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Hello, ladies, welcome back.
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In this session, we'll be showing you how to do fundamental analysis.
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I know a lot of you do not have time for him today because you might be busy with other things during
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the market hours.
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If you're one among them who do not wish to watch the market all the time, then swing trading or long
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term investment is the right choice for you.
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You can apply this method, which we will be teaching in this video, to find stocks for spring training
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as well as long term training.
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OK, so now before we discuss about fundamental analysis, first let us discuss about the rules.
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There are only two simple rules.
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Rule number one, invest fixed capital.
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So what do I mean by this?
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This means I will invest a fixed amount of capital, let's say five thousand rupees, ten thousand rupees,
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one lakh to lack any amount as your capacity.
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Once you decide a fixed capital, you need to have a dedicated trading account for this.
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If you're doing intraday, I suggest you not to use the same account for Suyin trading.
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OK, this is because if you have this capital in the same account in which you are doing intraday trading,
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there are high chances that you will use this fixed capital amount which you have kept for swing trading
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to buy stocks during intraday.
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So avoid having this fixed capital in the same account in which you are doing intraday.
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OK, this is the first rule.
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Now, the second rule is no withdrawal of profits.
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Why you should not withdraw your profits.
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I will explain why you should not withdraw your profits as we move forward with this session.
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OK.
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So if you are able to follow the rule number one and rule number two, then this matter I am teaching
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you will be very helpful.
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Now, let's understand this concept with an example.
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So now let's say you're fixed capital for spring training is to like rupee's the STOLOROW piece.
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You will divide it into 10 portions.
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OK, so Doleac divided by ten is twenty thousand.
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Right?
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So I will make ten columns like this each column.
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Twenty thousand rupees.
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Now, let's say you got to break out an A.C. bank and you'll want to enter the trade, you will use
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the amount which is there and call them a.
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Which is twenty thousand rupees.
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Addressed every column, you will market green or any color you want, the market green, which means
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free cash.
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I have so much cash with me even after investing in HDFC Bank.
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OK, now let's say after seven to eight days, you got 10 percent profit on the 20 thousand capital
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you invested in HDFC Bank after brokerage and taxes.
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How much will it be?
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Twenty two thousand.
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Correct.
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That amount will update it after this.
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You saw breakout and supply.
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Now you will use this twenty two thousand and Zoopla, right?
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Twenty two thousand.
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Because as a rule number two, rule number two says we should not withdraw our profit.
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We will have to use the profit and reinvest.
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So what are we actually doing?
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We are adding our base capital.
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Along with the non-profit and enlisting this so that the profit which we reinvest will bring in more
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profit for us.
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OK, this method is called compounding growth.
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What is it called compounding growth?
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So long story short, if the column is busy, then you will invest in Colombia.
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If Colombe is busy.
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You will use the funding column.
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Likewise, we will give chance to all the columns, there are two major advantage in following this
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method.
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First one is there is no need to go to your broker's account and see what is your capital, because
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this shit has all the necessary information that you need.
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Just see the column and you will know how much money is invested and how much free cash you have.
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OK, now the second advantage, if you follow this method, you would always have at least 30 to 40
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percent of free cash in your account.
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It is very important that you do not invest all your fixed capital.
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You should have a certain percentage of free cash in your account for emergencies.
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Let us say that a surgical strike or currency ban or any other situation which affects the stock market,
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you can use the situation to your advantage and grab opportunities.
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Basically, during the time when the market is making one side more, you need to have funds to buy
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them.
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Right.
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So if you have 30 to 40 percent of free cash with you, you can always use that to grab good trading
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opportunities.
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OK, now let me show you my data, which I have maintained during 2009.
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Traders, I'm not doing any swing trading because of the busy schedule, but the data which you are
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seeing right now will give you an idea as to how you need to maintain.
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OK, see, sixteen thousand capital became forty two thousand.
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Twenty eight thousand became seventy one thousand.
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Thirty four thousand became sixty four thousand.
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The stock is still in trade, twenty two thousand became eighteen thousand.
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I lost someone in the street.
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OK.
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And three thousand became fifty one thousand.
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OK, now, traders, how many stocks in this list do you have in your watch list?
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I'm sure that most of you wouldn't even have heard about these stocks, right.
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How did I find these stocks?
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I will tell you, there are two ways to find stocks.
