Financial Trading Mastery: Stocks, Forex & Commodities

In part II we will discuss about the different advantages that stock trading offers.

I worked many jobs in my life – shipping, government, films, etc. In my search for happiness, in 2004, stock trading came to me by chance. Since then, I am happily settled into trading stocks, currency & commodities.

Stock trading offers extreme advantages no job can ever match. Let us look at them one by one.

The 1st big advantage is there is nothing to sell. There is no need to look for a customer.

In today’s increasingly materialistic world, we constantly need more and more money and so we need to sell something or the other, more and more. Selling is very tough even to our own close friends & relatives.

And to sell their products or services even big companies resort to lies and cheating.

In stock trading, there is never a need to look for a buyer. Stock trading takes place in the electronic world where we sell with the click of a button on the laptop. We will learn how in the later sutra.

2nd big advantage is we don’t need to chase anyone for our money. When we do a job for someone or supply some goods, we would like to have our money immediately.

But in reality, it is not so smooth. I have personally experienced and seen many individuals and businesses suffer badly, just chasing their due payments endlessly, even being forced to grease the palms of clerks in the office.

Many times your payment never comes. But in stock trading, money comes instantly into our bank account the moment we sell our stock.

3rd big advantage is, we need not work all day long and night to make a living. As stock traders, we may choose to work just 2 to 3 hours a day, Monday to Friday and that’s good enough.

Rest all time we can devote to our family, hobbies, etc. I work from 7 am to 9 am morning, 8 pm to 9 pm evening, Monday to Friday… that’s it. I get enough time not only to fulfill my childhood dream of singing but many more now – yoga, films, teaching.

Another big advantage is we don’t need to buy an office to work in. We can work from anywhere… can travel the world. We can work from India, Japan, USA, favorite café, beachside, hill, anywhere we, please.

All we need is our laptop & internet. Earlier I used to live in Mumbai, a very stressful city difficult to focus on trading.

For the last few years I live & trade by a beautiful beachside on the western shores of India – Goa, a tourist paradise.

Commuting to the office & back can be a harrowing experience. It is a huge waste of time, money & energy.

In stock trading, there is no office to go to, as we basically work from the place we choose to live. In my previous job, I use to spend 5 hours commuting to and from the office. Now, I work from home, and travel time is nil.

Another big advantage is there is no boss or office politics to deal with. Pleasing your boss & dealing with office politics can be very consuming & painful. In stock trading, you are your own boss.

All you need to please is… your own self… to give the best trading results. You can do your trading all by yourself without any help. I do all my trading alone.

Our hard-earned money lying in the bank’s savings account is actually becoming…

.. less due to inflation or rising prices. If you are a good stock trader with a consistent track record..

you not only make trading profits in your own account and grow money for your self but there are huge funds waiting to ride on our stock trading skills.

You can either join an asset management company or become a fund manager yourself.

Star fund managers earn such mega-money & lead such luxurious lives that an ordinary person can’t even dream of. They live life king size.

As per ancient Hindu religious texts, we humans now live in Kaliyug, or the dark age.. ..an age where all human values are lost.

Money is the new God. And to earn this money, people can fall to the deepest levels of crimes, cheating, forgery.

But money earned from stock trading is clean & pure… pure white like a lily flower...

…But money earned from stock trading is clean & pure… pure white like a lily flower...

… the albatross in the sky… … or the pure innocence of a newborn baby. Of course, there are unscrupulous elements here too like in any profession. But we can choose the clean way...

We just learned the different advantages of stock trading. Here I put them all together for you in one place.

Thank you for your valuable time.

Having looked at such extreme advantages of stock trading, you may wonder, why everyone is not trading stocks? To my understanding, there are 4 reasons for that.

1st one is - lack of knowledge. Very few people know about stock trading. Stock trading is not part of a regular school or college curriculum.

2nd, lack of good teachers who can teach stock trading in simple words. Instead of simplifying they complicate it. This is why I made this class.

Just as cycling can take us to the farthest destination on this earth, stock trading can take us to our highest financial goals.

Stock trading is not rocket science.

In fact, it is very simple… as simple as learning to ride a cycle provided you learn from a good teacher who has deep knowledge, many years of experience, enjoys teaching and is a good communicator.

The stock is your cycle…

… the road is our stock direction.

The helmet, the bell, the brakes… are our safety gears to ward off danger or the risks during cycling…

.. similarly, in stock trading, we have safety gears like stop-loss, 3 losses in a row, etc. …to ward off danger or loss.

Learning to read stock direction correctly and identifying, calculating, and managing the risk are the 2 keys to this kingdom. We will learn all this in detail in later sutras.

