Stock Market Basics

Yes, you will be awarded with a certification from QuantInsti after successfully completing the online learning units.

No, there are no live or classroom sessions in the course. You can ask your queries on community and get responses from fellow learners and faculty members.

Yes, you can ask your queries related to the course on the community: https://quantra.quantinsti.com/community

Fast-speed internet connection and a browser application are required for this course. For best experience, use Chrome.

There is no admission criterion. You are recommended to go through the prerequisites section and be aware of skill sets gained and required to learn most from the course.

We respect your time, and hence, we offer concise but effective short-term courses created under professional guidance. We try to offer the most value within the shortest time. There are a few courses on Quantra which are free of cost. Please check the price of the course before enrolling in it. Once a purchase is made, we offer complete course content. For paid courses, we follow a 'no refund' policy.

Some of the course material is downloadable such as Python notebooks with strategy codes. We also guide you how to use these codes on your own system to practice further.

We focus on teaching these quantitative and machine learning techniques and how learners can use them for developing their own strategies. You may or may not be able to directly use them in your own system. Please do note that we are not advising or offering any trading/investment services. The strategies are used for learning & understanding purposes and we don't take any responsibility for the performance or any profit or losses that using these techniques results in.

Quantra environment is a zero-installation solution to get beginners to start off with coding in Python. While learning you won't have to download or install anything! However, if you wish to later implement the learning on your system, you can definitely do that. All the notebooks in the Quantra portal are available for download at the end of each course and they can be run in the local system just the same as they run in the portal. The user can modify/tweak/rework all such code files as per his need. We encourage you to implement different concepts learnt from different learning tracks into your trading strategy to make it more suited to the real-world scenario.

No. We provide you guidance on how to create strategy using different techniques and indicators, but no strategy is plug and play. A lot of effort is required to backtest any strategy, after which we fine-tune the strategy parameters and see the performance on paper trading before we finally implement the live execution of trades.

Lifetime access means that once you enroll in the course, you will have unlimited access to all course materials, including videos, resources, readings, and other learning materials for as long as the course remains available online. There are no time limits or expiration dates on your access, allowing you to learn at your own pace and revisit the content whenever you need it, even after you've completed the course. It's important to note that "lifetime" refers to the lifetime of the course itself—if the platform or course is discontinued for any reason, we will inform you in advance. This will allow you enough time to download or access any course materials you need for future use.

The core function of the stock market is twofold: firstly, it allows companies to raise significant amounts of capital by issuing new shares to the public in what's known as the primary market. This funding is vital for business expansion, innovation, and job creation. Secondly, for investors, it provides the opportunity to become part-owners of these businesses by purchasing their shares. This ownership stake can lead to potential benefits like capital appreciation (increase in share value) and dividend payments.

Investing in the stock market offers several compelling reasons for individuals globally:

• Wealth Creation: Over the long term, stock markets have historically shown a tendency to grow, providing a powerful avenue for wealth accumulation.
• Beating Inflation: Returns from stocks can often outpace inflation, helping to preserve and grow your purchasing power over time.
• Compounding: Reinvesting returns (like dividends or capital gains) can lead to exponential growth over long periods due to the power of compounding.
• Passive Income (Dividends): Many companies distribute a portion of their profits to shareholders as dividends, providing a regular income stream.
• Ownership in Businesses: Investing in stocks means you own a piece of successful companies, allowing you to benefit from their growth and success.

• Share/Stock: A unit of ownership in a company.
• Stock Exchange: A centralized marketplace (e.g., NYSE, NASDAQ, LSE, Euronext, TSE, SSE, BSE, NSE) where stocks and other securities are bought and sold.
• Market Indices: Benchmarks (e.g., S&P 500, Dow Jones Industrial Average, FTSE 100, DAX, Nikkei 225, Sensex, Nifty) that measure the performance of a specific group of stocks, representing a market, sector, or economy.
• Bull Market: A market condition characterized by rising stock prices and investor optimism, where prices are generally expected to continue climbing.
• Bear Market: A market condition characterized by falling stock prices and investor pessimism, where prices are generally expected to continue declining.
• Portfolio: A collection of all investments owned by an individual or institution.
• Diversification: The strategy of spreading investments across various types of assets, industries, and geographies to reduce overall risk.
• Dividend: A distribution of a portion of a company's earnings to its shareholders, typically paid periodically.
• IPO (Initial Public Offering): The process by which a private company first offers its shares for sale to the public.
• Market Capitalization (Market Cap): The total value of a company's outstanding shares, calculated by multiplying the current share price by the total number of shares.
• Volatility: The degree of variation of a stock's price over time. High volatility indicates greater price swings.
• Broker: A licensed financial professional or firm that executes buy and sell orders on behalf of investors.
• Bid/Ask (or Bid/Offer): The "bid" is the highest price a buyer is willing to pay for a stock, and the "ask" (or "offer") is the lowest price a seller is willing to accept.

