock market astrology’, technical analysis is a tool, or method, used to predict the probable future price movement of security – such as a stock or currency pair – based on market data. If you were a fundamental analyst, you would study a company’s financial statements, such as the income statement and the balance sheet, to ascertain its growth potential. You would also try to monitor factors outside these financial statements that would increase the company’s earnings in the future. For example, you would keep track of the new businesses the company is investing in, the new markets it is entering, and the new technology it has adopted, and so on. Technical analysis doesn’t believe in this approach. It believes that stock prices move in circles. If you can spot the section of the circle the price is currently in, you will be able to make sound investment decisions. To identify the current stage of the price pattern, you would use some analytical tools. These include various types of stock charts, some momentum indicators, and moving averages. How is it used? Now that you know the meaning of technical analysis let’s see the various tools that are used in it. They are: Charts Volume charts are one of the most widely used technical analysis tools that show the number of shares bought and sold in the market during a day. You can either use a bar chart or a candlestick chart for analysis. Momentum Indicators They are statistical figures calculated based on stocks’ price and volume data. During technical analysis, momentum indicators act as supporting tools to charts. One of the objectives of technical analysis is to confirm your views about a stock and momentum indicators help you do it with ease. The most widely used momentum indicator is the RSI (Relative Strength Index) Moving Averages Another technical analysis tool, with moving averages you can eliminate sharp and frequent fluctuations in a stock chart. Note that sometimes there could be sharp movement in stock prices within a short period. This makes it difficult to predict the trend. Moving averages help remove its impact and make the trend more prominent. Does it really work? Yes, Technical Analysis works and it can give you an edge in the markets. However, Technical Analysis alone is not enough to become a profitable trader. In the short term, with the right tools and composure, technical analysis can be a trader's greatest tool. However, it could also destroy your portfolio, if not implemented with the right judgment. Thank you for reading GIFT’s article. Be sure to read our weekly newsletter, and we hope to bring you more interesting and engaging content every week! Next week’s article will delve deeper into the stock market, and the mechanisms by which stock prices are decided. To be informed when our next newsletter and article is out, subscribe to us by using the ‘Join Us’ page on our website. GIFT yourself financial literacy today!
2
0
367
Kush Malpani
Aug 02, 2021
In GIFT Forum
Before delving into any kind of investing or as people more commonly like to indulge in “speculation”, the basics of both Fundamental and Technical Analysis of stocks, must be engrained in your mind. In this article, we will not only be covering what Fundamental Analysis is, but will also make sure that every single one of our readers understands the implications and importance of it, in very simple, non “Financial Jargon” terms. What is Fundamental Analysis? Fundamental analysis studies anything that can affect the stocks value, from macroeconomic factors such as the state of the economy and industry conditions to microeconomic factors like the effectiveness of the company's management. Basically, although each investor is exposed to the same financials and public information about the company, the effectiveness and the very deduction of what each investor thinks about the current price of the stock, will vary significantly. How to Use Fundamental Analysis to pick stocks? For stocks, fundamental analysis uses revenues, earnings, future growth, profit margins, and other data to determine a company's underlying value and potential for future growth. All of this data is available in a company's financial statements all over the internet nowadays. There are many ratios regarding this kind of analysis like the debt/equity ratio, the Book/Price ratio but the single most important metric used by every single person who tried their hand at the analysis of stocks, is the Price/Earnings or The P/E ratio. This ratio is the ratio of the current price of a company’s share in relation to its earnings per share, which is how much revenue the company generates, compared to its shareholder equity. This metric, in the most simple terms possible, can tell you how expensive or inexpensive a stock is, in relation to how much money the business under that stock, Is really making. Again, this ratio can be interpreted in various ways, but it can be an effective screener in your stock picking journey. Personally, we like to use the OPM or the Operating profit Margin, growth in net profit, trend in dividend yield and sales growth as key financials to judge a company’s core business. Things like the competence of the management of the company and the future prospects of its business, can also heavily impact an investors sentiment on a stock. However, such things are based on the interpretation of the investor and is very subjective. This is where opinions on a particular stock can heavily differ. Key takeaways This form of analysis is the single most oldest and effective way to generate good returns from the markets. Any aspiring investors journey towards that successful portfolio, must start from the very basics of Fundamental Analysis. Something to be noted is that Fundamental Analysis is only effective in the longer scheme of things and is the tool used by even the biggest hedge funds and investors, to knit together their long term portfolio. In the long run, the market will reflect the fundamentals. Thank you for reading GIFT’s article. Be sure to read our weekly newsletter, and we hope to bring you more interesting and engaging content every week! Next week’s article will delve deeper into the stock market, and the mechanisms by which stock prices are decided. To be informed when our next newsletter and article is out, subscribe to us by using the ‘Join Us’ page on our website. GIFT yourself financial literacy today!
