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