3rd. One-sided reporting by media has given stock trading a gambling image.

Reporting losses is sensational & it sells. If the media worked hard and reported profits too, the common man can benefit so much.

It was in 1987 when I had freshly joined a job in Kolkata that I 1st heard the words stocks & stock market.

As I tried to understand this new bird from my friend's relatives' colleagues, the only thing I got to know is that the stock market and gambling were the same.

They told me stories of people who lost loads of money trading stocks. However, they had no clue why these people lost so much money.

They had no knowledge about people who were quietly making tons of money from these markets. Mr. George Soros is a living legend in the world of stock trading.

He is famously known as “the man who broke the Bank of England”. In 1992, he made 2 billion US Dollars in just a few days.. trading currency.

There are many others like Mr. Ed Seykota, Mr. John Paulson, who generate phenomenal wealth year after year trading stocks.

The one thing common among all these great traders is they make money trading stocks, currency, or commodities. However, they employ different trading strategies. I highly recommend you study their lives and the trading strategies they employ.

And the last reason why everyone is not trading stocks is human greed.

When markets are roaring & stock prices are moving sharply up each day, even experienced traders fall victim to their own greed. They end up violating their own trading rules.

A common man just gets caught up in a market frenzy & ends up losing all.

It is no different than my younger days when I did not even learn properly how to ride a cycle. But in my greed to acquire a new cycle from my mother and to impress her, I ventured straight into the village market.

Just then I saw a cow staring at me. I was seized with fear and lost control. I fell badly.

The moral of the story is simple - first, learn then practice then trade.

If stock trading has such extreme advantages, it also must have some extreme dangers. Let us look at the dangers, disadvantages, or risks involved in stock trading.

The 1st one is the chances of incurring huge losses.

If we violate the rules of trading, we can lose all our money, that too in a very short time.

The good news is that, if we violate the simple rules of cycling or road crossing we can lose our life. Here, we lose only money.

We will discuss this in detail in later sutras. But the main point is we just can not afford to break the time-tested rules be it in cycling or in stock trading. If we do that we should be ready to suffer.

2. Stock trading is high tension job.

The stock trading journey is like no other journey. One day when our stock price moves up sharply and money comes into our account immediately, we experience extreme elation, we feel like on cloud nine, pat our back, brag to friends, and throw a lavish dinner.

The next day, when the stock price falls even more sharply and money instantly moves out of the bank account, we sulk alone, don’t take any phone calls & curse the day we took to stock trading.

Why this happens is because stock prices including currency & commodity have inherently built into their DNA phenomena called volatility. Volatility simply means stock prices moving sharply up and down in opposite directions.

Volatility word comes from the word volatile. There are times when our own moods are volatile, one moment happy.. another moment sad. We will understand volatility and how to deal with it in later sutras.

We went through each advantage & each danger one by one. Here I put the entire picture together in one place for you.

I wish you the very best in your new journey.

Thank you for your valuable time.

It is time for your fun quiz project.

The quiz will help you self-test your knowledge on this sutra.

There are 16simple questions.

Each question has 4 possible answers. Only 1 is right.

You need to pick the right answer and write it in your notebook. The correct answers are given in the end. Please don’t see the answers till you complete the quiz.

If you don’t get all the answers right on the 1st attempt, go through the videos again and then again take the quiz. Your objective should be to get all the answers right by yourself.

So, let’s get started.

In part II, let’s learn what is stock.

The word stock & the word share mean the same thing. Let us 1st understand the word – share.

Sharing & caring are part of human nature. Sharing time food clothes money with others, give us tremendous joy & happiness. It helps us achieve bigger goals in life that may not be possible alone. Let us look at an example of sharing and its benefits.

You wanted to buy this new smart cycle but don’t have the entire money. You take the balance money from your friend. In return, you allow your friend to use the cycle for few days each month.

This way both of you are able to enjoy the cycle. If there was no sharing none of you could enjoy the benefits of the cycle.

The same sharing happens in business too. Let us say your friend Tina has put up a new ice cream shop. She had small savings and set up a small stall not knowing how the business will turn out as there were already few ice-cream stalls in the area.

But her business turns out to be very good because she mixed fresh fruits with ice cream. She has new customers coming each day. She never imagined such a good response. But she can’t cope up.

She needs a bigger stall, a helper, a big refrigerator, more chairs, etc. for which she has no money. You help her with that money and she agrees to share a part of her profits.

In this process, what has happened, you have become a small partner in her business. In other words, you bought a share in her business.