The main participants in the stock market ecosystem worldwide include:

• Investors: Individuals or institutions (like mutual funds, pension funds, hedge funds) who buy and hold securities for long-term objectives such as capital appreciation or income.
• Traders: Individuals or institutions who buy and sell securities frequently to capitalize on short-term price fluctuations.
• Companies (Issuers): Publicly listed corporations that issue shares to raise capital from investors.
• Brokers: Financial intermediaries who execute trades for clients on stock exchanges.
• Regulators: Government bodies or independent agencies (e.g., the SEC in the U.S., the FCA in the UK, ASIC in Australia, BaFin in Germany) that oversee financial markets to protect investors, ensure fair practices, and maintain market integrity.
• Stock Exchanges: Organized platforms (e.g., NYSE, Nasdaq, LSE, Euronext, TSE, SSE) that provide the infrastructure for trading securities.
• Central Securities Depositories (CSDs): Institutions that hold securities in electronic form and facilitate their transfer (e.g., The Depository Trust & Clearing Corporation (DTCC) in the U.S., Euroclear and Clearstream in Europe, NSDL and CDSL in India).
• Clearinghouses: Entities that stand between buyers and sellers to guarantee the settlement of trades and manage counterparty risk.

• Primary Market: This is where new securities are created and sold for the first time directly from the issuer (company) to investors. The most common event in the primary market is an Initial Public Offering (IPO), but it also includes other forms of new share issuance, like rights issues or bonus issues. Companies raise fresh capital here.
• Secondary Market: This is where existing securities are traded among investors after their initial issuance. Stock exchanges are the central venues for secondary market activity, facilitating the buying and selling of shares that have already been listed. This market provides liquidity for investors, allowing them to sell their holdings to other investors.

To begin investing in the stock market from a global perspective, the typical first step is to engage with a licensed financial intermediary, commonly a stockbroker or an online brokerage firm. This involves setting up the necessary investment accounts and familiarizing yourself with the platform and processes for placing orders to buy and sell securities. Many modern platforms also offer educational resources and tools to guide new investors.

While terminology and specific regulations can vary globally, you will generally need two primary types of accounts to trade and hold stocks:

• A Trading Account: This account is opened with your chosen stockbroker and serves as your interface to the stock exchange, allowing you to place buy and sell orders.
• A Custody or Dematerialized (Demat) Account: This account securely holds your purchased securities in an electronic format, removing the need for physical share certificates and ensuring your ownership is digitally recorded by a central depository. (The term "Demat Account" is specifically used in countries like India, but the function of electronic custody is universal).??????? Both a trading account and a custody/dematerialized account are typically mandatory for efficient and secure electronic stock transactions in most financial markets.

When selecting a stockbroker, consider the following factors regardless of your geographical location:

• Regulatory Compliance: Ensure the firm is properly licensed and regulated by the relevant financial authorities in your country or region (e.g., SEC in the U.S., FCA in the UK, BaFin in Germany, SFC in Hong Kong).
• Fees and Commissions: Compare the cost structure, including brokerage charges per trade, account maintenance fees, and any other hidden costs.
• Trading Platform and Features: Evaluate the usability, reliability, and functionality of their trading platform (web-based, mobile app, desktop software). Look for useful features like research tools, charting capabilities, and educational content.
• Market Access: Confirm which stock exchanges and types of securities (e.g., equities, ETFs, mutual funds, options) they provide access to, aligning with your investment interests.
• Customer Support: Assess the responsiveness and quality of their customer service channels.
• Reputation and Security: Research the firm's track record, financial stability, and the measures they take to protect client assets and personal data.
• Service Model: Decide whether you prefer a "full-service" broker (offering personalized advice and extensive research) or a "discount" broker (providing lower costs for self-directed trading).

