Module 1 Introduction to Stock Markets

Chapter 13

Getting started!

436

Assuming you are done reading and understanding the entire 12 chapters in our very first module – Introduction to stock markets, you are now warmed up to dig deeper!

The objective of the first module is to give you quick hands on introduction to the stock markets. In our endeavor to introduce the stock markets to you, we have carefully selected concepts that you need to know, especially if you are absolutely new to markets. If you have many unanswered questions at this stage, it is a good sign. You will find your answers as we proceed to other modules.

At this stage, it is extremely important for you to understand why we have so many different learning modules, and how these modules are interrelated. To give you a head up, here are some of the modules that we will cover in Varsity.

  1. Introduction to Stock Markets
  2. Technical analysis
  3. Fundamental Analysis
  4. Futures Trading
  5. Option Theory
  6. Option Strategies
  7. Quantitative Concepts
  8. Commodity Markets
  9. Risk Management & Trading Philosophy
  10. Trading Strategies & Systems
  11. Financial Modeling for Investment practice

13.1 – So many modules – how are they interrelated?

The idea of ‘Varsity at Zerodha’ is to put up a repository of high quality market related educational content. The content, will cover various aspects of fundamental analysis, technical analysis, derivatives, trading strategies, risk management, financial modeling etc. Each main topic is categorized as a module.  If you are new to the markets, you could be wondering how each of these topics fit within the grand scheme of things.

To help you get a perspective, allow me to post a simple question to you.

In order to be successful in the markets, what according to you is the single most important factor? Success in markets is easily defined – if you make money consistently you are successful, and if you don’t you are not!

So if you were to answer this question for me, chances are you will think about factors such as risk management, discipline, market timing, access to information etc as the key to be successful in markets.

While one cannot deny the importance of these factors what is even more compelling and primary is developing a point of view (POV).

A point of view is an art of developing a sense of direction on a stock or the markets in general. If you think the stock is going up, your POV is bullish hence you would be a buyer of the stock. Likewise if you think a stock is going down your POV is bearish therefore you would be a seller of the stock.

Having said that, how do you actually develop a point of view? How do you figure out if the stock is going up or down?

To develop a point of view, one needs to develop a systematic approach to analyze the markets. There are a few methods using which you can figure out/ analyze what to buy or sell. They are:

  1. Fundamental Analysis (FA)
  2. Technical Analysis (TA)
  3. Quantitative Analysis (QA)
  4. Outside views

Just to give you a preview, here is a typical illustration of a trader’s thought process while developing a POV (whether to buy or sell stocks) based on a particular method of analysis –

FA based POV – The quarterly numbers looks impressive. The company has reported a 25% top line and 15% bottom-line growth. The company’s guidance also looks positive. With all the fundamentals factors aligned, the stock looks bullish hence the stock is a buy.

TA based POV – The MACD indicator has turned bullish along with a bullish engulfing candlestick pattern, with that study the stock’s short term sentiment looks positive therefore the stocks is a buy.

QA based POV – With the recent up move, the stock’s price to earnings (PE) touched the 3rd standard deviation. There is only 1% chance for the PE to breach the 3rd standard deviation. Hence it is prudent to expect a reversion to mean; therefore the stock is a sell.

Outside view – The analyst on TV is recommending a buy on the stock therefore the stock is a buy.

The POV you take should always be based on your own analysis rather than an outsider’s view, as more often than not one ends up regretting taking an action based on an outside view.

So after developing a POV what does one generally do? Does he straight away go and trade the point of view? Here is where the complexity of markets starts to kick in.

If the POV is bullish, you can choose to do one of the following:

  1. Buy the stock in the spot market
  2. Buy the stock in the derivatives markets.
    1. Within derivatives you can choose to buy the futures
    2. Or choose to trade via the option market
      1. Within the option market there are call options and put options.
      2. You can also do a combination of call and put options to create a synthetic bullish trade

So what you choose to do after developing a POV is a totally a different ball game.  Choosing the right instrument to trade which complements your POV is highly critical to profitable trading.

For example, if I’m extremely bullish on a stock from 1 year perspective then I’m better off doing a delivery trade. However if I’m out rightly bullish on the stock from a short term perspective (say 1 week) then I’d rather choose a futures instrument to trade.

If I’m bullish with constraints attached (example – I’m expecting the markets to bounce because of a great budget announcement, but I don’t want to risk much) then it would be prudent to choose an options instrument.

So the message here is – the market participant should develop a point of view and complement the POV with the right trading instrument. A well researched POV combined with the right instrument to trade is a perfect recipe for market success.

Also by now, hopefully you have got a sense of how all the different modules in “Varsity” play an important role in assimilating the market.

M1-ch13-chart

So keeping this in background, go ahead and explore the content on Varsity at Zerodha.

The next two modules will explore concepts that will help us develop POV based on Technical and Fundamental Analysis.

After reading through these two modules you will get a sense of developing a point of view on markets. The later modules we will discuss the different trading instruments that you can choose to complement your point of view. As we progress along, we will ramp up the flow to help you start calibrating your trades with effective risk management techniques.

436 comments

  1. kashish shambhwani says:

    loved it..learn a lot many new things..thanks 🙂

    • Karthik Rangappa says:

      Most welcome 🙂

      • harikrishnan says:

        Sir I had some doubt regarding the purchase of stocks of a company. After listing a company in stock exchange they are actually selling their share to the public, right. If company xyz issues 10rupee 10000 shares to the public, and I bought a 1000 shares of that company at rupees 10000. After some time I wish to sell my share. Then I ll put an ask price for my shares. What will happen if nobody buys my share?

        • Karthik Rangappa says:

          Well, this depends on the liquidity of the company. For a really large company like infy there is always someone buying and selling its shares…however there are some really small obscure companies in which trading does not happen…even if it does the volumes are low. So you need to make sure there is ample liquidity before you take positions.

        • Ajmal says:

          Hi Hari,

          In simple terms, like any traditional business that involves buying and selling trading is not any different. By liquidity we mean that the shares that you purchase should be easily sell-able. In other words if you purchase a stock that nobody wants then you will not be able to sell it.

          Before you purchase any stock check the volume of the stock that is being traded. This is a great indicator that tells you that so many people are buying and selling. More the volume the better. More volume involves more trades and more buyers and sellers which improves your chance of selling your stocks

          • Frank says:

            I have a question which bothers me. The volumes of shares like MRF and Eicher are always low then how do the price move so much in a day despite low volumes?

          • Karthik Rangappa says:

            When volumes are it is actually easy to move the price, even a small buy-sell can influence the price.

        • srinivas Karanam says:

          If no body is interest in your ask price ..trade will not execute.

      • Dipen kotecha says:

        How can i get inside information ( such as cmpny goes to anounce xyz) 😁

  2. Gaurav Lulu says:

    Excellent material with quality content. Thanks Zerodha.

  3. jagadeesh says:

    Thank you so much for the content sir.Thanks Zerodha. 🙂

  4. DS3717 says:

    Thanks for an introduction marked by clarity, and simplicity of explanation. Was very useful in following the material.