You will receive a small share of her profits each year. You don’t have to work there. It is your money that will work for you.

Large businesses are formed as companies. There are thousands of companies in the world whose stocks are available to buy & sell. Each country has its own companies – small & large.

There are mega-companies operating worldwide. These are called multinationals. They sell all over the world.

These are the names of some of the largest companies in the world. One can buy & sell their shares or stocks and participate in their profits.

So, the words share and stock means the same thing. They are interchangeable. Sometimes you may hear a friend say – Today I bought 10 shares of Coca-Cola. Other times he may say – today, I sold my 10 stocks of Coca-Cola.

We will not go into details of different types of stocks as it is not required to know for our purpose of stock trading. Just remember both mean the same thing.

When we buy the stock of a company we become a small partner or part owner in that company.

At the end of each year, we will receive part of the profits of this company. In technical words, it is called dividend. If a company accumulates large profits it may give free shares to existing shareholders. This is called bonus.

This type of financial activity is called investment.

What is trading?

Let us go back to Tina’s example.

Tina may buy ice cream just for herself for self-consumption or she may choose to set up a business of buying ice cream for selling.

The objective here is to make money by buying at a low price and selling it at a higher price.

This she would achieve by buying in large quantities at lower prices and selling it in small portions at higher prices. In this case, Tina is trading in ice cream.

All over the world, people trade in millions of products like rice, wheat, vegetables, clothes, jewelry, books, etc. These are the products that we need to run our daily life.

What is stock trading?

Like all other trading products, when we buy stocks with the sole aim of selling them at a higher price it is called stock trading. Simple.

There is a separate futures market also, in which we can do reverse trading i.e. 1st sell at a higher price, then buy the same stock at a lower price. We will learn about futures in later sutras.

Next, what is stock market?

When we want to buy vegetables we go to the vegetable market. When we want to buy fish we go to the fish market.

Similarly, when we want to buy or sell stocks we go to a specialized market which is called stock market. So stock market is simply a market where one can buy & sell stocks.

With the advent of computers & internet, now we can buy virtually anything online from the comfort of our home. Similarly, we can buy & sell stocks from anywhere. Almost all stock markets are online now.

Now let’s learn what is stockbroker.

When we want to buy vegetables we go to the vegetable market. There are many shops out there. We can buy from any shop.

Similarly, in the stock market, there are many shops from where we can buy and sell our stocks. Stockbroker is simply a shop to buy and sell our stocks.

For facilitating our buying & selling activity the broker charges us a fee called brokerage. On top of that, we also have to pay government taxes. In calculating our final price we have to take into account these 2 components.

When we buy we have to add these 2 heads to get the final purchase price.

When we sell we have to deduct these 2 heads to get our final sale price.

Broadly there are 2 types of brokers –

1. Full-service brokers who additionally provide stock recommendations and charts.

2. Deep discount brokers who do not give any stock recommendations or charts. Full-service brokers charge more brokerage as compared to deep discount brokers. We will discuss this in detail in later sutras.

Now, let’s learn what is stock exchange.

Stock exchange is the organization to facilitate & regulate stock trading activity.

Each stockbroker is a member of the stock exchange.

The world’s largest stock exchanges are - New York Stock Exchange, London Stock Exchange, Tokyo Stock Exchange.

Till now what we learned was the basic nuts and bolts of stock trading ..what is stock, what is stock market, what is stockbroker etc. Now we will learn a very critical aspect of stock trading as to how money is made and lost in stock trading?

Let’s first learn how money is made?

When we sell above our buy price we have a trading profit and so we make money.

In this example, we bought a stock at 100 and sold at 125. So our profit is 25.

How money is lost?

When we sell below our buy price we make a loss.

In this example, we bought a stock at 100 and sold at 75. The loss is 25.

Till now, it is simple 5th standard mathematics. But the stock trading story starts now.

You may say.. like in any other trading product why would I sell below my buy price? I am not here to make losses. I will always sell above my buy price.

Yes, my friend, you are right.

But let us understand why we are forced to sell at loss. To understand this we have to understand the price behavior of all other normal trading products like vegetables, cars, cycles, etc. as compared to the price behavior of stocks.

Prices of normal products like vegetable cars etc. do not change rapidly.

But prices of stocks change rapidly.

If we went to the vegetable market the price of vegetables may be the same as it was yesterday. If we went to buy a shirt the price of the shirt may be the same as last week. If we went to buy a cycle the price may be the same as last month.

But the prices of stocks change… forget last month.. forget last week… forget yesterday. They change every minute.

