When the put option premium is low and the call option premium is high, what does it imply?

A low put option premium and a high call option premium can indicate a bullish market sentiment. In options trading, a put option gives the buyer the right, but not the obligation, to sell an underlying asset at a predetermined price (strike price). The price of a put option is known as the put option Read more about When the put option premium is low and the call option premium is high, what does it imply?[…]

What is a FPO and how is it different from an IPO?

FPO stands for Follow-on Public Offer, which is another term for a secondary offering. It refers to a situation where a company that is already publicly traded issues additional shares of stock to the public. An IPO, or Initial Public Offer, is the process by which a privately held company raises capital by issuing and Read more about What is a FPO and how is it different from an IPO?[…]

Why is a positive price candle typically green and a negative price candle red?

The color of a price candle on a stock chart is used to represent whether the closing price of a security is higher or lower than its opening price. A positive price candle is typically represented in green and a negative price candle is typically represented in red. The reason for this color convention is Read more about Why is a positive price candle typically green and a negative price candle red?[…]

What is T+1 settlement cycle for stocks?

T+1 stock settlement refers to the process of settling a stock trade one day after the trade date. In other words, T+1 settlement means that when a trade is executed on Monday, it will be settled on Tuesday. From 27th January 2023 onwards, this is the new standard settlement cycle for all stock trades in Read more about What is T+1 settlement cycle for stocks?[…]

Open interest explained, and what does the relationship between open interest and the price of a futures contract indicate?

Open interest is the total number of outstanding futures contracts (i.e. contracts that have been entered into but not yet liquidated by an offsetting transaction or fulfilled by delivery) for a particular market or commodity. It can be used as an indicator of market activity, as an increase in open interest suggests that new positions Read more about Open interest explained, and what does the relationship between open interest and the price of a futures contract indicate?[…]

Liquidity eats liquidity; what does this phrase mean in financial markets?

“Liquidity eats liquidity” is a phrase that is often used to describe the way that liquidity can be both created and destroyed in financial markets. The idea behind the phrase is that when there is a high level of liquidity in the market (or in a specific instrument, for example, nifty) , it can attract Read more about Liquidity eats liquidity; what does this phrase mean in financial markets?[…]

How are standard deviation and probability related?

Standard deviation and probability are related in that they are both used to measure and quantify uncertainty or randomness. Standard deviation is a measure of volatility, which is used to quantify the amount of variation or dispersion in a set of data. It tells us how much the individual data points in a set deviate Read more about How are standard deviation and probability related?[…]

What is the “fear of missing out” syndrome in intraday trading, and why traders need to be aware of it?

The “fear of missing out” (FOMO) syndrome is a phenomenon that occurs in intraday trading, where traders feel a sense of anxiety or urgency about missing out on potential profits from a trade. This fear can be triggered by market conditions, such as a rapidly rising market, or by the actions of other traders, such Read more about What is the “fear of missing out” syndrome in intraday trading, and why traders need to be aware of it?[…]

How do stock markets react to hawkish and dovish monetary policies?

Stock markets typically react differently to hawkish and dovish monetary policies. When a central bank adopts a hawkish monetary policy, by raising interest rates or taking other measures to tighten monetary policy, it can lead to a decrease in stock prices. Higher interest rates make borrowing more expensive, which can lead to a decrease in Read more about How do stock markets react to hawkish and dovish monetary policies?[…]

Why is the European market’s opening bell significant for day traders in India?

The European stock market opening session, also known as the European opening bell, is an important time for traders and investors in India because it sets the tone for the rest of the trading day (which is the after noon trading session in India). It is the first opportunity for traders and investors in Europe Read more about Why is the European market’s opening bell significant for day traders in India?[…]

Looking at charts while the markets are closed gives you the impression that the markets are predictable.

Looking at charts while the stock markets are closed can give the impression that trading the markets is simple because the data is more static and therefore easier to analyze. When the markets are closed, there is no new information coming in and prices are not fluctuating, so it can be easier to identify trends Read more about Looking at charts while the markets are closed gives you the impression that the markets are predictable.[…]

What are CE and PE in options, and how to easily remember them? What exactly is it? 

CE (European call option) and PE (European put option) are financial derivatives that give the holder the right, but not the obligation, to buy or sell an underlying asset (such as a stock, commodity, or currency) at a specified price (strike price) on or before a specified date (expiration date). A CE option gives the Read more about What are CE and PE in options, and how to easily remember them? What exactly is it? […]

What is a technical indicator divergence?

A technical indicator divergence is a difference in the movement or direction of a security’s price and an indicator derived from that security’s price or volume, such as moving averages, momentum indicators (RSI, MACD) and oscillators, which are used to analyze the market trend and make predictions about future price movements. The divergence is typically Read more about What is a technical indicator divergence?[…]

Bid and Offer explained, How to quickly recall what is what.

In financial markets, a bid represents the highest price that a buyer is willing to pay for a financial instrument, such as a stock, bond, or commodity. On the other hand, an offer, also known as an ask, represents the lowest price at which a seller is willing to sell the same financial instrument. The Read more about Bid and Offer explained, How to quickly recall what is what.[…]

The significance of US Federal Reserve policy to the global stock market.

The Federal Reserve’s monetary policy decisions can have a significant impact on global stock markets because they can affect economic growth and inflation, which in turn can affect the performance of companies and the stock market as a whole. The Fed conducts monetary policy by adjusting the federal funds rate, which is the interest rate Read more about The significance of US Federal Reserve policy to the global stock market.[…]

What is the concept of “trapped buyers” and “trapped sellers” in intraday trading?

The concept of trapped buyers and trapped sellers refers to situations in which traders or investors are “trapped” in their positions and are unable to exit the market without incurring significant losses. This can occur when there is a sudden shift in market conditions or when there is a lack of liquidity in the market, Read more about What is the concept of “trapped buyers” and “trapped sellers” in intraday trading?[…]

What is ‘lock aspect ratio’ settings on your charting platform?

“Lock aspect ratio” is a setting that can be found in some charting and analysis software programs. It refers to a feature that allows the user to lock the aspect ratio, or the relationship between the width and height, of the chart so that it remains consistent when the chart is resized. When the lock Read more about What is ‘lock aspect ratio’ settings on your charting platform?[…]

Is algorithmic trading different from high frequency trading?

Algorithmic trading and high-frequency trading (HFT) are related but distinct approaches to trading in financial markets. Both involve the use of computer algorithms to facilitate the execution of trades, but there are some key differences between the two approaches. Algorithmic trading refers to the use of computer algorithms to design and execute trades based on Read more about Is algorithmic trading different from high frequency trading?[…]