  5. Anishcharith says:

    This is like HC verma for stock market
    awesome 🙂

  6. ZORAIDA says:

    WHO SUGGESTED SITE NAME AS “[email protected]: IS A UNIQUE MAN/WOMAN. HATS OFF TO HIM/HER

    EXCELLENT ARTICLES FOR THE BEGINNERS, BUT VERY SUITABLE FOR WHO IS NON-FINANCIAL GRADES WITH A KEEN INTEREST ON INVESTING IN TRADING AT FULL TIME WITH AIM OF HIS/HER SATISFACTORY RETURN LATER

  7. nshastry says:

    I AM BEGINNER WITH UR SITE-WLD APPRECIATE IF U NOTIFY ME NEW CONTENTS /POSTS BY EMAIL

  8. nshastry says:

    UR ARTICLES FOCUS ON TRADING OR INVSTMNT -I AM AN INVESTOR WITH S/T POSITIONAL TRADES

    • Karthik Rangappa says:

      In fact most of the candlestick patterns explained is with a perspective of short term positional trades. Request you to kindly go through the same.

  9. pravin kumar solanki says:

    sir pls explain about top line and bottom-line growth. I can not understand about topline & bottom line growth.

  10. udit says:

    in “sort” type of investment 1st i have to sell and then i have to buy share but in how much time i have to buy??

  11. ASHOK KUMAR SINGH says:

    Sir, Excellent article. I would like to know and attend your class room course,if any.

    Have a nice day……Regards

  12. vishvendra89 says:

    Thank you sir for providing such a wonderful platform for learning.
    The way you explain is so simple, interactive and easy to learn plus the pictures make it very interesting. – AWESOME!!

  13. krishnasai says:

    Out of All Chapters in this module, I loved chapter 12 and chapter 13..hope to see this as next “Investopedia”..your examples are gud..keep innovating and improve the services…Great Initiative by Zerodha…

  14. Sandeep Razdan says:

    Karthik ,i have fallen in love with you :=) .Love you as a teacher and your teaching methods .Please get the Futures and Options modules also up and ready quickly .Awaiting with a lot of curiosity on how high our learning curve will go up. Regards Sandeep

  15. sushil 12 says:

    wa wa !! dil khoosh hogyaa.. 😀 😀 sir you are great… am big fan of you again.. looking ahead for future trading module … 😛 😛

    • Karthik Rangappa says:

      There is lots more to come on Varsity, please stay tuned 🙂 We are working on Futures Trading, the module will be posted by Jan 2015.

  16. VIJAY says:

    Excellent piece of work Karthik. You really nailed it. Love to see more …

  17. ravi patel says:

    Good job sir ji

  18. Legend says:

    MAn Karthik who are you man ? .. Am bowled seeing these posts … U r awesome … I have searched for years to find things and you nailing them on one board .. Kudos to your effort … Am Jaga a Systems Analyst by profession. Would like to know about your profile is that’s ok..

    Once again many many thanks for the beautiful piece of work you have put in …

    Warm Regards

    • Karthik Rangappa says:

      Lol 🙂 Thanks for the kind words. You are making me feel like a hero! Like many of my motivated colleagues, I’m too working towards making Zerodha the best financial services firm in the country, this is my bit towards that. Please stay tuned, we have planned a lot of good content for Varsity. All of which will be up over time.

  19. Balraj Reddy says:

    Thanks a lot team. I had no knowledge about share and stocks before reading this. I thought just buy and sell. Now I have a different picture about the market. Will finish all the modules and start trading soon 🙂 Thanks again…..

  20. Naveen says:

    Thanks a ton. Clear and concise introduction to Stock markets. My journey into value investing has truly begun.

  21. Bharat says:

    Thanks for educating us with such wonderful information

  22. Harish says:

    What is averaging?

    • Karthik Rangappa says:

      Averaging is a term used when you buy shares in order to vary the cost of transaction. For example – Initially I buy 100 shares at Rs.20, cost of buying is Rs.2000. Next the price comes down to Rs.15, I buy another 100 shares this time the total cost of buying is Rs.1500/- and the overall cost is Rs.2000 + Rs.1500 = Rs.3500. Divide this by total 200 shares, the average cost of buying works out to 3500/200 = Rs.17.5. Therefore initially I bought at Rs.20, now I averaged it at Rs.17.5. This is called averaging.

  23. MUNIREDDY B M says:

    SIR I LEARNED TO TRADE. I CAN ONLY INVEST RS 1LAKH. I PL.GUIDEWANT TO EARN FOR SHORT TERM DAILY BASIS

  24. govi99sss says:

    Dear Sir…
    which one is the best option strategy…?

  25. aphatak says:

    Awesome ! hats-off!! excellent initiative !!! happy to be a Zerodha customer.

  26. Harsh says:

    Suppose I dont have cash in my zerodha account, then I buy some shares with value X in the morning using leverage. The share price goes high in afternoon. And now the value is X+Y. And I sell them earning the profit of Y. Then how much interest I have to pay? If I sell them BTST then how much interest? I how much time span I should pay out leverage to zerodha?

    • Karthik Rangappa says:

      You cant do this, as you need to have a cash balance before you can employ leverage.

      • Hello Karthik,
        I am not able to understand how to buy shares if no balance in Zerodha account ?
        And am also not able to understand your reply.
        Can you please explain?

        • Karthik Rangappa says:

          To buy shares for delivery you need to have 100% cash. For example if you want to buy 10 shares of 100 Rupees each, then you need to have 1000 in your account.

  27. muthukishor says:

    Good work team Zerodha.
    Lot of learning on basics of a share market.

  28. Darshan says:

    Good content. Lucid writing. I wish, I had gotten it earlier. Looking forward to more.

    • Karthik Rangappa says:

      Thanks, we are still working on developing the content…we are working on Options now. Please stay tuned for more.

  29. Brijesh says:

    Excellent Work ….Thank You Very Much

  30. harikrishnan says:

    Sir I had some doubt regarding the purchase of stocks of a company. After listing a company in stock exchange they are actually selling their share to the public, right. If company xyz issues 10rupee 10000 shares to the public, and I bought a 1000 shares of that company at rupees 10000. After some time I wish to sell my share. Then I ll put an ask price for my shares. What will happen if nobody buys my share?

    • Ganesh says:

      Actually This question has already been answered before. Here is it:
      Well, this depends on the liquidity of the company. For a really large company like infy there is always someone buying and selling its shares…however there are some really small obscure companies in which trading does not happen…even if it does the volumes are low. So you need to make sure there is ample liquidity before you take positions.

  31. ThomiCool6 says:

    I cannot wait to read more about investment. 🙂

    • Karthik Rangappa says:

      Good luck, we have put up the whole module in the Fundamental Analysis section. Please do check 🙂

  32. Vishnu Sankaran says:

    Dear Sir, First of all, thank you very much for the wonderful efforts for training beginners like me. I have one question on the bid and offer part. If I want to purchase 3000 shares from the market and I raise a limit order. My price was 300 on the order. The quotes are showing 1 stock at 300 and another ones are 301,303,306,305 respectively. what does that mean? out of my 3000 requirement, I get only one share? or I have to raise a market order? kindly advise

    • Karthik Rangappa says:

      In this case you will get only 1 stock @ 300 and the balance 2999 will be pending order. Remember this is a limit order, hence you will get a fill only when the price meets your specification.

  33. kieron says:

    Sir
    Where I get proper information about Quantitative Analysis (QA) I am interested to learn it

  34. i have a doubt 1. iam not getting my preferred equity or scrips in the trading platform a task bar above the trading platform i have seen
    normal/nse or bse next be bl bt b2 d1 dr eq and h1 to h 9 etc kindly give breaf f details of thid abbrivation iam interested to get a training
    if possibile arrang the meetting at kerala

    • Karthik Rangappa says:

      B1, B2, H1 etc are all different series in the markets. For normal equity please select “EQ” series. Sometimes the scrip that you want if not in EQ will be available in B1 series. If the scrip is in B1, you cannot do intraday trade on it. To add stocks to your marketwatch, please use the drop down menu. If you are trading with Zerodha, then please do contact +91 80 40402020 for more details.
      Unfortunately we do not conduct training sessions in a phyisical set up.

