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PaperStone Analytics, Bhubaneswar (2026)

19/03/2022

C:02: Rationale of Technical Analysis:

1. Market action discounts everything. (i.e. Fundamental, political, psychological or otherwise )

2. Price always moves in trend.

3. History repeats itself. (The future is just a repetition of past )

18/03/2022

Concept 1: Technical Analysis:

It is the study of market price action and psychology, primarily through use of charts, for the purpose of forecasting future price trends.

Price and Volume information are mainly used to forecast.

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Technical Analysis(TA) is superior to Fundamental Analysis(FA) for trading. FA tell the Value, where as TA tell the Price. The fundamentalist studies the cause of market movement, while the technician studies the effect.

Price often acts as a leading indicator of fundamental reason.
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Technical Analysis is an Art. To be an Artist, First you need to know.. how to use Paint Brush and Canvas. Secondly you need to know the peculiarities.

04/03/2022

When a Technical Analyst with half knowledge get deceived by market moves, he often blames the News.

By blaming the News, he often forget the very first Golden rule / assumption of Technical Analysis.

"Market Action Discounts Everything.( Fundamentally, Politically, Psychologically or otherwise such as Insider trading, Climate change, Wars, Epidemic or Pandemic) "

Anything that is known or unknown to general public, all are reflected in price charts.

Join our classes to know more.

Please don't forget to like, share and post comments.

04/03/2022

Managing Raw material cost through Commodity Derivative:

There is and there will be always uncertainty in markets due to several macro and micro economic factors. It is very difficult for the government to control prices through policies.

So how a Company manages its product cost? OR Can manage. How can it survive when there is so much of fluctuation in price?

Due to Ukraine Invasion, price of commodities such as Wheat, Corn, Crude Oil, and metals are sky rocketing.

It can be controlled through use of Derivatives. Derivatives are most innovated financial product. It is used as a hedging instrument to reduce risk.
Companies or Industries, which is manufacturing consumer goods by using commodity (traded in financial market).

They buy commodity future, when price is low in commodity market for their inputs, by paying margin only. when the price is increased later, they sell that commodity future. The profits earned by selling commodity future is used in buying inputs from cash market.

What if, the price is decreased after buying commodity future?

Of course, they will suffer loss. But that loss will be covered since they are buying their inputs from cash market at cheaper price. Also, their primary aim is to keep their input cost steady, not to make profit in buying inputs.

Companies or Industries can also write a Call option while buying commodity future. By writing call option, they can cover the loss suffered in buying future, even make profit. Which will ultimately reduce their input cost.

There are a lot of strategy, which can be used to control the input cost by using derivatives.

Technical Analysis (TA) also helps in determining
a) The price at which one should Buy or Sell.
b) The risk involved with the Trade.
c) Expected Reward on the Trade

As an Independent Technical Analyst, we use these strategies to make profit at less risk.

03/03/2022

Most of Technical Analyst believe that there is no Holy Grail to make profit in Financial Market. But we do believe in Holy Grail.

Holy Grail is the Knowledge of Technical Analysis. You can get the Holy Grail by only learning and practice.

There are lot of technics to make profit. But to make consistent profit, you can follow only one.

Also remember half knowledge is more dangerous than ignorance.

As Bruce Lee rightly said " I fear not the man who has practiced 10,000 kicks once, But I fear the man who has practiced 1 kick 10,000 times.

"All you need is one pattern to make a Living"- Linda Bradford Raschke (American financier, operating mostly as a commodities and futures trader.)

Join our free classes to know more.
Don't forget to like, share and comments.

21/02/2022

A ( Problem, Solution ) Pair.

What is it means? There will not a problem without a solution And there will not be a solution without a problem.

Best example: Pandemic. COVID19 Virus. So it was our problem. It also gave us the solution to fight. Vaccines are made from dead COVID19 virus.

Pattern always come in pairs. You just need to find the solution. If you find the solution, you will get an opportunity and if you don't find, you will be punished. That is how... It works.

Please don't forget to like, share and post comments.
It will motivate us.

20/02/2022

Is this not true ?

In Financial Market, you need to know both side as a Buyer and Seller to make profit. Buyer need the financial instruments and Seller need the money.
Both of them want more of it, But they have limited supply. Once Buyer purchased the financial instrument, he become a seller.

If price is less, Buyer will buy more quantities expecting that the price will go up And Seller will sell more quantities expecting that price will go down in future.

And if you are wondering, Why sellers will sell more when price is less… then you are wrong.
As a common people, we don't know the sellers behavior.

It is because of Fear of loosing money, If price of that instrument falls more than his expectations.
The level of fear is amplified, If economic factors are bad.

At that time, New Buyers will not buy. There will be only supply without any demand.

If you are thinking .. Price will fall if Economic factors are bad.. Then you are wrong again. Price will increase faster till the demand comes in.
Of course, there will be temporary fall before the rise.

That is what happened, when lock down declared during pandemic.

"Why do we fall? So that we can learn to pick ourselves back up.” - Batman Begin Movie Quote

If Economic factors are still bad after the rise in price, price will fall.

On the other hand,

If price is more, Buyer will buy less because he has limited money.
And Sellers will sell less quantities expecting that price will go up in future.

Again, Why Sellers will sell less if price is more… It is because of Greed, If price of that instrument is increasing he will be greedy and reduce the supply.

Once supply is reduced, price will fall, till demand for that financial instrument comes in. But before the fall that there will be a temporarily sharp rise.

If economic factors are good, Price will fall more sharply, till economic conditions become bad again.

Like any other market, Financial Market is also always influenced by these 6 main factors (Demand, Supply, Quantity, Fear, Greed, Money/Capital, Economic factors).

These 6 factors CAN NOT be balanced at all together.

