Road map to start Trading and Investing

Road map for Trading

Today, I’m giving you a complete roadmap that, if you follow correctly, will help you gain a lot of knowledge. But the real thrill comes when you trade and invest with real capital in the market. I will guide you step-by-step on what mistakes to avoid and how to control your emotions.

First, to start trading and investing, you need a platform because you can’t trade or invest without one. Here are the names of some platforms:

 * Zerodha

 * Groww

 * Angel One

 * Upstox

 * Dhan

These are currently the most popular platforms in India. All of them are trusted apps and are registered with SEBI. Use whichever one you find easier to work with.

Note: You should open a Demat account because you’ll use one for investing and the other for trading.

You may have heard someone talk about certain lines going up and down in the market. In reality, those are called candles, and the lines that move up and down represent the price. Now you might be thinking, “Isn’t this risky?” Yes, it is, but only until you learn everything. Let’s understand this with an example.

Just like I mentioned earlier about Raju and Shyam, they found out that the price of goods was going to increase, but the customers didn’t know. They would only find out the next day when they went to the market to buy those goods. However, if you learn everything, you can also figure out how high a stock is likely to go on a given day by looking at those candles. Can you make money when the price falls? Yes, absolutely.

What is a Stock?

When the owner of a company wants to expand their business, they need money. Now, you might ask, “Don’t banks give them loans?”

Yes, banks do give them loans, but sometimes they need even more money. Another question you might have is, “Don’t they have their own money?”

Of course, they do. Let’s understand this with an example. Suppose you go to buy a car worth 20 lakhs. Would you pay the entire 20 lakhs using all your savings? The answer is no. You’ll give a small amount to the showroom, which is called a down payment, and take a loan from the bank for the remaining amount. This way, you can work, and your savings (minus the down payment) are also safe. Companies do the same thing.

To raise funds, a company sells a portion of itself. This process is called an IPO (Initial Public Offering). It’s during an IPO that customers like us buy a part of the company, hoping it will give us a profit later. This is what we call stocks.

You need to learn about candlesticks. There are many types of candles, each forming and working effectively in different timeframes. Some common candles that appear in the market are:

 * Hammer

 * Inverted Hammer

 * Doji

 * Shooting Star

 * Morning Star

Each of these has a different function.

Step Two

Next, you need to learn about chart patterns. In simple terms, a chart pattern is the data that is formed over several months and weeks. Chart patterns give us a clear view of whether the market is likely to go down or up. They take a long time to form, and swing traders often take advantage of them. Do they work for day trading? Yes, they do, but since day trading is only for a single day, you can only make a limited profit.

Let’s use an example to understand this: if you have been following a stock for 4-5 months and tracking its chart and movement, would you just take the profit you get in one day and leave? The answer is no, especially when you know that it can give you much more, or that the stock might go up or down for a few more days. What’s the point of analyzing it for so many months then?

Some of the most common chart patterns are:

 * Head and Shoulder

 * Double Top

 * Double Bottom

 * Rising Wedge

 * Falling Wedge

There are more, but you will see these five appearing most frequently on charts.

After that, you need to learn about Support & Resistance.

Let’s understand this with an example of a house. The roof of the house is the resistance, and the floor is the support. If you throw a ball, it will bounce back to you from the floor, where it started. The price works in a similar way, moving within this zone. Now, you might have a question: “Does the price ever break out of its support and resistance zone to create a new one?” The answer is yes. It will then form a new zone and continue to move within it.

Another question: “Can the price return to the previous zone?” The answer is absolutely yes. However, for the price to return to the previous zone, there must be a reason. This could be due to global markets, one country attacking another, a company scamming people (like taking a loan and not paying it back), a company going out of business, or fluctuations in inflation.

Lastly, What is an Indicator?

An indicator shows you the way, indicating where the market might go—up or down.

Example: You’re driving in a new city, and you don’t know which road goes where. You don’t see any people, but you do see signs on the roads with symbols showing where each road leads. Indicators work in a similar way—they help show you the path. But there are many indicators, such as:

 * Pivot Points

 * RSI

 * Bollinger Bands

 * EMA

 * Moving Average

 * Volume

These are the most commonly used in trading and investing. Among all of them, the indicator that gives the most accurate moves is Volume. When you add volume to your chart, it clearly shows you how many participants there are, how much trading has decreased or increased, and whether the price is likely to go down or up. This can be predicted using volume. In a true sense, volume is an indicator that, if understood well, can help you do very well in intraday trading.

Volume is an indicator that tells you how many buyers and sellers are in the market. All the other indicators tell you whether to buy or sell, just like in my car example. But volume not only tells you what to do but also provides information on when and how many buyers and sellers are present.

We’ll explain how to combine volume and price in the next post.

Note: In trading, the simpler your setup, the easier it will be to make a profit. The more complicated you make it, the more trouble you’ll have. For example, don’t use too many indicators on your chart; one or two is enough, no more.

Many people will give these things different names to get you to buy their paid courses, but in reality, they will teach you the same things you learned in the beginning. Focus on the things I’ve mentioned and become a master at them. After 2-3 years in the market, everything will become crystal clear. It’s like when a child first starts school. Are they asked to write a complex math problem or a person’s name right away? No, they aren’t. They are taught the ABCs and 123s, and those foundational skills are what they use later to solve math problems, write names, or anything else. Trading is just like that. this is the Road map to start Trading and Investing.