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The first one is through Tretyakov.
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So this is my trade tiger account here.
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If I go to Tool and click on Best 20, the system will filter out and give me 20 best stocks out of
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these 20 stocks.
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I will consider the stocks, which are more than one hundred rupees and stocks less than that amount.
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I will not select because I feel the stocks, which are less than one hundred rupees returns, are very
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less.
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Sometimes the movement will be 50 percent to one rupee, which I don't think is attractive.
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So after filtering out stocks, which cost more than one hundred rupees, these are the final stocks
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which I have chosen from trade Tiggers Best 20 stock list, the same stocks I have added to my watch
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list.
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OK, now, before we discuss how to do fundamental analysis for these talks, let us understand why
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we selected stocks.
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We selected stocks not just because they have given breakout.
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The main reason is when these stocks could breakout, they increased by five to 10 percent.
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Is this the first time this dog apricot, no.
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It's going to break out here.
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It's given Prikhodko.
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It's given Briguglio.
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And if you choose the stock.
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Continuous three days rally and the future, Kristie.
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A rally here.
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Or you can check the stock.
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A rally here.
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Increase here.
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Again, it's trying to rally here, if you're planning on shorting the stock, then you have to go for
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futures, right?
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Only with futures.
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You can sell first and buy later.
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So if you had seen this breakdown and entered the street more than 40 to 50 percent, it went down.
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So all these stocks have very high potential of moving up or down on a frequent basis.
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It's very important that you learn how to find breakout or breakdown that we have clearly mentioned
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in our courts.
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Right.
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And all the strategies we have told you how to find breakout or breakdown.
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I'm not randomly telling you you had a shorting opportunity here.
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If you see this trend, this trend has one of the strategies from Marcus, right.
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If you are checked out, of course, you clearly know that we had a shorting opportunity because here
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one of our strategies works, right?
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So likewise.
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You can either use your own strategy or the strategy, which will teach you.
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OK, say again, the stock made a big rally here.
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Can you get up to this?
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The advantage that we have when we select these stocks are trading session will complete in just two
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or three days.
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Most of the time, there is no need to hold a stock for a month or so.
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The second way to find breakout stock is through a trading tool called Chatting.
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I have a video called How to Select Stock for interest in that.
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I have clearly explained how to find stocks using charting and that you will find trending stocks.
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OK, so you traders, if you don't have to Tiger, no problem.
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You can use chatting itself to find stocks.
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To be honest, in chatting you will get even better results.
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So have a look at that.
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OK, now just because Tiger give us a breakout of breakdown stocks or chatting, give us breakout Bricktown
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stocks.
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We will not just go and buy or sell before buying any stock.
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There are four important things we need to look at.
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Only if these four things looks fine, then we can think about investing in the stock.
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These four things.
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What we are going to look at that is a fundamental analysis.
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OK, now traders, can you see this list, this list as all the stocks, which is that in our stock
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exchange, OK, and in this section we have from which industry these stocks are from like I.T. software.
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Pharma, chemical, textile.
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Oil extraction, cement, plastic products, shipping, all the stocks from all the sector will be in
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this list.
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OK, now let's say tomorrow morning you watch the news and you got to know sugar industry is doing well.
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OK, so what do you have to do to click on this?
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Here you need to search for sugar.
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And you will get the list of all the sugar companies which is listed in the stock exchange.
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OK, traders, can you see one column called?
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Chuckling So what we use this link for us example.
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All this a sugar company right now, let's say you want to check if there is breakout and rain sugars,
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OK?
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Just click on this link.
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You'll be taken to the chuckling website.
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OK, so here's what you can do.
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You can check.
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You can check for breakouts, OK?
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There's no breakout in this.
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You can check for other shugar industries.
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Also, if I choose Rahner shugar and check.
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Here, there is a possibility for a breakout, right?
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Likewise, what you can do is you can check for Breakout directly, go into the chart using chuckling
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We need to know the breakout because we need to enter the trade during the breakout rate so that we
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make maximum profit into the trade quickly and exit the trade quickly.
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We need to enter trades when there is a breakout of Bricktown.
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OK, break down when you're working on futures.
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And now just because a stock breakout, we will not enter because we are doing swing trading and long
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term investment.
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So we need to check the fundamentals of the stock.