On your TV set on a financial news channel, if you look at the bottom, you will see a strip that is showing the stock prices. If you notice closely the price is changing continuously.

But why the stock prices change so fast?.

It is because stock prices don’t have a fixed price like a shirt or a cycle. Now, what does that mean?

In calculating the sale price of a cycle….. manufacturers just add up the cost of its components….. labor cost... Rent, electricity, etc…..finally they add up their profit margin ….. and thus you get the final sale price.

But the stock prices are not calculated this way. The stock market is an auction market. What is an auction market?

Let us say your cycle is now 5 years old rusted broken in parts & you want to sell it.

You show it to your friends. Some friends may not be interested in buying it at all. One friend may offer you 5, other may offer you 7 and like that... Who are you going to sell it to? Obviously, the one who gives you the highest price.

This process is called auctioning.

The market where auctioning takes place is called the auction market.

In the auction market, there is no fixed price for a product.

The price is decided by the 2 market forces – demand and supply.

Products whose prices can not be fixed by conventional methods like a painting, old goods, and stocks are sold in the auction market.

The highest bidder gets to buy that product.

Demand being the same, if there is 1 cycle for sale, since the supply is less, so you get more price.

But if there are hundreds of such cycles, the supply is more hence you get a lower price.

Stock market is the biggest auction market in the world.

Stock prices can not be fixed simply because their prices are dependent on the future performance of the company which in turn is dependent on many factors outside the company’s control e.g. the overall economic situation of the country or the world economic outlook etc.

Another aspect of the stock market is that it is a sentiment-driven market.

If more people feel.. that is sentiment, that the company is going make excellent profits in future, more people want to buy that stock so there is more demand. Why do they want to buy?

Because they feel the price will go up in the future, so buy now at a lower price to sell at a higher price later and thus make a profit. so the stock price goes up.

Reverse situation. If more people feel that the company is not going to perform better in the future, more people want to sell it (more supply). Why?

So that if they are in profit their profit does not get reduced or if they are in small profit then they should not be in loss or if they are in loss their losses should not become bigger. And so the price goes down.

The rapidity with which stock prices can rise & fall can be understood by a stock market event known as Tulipmania in which people made & lost a fortune overnight.

The growing popularity of the Tulip flower in the early 17th century in the Netherlands caught the attention of the entire nation.

Within 3 months the price shot up by 20 times.

… & within the next 3 months, the prices fell dramatically back to the original level.

As professional stock traders, our job is to buy at the lowest price…and sell them at the highest price.

The method to do that is the core subject of this class. We will learn as we go along.

I wish you the very best in your new journey. Thank you for your valuable time.

It is time for your fun quiz project. The quiz will help you self-test your knowledge on this sutra.

There are 14 simple questions.

Each question has 4 possible answers. Only 1 is right

You need to pick the right answer and write it in your notebook. The correct answers are given in the end. Please don’t see the answers till you complete the quiz.

If you don’t get all the answers right on the 1st attempt, go through the videos again and then again take the quiz. Your objective should be to get all the answers right by yourself. So, let’s get started.

In part II traits, we will learn about the 1st trait – knowledge.

But 1st we need to understand what is trait.

A trait simply means a basic quality or a base skill.

They will lay a strong foundation upon which you will create your magnificent stock trading work.

Without a strong foundation, magnificent works like the Taj Mahal or the Great Pyramids would not have survived the ravages of time.

Acquiring traits takes deep understanding, persistent effort & a long time. Let us 1st look at an example of a trait.

Your friend wants to be a singer. Now, the 1st quality she should have is a good voice. If she does not have a good voice are you going to listen to her? No. No matter how close you are with her. The 2nd quality your friend should have is – she should practice her singing regularly.

Are you going to enjoy the singing if her voice is not trained or disciplined? No. She may sound nice but if her voice lacks range, modulation, pitch, tempo, after few minutes you will feel tired and go to sleep.

Similarly, a person who wants to get into stock trading must work to have those qualities that are needed to be a successful stock trader. Simply wearing a nice flashy dress will not work.

There are 5 essential traits that are needed for success in stock trading. I call them 5 pillars of success. It is these 5 strong pillars that will make your stock trading base strong.

On the strength of these 5 pillars, you will create your own magnificent stock trading work that will leave your imprint on the sands of time.

Let us look at the 1st trait needed to be a successful stock trader - Knowledge.

You must have complete knowledge about your area of work. Half knowledge is dangerous. It will cost you dearly. Let us go back to our example of the cycle. If you are thinking to ride a cycle, slowly you must get to know, everything about the cycle - various parts, how does it work, how to balance, etc.