So it is a non-linear equation that makes it difficult to predict.

There comes the role of Government. They form policies and laws to balance these up to some extent.

All these concepts are from Economics. Economics is considered as a modern science which was developed in 18th Century. Although It was very theoretical at that time, due to technological constraint. Now it is very much practical. We use it daily without knowing it.

You think that you know it. But you don't know that you that you don't know.

On the other hand.

To Become A Technical Analyst you don't need to know All the above paragraphs. Theory is very boring right ?

You just need to know that
"The interaction between buyer and sellers create a behavioral price Pattern. Which can be predicted well in advance."

And Technical analysis is an Art. you just need eye to see it.

To Learn more join our free classes.
Please don't forget to like, share and post comments.

19/02/2022

Financial instruments are the monetary contracts between parties.

It is divided into 2 groups.

Cash instruments(stocks, Currency, Bonds)
Derivative Instruments( Stock, currency, Commodity or, Index Derivatives)

Cash instruments are limited in supply.

Whereas Derivative instruments are unlimited in supply. These instrument derive its price from the cash instrument.

This is the most innovative financial product. They don't exist but it is traded.

Derivative instruments do come with a expiry date, where as cash instrument don't have any such expiry date.

18/02/2022

Hi...

Today topic is about Technical Chart.

So what is it...

It is the Graphical representation of Price Action of a Financial Instrument over a period of time.

Remember, In my last post. I told that we can see Demand and Supply forces.

Through Technical Chart, we can See it.

Remember, In School and Colleges.. we used to prepare Graph Manually. It is exactly the same.

But at that time, we didn't know how to use in real life.

Thanks to our technology, we don't have to prepare that Graph Manually.

To Know more .. Join Our free classes.

And please don't forget to like and post comments.

Thank You!

15/02/2022

Hi...

I just read the news that...

Dow Futures Surge 385 Pts; Tensions Ease on Russian Withdrawal Report.

Russia's Defense Ministry said earlier Tuesday that Russia will return some of its troops to their bases after completing a series of drills near the Ukrainian border later this week.

Do you feel that this is the reason, Dow Increased today ?
What if if they start one more Drill ? Dow will fall ?
If you think so , then you are wrong.

Market always moves by law of Demand and Supply

Learn… How to See the flow of Demand and Supply by Technical Analysis. YES YOU CAN SEE THE FLOW.

Enroll for Free class/ Demo on this Saturday.

Check the Event tab of this page for Meeting Link.

11/01/2022

The Cap Seller and The Monkeys Story

I believe that you must have heard this story in your childhood. And fully aware of the moral of the story. But you missed one moral.

Let me tell you the story, one more time.

Once upon a time, a cap seller was traveling by walk by way of a forest to a village. It was a very warm day and so he chose to lay down under a tree and take sleep for some time till the sun sets down. As he was extremely tired, he slept quickly.

When he was sleeping several monkeys came down the tree and pulled the cap seller’s bag. They opened the bag and found the caps inside. The monkeys picked up the caps and climbed back up the trees. The cap seller woke up after some time and was surprised to find his opened bag and the monkeys all using his caps.

The cap seller became very upset, he shouted at the monkeys in the tree. The monkeys yelled back at him. This made the cap seller much more irritated. He picked up few stones from the ground and threw them at the monkeys. This time the monkeys threw the fruits they had in their hands at the cap seller.

The cap seller was shocked at these actions of the monkeys. He thought for a while. This time, he taken off the cap, he was wearing and threw it on the ground. The monkeys that were seeing him also did exactly the same. They threw all the caps on the ground.
The clever cap seller collected all the caps, filled them back in his travelling bag and moved away from that location.

SO, what is the moral?
“Clever thinking can easily solve a problem” You know this .

Another Moral based on technical Analysis. “Crowds tends to behave in a predictable manner, they usually follow influential person/crowds” Here in this story, Monkeys are the crowds and Cap Seller is the influential person.

In Financial Market, Smart money (Mutual fund, Insurance companies, High Net worth Individual) are the influential person and Retailers are the crowds.

Retailers can make money easily if they follow what Smart money is doing.
Buy if smart money is buying and sell if smart money is selling.
What smart money is doing… figured it out by learning Technical Analysis.

“Crowds tends to behave in a predictable manner." This is not applied only to financial markets; this is the real truth. You must have noticed in a meeting or conference, when some people started laughing or clapping, Lot of other participants do the same and participate in laughing or clapping.

If you like the story, please post your likes and comments below.
Interested in Learning Technical Analysis, Message us.

10/01/2022

"Technical Analysis. It is not something new. It was always there... Like a lost Ark. In 19th century, Some author found this and wrote different books on Technical Analysis(TA). Still it was very difficult to use TA as an approach to financial market at that time, due to Technological constraint.
Fundamental Analysis was considered as best at that time.
But now we are in 20th century, The Analysis which was not possible decades before, now available at your fingertip. Of Course Knowledge of those is very crucial in applying.

Now a days, a commerce graduate with MBA working in MNC or Banking Sector and doing mostly copy paste jobs.(80%). When they will be moved to Senior level, they will be working in emails only.
Complete Wastage of knowledge, skills and Talents.

When I left my Job, One of colleague in that company , who is Chartered Accountant by himself. He pinged me asked about my aspiration. I said, I am going to be a Technical Analyst. He instantly fired one more question.. Can you tell me Black-Scholes formula.

I didn't tell him. That he is an Idiot and obsolete.

To be a Technical analyst , you don't need to know that formula. Price always moves in Trend.

However, I refer it sometimes.
And For that there is technology, which can calculate instantly. I am not an Obsolete.

I can Learn, Un-learn and Re-learn.

PaperStone Analytics

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