Trading Academy

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Trading Academy The beginners guide to Stock
Trading
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Topics were going to cover

• Technical Analysis
• Chart Patterns
• Moving Averages
• Fibonacci

• Fundamental Analysis
• Financial Statements
• Accounting Ratios

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Introducing Fundamental Analysis

• What you need to know!

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Financial Statements
The three major Financial Statements (in a
nutshell)
Balance Sheet Provides information of a
companies total assets and total liabilities
Cash-flow Provides information about a
companies revenue and expenditure (its in-goings
and out-goings)
Income Statement Provides information on a
companies total income
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How does it work? Balance Sheet
Balance Sheet
Purpose A balance sheet reports a companies
financial position at a fixed point in time.
(Like a snap shot)
Whats on it? Assets (what the company
owns) Liabilities (what the company
owes) Shareholder Equity (what belongs to the
owners after liabilities)
The following formula summarizes what a balance
sheet shows ASSETS LIABILITIES
SHAREHOLDERS' EQUITY A company's assets have to
equal, or "balance," the sum of its liabilities
and shareholders' equity.
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How does it work? Cash-flow
Cash Flow
Purpose The Cash-Flow statement reports the
flow of cash into and out of a company in a given
year.
The Three key categories in a Cash-Flow
Net cash provided (or used) by Operating
activities (products, services)
Net cash provided (or used) by Investing
activities (property, plant, equipment)
Net cash provided (or used) by Financing
activities (Stocks, Bonds, Banks)
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How does it work? Income Statement
Income Statement
Purpose The Income Statement indicates how much
revenue a company brings into the business by
providing goods and services for a set time.
The Three Key categories of an Income
Statement
Revenue
Gross Profit (EBITDA)
Net Profit (minus expenses)
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Introducing Financial ratios
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• Different kinds of Financial ratios
• Liquidity Measurement Ratios Profitability
  Indicator Ratios
• (Measures Liquidity) (Measures Profitability)
• Debt Ratios Operating Performance Ratios
• (Measures Debt) (Measures efficiency)
• Cash Flow Indicator Ratios Investment Valuation
  Ratios
• (Measures Cash flow) (Measures investment
  quality)

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Ratios Explained

Why are they used? Financial ratios can be used
to quantify many aspects of a business and are an
integral part of financial statement analysis
What are they? A Financial ratio is a ratio of
selected values on an enterprise's financial
statement i.e. Current Ratio Assets/ Liabilities
How are they used? Financial ratios can be
used for comparisons between companies,
industries, different time periods for one
company and also to compare a company and its
industry average
How are they categorised? Financial ratios are
categorized according to the financial aspect of
the business which the ratio measures. There are
5 categorisation
Get the Investment Handbook for further
information
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Introducing Technical Analysis
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Chart Patterns
Different kinds of Chart patterns
Trend Patterns Trend Patterns indicate the
general direction of a stocks price movement
Continuation Patterns Continuation Patterns
suggests a trend is exhibiting a temporary
diversion in behaviour and will eventually
continue on its existing trend.
Trend Reversals A Trend reversal can be a
positive or negative change against the
prevailing trend.
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Trend Patterns Overview

• Strong resistance line, Higher Lows, Buyers have
  momentum

• Lower Highs, Higher Lows, Break-out

• Strong support, Lower Highs, Sellers have momentum

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Continuation Pattern Overview

• Characteristics
• Price is Ranging
• Indication of large volatility
• Price movement usually continues original trend

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Reversal Pattern Overview
Downward Reversal Pattern
Upward Reversal Pattern
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Introducing Moving Averages
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Different Types of Moving Averages
Two Main Types of Moving Averages

• Simple Moving Average (SMA)
• Characteristics
• Equal weight is given to all data
• Short-term averages respond
• quickly to changes in the price
• of the underlying, while long
• term averages are slow to react.
• Best used when analysing for long term trade

• Exponential Moving Average (EMA)
• Characteristics
• More weight is given to new data, so it reacts
  faster to price movements
• Short-term averages respond quickly
• to changes in the price of the
• underlying, while long-term averages
• are slow to react.
• Best used when analysing for a short term trade

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How to use Moving Averages
MA Can be used to determine trend reversals
(Crossover) MA Can be used to determine good
entry and exit positions MA Can be used as a
measure of volatility
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Introducing Fibonacci
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Origins of Fibonacci
Italian Mathematician who lived in the 12th
Centaury Fibonacci is best known to the modern
world for The spreading of the Hindu-Arabic
numeral system in Europe, primarily through the
publication in the early 13th century of his Book
of Calculation, the Liber Abaci. AND A
modern number sequence named after him known as
the Fibonacci numbers, which he did not discover
but used as an example in the Liber Abaci.
Leonardo Fibonacci
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Different kinds of Fibonacci
Fibonacci Re-tracements
Fibonacci Extensions
Fibonacci Arches
Fibonacci Fans
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How to use Fibonacci (Re-tracements)

• Fibonacci can be used to indicate good entry and
  exit positions
• Fibonacci can be used to help forecast support
  and resistance lines
• Fibonacci can be used as help forecast trend
  reversals

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In Summary

• Topics weve covered

• Fundamental Analysis
• Financial Statements
• Financial Ratios

• Technical Analysis
• Chart Patterns
• Moving Averages
• Fibonacci

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Congratulations you have graduated to High School

• Next Presentation
• High school 9th 12th Grade
• Grade 9th Market Hours
• Grade 10th Pivot Points
• Grade 11th Elliot Wave Theory
• Grade 12th Introducing new markets

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Class Dismissed!!!