Imagine if without proper knowledge & training you took your cycle out on the road, what is going to be the most likely outcome? You can lose your life. The same is the case with stock trading. You must 1st learn each and every aspect of stock trading before you actually start real trading

The next question is where do you get that knowledge? It is here.. in this class. You don’t need to read hundreds of books – I have done that for you. You don’t need to read thousands of internet pages – I have done that for you. You don’t need to attend any other course, seminar, workshop – I have done that for you.

You don’t need to struggle for stock trading knowledge – I have done that for you. All you have to do is pay undivided attention here, learn slowly, revise, re-revise, practice, more practice & then trade. This class will give you all the necessary knowledge, tools, techniques, rules that are required for stock trading.

Of course, if you want to satisfy your academic curiosity, you can read books, attend seminars. Nothing prevents you from doing that. But 1st please learn what is being taught here.

Once you have gained all the knowledge, you need to put your knowledge to work in few simple steps or a Daily To-Do list. This way you can finish your daily work in just about an hour or two.

The 2nd important trait is hard work.

In life please remember that there is no shortcut to success. You should be ready to put in a lot of hard work especially during your learning & initial trading days. Unfortunately, there is no substitute for hard work.

You have to spend hours and days in 1st understanding what is being taught here, grasping it, clarifying your doubts with me, rationalizing it, practicing it. Later, it will come very easy for you. Hard work beats talent when talent doesn’t work hard.

The 3rd trait and a very important pillar of success is discipline. It is also the most difficult trait to acquire.

Discipline simply means having the ability to execute your daily trading routine on time without fail. To do this you need 2 things…

1. Your daily to-do list & 2. The time when you have to do it.

Even after so many years in stock trading, there are times when I end up losing my discipline.

On many occasions, I end up going out socializing when my daily routine says a big NO. This happens especially on days when either I made some good money or lost it.

When I make good money I want to go out to claim my fame by bragging about my great stock trading skills.

And when I lose money I want to find a shoulder to cry on who will sympathize with me that the stock market is such a cruel place.

There is one more reason why this happens. Stock trading is a very lonely, monotonous & high-pressure job.

It is not a teamwork job. You may have one or two people helping you. But ultimately it is you who makes all the decisions and it is you who is responsible for your end results – profit or loss.

You have to save yourself from people who know nothing about markets but will talk a lot and create doubts in your mind.

I never watch any TV, never read any financial papers, never seek my broker’s or another person’s advice on stock markets. I do my own research & take action accordingly.

At the end of all the sutras, you too will become competent to do your own research.

If the people on TV or my broker knew how to make money trading stocks, they would be making money trading stocks and not talking on TV or running a stockbroking business.

You will never find great traders talking on national television as they are too busy taking stock trading decisions. Sharing their hard research on television is the last thing one should expect from them.

In stock trading, our discipline has to be that of a soldier. A soldier is always ready, war or no war.

Please remember this forever that as a stock trader we are always in the war zone because of the rapidity of stock price movement.

Overnight if your enemy has moved to the right, will you still keep pointing your gun to the left? If you do that you are bound to get hit.

In stock trading, it means a change in the direction of your stock price. We will learn this soon.

Strict discipline is the backbone of a successful stock trader.

In our body, the backbone not only connects & supports other parts but also nourishes and sustains them as the life-giving blood channels - veins & the signaling channels - nerves pass through them.

Discipline is the strong pillar of strength.

The relationship of discipline to a stock trader is the same as that of a mother to her child.

A mother is always ready to face the greatest threats to her own life to provide support sustenance and growth to her children.

Discipline provides us strength to live through the vagaries of stock trading during times of high volatility when prices move sharply in opposite directions leading to confusion, chaos, and losses.

If discipline is the pillar of strength it also protects us from doom.

In stock trading, discipline allows us to cut our losing trades immediately by using a technique called STOP LOSS before they become a big hole in our trading capital.

We will learn about this in detail in later sutra.

The 4th trait needed to be a successful stock trader is patience. It is again a very important pillar of success.

There is an old saying.. patience pays. Let us see few examples to understand the importance of patience in stock trading.

A spider weaves its web with great knowledge, skill, and immense hard work.

Once the web is complete, it waits patiently for the right signal or vibrations from its web that prey has arrived.

It knows when there is a false signal created by wind or rain as it is its own web.

And when the web generates the right signal it knows its prey has arrived. And then it strikes its prey with lightning force.

A lioness does the same. She waits patiently for days till the prey is within her striking reach. Till then she saves her energy to protect her cubs.