  35. K.Srinivas Reddy says:

    Sir, please explain what is de-listing and its impact on share holders?

    • Karthik Rangappa says:

      De-listing happens when a listed company wants to pull off their shares from the public market. Usually when a company delists shareholders will get a better price. For example company ABC is trading at 100 on NSE, the company decides to delist, then the company is expected to delist at a premium …so maybe they can offer 130 or 140.

  36. srikanth reddy says:

    Sir,, if a company comes for public issue with floor price and price band of 500 -520, and if lead manager decides the issue price as 510,, then at what price it will be first listed in stock exchange?

    • Karthik Rangappa says:

      Listing will be at 510….and based on the demand supply the stock can open much higher or lower on the listing day.

  37. Sagar says:

    IF I already have shares in my holding and I take a short position (intraday) and then close it before the market closes by buying it, will my holdings remain intact or there will be First in First Out impact on it? I dont want my holdings date and cost to get affected by intraday trades. Please provide clarity. Thanks.

    • Karthik Rangappa says:

      I’m assuming you are trading with Zerodha – so if you do intraday the order type is either NRML, MIS, or BO/CO….so this order type ensures that the trade is intraday and hence does now interfere with your holding. For you to square off from holdings the order type to use is CNC.

  38. Anand says:

    Hi Karthik,

    I have a doubt on IPO section,

    ” The total of 50 lakh shares is called the Authorized shares of the company. These shares have to be allotted amongst the promoter and two angels plus the company has to retain some amount
    of shares with itself to be issued in the future”

    As per initial share holding pattern, promoters and angel investers control 25 lakhs shares,

    My question is “who provided other 25 lakhs ruppes and who controls/owns 25 LKHS shares in company’s account” .Based on the seed funding by promoter( 20 LKHS) and angel investors (2* 2.5 LKHS), shares are allocated. How shares are allocated under company’s account ?

    Thanks,
    Anand

  39. Ajit says:

    Hi Karthik
    i mostly trade in options..i got your three points except the one called QUANTATIVE ANALYSIS,what is that about touched 3rd standard deviation..and were can i find that.Is it on every trading platform,when to expect bullishness with respect to standard deviation…please explain..and help me with this VWAP…thank you

  40. Prasanna Kumar cv says:

    ಶ್ರೀ ಕಾರ್ತೀಕ್ ರಂಗಪ್ಪ ರವರಿಗೆ ಧನ್ಯವಾದಗಳು ….ಷೆರ್ಸ್, ಸ್ಟಾಕ್ ಟ್ರೇಡಿಂಗ್ ಕಬ್ಬಿಣದ ಕಡಲೆ ಯಂದು ತಿಳಿದುಕೊಂಡಿರುವ ನಮ್ಮಂತವರಿಗೆ ನಿಮ್ಮ ಸಂಸ್ತೆ ದಾರಿದೀಪವಾಗಿದೇ …ನಾವು ಷೆರ್ಸ್ ನಲ್ಲಿ ನಮ್ಮ ಬಂಡವಾಳವನ್ನು ತೊಡಗಿಸಿ .. ಲಾಬದ ಅಸೆಇಂದ .ನಮ್ಮಿಂದ ಟ್ರೇಡ್ ಮಾಡಲು ಆಗುವುದಿಲ್ಲ ವೆಂದು …… ಬೇರೆ ಏಜೆಂಟ್ ರವರ ಮುಲಕ ಟ್ರೇಡ್ ಮಾಡಿಸಿ ಲಕ್ಷಾಂತರ ರುಪಾಹಿಗಳನ್ನು ತೊಡಗಿಸಿ ಎಲ್ಲವನ್ನು ಕಳೆದುಕೊಂಡಿದ್ದೇವೆ…… ಸದ್ಯ ಕೊನೆಗೂ ನಿಮಂಥ ಸಂಸ್ತೆ ನಮಗೆ ಸಿಕ್ಕಿದ್ದು ನಮ್ಮ ಪುಣ್ಯ ….ನಿಮ್ಮ ಇ ಪಟ್ಯ ದ ಸಲಹೆಗಳನ್ನು ಚಾಚು ತಪ್ಪದೆ ಪುನಃ ..ಪುನಃ ..ಓದಿ ಕರಗತ್ ಮಾಡಿಕೊಂಡು ನಿಮ್ಮ ಸಂಸ್ತೆಯಮುಲಕ ನಾವು ಮತ್ತು ನಮ್ಮ ಸ್ನೇಹಿತರು ಕಳೆದುಕೊಂಡಿರುವ ಬಂಡವಾಳವನ್ನು ಪಡೆದೆ ಪಡೆಯುತ್ತೇವೆ
    ಧನ್ಯವಾದಗಳು
    ಪ್ರಸನ್ನ ಕುಮಾರ್ ಚ ವೆ

  41. mohammad yunus says:

    Sir fabulous article full of knowledge with complete explanation. If I do good in this market it will be all because of you and if I do bad it will be my fault.

  42. stevemnzs says:

    Brilliant stuff Karthik!

  43. mahalaxmi says:

    I want to start trading, can you please guide me through.
    I would like to know about opening de-mat account, particularly please tell if I can handle all procedures online?

  44. mahalaxmi says:

    can you please tell me what is this discount broking and how is it different from full broking?

  45. Divyansh says:

    Simple and amazing content, compatible and easy to understand for both rookie and an elite trader.

  46. ahmed says:

    in modules chapter 8 to 10 is not updated why?

  47. tarun21111995 says:

    sir, i have studied some modules completely. they are very helpful for a person like me who hails from defence background. i want to suggest that this information can be more understandable and attractive if it is in the form of short videos.

  48. ksk says:

    content is awesome.feeling confident to invest in stocks

  49. NJ says:

    Excellent material for new beginers. very smoothly explained. I bet even a first standard student will understand this :p

  50. Sushant says:

    Hi Karthik. I have just applied for a demat and trading account with Zerodha. I went through your Module 1 and it has provided a quantum jump in my understanding about many Stock market related queries. Keep up the good work. I am eager to complete the other modules now.

  51. demolition says:

    Sir please may i inquire about when we can get currency, commodity section topics listed on varsity.

  52. aehsan4004 says:

    hello karthik ,

    just a general query .

    what are your views about a CFA qualification from US -CFA institute ?

    does this add any value to our trading / investing performance ?

    • Karthik Rangappa says:

      You need it if you plan to build a career in investment management…but not really required for personal trading and investing.

      • aehsan4004 says:

        lets say a retail trader /investor after years of consistent returns wants to set up his own hedge fund or AMC ….can he attract outside money based on his returns or people still look upto paper-qualifications ?

        for an avg . retail trader what is the best method to improve his/her trading performance ?

        • Karthik Rangappa says:

          Well it really depends on how well you can communicate with clients. If your clients know you well, then qualifications does not matter, but to attract new clients, qualifications matter to some extent.

          Also, I think SEBI needs qualification and relevant experience certificates before issuing the licence. Suggest you double check this.

  53. Arun says:

    What is the meaning of Hot and Cold with respect to stock market.