While the precise interface may differ across various brokerage platforms, the fundamental steps for placing stock orders are generally consistent worldwide:

1. Log In: Access your trading account through your broker's online platform, mobile app, or dedicated software.
2. Select Security: Use the search function to find the specific stock or security you wish to trade (usually by its ticker symbol or company name).
3. Choose Action: Indicate whether you intend to "Buy" or "Sell" the stock.
4. Enter Quantity: Specify the number of shares you want to trade.
5. Select Order Type: Choose the type of order that best suits your trading strategy:
   • Market Order: An instruction to buy or sell immediately at the best available current market price. This prioritizes speed of execution.
   • Limit Order: An instruction to buy or sell a security at a specific price you set, or better. Your order will only execute if the market reaches your specified price. This provides price control.
   • Stop-Loss Order: An order to buy or sell a stock once its price reaches a certain "stop price." This is primarily used to limit potential losses on an existing position.
6. Review and Confirm: Carefully review all the details of your order (stock, quantity, price, order type) before submitting it. Once confirmed, the order is sent to the exchange for execution.

Stock market trading hours are specific to each individual exchange and the country or region it serves. There is no single, universal "stock market hour." For instance, the New York Stock Exchange (NYSE) operates from 9:30 AM to 4:00 PM Eastern Time, while the London Stock Exchange (LSE) trades from 8:00 AM to 4:30 PM Greenwich Mean Time. Many exchanges also offer "pre-market" and "after-hours" trading sessions. It is crucial for investors to check the specific trading hours, relevant time zones, and public holidays for the exchange where they intend to trade.

Stocks can be categorized through multiple frameworks to help investors build a diversified portfolio:

• By Market Capitalization:
  • Large-cap: Well-established companies with high market value; generally stable and mature.
  • Mid-cap: Medium-sized companies balancing growth potential with stability.
  • Small-cap: Smaller companies with higher growth potential but increased risk and volatility.
• By Investment Characteristics:
  • Blue-chip: Financially sound, reputable companies with stable earnings and consistent dividends.
  • Dividend Stocks: Companies that regularly distribute profits to shareholders as passive income.
  • Growth Stocks: Companies expected to grow at an above-average rate, typically reinvesting earnings rather than paying dividends.
• By Sector: Broad economic classifications that group companies based on their primary business activity. Common sectors include: Technology, Healthcare, Financials, Energy, Consumer Discretionary, Industrials, and Utilities.
• By Industry: More specific groupings within sectors (e.g., within the Technology sector, industries include Software, Semiconductors, and E-commerce).
• Importance of Diversification: Understanding these categories is crucial for reducing risk. Spreading investments across different sectors and industries helps mitigate the impact of a downturn in any single area of the economy.

A stock quote provides key data points about a stock's trading activity:

• Price: The current trading price of the stock.
• Volume: The total number of shares traded during a specific period (e.g., a day).
• Open: The price at which the stock first traded when the market opened.
• High: The highest price the stock reached during the period.
• Low: The lowest price the stock reached during the period.
• Close: The final price at which the stock traded when the market closed.

A stock chart visually represents this price data over time. A common type is the candlestick chart:

• The body of the candlestick shows the range between the opening and closing prices. A green (or hollow) body indicates the price closed higher than it opened, while a red (or filled) body indicates it closed lower.
• The wicks (or shadows) are lines extending from the body that show the highest and lowest prices reached during that period.

Corporate actions are events initiated by a company that affect its stock and shareholders:

• Dividends: A distribution of company earnings to shareholders. The stock price typically adjusts downwards on the "ex-dividend" date to reflect the cash paid out, but consistent dividends are often a sign of a company's financial health.
• Stock Splits: A company divides its existing shares into multiple new shares (e.g., a 2-for-1 split doubles the number of shares). The price per share decreases proportionally, but the total value of an investor's holding remains the same. Splits can make shares more affordable and increase liquidity.
• Bonus Shares: Additional shares issued to existing shareholders for free, typically from the company's reserves. Similar to a split, the price per share adjusts downwards while the overall value of the holding remains initially unchanged.
• Rights Issues: An invitation to existing shareholders to buy additional new shares, usually at a discounted price. This allows companies to raise capital while giving existing shareholders the chance to maintain their ownership percentage. The stock price often adjusts downwards, reflecting the potential dilution from the new shares.