Once the prey is within her calculations she puts in all her energy to get her prey.

Her calculations, preparations, speed, skill are so perfect that she ends up killing an animal twice her size.

Similar is the reality for we stock traders. Once we have learned how to trade, laid down all our rules, we wait and wait…for the right trade to arrive.

At times it can be days & weeks for the right trading opportunity to play out before us. But it does play out for sure.

Trade or the buying opportunity will arrive that has the least risk of loss of capital & greatest reward of trading profit.

When to go for the kill and when not… is the great hallmark of big hunters…… and when to trade & when not to trade is the hallmark of great stock traders. It requires immense patience, mental discipline to do that.

And when that moment arrives, we go for the kill with full force.

Novice traders lacking proper stock trading skills want to trade each day, each moment, only to lose their precious trading capital.

We have to guard our bullets.. the trading capital, ferociously like the spider or the lioness guards their energy.

Often people blame the stock market for their losses. But the problem lies not with the markets but deep within us.

We treat stock markets frivolously as if it is some fun place for some quick money. In reality, it is a very slow big rich game.

We behave like a small child who starts playing with fire without knowing about the huge dangers.

If we learn to respect the stock markets, stock markets will reward us generously.

But if we don’t the punishment is swift & hard.

The last and the most important trait & the strongest pillar of success is humility.

What is humility? It simply means to stay humble at all times… not to hurt anyone…. to be good to others… help others if possible.

Humility comes from spirituality. You just learned few sutras.. don’t go around telling people you are the next millionaire to watch out for.

A humble person is highly spiritual for he or she has gained the highest wisdom - that this world in which we live is just a temporary guest house.

One day we will all be gone like everyone else before and after us. Money, name, fame.. all will be left behind.

…Please be constantly aware of this – I AM JUST A GUEST on this earth.

The moment we lose sight of this simple truth, we get sucked into the vortex of MAYA or the illusory material world at the center of which lies demons like ego, vanity, lust, greed, fear that will suck our life and turn it into pulp.

…Humility helps us to stay in touch with reality and not some dreamy world.

Our job as professional stock traders is to put in our best work based on our knowledge, skill & discipline.

We are never to fall into the trap of the powerful emotions of greed & fear and end our trading career even before it began.

Our mind should be completely absorbed in the job and not on money, name & fame. These things will come to us sooner or later. …If you trade on emotions the results will be disastrous.

If we don’t practice humility, false ego & overconfidence sets in.

We will start trading aggressively, throw our own time-tested trading rules out of the window, only to lose all our trading capital.

Humility saves stock traders from the biggest pitfalls - greed & overconfidence.

This is where thousands of wannabe stock traders are buried.

Humility allows us to keep our feet firmly on the ground while our heads may be in the sky.

Stock trading has great potential to free we human species from the continuous… endless… futile struggle to survive & secure our material future only.

It frees our time and makes available the resources so that we may travel within our own self wherein lie the biggest treasures - peace, prosperity & happiness.

Here are all the 5 traits or the 5 pillars of success, all put together for you in one place. I would urge you to start practicing them starting right now….

Having looked at the 5 essential traits now it is time to learn about the tools that are needed in stock trading. In part III tools, we will learn about the 1st tool - computer

But 1st we need to understand what is a tool.

Acquiring traits take a long time & persistent effort but acquiring tools is easy as we can buy them from any shop.

In simplest words, a tool is an object or a device that helps us achieve a given task. A toothbrush helps us in brushing our teeth, a spoon helps us in eating our food nicely, a phone helps us in communicating with others. Our world is incomplete without tools. We need them at each step of our life.

Similarly, in stock trading, we need tools that make our task easy and the 1st tool is a computer.

You just need a simple computer with an excel sheet & internet.

You don’t need any expensive computer or laptop.

Your internet connection should be just decent. There is no need for high-speed internet. I do all my trading with a simple laptop that is now 10 years old.

2nd, we need to open a trading account with a stockbroker.

We should go for an online account.

In online, the control is with us and not with the broker.

If there is no online account in your country, you can go for an offline account.

But it is not advisable because you have to deal with a lot of paperwork there. Online accounts have nil paperwork.

The brokers have different types of accounts. You would need to open a 3 in 1 account or triple account.

This is just one account but has 3 different facilities built into it – 1st one is a bank account where your money resides. 2nd one is a de-mat account where your stocks reside. 3rd is a trading account from where you do all your buying & selling. It is an automated system.

The moment we buy a share the money immediately moves out of the bank account and the share comes into the de-mat account.

When we sell, the stock automatically goes out of the de-mat account and the money comes in to the bank account.