  54. dheeraj says:

    Please tell me about nifty buying

  55. Nikhil Gulumkar says:

    Best Article I read this month. Will definitely share

  56. Jagdish kumar says:

    Loved it,
    thumbs up

  57. Jyoti says:

    sir,
    i am a beginner and start investing with zerodha along with reading the phase-wise lessons of your varsity section. its really really nice job and being a knowledge-less person its very informative.
    i have a suggestion to please recommend the stocks to your account holders for that you may charge minimum fee, if so that would be a great help to the investors who are investing in the stock market for long term perspective.

    • Karthik Rangappa says:

      As a company we are against recommending stocks. Instead we like to educate our clients so that they can take informed decisions themselves!

  58. RD3032 says:

    Hi,
    I read chapter 1 & 4 thoroughly. As I am planning for long term investment, I think fundamental analysis is enough. Do I require to read all chapters? Please suggest.

  59. SARAVANA PERUMAL D says:

    Hi Zerodha Team,

    One small request, if you launch trading practice demo account with live feed market data on existing platform (pi or kite), it’s very useful for novice trader and new upcoming person.

    Thanks in advance.

  60. SARAVANA PERUMAL D says:

    Hi Zerodha team,

    One more small doubt for me. If the stock is de-listed from the exchange. Then, how can i trade the stock and why the stock de-listed from the exchange. How can i protect from this trap? How select the stock?

    Thanks in advance.

    • Karthik Rangappa says:

      If the stock is de listed then you cannot trade it. In fact, if a stock that you hold is about to get de listed, then it usually gets delisted at a very high premium to its current price, which is really good for the investors.

  61. srinivas chaitanya says:

    i was not able to understand these clearly before reading this..thank u very much if u write a book for beginners i am sure it will be best selling book for beginners

  62. CHAITANYA KALE says:

    Market Guru,
    Why not separate module on Quantitative analysis on varsity.

  63. Suja says:

    Hi Karthik, I have a question for you. I have not started trading yet and after completing the first chapter recently, I’m in the initial pages of Technical Analysis. All I know about Stock is from your first module. I know you’re coming for the stock portfolio session in IIM Bangalore, wanted to know if I could attend the session with the knowledge that I have.

    • Karthik Rangappa says:

      Curious to know how you figured out about the IIM B event 🙂

      I intend to focus on ‘Options Trading’ at the IIMB session and nothing related to TA.

      • Suja says:

        The session requires registration, I got to know about it from FB, and saw your name there.
        I don’t have an idea of ‘Options Trading’ at all, does that mean the session will be difficult for me to understand?

  64. Vaibhav Joshi says:

    Hi Karthik,

    Apologies as my question is not related to this chapter.
    Today 21 Oct 2016 – NBCC offer for sale for non retail investor(floor price 246 and 5% of on cutoff price) – I thought to apply but I saw its trading on 242 on open market.
    1.What is OFS and what are its benefits?
    2.In above case why some will buy through OFS or what is better?
    3.How discount is provided? at the time of purchase or later?
    3.Suggest some article on the same

    Thanks!

  65. waseem khan says:

    In Chapter 6 you have mentioned: Day Trader – A day trader initiates and closes the position during the day. He does not carry forward his positions. He is risk averse and does not like taking overnight risk. For example – He would buy 100 shares of TCS at 2212 at 9:15AM and sell it at 2220 at 3:20 PM making a profit of Rs.800/- in this trade. A day trader usually trades 5 to 6 stocks per day.
    and in Chapter 10 you have mentioned: All equity/stock settlements in India happen on a T+2 basis.
    My question is: If i am a day trader then how can i buy and sell the same stock on the same day when all equity/stock settlements in India happen on a T+2 basis.

    • Karthik Rangappa says:

      Well, when you trade intraday, you close all the positions by close. Therefore you are fair and square. However, if you want to purchase a stock for delivery, then you will have to buy…and the settlement happens on a T+2 basis. By settlement i mean, the act of the stock hitting your DEMAT account.

      • Jay says:

        Requesting you to please explain with an example .

        • Karthik Rangappa says:

          You buy TCS at 9:30 AM and sell it anytime before 3:20 PM (using product code MIS, Bo Or CO) then its considered an intraday trade. However, if you buy TCS with CNC as your product type, then you are essentially buying the stock to hold for few days. Settlement in such case happens on a T+2 basis.

  66. Abhishek says:

    Sir, which all modules should i complete before actually starting to trade. I want to be a swing trader and would like to go long and short sell as well for more than a day…

    • Karthik Rangappa says:

      I guess you messaged on Linkedin as well….as I mentioned, it makes sense to learn TA, it helps you develop a point of view. Maybe you could gradually move to quantitative technique.

  67. Jay says:

    Great content, explained in layman’s terms,
    thankful to it
    will recommend it to anyone who wants to learn the technicalities of stock market.

  68. Rakesh says:

    Excellent Material, just apt for someone to begin…

  69. s20ckdaddy says:

    sir, I want to start investing in stock market but there is a little fear. I have studied a lot and had also done a course of technical analysis.But whenever I start playing any virtual game of stock market I just end up that I know nothing. what should i do???????

  70. santubadam says:

    Dear sir,
    Can we place short sell order through CNC if we know that the trend in the particular stock is bearish and the trend will continue for few trading days…?
    Thank you ..

    • Karthik Rangappa says:

      You should be using MIS here.

      • agradut says:

        Can you explain multiple day short position?
        I thought both BSE/NSE does not allow such shorting and carrying position to multiple days. it is settled on the same day.
        If i do not own the stocks how can i sell them, unless i buy it at the end of the day to square of the position?

        • Karthik Rangappa says:

          Yes, you can only short spot on an intraday basis. To carry positions overnight, you need to look at futures market.

  71. Krishna.K says:

    Hi Karthik,
    i recently opened an account with zerodha , i have a quiery ,when i tried to place an order there is an option like VALIDITY: DAY OR IOC what is the meaning of this?
    2nd doubt if i enter a scrip name in wishlist like reliance it is showing RELIANCE-BE, RELIANCE-BL what does that mean.
    Thanks&Regards

    • Karthik Rangappa says:

      A day order is valid until it gets executed or till the end of day (market close). For example, if your order is to buy Reliance at 985, then the order stays in the system till Reliance hits 985. Immediate or Cancel (IOC) on the other hand checks for the price, if it is 985, the order gets executed, else gets cancelled.

      BE, BL, EQ etc are all different market segments. You can know more about it here – https://www.nseindia.com/products/content/equities/equities/mrkt_segment.htm

      If you are just starting, I’d suggest you stick to EQ.

  72. Karan heda says:

    Thank you so much. I am going to read all the other modules as well. Nd i would return the favour by opening an account with Zerodha.

  73. Karan heda says:

    Just wanted to confirm that, isn’t it that all the 5 other charges other than Brokerage will be same irrespective of the broker you choose ?

  74. Gagan wason says:

    Thanks Zerodha great material easy to understand , i am planning to invest real soon . Right now i am gathering all the knowledge that i could before going live . Thanks again Zerodha it would be very difficult without to understand the concepts so easily.

  75. praveshbajaj says:

    1>is stock operaters exist in indian stock market.
    2>how to identified stock in which stock operaters exist.
    3>how to analys operater intention that he want to move stock up or down.

    • Karthik Rangappa says:

      1) Yes, they do and their activities is illegal

      2) They usually prefer operating in ill-liquid stocks

      3) To some extent, the charts would help.

