What is the Stock Market?

The stock market is a marketplace where buyers and sellers trade shares of publicly listed companies. It serves as an economic barometer and offers individuals and institutions opportunities to invest and grow their wealth.

Key Stock Market Terms

• Stocks: Units of ownership in a company.
• Bull Market: A period of rising stock prices.
• Bear Market: A period of declining stock prices.
• Dividends: Payments made by a company to its shareholders from profits.
• IPO: Initial Public Offering - when a company first sells shares to the public.

How to Get Started

Getting started in the stock market involves:

• Researching companies and understanding their financial performance.
• Setting up a brokerage account to buy and sell stocks.
• Learning technical indicators like RSI and MACD to time your trades.
• Diversifying your investments to spread risk.

The Importance of Risk Management

Successful investing involves balancing risk and reward. Always:

• Avoid putting all your money into one stock or sector.
• Invest only what you can afford to lose.
• Use stop-loss orders to limit potential losses.
• Stay informed about market trends and news.

Understanding Candlestick Data

Candlestick charts are a popular way to visualize stock price movements over a given time frame. Each “candle” includes:

• Open: The price at the start of the trading period.
• High: The highest price reached during the period.
• Low: The lowest price during the period.
• Close: The price at the end of the trading period.
• Volume: The total number of shares traded in that period.

Core Technical Indicators

• RSI (Relative Strength Index): Measures recent price changes to identify overbought (above 70) or oversold (below 30) conditions.
• MACD (Moving Average Convergence Divergence): Tracks momentum by comparing two moving averages. Bullish and bearish “crossovers” often signal potential trend changes.
• Bollinger Bands: Based on a simple moving average and standard deviations, these “bands” can highlight when a stock is too high (upper band) or too low (lower band) relative to its recent average.
• SMA (Simple Moving Average): The average closing price over a specific time frame (e.g., 20 days). A smooth way to track overall price trends.
• Stochastic Oscillator: Looks at the most recent closing price compared to the high-low range over a set period to gauge momentum and overbought/oversold levels.

Using Automated Tools for Entries & Exits

Beyond fundamental and technical analysis, traders often set up automated rules to manage their positions more efficiently:

• Profit Threshold Rate: A predefined target (like 10%) at which you plan to sell some or all of your shares to secure gains.
• Trailing Stop Loss: A dynamic stop loss that “trails” the stock price as it moves higher, aiming to lock in profits while allowing room for growth.

By combining indicator-based signals (e.g., RSI < 30 for oversold) with these automated triggers, many investors find a more disciplined approach to trading and protecting profits.