EQUITY

Equity means ownership value — the part of something that truly belongs to you after all debts are subtracted.

Simple definition:

Equity = What you own – What you owe

Real-life example

Home (Property Equity)

You buy a house for Rs. 300,000

You still owe the bank Rs. 180,000 (mortgage)

Equity = Rs. 300,000 – Rs. 180,000 = Rs. 120,000

That Rs.120,000 is your ownership in the house

Stock market example

If you buy shares in Apple, Tesla, or any company:

You now own a small piece of that company

That ownership is called equity

Stocks = equity investments

Shareholders = equity owners

Types of positions in trading

Long-term equity holding (Delivery/holdings)- Delivery trading is a stock market investment method where shares are bought and held for more than one day, potentially for weeks, months, or years., these shares are transferred to the buyer’s Demat account, granting ownership, dividend eligibility, and voting rights

Intraday trading: Buying and selling a financial asset on the same day to make profit from small price movements.

You don’t hold the asset overnight.

Swing trading: is a trading style where you buy and hold an asset for a few days to a few weeks to profit from medium-term price movements.

Not same day like intraday, and not years like long-term investing — it’s the middle ground.

Scalping: Scalping is a trading style where traders make very fast trades to earn small profits repeatedly — often within seconds to minutes.

It’s the fastest form of trading.

ETF stands for Exchange-Traded Fund.

An ETF is a basket of investments (stocks, bonds, commodities, crypto, etc.) that you can buy and sell like a normal stock on the stock exchange.

Examples:

Gold ETF

Tracks gold price, you invest in gold without buying physical gold

NIFTY ETF

Tracks NIFTY 50 index, One ETF = top 50 Indian companies

Like there are Bankbees, Techbees, pharmabees, etc.

Fundamental Analysiss

Fundamental Analysis- is a method of evaluating an asset by studying its real value using financial, economic, and business factors — not just price charts.

Fundamental analysis = understanding the true value of a company/asset and deciding whether it’s undervalued or overvalued.

Who should use fundamental analysis: Long-term investors, Swing traders, Portfolio builders, etc.

Major metrics to measure fundamentals of a company

Metric

Meaning

Explanation with Example

Revenue

Total sales

A company sells products worth ₹10,00,000 in a year → Revenue = ₹10,00,000

Profit

Earnings

Revenue = ₹10,00,000, Expenses = ₹7,00,000 → Profit = ₹3,00,000

EPS

Profit per share

Profit = ₹3,00,000, Shares = 1,00,000 → EPS = ₹3 per share

P/E ratio

Price vs earnings

Share price = ₹60, EPS = ₹3 → P/E = 20

ROE

Return on equity

Profit = ₹1,00,000, Equity = ₹5,00,000 → ROE = 20%

Debt-to-equity

Debt level

Debt = ₹2,00,000, Equity = ₹4,00,000 → D/E = 0.5

Free cash flow

Real money

Cash after expenses = ₹1,50,000 → Usable cash

Gross margin

Profit quality

Revenue = ₹10,00,000, Cost = ₹6,00,000 → Margin = 40%

 

Along with that

Business quality-Business model, Competitive advantage (moat), Market share, etc

Growth factors- Industry growth, Expansion plans, Global reach, etc

Technical Analysis

Technical Analysis is a trading method that studies price charts, patterns, and indicators to predict future price movements — instead of company fundamentals.

In simple- Technical analysis uses charts and indicators to predict price movement and trade smartly.

Purpose:

When should I enter a trade?

When should I exit?

Where is risk?

Where is profit?

What technical analysis uses

  1. Price charts
  • Candlestick charts
  • Line charts
  • Bar charts
  1. Timeframes
  • 1m–5m → Scalping
  • 15m–1H → Intraday
  • 4H–Daily → Swing trading
  • Weekly/Monthly → Investing
  1. Trends
  • Uptrend 📈 (higher highs, higher lows)
  • Downtrend 📉 (lower highs, lower lows)
  • Sideways (range-bound)
  1. Support & Resistance
  • Support = price floor
  • Resistance = price ceiling

Key indicators widely used across charts in trading view or any other broker charts

Indicator

Purpose

Ideal/Reference Values

RSI

Overbought/oversold

70+ = Overbought, 30– = Oversold

MACD

Trend & momentum

MACD line crossing signal line → Buy/Sell signal; Histogram turning positive = bullish, negative = bearish

Moving Averages

Trend direction

Short-term MA > Long-term MA → Uptrend; Short-term MA < Long-term MA → Downtrend

Bollinger Bands

Volatility

Price touches upper band → Overbought; Lower band → Oversold; Squeeze → Low volatility → Breakout likely

VWAP

Fair price

Price above VWAP → Bullish; Price below VWAP → Bearish

Volume

Strength of move

Increasing volume confirms trend; Low volume → Weak trend

How the indicators calculate the values

RSI (Relative Strength Index)- RSI = 100 − [100 / (1 + RS)], where RS = Average Gain ÷ Average Loss over 14 periods

Example: Suppose stock closes last 14 days: average gain = ₹2/day, average loss = ₹1/day → RS = 2/1 = 2 → RSI = 100 − [100 / (1+2)] = 100 − 33.33 = 66.7 → Not overbought yet

MACD (Moving Average Convergence Divergence)– MACD = 12-day EMA − 26-day EMA; Signal line = 9-day EMA of MACD

Example: 12-day EMA = ₹105, 26-day EMA = ₹100 → MACD = ₹5; Signal line = ₹4 → MACD above signal → buy signal

Moving Averages (MA)- Simple MA = Sum of closing prices ÷ Number of periods

Example: Last 5 days closing: ₹100, ₹102, ₹104, ₹106, ₹108 → MA = (100+102+104+106+108)/5 = ₹104 → If current price ₹106 > MA → Uptrend

Volatility- Upper band = MA + (2 × SD), Lower band = MA − (2 × SD), SD = standard deviation of price

Example: Last 5 days closing: ₹100, ₹102, ₹104, ₹106, ₹108 → MA = ₹104, SD = 3 → Upper = 104 + (2×3) = ₹110, Lower = 104 − 6 = ₹98 → Price ₹108 → Near upper band → Overbought

VWAP (Volume Weighted Average Price)- VWAP = (Sum of Price × Volume) ÷ Total Volume

Example: Trades: 100 shares at ₹100, 200 shares at ₹102, 300 shares at ₹104 → VWAP = (100×100 + 200×102 + 300×104)/600 = (10000+20400+31200)/600 = 61600/600 = ₹102.67 → Price above VWAP → Bullish

Volume- Total shares traded in a period; can compare to average volume

Example: Stock traded 50,000 shares today; 5-day average volume = 30,000 → Volume higher than average → Trend strong

 

How the returns will be calculated

Metric

Use

Time Considered

Example

Absolute Return

Simple profit

Total period only

₹1L → ₹1.2L → 20%

CAGR

Annualized growth

Equal yearly periods

₹1L → ₹1.5L in 3 years → 14.47% p.a

XIRR

Annualized growth for irregular cash flows

Exact dates of investment

SIP ₹50k + ₹50k → ₹1.2L → ~37.6%

 

Absolute return = Quick view

CAGR = Compare yearly growth of one-time investments

XIRR = Best for SIPs, multiple irregular investments