  76. Pavash Dixit says:

    That was an excellent effort to provide basics for Novice Investors

  77. Karan says:

    Thanks for the all the information. Great medium for beginners.
    Can u share some information regarding how different is your company from Futures First. I know they trade their own money, they do not trade public money and also they do not trade in stocks.

    • Karthik Rangappa says:

      FF is a trading company, they trade their own money. We are stock brokers – we give you the access and infrastructure to trade the markets. Along with this, we give a host of other services, including Zerodha Varsity.

  78. Anon says:

    How is your work different from investment bankers (managers)?Also can u suggest how or what other skills are required to make a transaction from trader to investment banker?

    • Karthik Rangappa says:

      IB’s offer a whole host of services to corporate like – Mergers, joint ventures, acquisitions, merchant banking, stock broking, structured products etc. We offer just stock broking (at least for now).

  79. Prashant Dhanavade says:

    Thank you for creating this ! Its fabulous. Most importantly, the content is relevant, easy to follow and hopefully retained. I am a doctor and have always hated finances due to its jargons and complexity. Usually, I start studying these things and loose interest very quickly, given the dry subject and difficulty understanding.
    I spent entire day reading the first module and I am feeling enlightened. In fact, I am so looking forward to the next modules !
    Keep up the great work !
    Best,
    Prashant

  80. anon says:

    My question is not related to this chapter but still please if u could help with this.
    What should be done if i have brought shares of some company and companies losses are rising every quarter and revenues falling every quarter and in near future also company is not giving much hope.(Like happening for IDEA now).What should be done to minimize the losses??

  81. Sumit Anand says:

    loved the content hope the rest of the modules are like this, if this is trading then i love it. even being an engineer i m thinking to start trading
    😛

  82. aravindt says:

    Love this module.Such a great place to start with for beginners like me:)

  83. Mrinalini says:

    Wow!! I have never understood stock markets before. Your explanation is so clear for beginners like me. Thanks a lot, Karthik and Zerodha team.

  84. amitzaware says:

    Amazing content…!!! Request to add a chapter on Mutual Fund/SIP..!!

  85. Subhajit Sarkar says:

    I am a client of zerodha, I want buy IPO, How can I.

  86. Arpit says:

    If i use cover order for equity (intra-trading) and use leverage because of insufficient funds, will there be any interest ?

  87. Arpit says:

    and also it is showing on my dashboard that 2.41k margin available, what does that mean and will any interest will be charged?

  88. Arpit says:

    and do i owe anything to zerodha

  89. Jinal says:

    I just finished reading Module 1.
    Amazing content, so beautifully written and explained. The way you explained why cos. go public via story telling – wonderful
    In one of the above comments you said you will be adding content on Mutual Funds and SIPs – really looking forward to that.
    Thankyou Karthik and Zerodha team. Kudos to you’ll

    • Karthik Rangappa says:

      Thanks for the kind words, Jinal. A module on personal finance is long overdue. Will do something about it soon.

  90. KT says:

    I can’t thank you guys enough for such easy to understand content, will study some more and open a Zerodha account soon 🙂

  91. Anirudh says:

    As per my understanding I can invest in a particular company under stock market. But how to invest in nifty as its an index comprised of several companies?

  92. Bhanu prathap says:

    Karthik sirrr, you are doing a great job……..Really thank you sir.

  93. Vijaykumarg says:

    I did not know ABCD of stocks , now I atleast know the letters of stock market . Thank you Karthik sir ….. I think I will be able to create words after going through the remaining modules. Thanks once again 🙂

  94. Amol Kawane says:

    Excellent content. I know most of things but still some new concepts are cleared. Thank you zerodha.

  95. KUMAR ABHISHEK says:

    Sir , if we hold a scrip- infy and we want to do BTST in the same script ,how can we do it since FIFO we sell the shares from demat ,and will FIFO also apply if we do intraday trade in same script (infy).

  96. kiranintouch says:

    Excellent Work Karthik !! Much Appreciated !! Request you to advice regarding quantitative analysis. If i wish to trade as a swing trader, would the volatility distribution explained in “Options” module be sufficient for me to get a POV (as far as QA is considered, in addition to POV from TA and FA ). If not, request to add that module. Also i understand, getting a POV by making use of your technical analysis module, i may trade at 3:20pm (same day)or 9:15am(next day) by considering 3-6 months candles. But what do you recommend be the number of historical candles if i wish to trade during the day. And is the pivot provided by zerodha kite,obtained on the same lines as that explained in the “Support and Resistance” chapter of TA module. Lastly does zerodha provide quantitative charts(Volatility distribution chart as explained in Options Module) in any of the platforms, if not do you suggest any forums or platforms for obtaining the same. Alternatively i can also use the spreadsheet provided in the “Volume Distribution” module, but request you to suggest the history data for the stock i need to consider if i wish to be a swing trader.

    • Karthik Rangappa says:

      Thanks Kiran.

      1) Yes, it certainly does.
      2) It really depends on your outlook. For example, I mostly look at EOD charts for intrday for at least 3 months. Some people only look at last 3 days data…and some look st last 15 mins data. So there is no right or wrong answer here.
      3) Pivot works on a preset calculator, this is different from what we have discussed in S&R chpater
      4) No, not as of now
      5) Will try and do that

  97. kiranintouch says:

    Request to suggest a good website for economic market calendar, where i can read about key events of the market.

    • Karthik Rangappa says:

      Have you checked trading economics site?

      • kiranintouch says:

        Thanks Very Much Karthik !!
        1. Trading Economics Site has lot of useful information. Request to let us know if impact of Key Events Globally on Indian Stock Market.
        2. Also wanted to know if there is a site where i can find time of declaration of corporate earnings as in trading economics, as most of the websites i have found only have dates but do not mention time. And at trading economics, i was unable to find Indian corporate.
        3. And lastly, as Indian Citizens are we allowed to trade in global markets such as US. Is there a similar concept as FDI for US markets. Also would like to know your opinion for trading in US markets. My reason for trading in US market would be to take advantage of dollar conversion rate, ie if i manage to make profits in dollars, i can be at an advantage as i would still be spending in INR only.

        • Karthik Rangappa says:

          1) Yes, it is a very resourceful site.
          2) Moneycontrol has it I guess, please do check the site
          3) Yes, you can. But RBI has a restriction on how much you can invest. Guess its 25K USD.

  98. Jeevan says:

    Hello Karthik,
    I just finished Module 1 and I must say that this is my best investment (time) and how I wish there is a formula to calculate my ROI (Knowledge) in quantitative terms. I am going to keep on investing on the other modules. I just want to say Thank you very much for teaching us. You are awesome ! 🙂

    • Karthik Rangappa says:

      Hey Jeevan, I’m so glad to hear this 🙂

      The best investment in market is your investment in learning. This is the only investment where returns are guaranteed :). The more you invest, the more returns you earn.

      Good luck and happy learning!

  99. Sunil Dutt says:

    Dear Sir,
    I would like to pay my sincere thanks to zerodha and specially, many many thanks to Karthik Ji as I learnt a lots from Module 1 which could be possible by your noble efforts.
    Again thanks.

  100. Aumprasad says:

    Very good content for beginners , simple and right choice of words, learned lot of things ,and cleared many doubts, thanks.

  101. Pravin says:

    Sir …I have shilpi cable stock ..From last 5 to 6 days stocks continusoly hitting to lower circuit …There is no buyer in this case how to sell stocks …How to place order …In such cases …So that I will able to sell stock

    • Karthik Rangappa says:

      You will have to just place the order everyday with a hope it will get executed. No other way out here.