There is no need to call anyone for anything. There is no paperwork to be done.

We can check the buy price, sale price, etc., and track all details of our trading at any time we like. It is a beautiful & efficient system.

You should open your account with a reputed broker.

Nowadays you will find a stockbroker at the end of every street. Never go for new brokers or un-branded brokers.

Banks that have opened share broking business are the best to go with as they have a high reputation.

Go for the broker who is offering the lowest brokerage.

Never mention a word to a new, un-reputed broker as they will chase you to the end of the world to open your account with them, enticing you with very low brokerages.

During market meltdowns, they will run away with your money or put you into huge losses.

Never listen to your broker as far as trading advice is concerned because his interest is in conflict with our interest.

For each buy and sell he charges his brokerage. A broker earns money from brokerage.

We earn money from trading profits. We may have trading profit or a trading loss. But he never has a loss. He earns even when we have a loss.

If you listen to his sweet talks, he will make you trade more and more. He will never take the blame for our trading losses.

Moreover, he will never forgo his brokerage even in a trading loss.

When you will confront him about your trading losses, he will simply say – “what to do Mam, the market has turned bad”.

If he knew how to make money trading stocks, he would be in the business of stock trading and not stockbroking.

Stockbroking is just clerical work hardly needing any brains.

III. We need professional charting software bought from a charting service company.

It does not cost much.

Charting software is an essential tool for a stock trader.

There are many companies that offer professional charting software.

We will learn in later sutra how to use charting software.

Lastly, we need some trading capital to do our buying of stocks. How much? We will learn in later sutra.

This brings us to the end of stock sutra 3.

To summarize, we need 5 skills & 4 tools to be a successful stock trader. Here I put them all together for you in one place.

I wish you the very best in your new journey.

Thank you for your valuable time.

It is time for your fun quiz project. The quiz will help you self-test your knowledge on this sutra.

There are 15 simple questions.

Each question has 4 possible answers. Only 1 is right

You need to pick the right answer and write it in your notebook. The correct answers are given in the end. Please don’t see the answers till you complete the quiz.

If you don’t get all the answers right on the 1st attempt, go through the videos again and then again take the quiz. Your objective should be to get all the answers right by yourself. So, let’s get started.

In part IIa we will understand why do we need to read stock direction.

How we make money in stock trading? By buying a stock at a lower price and then selling the same at a higher price.

In short, buy low sell high.

This is possible only if we know which way a stock's price is moving.

A stock's price can move in one of these directions only - up, down, sideways

If a stock's price is moving down we can not make money except if we are trading stock futures.

If stock's price is moving sideways again we can not make money.

It is only if stock's price is moving up that we can make money by buying low and selling high.

And so we need to know the stock's direction.

But you may wonder why it is so difficult to read stock's direction. You may say it is very easy here to read. this is up, this is down, this is sideways.

In real-world stock's price does not move in a straight line. Its movement is highly uneven as seen here.

If we can learn to read stock direction correctly the knowledge would be worth a fortune.

We will learn more as we go along.

This brings us to a unique phenomenon in stock price movements called stock trends.

It simply means a stock's price is moving in a particular direction with great strength.

If a stock does not have a strong directional strength the chances the chances that the prices can reverse any time are very high leading to losses.

But if it is moving with great strength our chances of making money is very high. WE stock traders make money by riding these trends.

Once a trend is in place we buy a stock at lower prices and sell the same at higher prices. We keep doing this till the trend meets its end.

This brings us to 1st of the Golden rules of stock trading - Trend is my friend till the end where it bends.

Golden rules are the collective wisdom of millions of traders from all around the world. These rules developed over centuries. They are like the lighthouses for a ship to sail through troubled waters. We must understand them clearly and follow them. We just can not afford to violate them. We must refer to them whenever we are in doubt, confusion, and chaos. They will guide us to safety & success.

Let us now learn about the construction of trends, how it starts, develops and ends. Each new trend must be traded from its beginning till its end.

This is how a typical new trend begins.

At point A the trend is down. At the point, B comes the bend and the previous downtrend is over.

A new uptrend begins from point C. This is where we should buy our stock.

This new uptrend continues till point D.

At point D we again see a bend which means the trend is now over. We must sell our stock here.

And hence the golden rule - trend is my friend till the end where it bends.

There are many characteristics associated with stock trends.

1st one is trend strength. It simply means the speed at which a stock's price is rising or falling.

Trends can be mild or strong or very strong.

ii. Trends feed on themselves. What does it mean? Let us see an example.