0
1
65
Kush Malpani
Jul 19, 2021
In GIFT Forum
Welcome to The Global Investing Forum for Teens (GIFT)! Who are we? GIFT is an organization incorporated by 2 enthusiastic teenage investors to create financial literacy and investing prowess in young individuals across the globe. Why did we start GIFT? The Founder and CEO: Kush Malpani is a 15-year-old high school junior, investor, and social entrepreneur. Having been a keen investor since the age of 12, he felt there was a dearth of information and resources for teenagers wishing to learn about, and invest in the stock market. Given these restrictions, he wanted to establish an organization that helps teenagers invest in the stock market, focusing on the fundamental and technical facets of investing. The Co-founder and CIO: Veer Jhaveri is a 16-year-old high school junior and investor. He has been deeply involved in the stock market since the age of 14 and is extremely passionate about stock movements and various technical and analytical aspects of the market. He saw the need and the opportunity to educate teenagers like himself and pushing them to get involved in the stock market, due to the lack of practical resources available to Indian teenagers. What is our mission? GIFT seeks to further the mission of financial literacy in teenagers across the globe, and generate a curiosity for learning about the technical and fundamental aspects of the stock market in young minds. Most teenagers around the world have no idea how the stock market works, therefore keep their money dormant in saving accounts. In the words of Robert Allen, “How many millionaires do you know who have become wealthy by investing in saving accounts?” Therefore, we seek to inculcate a habit of investing in youth from a young age, to enable them to invest as they grow older, thereby also contributing to the growth of the world economy. India, being a developing nation, is home to 1.4 billion people, out of which only 3% invest in the stock market. We seek to increase this number substantially and awaken investing prowess in our youth. The Basics: What is the stock market? The stock market is a collection of exchanges and markets where the activities of buying, selling, and issuance of shares of publicly-held companies take place. What this means, is that the stock market is a place wherein you can buy a small part of any company that is available in the market. However, it is important to note that you can only buy shares (parts) of companies which are listed in the market. For example, if there is a private company that an individual has started, and he does not wish to put his company on the stock market where the public can buy parts of it, he will not list it, therefore shares of private companies cannot be bought. However, shares of public companies like Reliance Industries, Tata Consultancy Services, Infosys, etc. which are listed on a stock exchange in the stock market, can be bought by any individual of the public, who is above the age of 18. What is a stock exchange? A stock exchange is a place where these stocks are listed. Some major stock exchanges of the world are the BSE (Bombay Stock Exchange), NYSE (New York Stock Exchange), Tokyo Stock Exchange, London Stock Exchange, etc. If an individual wishes to open parts of his company to be bought by regular individuals of the public, he can list his private company on the relevant stock exchange of his country. After going through regulatory approvals and processes by the Securities Exchange Board of India (SEBI), which manages all facets of the stock market, and ensures the legality of everyday trades, the company can be listed on the exchange through an IPO (Initial Public Offering), therefore offering the public a chance to buy shares of his company, which will now be known as a publicly held company. How can the public buy these shares? For one to buy shares of publicly-held companies, a ‘DEMAT’ account must be opened at a securities firm such as ICICI Securities, Zerodha, Axis Securities, etc. Through this DEMAT account, shares of publicly owned companies can be bought by individuals, sitting in the comfort of their homes. If the shares in question are being bought of a company doing an IPO, then those who wish to buy shares must apply for them through their stock broking (securities) firms, who will carry out their request. Further information on IPOs will be covered by later articles. If the shares in question are shares of a company that has finished its IPO or is listed in the market since a long time, they can be bought by regular buying and selling from other traders. Once an IPO is complete, the members of the public holding the shares they received through the IPO can decide whether to buy, hold, or sell them. If they wish to sell them, they can do so through their broking firms, who will list these shares in the market at either the prevalent market price, or the price that the individual selling them desires. Simultaneously, if an individual wishes to buy shares of those company, he will also place a buy order through his broker, at either the prevalent market price, or if he wants a price lower than the market, he can put a price ceiling for his buy order too. Therefore, if the prices desired by both parties match, the order can be executed, and trade of shares takes place. How can teenagers invest in the stock market? Unfortunately, the regulations of the Indian Stock Market prevent individuals under the age of 18 from explicitly investing in stocks. However, there are loopholes around this law. For one, teenagers can ask their parents to open a stock trading DEMAT account in the parent’s name, and with as little as Rs. 100, they can begin investing in the stocks they want. For those with little to no knowledge about the market, investing in index funds is a easier alternative. Index funds are collections of various stocks that are run by bigger investors and companies. By buying a share (part) of an index fund, one can essentially buy a small amount of multiple stocks. On the whole, teenagers in India can currently invest in stocks through their parent’s accounts. On the other hand, teenagers in the USA or other countries can invest in the stock market by themselves. Recently, Fidelity, a US investment giant, announced that the ‘Fidelity Youth Account’ will allow teenagers from the ages of 13 to 17 to use the account as a DEMAT, and savings account, with no fees on any trades. Therefore, in other countries, teenagers can trade in this way. Thank you for reading GIFT’s article. Be sure to read our weekly newsletter, and we hope to bring you more interesting and engaging content every week! Next week’s article will delve deeper into the stock market, and the mechanisms by which stock prices are decided. To be informed when our next newsletter and article is out, subscribe to us by using the ‘Join Us’ page on our website. GIFT yourself financial literacy today!
2
0
46

Kush Malpani

Admin
More actions