  102. p s ganeswara rao says:

    hi kartheek ji small doubt ( good or bad i dont know) placing. here is the question
    futures contract for wipro now (24/06) future price 258
    lot 2400 expiry on 29/2016. for the same buy margin 205488
    sell margin 76968 why that much difference (128520)??
    2) i observed some times futures price is trading at lower than spot.
    i learned futures mimics spot. futures acts according to underlying asset
    please clarify me sir

    • Karthik Rangappa says:

      1) Futures margin is the same for both buy and sell, they cant differ. Are you sure you are looking at the right contract/right number of lots etc? Please do recheck once.
      2) Yes, there are at times when futures trades below spot (referred to as discount) and at times, futures trades above spot (referred to as premium). This happens due to the natural demand and supply situation in the market. However, the overall price movement in Futures is based on the spot prices.

  103. p s ganeswara rao says:

    hi sir . nifty17jul 10600 ce @prem. 0.10 trying to buy 7500 (100lot) in nrml
    is rejected with message , rms: margin exceed.required 9375.
    how the fig 9375 came?? 0.10×7500=750 only please clarify me
    in our calculator also its showing 750 only plese
    what is day and ioc in validity sir while placing order

    • Karthik Rangappa says:

      It should be 750, I’m guessing you had some other open order or something. Can you please check with our Support executives once?

      Day order is valid for the entire day but IOC is immediate or cancel. For IOC to go through, both price and quantity should match with what is available in markets.

  104. samgk says:

    Do you guys have any learning material about mutual funds? I invested Rs.5,00,000 in a liquid fund (Peerless) through Zerodha in October and when I checked a couple of days back the current value is below the original amount. In other words, I lost around Rs.2000 in 8 months. I thought liquid funds were safe enough. Can you explain what may have happened? Thanks.

  105. anantk007 says:

    Great content….Thanks.

  106. mohammed safiuddin says:

    can someone explain me about picking a stock for fundamental analysis from around 6000 companies available to invest

  107. Rohan says:

    The entire guide is really productive for a beginner like me. Truly remarkable guide to start with.

  108. Shafna CP says:

    Brilliant tutorial! THis guy must be a maths teacher!

  109. ZB4376 says:

    just finished the first module..all the chapters are excellent but personally I loved the one on IPO and pre-IPO funding and that other one on short selling that use the example of flipkart mi sale 🙂

  110. Hits says:

    If any company issue Bonus share 2:1, then its prices will be half.
    Then don’t it will affect the Nifty of Sensex if its in Nifty-50 or Sensex-30…..as they calculated by averages of them…!!!!

  111. vartika says:

    Easiest way of learning stock market.. thank you (y)

  112. P.S.perumal says:

    I like to trade on Forex on some international stock exchange for that I have to write some exam to get permission from rbi or not

  113. Bharath says:

    The main reason of the company going public is to raise funds for its expansion. if an early investor wants to exit, which one would be considered as priority? will the company and the investor will sell there shares separately to the public?

    • Karthik Rangappa says:

      Could be for any reason –

      1) Money for expansion
      2) Exit for investors
      3) Pay off debt

      They will all have to transact via the stock markets.

  114. Bipul Kumar says:

    Dear Sir/madam,
    How can we check the shares holding period?

    • Karthik Rangappa says:

      If you are trading with Zerodha, I’d suggest you check the Q backoffice > portfolio > holdings. Under the stock names in holdings, click on ‘+’ icon and you will get the number of days you have been holding on to the shares.

  115. Mehrotra says:

    Tumba thanks dear,
    Just want to know as a bigenner which type of trading or investing one shud be doing.
    I have no idea about trading but have inclination towards shares.

  116. RAJESH.R says:

    i loved your site, because all informations are here, i learned like a class room. thanks

  117. Johnson says:

    Hell Sir,
    Yesterday I purchase 1000 shares of SBI @ RS 300 [say] at Intraday Trading Zerodha Platform, after some moment it hit a Stop Loss and I lost Rs 2000/- on the trade.
    In this case how much would be debited from my Zeroda Equity Balance.
    I think RS 4000/ was debitted from my account.
    Kindly explain such scenario , I am new to trading….
    Thank you

  118. Sarath Mohan says:

    Hi,

    If i convert my position of XYZ from MIS to CNC before the squaring off , will margin available on my stocks till T+2 ? or do i need to add money at end of T day?

  119. Rakesh Jamwal says:

    Good job Team Zerodha

  120. Rakesh Jamwal says:

    i have a demat & trading account with edelweiss can i convert it in zerodha & close my all other demat & trading account …..please provide me this facility….& explain the charges for this activity…

  121. Anup Joshi says:

    Hi,

    can shares from one demat account be transfered to another demat account.

  122. SaiKumar Immadi says:

    Three weeks ago, I started thinking about investment. I started out with knowing about mutual funds and then two weeks ago I started to look for trading and how to do it. And then, a week ago I found this. This is the most awesome content that I have ever read on the internet. It’s really helpful and everything is in place for the beginners to start with.

  123. Swapnil Iyer says:

    Too good. Thanks for providing the required information in a contained format.

  124. Aishwarya says:

    One of the most simple and interesting materials. Thanks 🙂

  125. Amit says:

    I want to know after an IPO how does the company benefit from trading of it shares

  126. Alex Prabhu says:

    Does Zerodha offer a practice demo account to practice day trading?

  127. Saurabh says:

    I have no words to describe the beauty of your articles. This is very very helpful to guy like me (I.T professionalist) who have a great zeal to invest in market but always fear of “share market is gamble and always loss” but i always believe to first go to deeply to understand then will be able to judge whether this is really a gamble or mind game..
    I was looking for an online material to get basics and market running fundamental knowledge and by luck found this website.
    Again Thank you so so much for such a fantastic,knowledgeable,well explained & complex contents 🙂
    Cheers !!!

    • Karthik Rangappa says:

      Welcome to Zerodha Varsity 🙂

      Thanks for the kind words, Saurabh. Words like these motivate us to put up better content.

      Good luck and happy learning.

  128. Saurabh says:

    I have following queries with respect to share market .
    can you please help me to understand this.
    1) Does company growth totally dependents on share market value.
    For example : An I.T company share market prices are getting down by 50% (from 500 per share to 250 per share) but company running with all existing clients so does this prices down will start layoff in company or what does impact of low share prices for any individual company.
    2) Personally , i want to retain share for longer period then want to sell it out so is there any different category for this .As i knew that in intra-day share will be buy/sell on the same day.
    3) what is an ideal way to open trade/demat account . With broker or direct with bank.
    For example : should i go with sharekhan/zerodha or icici direct . which to select and why?

    • Karthik Rangappa says:

      1) No, the growth depends on the core operations of the business. The share price is a reflection of the growth in operations. If operations and business grows, so will its share price
      2) Yes, you can invest for long term. I personally know people who continue to hold Infy shares from the time of its IPO
      3) You can choose to open it with a broker like us :). We are India’s leading stock broker. If you have an AADHAAR number, then you can even open the account online within few minutes, click here – https://zerodha.com/?ref=varsity

  129. Anand says:

    Thank you very much Karthik . i read the entire Module 1 that is all 13 chapters in one go . The language used is very simple and you have explained the most complicated things in the most simplest and interesting way.

    Thanks Again .God Bless You.