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OK, so there are two ways to check fundamentals.
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The first way is through market model with market model.
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Getting to know the fundamentals of a company can happen very quickly.
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OK, but the problem with market mojo is it has a monthly fee.
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Initially you will have five times trial.
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You can trade with five or six stocks.
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They will give you some trial.
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After that, they will charge it somewhere around thousand five hundred rupees also.
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OK, so if you are interested, the easy way to check.
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Now, let me quickly check for one company and show it to you.
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OK, now let's say I search for Axis Bank.
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Axis Bank as I click on this link.
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I've been taken to Market Mujo website.
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OK, so how to do fundamental analysis, we will see this is a simple way of doing fundamental analysis.
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OK, now here you can see for section one is quarterly financial trends.
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Another one is technical.
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Another one is quality.
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Another one is valuation.
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OK, so let's not get confused about what is written here.
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Flat.
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Good.
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Fair.
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Mildly bearish, mildly bullish, whatever it is, we don't care anything about that.
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OK, the first thing what we need to do is we need to ignore the section.
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The technical section, OK, why we need to ignore.
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Because we are price action traders, the stakes are as they might be, all those things into consideration
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and it gives technical analysis, all those indicators is not useful for us because we are price action
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traders.
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Correct.
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So we will completely ignore technicals.
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OK, remaining, we have three sections, one, two and three.
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Correct out of this.
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Now, let's say quarterly financial trend.
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This section is green.
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If it is green, then we say, OK, 50 percent confirmed this stock is good.
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OK, this has to be green, apart from this, any one from these two, if it is green, then we say
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this is a good stock.
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Fundamentals is good about this stock.
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OK, see, traders are doing fundamentals is not that easy.
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But when it comes to market module, the way how they do fundamentals is very good.
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It's very reliable.
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So you can depend on this.
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OK, but if this only is red, orange, yellow, whatever color it is, apart from green, immediately
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we will see the stock is not good for swing trading.
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It is better not to invest in that kind of stock.
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OK, so this is a simple way.
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Quickly, you can get all the information that you need.
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OK, but market model is expensive, right?
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Because it's expensive.
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A lot of people might not be interested in this.
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That is why we have screen Adut and Linko.
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If you click Screener Dotan for access back, you will get the fundamentals of access bank OK, in this,
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there are four factors which you need to consider.
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So let's discuss about all the factors one by one.
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OK, now let me take panish sugar as an example to understand fundamental analysis.
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OK, I will try to explain all of these metrics in a very simple tone.
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I will tell you at what level you can consider the stock and at what level you cannot consider the stock
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for swing trading.
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OK, so the first thing we need to look at is speculation to earnings growth ratio or peg ratio as a
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stock valuation metrics.
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This metric help us to know the growth potential of a company.
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This will tell us if the company has good growth potential or is the company already reached the growth
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level?
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We can also know if the company proprietor's has interest in growing the company any further or not.
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OK, now if the peg ratio is between plus zero to plus one, we will see that this company has potential
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to grow.
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OK, like zero point to zero point seven zero point five zero zero point nine nine anything for that
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matter, if it is between plus zero to plus one, we can consider that stock.
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If the stock peg ratio is lesser than plus zero, like minus zero point one minus zero point five seven,
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whatever ratio below zero, we will see that this stock has no potential to grow as per the PANKRATION
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metrics.
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And if the stock peg ratio is more than plus one, then we will see the stock has already grown enough.
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There are chances that this stock will not grow any further, or even if it grows, the growth percentage
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will be very low.
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Now, if you see the stock, the peg ratio is zero point one one.
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So we can see the stock has potential to grow so we can consider the stock only as the first metrics.
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OK, and just in case, if the payout ratio is not visible for you here, you have an option called
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a ratio to table right here.
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If you enter BTG, you get a peg ratio.
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OK, and I think what I'm seeing in this video, if it's not visible here, if you enter that here,
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you will find it.
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OK, so the second matrix which we look into is pledged percentage pledge.
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What do they call it in Hindi Greevey Rachna, they say.
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Right.
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That's called pledging.
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Now we know all the company has proprietor's.
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Correct when the proprietor's pledged their share of the company and take loan from the bank and return
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and use this money for something else.
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We call it pledging.
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But why will the proprietor pledger shares any idea?
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It's not because the company needs more money.
