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|On a bar chart the x-axis records
the time whereas the y-axis price.
When the markets are near at the top, the prices
of stocks begin to rally sharply accompanied with heavy volumes. It is also seen
that the open interest is reduced at blow offs.
Bottom Reversal day
|When the stock
market is near the end of the downtrend, near the last
after the new low is made and next day the market
|The breakaway gap gives the
first hint of the change of the trend of the stock
market/ gold and silver market. Once the market tired
everyone and the market has stayed there for a long
time, which can be seen by a major saucer
formation-taking place or an inverted head and
shoulder formation-taking place. Suddenly the stock or
the index breaks a major trend line or the neckline of
the inverted head and shoulder and moves up on heavy
volumes. It is seen that breakaway gaps are not
currently filled easily. Though at times the stock
takes a rest before moving up again. When markets are
at the top, the breakaway gaps are the first signs of
the starting of the fall. On the top formation, a
falling saucer formation or a head and shoulder can be
||It is a bearish
formation normally wherein two trend lines
initially go in different ways.
|It is a term referring to
wherein the stocks suddenly move up and starts falling
with the result that the investing public is trapped.
Technical formation generally speak of bull and bears
trying to trap each other.
|A bear market is where the
prices are falling, sellers outnumber the buyers,
market sentiment is down and presence of any other
negative sentiments in the market. Patterns of market
charts forms lower bottoms and lower tops. The bear
market is characterized by three phases namely:
1st Distribution Period: this phase starts in the
later part of a bull phase (market). In this phase the
intelligent investors sense that the current Bull Run
has overrun and is due for a correction (valuations
are high), so they unload their holdings at higher
2nd Panic Phase: in this phase the number of sellers
exceeds number of buyers hence indicating a start of
downtrend. Prices begin to fall at a fast pace, as
most investors want to quit their positions in a
falling stock. Then starts secondary recovery of the
prices in the form of sideways movement of share, this
recovery may last for a long period of time.
3rd Phase: in this phase those investors who did not
sell their holding throughout the above two stages or
those who had purchased the shares during the panic
phase finding the prices cheaper from their top
levels, start selling their stakes.
The bear phase ends when every bad news, the worst to
be expected, etc. has been discounted in the price of
|This strategy is adopted by
an investor who visualizes the market going down and
he buys a put option with a higher strike price and
sells a lower strike price put option. Both options
have the same expiry date. Example :- if an investor
foresees the Index going down and assuming that Nifty
Index is at 2000, then he buys a put 2000 and sell a
put 1950 with a result that his investment is also
less as well as he gets a profit if the market goes
Bear Spread one can also sell a call of lower strike
price and buy a call of higher strike price.
Example:- here you buy a call 2000 and sell a
|It can be created by buying
a call of lower strike price and selling a call of
higher Strike Price.
Both calls should have the same expiry date.
Example:- If Nifty Index is at 2000 then one
can buy a call strike 2000 and sell call 2050.
So if the market goes up you have a profit.
Similarly, one can short a higher strike price
put and buy a lower strike price put.
|It measures the correlation
of an individual stock against the movement of the
|This is the best market
price a buyer is ready to buy at.
|Book building is a process
of deciding the issue price of an IPO. It is used at
the time of offering the shares to public through an
IPO. It is a process of pricing an IPO, in which a
band of price is provided to the prospective bidders.
Every investor is asked to state his bid price and the
number of shares for which he is applying. After the
closure of issue (date of receiving bids) the company
with the help of its book runner (merchant banker)
decides upon the price at which the shares will be
issued to the public. These days most of issues to
primary market are through book building process.
|It is a group of top 30
stocks in BSE (Bombay Stock Exchange). The Index is
computed on the basis of market capitalization
weighted Index method. It is based on free float of
equities in the market. Dow- Jones is also composed of
is an option strategy in which neither the profit is
much nor the risk is much. In this strategy, there
will be three different strike prices.
It can be created by buying two call options,
one with low strike price and the other with
comparatively high strike price, and selling two call
options having the strike price which lies in the
middle of above two strike prices.
It should be near to the prevailing stock
this spread we can expect profit if stock price
remains close to the strike price of options which we
Example:- If Nifty Index is 2000 then you may buy a
call 1950 and another call 2050 and sell two calls of