  130. Hits says:

    What if broker like Zerodha closed overnight….!!!!!
    I mean what would happen to my funds in zerodha a/c and shares owned by me…!!!!

  131. mehul says:

    Hi karthik,
    The charting indicators option is not showing in the kite web browser in my mobile phone after formating it at service centre. Can you please guide.
    Thanks & Regards

  132. Illuru umakantha reddy says:

    dear karthik,

    The material is very useful for beginners . Nice effort

  133. Sandeep Mhatre says:

    Enjoyed reading! Many concepts cleared in a very simple way!! Thanks for sharing.

  134. Bhavik says:

    Can i sell the share on next day or same day (if i select CNC type)? Because in module i learn that we recieve share on t+2 day then how i sell my share before i get it.

  135. vipul says:

    would like to know how one can use margin trading. I am currently using kite. Is it possible there.
    Also are there any demo videos on the various features on buy & sell, charting, backoffice etc available on zerodha

  136. Veer says:

    How can I put stop loss in option trading.
    Example: I bought a LOT of JET AIRWAYS 600CE Sep @ 15. And now it is trading @17. So now I want to sell it @18 if it touches 18 but also don’t want to sell less than 16.50 if it goes down. Please advise.

  137. Ganesan says:

    Hi, I am new to stock markets and your materials providing me great knowledge from basic. I have query on short position, in which first i sell some stock and then i need to buy it to close the existing position. Is there any timeline to complete it and what if i don’t complete it.

    • Karthik Rangappa says:

      Yes, if you are shorting in the spot market then you will have to close the position within 3:20 PM on the same day. However, if you are shorting in Futures, then you can carry forward the position overnight.

  138. Karthik says:

    Hii sir I am karthik from hyderabad ‘ I have opened a demat account in zerodha
    But I do not know how to trade in options and how to select a stock
    Please help me sir ‘ how to learn and invest in option market

  139. abhishek kumar sah says:

    1) how can an indian trade in international market say US from india?
    2) Who should be the broker in that case?
    3) does an indian brokerage firm allow to trade in say US market?
    4) I have listened some people trade in gold in the international market, how do they do that?

    • Karthik Rangappa says:

      1) You will have to find a broker who allows you to trade US stocks. RBI has a restriction of upto $250,000 of investments per year. No leveraged trades allowed
      2) & 3) Yes, some allow not sure of the names for now
      4) Same as above.

  140. Kannadiga says:

    Dear Karthik anna,,,

    Are you from the same planet where we also belong too??!! you amused me with your knowledge . “Knowledge is power” obviously not,,but using that knowledge for well being of all is the real power,,,i have specific goals in my life , one more goal added to my list, that is meeting you in future . I will make you proud by becoming key player in Indian stock market

    Thanks a ton !!!!!

    • Karthik Rangappa says:

      Knowledge grows when you share it with people 🙂

      I wish your dream comes true and you indeed become a key player in the markets!

      Good luck and stay focused 🙂

  141. ANoop says:

    Hi Team, Could someone suggest on how to buy and retain shares for more than a day? whenever i start to buy the validity says one day and i will not be allowed to carry forward. please let me know how to do this

    THanks
    Anoop

    • Karthik Rangappa says:

      You should use the product code as CNC. CNC means cash and carry and is used when you want to buy shares for multiple days/weeks/months etc.

  142. mohammed says:

    Hi sir,
    Your lectures are awesome. I have a question for you. what if I bought a stock in cnc and sold it on the same day.Can I do CNC for intraday trading?
    What is difference between ioc and day options which zerodha shows in advanced menu

    Thanks
    Mohammed

    • Karthik Rangappa says:

      Yes, you can do that and this would be considered as an intraday trade. IOC is immediate or cancel, you can use this to place orders when you are particular about the time of execution. The day order is valid for the day.

  143. mohammed says:

    Sir,
    My order got rejected and it say Rule:check holdings, no holdings present for entity account-ZP8084across exchange across segment across product.

    It was showing stocks in my positions. but i was not allowed to sell, order was getting cancelled with the above message. This happened for half an hour. After that I could sell them. Why is that happened?

  144. mohammed says:

    Sir,
    how are the payment gateway charges for zerodha?
    How are DP charges applied? is it 13.5 per stock of same company? or 13.5 even for 100 stocks of same company?

    • Karthik Rangappa says:

      The payment gateway charges is Rs.10.63/- including 18% GST. DP charges are applicable when you sell shares from your holding. This is on a per script basis, does not matter how much you sell.

  145. Shashi says:

    Hi Karthik,

    I have a questions . I have a 9-5 job . Is there a paid sms/whatsapp service that will send market alerts before moneycontrol, etc. My idea is to trade the news flow for a few minutes.Please advise.

  146. Dnyaneshwar says:

    Hi Karthik,

    Thanks for such a quality information about stock market explained in simple way.
    Really helpful for a beginner like me who lite

  147. Dnyaneshwar says:

    Hi Karthik,

    Thanks for such a quality information about stock market explained in simple way.
    Really helpful for a beginner like me who literally didn’t have a knowledge about the stock market before opening account with Zerodha.
    Keep it up..

  148. Prasad says:

    hello sir,
    thank you for the awesome training you have given… Sir i need a clarification regarding the market depth.. As I am new to stock market trading, I am getting horribly confused with the terms bids and offer …kindly help me out..thank you again…

  149. Sachin says:

    Take a bow Kartik n team for fabulous work, it’s like better than reading so many other books on markets and your lucid language and example made it all so much clearer, kudos

  150. Sachin says:

    Take a bow Zerodha team for fabulous work, it’s like better than reading so many other books on markets and your lucid language and example made it all so much clearer, kudos

  151. ABHI says:

    I just loved reading varsity. Though i have still one question in mind regarding IPO. Can a company get listed in secondary market instead of going through the process of IPO?

  152. Hemprasanth says:

    What is face value of a stock? What’s the difference between this and stock price?

    • Karthik Rangappa says:

      Face value is the nominal value of the share at the time of creation of the share. The stock price is the price determined by the market participants.

  153. Sundeep says:

    Sir you have said that scalping is essentially buying and selling of stocks in large quantities, for a small price difference. Now, what is large quantity? Would a number like 25000 qty of a particular stock be enough for scalping?

    • Karthik Rangappa says:

      This again depends on the stock price. If the price says 10, then 25K is not much. So instead of thinking in terms of quantity, it makes sense to think in terms of the value of transaction.

  154. Kamil Hasan says:

    I am speechless, I can’t believe such a wonderful information with great illustrations are provided free of cost.. I will be indebted to you always Sir… You are great Man

  155. Krishna Deshmukh says:

    how many modules are covered in zerodha varsity? why cant i see the 11th module ‘financial modelling for investment practice’ as mentioned above?

  156. SHIV SHAKTI says:

    thank you so much sir….
    you are the main reason for making share market easy for thosands of people and letting them to make indian economy better

  157. Heer says:

    learn much and you make easy to understand basics. I will start read module 2 soon. Thanks a lot for sharing such a good content.

  158. pra says:

    I have question, I wonder in a falling market like the one we saw in 2008 and 2013 where market was on a freeflow, how a person can sell a particular stock? I mean there should be a buyer right? Why do anybody wants to buy in a free flow market?

  159. Pradeep says:

    Sir you’ve written about how to develop a POV using fundamental and technical analysis. But you never got around to quantitative analysis. If it’s not on cards anytime soon, can you suggest some books on the topic?

  160. Sundeep says:

    What are the different basis for trading? I know trading based on Fundamental, Technical and Quantitative approach. What others forms of trading is there?