A forest fire may start due to the carelessness of some tourists leaving behind a burnt wood that he or she used for cooking. The fire can spread quickly engulfing other leaves, bushes, trees in its way. So the forest fire feeds on itself. The same thing happens with stock trends.

When a new uptrend starts more stock traders notice it and start buying the stock at lower prices with the intention to sell the same stock at higher prices to make money. This new money feeds the uptrend which in turn attracts even more new money. And thus the trend continues to move up.

Reverse, when a new downtrend starts more sellers come in to sell to book profit or reduce their losses. The short sellers come in to join the money-making party and that feeds the trend and the trend continues its downward journey. We will learn about short selling in later sutras.

Another characteristic of trends is that they can reverse at any time without any warning. Hence we always trade with strict risk management rules in place. We will learn about risk management in later sutras.

4th very important characteristic of trends is that they can last for very long periods. Humungous trends have been seen to exist lasting for several years. Let us see an example.

Above is the yearly chart of the American stock market index - Dow Jones Industrial Average in short DJIA. There are 2 lines in it. Topline is the actual index price line. The bottom line is an indicator line. I have used moving average exponential 21 days. As long as the price line is above E21, we conclude the uptrend is on.

Now let us check the date when this uptrend started and ended. The trend started in 1993 and continues till date. The last date shown here is 19/6/2019. So the uptrend is on for the last 26 years. We stock traders make money by riding trends. Imagine if anyone was on this uptrend how much money he or she could have made.

The only way to identify such trends is through charts.

What is a chart?

A chart is simply the pictorial representation of stock prices. Pictorial representation! What is pictorial representation? It is said a picture is worth a thousand words. Let us see an example.

Your friend Tina is narrating her exciting journey to a game park - “I went with my friend to a game park. The park had many rides. There were many people. Everyone was enjoying it. I had a lot of fun. I and my friend wore orange top etc, etc, etc.” No amount of her telling the experience in words can really convey the complete picture.

Instead, if she just showed us a picture of her visit, everything would be more than clear. That’s why the saying – a picture is worth a thousand words. Similar is the situation with the stock prices.

This table has the daily prices of a stock for 7 days. From this table, can we easily say the direction in which the stock’s price is moving? Whether they are rising or falling or moving sideways?... It is very difficult.

But if we plotted the price on a chart paper, we get the pictorial representation of prices. And now anyone can easily say the prices are going up, hence the stock direction is up.

So, a chart is simply the pictorial representation of stock prices and gives an easy way to know the direction in which a stock’s price is moving.

ii. It is a tool in the form of computer software. A tool helps us achieve a task. Similarly, charts help us in stock trading work.

Before the advent of computers, charts were made manually involving huge time, money & energy. But now with computers, it is a child’s play to get the chart of any stock.

What is an indicator?

An indicator indicates some information.

Each day in our daily life we take the help of a number of indicators.

Like, this car’s indicator light is informing – “I am turning to the right” or, this signal light is telling the traffic to move ahead and this cyclist is indicating that she is going to turn right.

So, an indicator simply indicates some information that helps us in carrying out our daily activities in a safe manner.

Similarly, in stock trading, an indicator is a very important charting tool that indicates stock direction or the direction in which a stock’s price is moving – up, down, or sideways.

The last part is your fun quiz project to self-test your knowledge on this sutra

There are 15 simple questions.

Each question has 4 choices of answers. Only 1 is correct.

You need to pick the right answer.

Correct answers are given in the end. Please don’t see the answers till you complete the quiz.

If you don’t get all the answers right on the 1st attempt, go through the videos again and then again take the quiz.

Your objective should be to get all the answers right by yourself.

So, let’s get started.

Here you will learn the use of risk management in stock trading.

You will learn about the different benefits of risk management.

This is your place to self-test your knowledge on this sutra through a fun quiz.

You will learn what is the use of having a trading system in place.

You will learn about the benefits of having a trading system.

You will learn who can use my trading system.

You will learn about the benefits of using my trading system.

This is your fun quiz project to self-test your knowledge on this sutra.

You will learn what is stock futures.

You will learn about the differences between stocks and stock futures.

You will learn about the advantages and dangers involved in trading stock futures.

Here you will learn about the 7 different features of stock futures.

You will learn how to calculate investment, profit & returns in trading stock futures.

This is your fun quiz project. You can self test your knowledge on this sutra.

Here you will learn - What is currency trading.

You will learn about the different features of currency trading.

This is your fun quiz project to self-test your knowledge on this sutra.

What is commodity trading?

You will learn about the different features of commodity trading.

This is your fun quiz project to self-test your knowledge on this sutra.