How is the concept of the sunken cost fallacy relevant to day traders in the stock market?

The sunk cost fallacy is a cognitive bias where individuals continue to invest in a decision or project based on the cumulative investment they have already made, despite new evidence suggesting that the decision or project is unlikely to be successful. This bias is problematic because it leads people to make decisions based on past Read more about How is the concept of the sunken cost fallacy relevant to day traders in the stock market?[…]

What is “options pinning effect” ?

The options pinning effect, also known simply as “pinning,” refers to a phenomenon in financial markets, particularly in options trading, where the price of an underlying asset tends to gravitate towards or “pin” a specific strike price as the options contracts near their expiration date. This effect is particularly noticeable on option expiry days. The Read more about What is “options pinning effect” ?[…]

What is the psychological reason why retail traders feel pressured to trade frequently?

Retail traders often feel pressured to trade frequently to prove their skills or justify their participation in the market due to various psychological and emotional factors: Validation and Identity: Trading can become tied to a trader’s sense of self-worth and identity. Frequent trading and perceived success in the market can validate their competence, making them Read more about What is the psychological reason why retail traders feel pressured to trade frequently?[…]

Range bars chart and range bars settings for nifty

A range bar chart is a sort of graphical representation that graphically shows the extremes of a data set. Instead of focusing on a single data point like regular bar charts do, range bar charts show the entire range of values, from low to high. The vertical length of each bar in the graph shows Read more about Range bars chart and range bars settings for nifty[…]

What is client-level fund segregation and monitoring? 

The practise of separating and monitoring the funds of specific clients in order to make sure that each client’s assets are managed in a way that is compatible with their investment goals and strategies is known as “client-level fund segregation and monitoring.” This is a crucial procedure in the financial sector, especially when it comes Read more about What is client-level fund segregation and monitoring? […]

Relevance of volume point of control in intraday trading

The Volume Point of Control (VPOC), a technical analysis indicator used in intraday trading, shows the price level where the most trading activity has taken place during a specific time period, usually a trading day. It frequently goes hand-in-hand with volume profile analysis, which aims to comprehend the distribution of trading volume at various price Read more about Relevance of volume point of control in intraday trading[…]

Why is a strong trading psychology more important than technical analysis when it comes to intraday trading?

While technical analysis is critical for intraday trading since it gives traders the skills to analyse price patterns, trends, and indications, it is conceivably even more crucial to have a strong trading psyche. In the context of intraday trading, trade psychology is more important than technical analysis for a number of reasons: Emotional Control: Making Read more about Why is a strong trading psychology more important than technical analysis when it comes to intraday trading?[…]

What does candlestick psychology mean?

Candlestick psychology, sometimes referred to as candlestick analysis or candlestick patterns, is the process of using candlestick charts to read and comprehend price movement and market sentiment. Using a variety of candlestick forms, candlestick charts provide price information over a given time period, such as minutes, hours, days, or weeks. Each candlestick on the chart, Read more about What does candlestick psychology mean?[…]

Why are levels near record highs so important for stock markets?

Levels near record highs in stock markets are considered significant for several reasons: Media and Investor Attention: Record highs tend to receive significant media coverage, which increases market visibility and captures the attention of both retail and institutional investors. The heightened attention can lead to increased trading activity, liquidity, and volatility in the market. Psychological Read more about Why are levels near record highs so important for stock markets?[…]

Why does the market decline when the public’s outlook improves?

The market falling when the general public becomes optimistic can be attributed to a few factors: Over-optimism and Expectations: When the general public becomes overly optimistic about the market, it can lead to inflated expectations and an excessive rise in prices. This can create a situation where the market becomes overvalued and vulnerable to a Read more about Why does the market decline when the public’s outlook improves?[…]

What is securities transaction tax / stt?

Securities Transaction Tax (STT) is a tax that is levied on the purchase or sale of securities listed on recognized stock exchanges in India. It was introduced in India in 2004 and is a tax on the transaction value of securities. STT is payable by both buyers and sellers of securities and is collected by Read more about What is securities transaction tax / stt?[…]

Stock market prediction is a time-sensitive prediction. Why?

Stock market prediction is a time-sensitive prediction because the stock market is a highly dynamic and volatile system. The prices of stocks and other securities fluctuate constantly due to a variety of factors, including economic indicators, company news, geopolitical events, and investor sentiment. These factors can change rapidly and unexpectedly, which means that stock market Read more about Stock market prediction is a time-sensitive prediction. Why?[…]

What is liquidity risk in stock markets?

Liquidity risk refers to the risk that an investor may not be able to buy or sell a security, such as a stock, at a desired price or in the desired quantity due to a lack of market participants or insufficient trading volume. In the context of stock markets, liquidity risk arises when there is Read more about What is liquidity risk in stock markets?[…]

What are American depository receipts (adr) ?

American Depository Receipts (ADRs) are certificates issued by U.S. depository banks that represent shares of foreign companies. ADRs allow U.S. investors to invest in foreign companies without having to buy the actual shares on a foreign stock exchange. When a foreign company decides to issue ADRs, it will typically hire a U.S. bank to manage Read more about What are American depository receipts (adr) ?[…]

What is a real estate investment trust?

A real estate investment trust (REIT) is a type of investment fund that owns and operates income-generating real estate properties. REITs invest in a range of real estate assets, such as commercial office buildings, residential properties, shopping malls, hotels, and industrial warehouses. REITs are designed to provide investors with an opportunity to invest in real Read more about What is a real estate investment trust?[…]

What is the Federal Open Market Committee?

The Federal Open Market Committee (FOMC) is the monetary policymaking body of the United States Federal Reserve System. It is responsible for setting monetary policy in the United States, including decisions related to interest rates and the money supply. The FOMC is made up of twelve members, seven members of the Federal Reserve Board and Read more about What is the Federal Open Market Committee?[…]

What is hedging in the stock market?

In the stock market, hedging refers to a strategy used by investors to reduce or mitigate the risk of potential losses. Hedging is done by taking an offsetting position in a security or a group of securities that are negatively correlated with the original position. For example, an investor who holds a portfolio of stocks Read more about What is hedging in the stock market?[…]

Why are the stock markets volatile during the first few minutes of the market opening?

The stock markets can be highly volatile during the first few minutes of the market opening due to several reasons: Overnight news and events: News and events that occur outside of market hours, such as economic data releases or geopolitical developments, can lead to significant price movements when the market opens. This can cause a Read more about Why are the stock markets volatile during the first few minutes of the market opening?[…]

What are the components of an option chain?

An option chain is a table that displays the available options contracts for a particular underlying asset, such as a stock or an index. The components of an option chain include: Strike price: The strike price is the price at which the underlying asset can be bought or sold if the option is exercised. Expiration Read more about What are the components of an option chain?[…]

What are triangle pattern breakouts?

A triangle pattern breakout is a pattern that occurs in technical analysis when the price of a stock or other asset moves out of a triangular pattern. A triangular pattern is a chart pattern that is characterized by a series of lower highs and higher lows, which form a triangle on a price chart. The Read more about What are triangle pattern breakouts?[…]