    • Sundeep says:

      Sir to be clear, I’m asking about the basis on which trades can be taken, like based on market profile or technical Analysis.. And not the time frames. It’d be greatly helpful if you can guide me on this. BTW, enjoying varsity very much.. Have recommended it to all my friends and colleagues as well. Thanks in advance.

      • Karthik Rangappa says:

        Thanks for spreading the word about Varsity, Sundeep.

        Selecting the time frame is secondary. If you opt for TA, then something like candlesticks will help. For investing, nothing beats Fundamentals…and for short-term trading, you can consider something like pair trading (based on stats/quants).

    • Karthik Rangappa says:

      These are the three main categories, Sundeep.

      • Sundeep says:

        Sir what are some lesser known methods/basis for placing a trade apart from those three? That’s what I wanted to know. Thanks for the amazing write ups sir.

        • Karthik Rangappa says:

          Every other technique is a derivative of these three broader techniques. Of course, you can always rely on your gut. This is outside the purview of the TA, FA, and QA. A lot of traders use this occasionally, including me 🙂

          • Sundeep says:

            Sir I have few more doubts. How would you classify placing trades based on market behavior? Like volatility is high on stocks surrounding news. So short the same. What kind of trade is that?

          • Karthik Rangappa says:

            Since its a bet on Vol, I’d peg it to QA. In fact, you can use ATR indicator to get a sense of Vol, that would be TA.

  161. Sajeev says:

    Excellent Article. Was able to learn many new things.
    Need to learn about the derivative markets in the coming chapters and developing PoV.

  162. srisri says:

    QA based POV – With the recent up move, the stock’s price to earnings (PE) touched the 3rd standard deviation. There is only 1% chance for the PE to breach the 3rd standard deviation. Hence it is prudent to expect a reversion to mean; therefore the stock is a sell.

    can you please elaborate the above? It’s a tad bit confusing.

  163. mahesh says:

    Dear sir,

    Can you please elaborate differences between last trading price LTP and close price of equity stock?

  164. Amnendra says:

    Happy to know about new thing and in the best simple way,these things are happening in front of us on daily basis and we have to know behind the scene.
    Good platform.

  165. Pranav says:

    Nice explanations. Thanks

  166. Niranjini says:

    Hi!! Thank you.Must say an excellent article for beginners. So Karthik I don’t understand the last part of this module.
    1)What is an MACD indicator?
    2)What is PE ratio? And third standard derivation?

    • Karthik Rangappa says:

      The terms are explained in their respective modules (MACD in Technical Analysis and PE in Fundamental Analysis, and Standard Dev in options and trading systems). I used these terms here to give a sense of what to expect.

  167. rushabh says:

    is it necessary to buy the stock the same day you shorted? if yes,why so?

    • Karthik Rangappa says:

      Yes, otherwise you will have to give delivery of shares. Hence to avoid this, you close the position the same day.

  168. Arundathy Krishnan says:

    Hi Karthik,

    Thanks for explaining the contents in a easy to understandable way.

    I have a query. There are approx 5500 stocks in the market. At the starting point, how to pick up a winning stock/how to select stock for analysis? Could you please provide some guidance on this.

  169. Vinay says:

    Sir where is this quantitative concepts.I couldn’t find it.will it come after trading systems.BTW you explain any thing in such a plain practical way and so effortlessly that after reading it feel like WOW.

  170. omi says:

    A little off topic question
    what education or degree course would you advice which will help someone who wants to do stock trading for a living (only for own business ,not considering and requiring any job ) .

    • Karthik Rangappa says:

      That will be difficult to answer, Omi 🙂
      I don’t think there are any courses designed to do that. You just need to read a lot of content and develop a path ahead for yourself.

  171. Prakash says:

    Excellent article sir. Hats off to you sir… Karthik (Y)

  172. yesh says:

    I have read somewhere that sebi has investor protection fund for investors or traders for default with maximum compensation of 25 lakh. So in case say xyz broker defaults or hypothetically say runs away with clients money so will the trader or investor would get compensation from this fund put by sebi

  173. pramod says:

    Great post.

    I have doubt, Can any retail investor like me be able to buy shares of MRF or Eicher at the lower levels?
    Meaning, will these share price comes down? either by way split or bonus or will it fall to its lowest level?

  174. prakhar says:

    which countries stock market affects nifty

  175. Naveen says:

    Awesome!!
    You have explained it in a very simple manner. It’s very easy to understand for a beginer.

  176. prakhar says:

    one small doubt what is the crriteria of being called as retail trader in indian contest.
    i mean is it the trading account capital from which someone trades or else.

    • Karthik Rangappa says:

      There is no formal definition for this. Generally, if you are an individual trading the markets, you are considered as a retail participant.

  177. Ram says:

    Hey Karthik,
    When is the 11th module gonna come?

  178. Dinesh says:

    Awesome content !! The way it is explained is simple and clear.

  179. raman sharma says:

    Apart feom zerodha’s fabulous content the comment section is also interesting after reading 413 comments your 413 doubts are cleared. cheers!!

  180. Sangita Mahajan says:

    If you think the stock is going up, your POV is bullish hence you would be a buyer of the stock. Likewise if you think a stock is going down your POV is bearish therefore you would be a seller of the stock.
    I dont understand this, when rate is high then it buy
    And rate is low then sale
    Sale of low rate & purchase of high rate, then how profit gain

  181. Arun says:

    Superb article

  182. Arvind says:

    Great work guys ! Really helpful 🙂

  183. Lalita Teckchandani says:

    Much more than what I learnt at MBA! Thanks for the humongous effort this must’ve taken. Much appreciated. Have also ordered the ‘Finance made easy for kids’ as a birthday present since my younger one certainly has a ‘trading mentality’ 🙂

  184. Saurab Rao says:

    This is truly fantastic. Really appreciate the efforts you have taken to explain all the required concepts. You just made stock market interesting for a total newbie like me! Hope to dig in further, especially curious to learn about derivatives. Can you suggest a good read on it, or is it already included in one of Varsity’s sections?

    • Karthik Rangappa says:

      Glad to hear that Saurab! Varsity’s section on F&O is a good start, it gives you a good understanding of the basic concepts. There are plenty of books which you can read later on. Really depends on your area of interest.

  185. anil says:

    dear sir,

    actually i have query regarding intra day trading ……..

    1) sir can we trade any security or stocks in intraday without using MARGINE provided by zerodha.

    2) can i buy any stocks in CNC and i want to exit my position same day is this possible.
    (i want to tarde as intraday without using margine)

    if possible is there penalty levid on me or not

    • Karthik Rangappa says:

      1) Yes, you can do a CNC order types, pay full cash and trade
      2) Yes, possible. No penalty for doing so. However, since its an intraday trade, you will be charged intraday brokerage.

  186. Deepak says:

    Hey, in this module you talked about there are 11 modules.
    They are-
    1.Introduction to Stock Markets
    2.Technical analysis
    3.Fundamental Analysis
    4.Futures Trading
    5.Option Theory
    6.Option Strategies
    7.Quantitative Concepts
    8.Commodity Markets
    9.Risk Management & Trading Philosophy
    10.Trading Strategies & Systems
    11.Financial Modeling for Investment practice

    But actually there are 10 modules. Shed some light

  187. karan says:

    Hi,
    You have mentioned that there is a module of Quantitative Concepts, but there isn’t anything as such, in Varsity.

Post a comment