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If that was the case, they will issue right and introduce fresh stocks to the public or existing shareholders.
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From that, they can easily make money, right?
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Issuing new shares.
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They'll make money.
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Correct.
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Or if they do not want to issue fresher's, then they can take loan from the bank.
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But without doing this, if the proprietor is pledging your shares and taking money and investing somewhere
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else means he's losing confidence on the company's growth.
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Trader's proprietor is a board member of a company.
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Correct.
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He will be a part of all the internal discussions.
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Then, of course, he will know all the information's first correct during the board meeting, any time
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he will get to know all the information before the public knows.
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So if the proprietor pledges a share, then it is a caution that there is something fishy in the company.
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We should avoid that stock.
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If the pledge percentage is less than 10 percent, then it is fine because some proprietor's pledge
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this year and with the money they get, they will use it to run new businesses or parallel companies.
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Correct.
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But if the pledge percentage is more than 10 percent, we will avoid.
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OK, this is a second validation.
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Now, let us see the third validation.
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We need to check cash flow, OK?
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For any company to grow, it needs regular cash flow, correct?
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Only when there is a continuous cash flow, the business will run smoothly.
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A company will always have expenses like salary, rent, maintenance and lot of other expenses to run
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day to day business.
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Correct.
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And even if they want to do any kind of innovations, anything, for that matter a company, if it wants
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to reach to the next level, it needs to be more innovative.
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They need to maybe create more branches and all those things.
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Right.
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So for that, they need cash flow with them without having liquidity.
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Can anybody grow?
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So it is very important that end of a financial year, a company has enough cash flow.
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If a company has enough cash flow, then we can think like, OK, this company is a bit secular.
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It has little funds with them so that in case they have more expenses, it will be taken care of with
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the cash flow that they have.
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They need not lend from someone or take loans, anything as such.
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OK, now how do we check cash flow as the company has to have positive cash flow for the latest two
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years?
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So these are the latest two years.
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Twenty, twenty, twenty, nineteen, the year before that, we do not worry, but the latest two years
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at least, the company has to have positive cash flow supernational recent year.
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They do not have enough cash flow.
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Right.
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So this can be a problem.
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So if a company's cash flow isn't positive for at least the latest two years, then we say this company
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has enough cash flow to take care of them.
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So there is potential to grow.
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So when a company grows, what happens?
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Obviously, the value of the company increases.
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If company value increases, what happens are stock value increases.
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If stock value increases obviously will make more money.
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Right.
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So it's really important that we see cash flow, not the final validation.
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This market cap, OK, market cap means the value of the company that is traded on the stock market.
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For example, if you want to check the market cap of a company, you need to multiply the total number
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of shares of that company by the present share value in the stock market.
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Companies are grouped as per market cap that is small cap, mid-cap large cap and ultra large cap.
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But to make things simple to understand, I have made small changes.
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OK, now this is how I will group the stocks as one market cap.
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Any stock was market cap is from zero to two hundred crores.
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They fall under microcap from two hundred to two thousand crore.
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The stock fall under SmallCap from 2000 to forty thousand crore.
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They fall under mid-cap.
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Any stock whose market cap is more than 40000 crore, they fall under Large-Cap.
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OK, now if you go and check for Sugar Panish, you go.
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Market cap is one focus.
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OK, that means it falls under microcar.
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OK, when you find a breakout in Perny Sugar, you will not go and enter the trade before you enter
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the trade.
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You need to see how the index is performing.
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OK, so for example, panish you go for Thanda Microcap but there is no separate index for microcaps.
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So we will check SmallCap one hundred.
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Now this is an index index means it has got one hundred companies which are there in SmallCap and it
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tells us the overall performance of the small cap companies, just like how Nifty 50 shows the overall
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performance of Nifty 50 stock sameway nifty small cap shows overall performance of the small cap companies.
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When you get a breakout and pony sugar, you should also see that the small cap index is also giving
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a break.
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For example, if I draw a trend line like this, OK, and I'm getting a breakout here in nifty small
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cap country at the same time, if I get a breakout in sugar, then there is high chances that for the
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stock price to go up, OK, we need to use even the index as a confirmation signal to enter the trade.
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So if you get a breakout in Pudney Sugar and you also get a breakout in the small cap index, what do
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you think will happen that the high chances for the market to go up?
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But if you see a breakout and punished but the small cap indexes and consolidation at that time, there
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are high chances that the market can go against you and hit the stock.
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Plus, OK, so it's very important that we check the market cap of the company and see under which category
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of market cap it falls is a small cap, mid-cap or large cap, and then we need to go and check the
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index of that particular stock.
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Now, let's say a potential market cap, for example, is two thousand five hundred crores.
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OK, if the stock is two thousand five hundred close, it falls under midcap.
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Right.
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So what we need to do, we need to see Nifty Mid-cap Hundred.
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If Nifty Mid-cap Hundred is performing well and giving us a nice breakout, then there are high chances
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even for one Nishioka to perform well.
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OK, traders, I hope your understanding my point.
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If the market cap of a particular company is under SmallCap, then we need to see how small cap index
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is performing.
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If the stock is a mid-cap, we need to see how mid-cap index is performing.
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OK, this is how we check.
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It's very important that we checked this before we entered the trade or else that high chances for the
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market to go against us.
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OK, now traders, if you're trading in nifty 50 stocks and the time frame in which your trading is
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less than a daily timeframe, that is if you're trading on 15 minutes, 30 minutes, one hour, 120
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00:24:45,230 --> 00:24:52,040
minutes or daily timeframe, if you're doing swing trading in nifty 50 stocks and these timeframes,
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then there is no need to check the fundamentals because these stocks came into Nifty 50 only because
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these stocks, all the thorough research has been done.
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Only then the quality stocks has been picked and put in 50 50.
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So the market research has already been done here.
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So 15 minutes, 30 minutes, one hour, one, 20 minutes and daily time frame, you can do swing trading
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with a nifty 50 stocks without doing fundamentals.
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But if you're trading on nifty 50 stocks on a weekly timeframe, then fundamentals is needed.
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Why?
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Because you're keeping the stock with you for a longer duration.
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So it's important that you do the fundamental analysis.
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00:25:32,870 --> 00:25:41,780
OK, now, if you're trading in micro-cap, small cap and mid-cap stocks all the time frame, you need
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to do fundamentals, right?
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All these are small stocks.
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00:25:44,840 --> 00:25:49,100
It is important that you do thorough research because we do not trust these stocks.
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Right.
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So if you're working on micro-cap, small cap and mid-cap stock, do not do swing trading without doing
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fundamentals.
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OK, and by the way, there's no point in trading on micro-cap, small cap and mid-cap on a lower timeframe
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because let's take panish as an example.
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Can you see random selling against random selling, random buying a big quicks here?
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00:26:11,930 --> 00:26:17,930
So when you trade with small stocks on a lower timeframe, the movement of stock cannot be predicted.
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00:26:18,500 --> 00:26:20,840
OK, so what kind of movements these are?
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00:26:22,960 --> 00:26:29,190
Right, but if you trade on a weekly timeframe, at least now you're getting a better idea of how the
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00:26:29,190 --> 00:26:30,720
market is moving, right.
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00:26:30,750 --> 00:26:36,450
So when you're trading with microcaps SmallCap and midcaps, it's better you trade on a higher timeframe.
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00:26:36,490 --> 00:26:39,510
OK, now, traders, you know, I am a technical trader.
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00:26:39,520 --> 00:26:46,110
I feel these four fundamental validations is more than sufficient for me to choose stocks for swing
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00:26:46,110 --> 00:26:46,590
trading.
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The importance I give for this 10 percent, that's 90 percent completely depends on technical analysis.
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I rely more on technical analysis in a price action lecture series.
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00:26:58,710 --> 00:27:03,570
Course, we have explained all the technical strategies which we use to trade.
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00:27:03,570 --> 00:27:10,190
A lot of fundamental traders check many more fundamental data to choose the right stock for swing trading.
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00:27:10,200 --> 00:27:14,330
But this is how I do, and it has given me very good results.
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00:27:14,340 --> 00:27:18,960
I rely more on technical analysis in a price action lecture series.
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00:27:18,960 --> 00:27:23,900
Course, we have explained all the technical strategies which we use to trade.
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I have shared the multi by the Excel sheet link and thus we do.
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You can go ahead and download it.
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It will be very useful for you traders.
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I hope you have enjoyed the session.
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That's all for this we do.
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I'll see you on the next one.
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