By failing to prepare, you are preparing to fail.” – Benjamin Franklin
Trading/Investing is a professional activity. It involves making decisions regularly. The trading plan will act as a reference document for a trader to make these decisions.
You can use FalconFunda’s below 3D approach to put together your trading plan.
Moving Average Convergence Divergence (MACD) is a technical analysis momentum indicator used by traders /investors to identify the trend direction of securities.
The MACD indicator on the price chart usually has below parts:
Some key things to remember:
How to derive Trading sentiments from MACD?
Traders derive trading signals based on when MACD and Signal lines crossover, diverge, fall/ rise.
Sentiment Vs Crossover Mapping
| Bullish Sentiment |
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| Bearish Sentiment |
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Sentiment Vs Divergence Mapping
Divergence happens when there is a difference between the MACD and the price action of the security on the chart. This is considered a very strong signal.
| Bullish Sentiment | Price of the security makes lower lows and MACD line makes higher lows. |
| Bearish Sentiment | Price of the security makes higher lows and MACD line makes lower lows |
Your attitudes and beliefs play an important role in your trading / investing journey. You can use FalconFunda’s below 3T’s approach to continuously (re)-build yourself.
(T)une your Mindset:
Financial markets are constantly changing and you have to tune your mindset to be ‘positive’ on an everyday basis to adapt to situations, keep your emotions under control and make better decisions.
A key question to ask yourself daily which will help to tune your trading/ investing mindset is ‘ What can I learn from this situation? ‘.
(T)une your Motivation:
Let’s accept it, our motivation levels fade over time. So how do you tune your motivation levels even when you don’t feel like it?
One of the most important things you can do at the beginning of your trading / investing journey is to document your ‘why’ and also goals.
So ask yourself every day ‘What is my reason for trading / investing? ’ to help tune your motivation levels !!
(T)une your Habits:
Like anything else, you need to identify and practise good habits on an everyday basis to be successful in your trading & investing journey.
Some of the key everyday habits for a trader are
So ask yourself every day ‘Have I practised the right habits today to achieve my investing & trading goals?’.
Falconfunda.com can help you learn trading fundamentals via email every day!
Finally, have & show gratitude no matter what!!
Download Excel Sheet – Tuning Log
Exponential moving average (EMA ) is a technical analysis indicator used by traders /investors to identify upward or downward trend direction of securities.
Unlike SMA, EMA gives more importance to data that is more recent. Because of this EMA follows prices on the chart more closely than a SMA.
Psychology of Exponential moving average indicator is that it helps a trader understand the general direction of the trend. A rising EMA line on the chart will support the price move encouraging traders to participate and falling EMA line on the chart will provide resistance to the price move means traders will be lenient to sell.
Exponential moving average is available as an indicator on charting tools like TradingView.On the price chart,d irection of the EMA line will indicate whether the security is in uptrend, downtrend or ranging.
Traders/Investors simply apply this EMA indicator to a chart and derive trend direction.
After applying the Exponential moving average indicator, if the EMA line is moving down consistently then it indicates downtrend and vice-versa.
Practice Exponential Moving Average – Beginner
Practice Exponential Moving Average – Intermediate
Exponential Moving Average is a very popular indicator for doing technical analysis!
Follow these instructions to apply Exponential Moving Average Indicator onto any chart on TradingView!
Step 1: Have your tradingview chart open.
Step 2: Click on Indicators & Strategies icon on the top.
Step3 : Type ‘Moving into the search box on the top of the the popup window’. Select Moving Average Exponential. Click X icon on the Top right hand side.
Step4 : Observe the EMA line on the chart
Step 5 : Adjust the EMA line color, Moving Average length, color and other values by ‘double clicking on the line’!
Next : Learn how to interpret signals using Exponential Moving Average – Technical anlaysis indicator on chart!
Bar chart is a visual way to represent Open, High,Low, Closing pricing movements of the security.
A single bar has a vertical line, left horizontal tick and right horizontal tick.
Vertical line indicates the high-to-low price range.
Left horizontal tick shows open price.
Right horizontal tick shows closing price.
Bar charts help a trader/investor visualise bullish sentiment ( upward / uptrend price movement on chart ) or bearish sentiment( downward / downtrend price movement on chart ) by displaying bars using different colours.
A bullish bar is one in which the price has closed higher than it opened – the vertical line of such bar is usually represented in green.
A bearish bar is one in which price has opened lower than it opened – the vertical line such a bar is usually represented in red.
Difference between high price and low price is called range.
Emotions & Sentiments drive financial markets. So it is absolutely important for you as a traders/investor to understand your own thought patterns about money. This will help you to get a grip on your emotions & make better financial investment decisions.
Understanding your money related emotions i.e fears, greed, shame, envy and coming up with a way to manage them is a must have tool for a financial investor & trader in the longer term.
People usually fall into one of the below 7 personality types according to Ken Honda, author of bestselling book “Happy Money: The Japanese Art of Making Peace With Your Money”.
So which personality type are you ?
Take FalconFunda’s Mindset about Moneytest and find out your personality type.
Understand Your Mindset about Money ?
Chart pattern is a shape drawn on the price chart to predict future price movements based on the past data.
Chart patterns are split into below three types, depending on the price behaviour.
1 Reversal Chart Patterns: They signal the ongoing trend is about to change and price will reverse direction.
2 Continuation Chart Patterns: They signal that ongoing trend will continue and price will continue in current direction
3 Bilateral Chart Patterns: They signal that the ongoing trend will either continue or it can change direction.
Examples of Chart pattern types.
Bilateral patterns Examples :
Traders & Investors chart patterns as a technical analysis tool to determine the projected price of securities.
Practice Chart Patterns – Beginner
Traders use Trading Indicator as technical analysis tool on price charts to ascertain market conditions.
There are mainly two types of trading indicators
When applied on a price chart of a security, Lagging indicators will analyse the past market condition and indicate momentum whereas Lagging Indicators will predict future price action of a security.
There are 100’s of trading indicators to choose from. Some of the very popular one’s are below :
Moving Average
Exponential Moving Average
Moving Average Convergence Divergence (MACD)
Relative Strength Index (RSI)
Percentage Price Oscillator (PPO)
Parabolic SAR
Average directional index
Stochastic oscillator
Standard deviation
Bollinger bands
Fibonacci retracement
Williams Percent Range (%R)
Commodity Channel Index (CCI)
Ichimoku cloud
On-Balance volume (OBV)
Accumulation/Distribution line
Aroon indicator
Indicators drawn on top of existing chart are called Overlays and one’s drawn separately are oscillators.
Stock market is a place where public companies list their shares for buyers and sellers to trade.Trading happens in exchange via stock broker and electronic trading platforms.Stock market can be imagined as a collection of Stock exchanges.
Trading in the stock market means securities are transferred from seller to a buyer.
How does it work ?
For example,
Exchanges provide real time pricing information of these listed company shares (also referred to as stock or equity ) for buyers and sellers to make a decision. Buyers and Sellers interact with exchanges via stock brokers and electronic trading platforms.
Examples of Stock Market exchanges: NYSE,NASDAQ.
Examples of Stock brokers : eToro,Fidelity, Robinhood, Fidelity, Trade Station.Examples of Electronic Trading Platforms : E-Trade, Nasdaq.
Window is a two day potential trend continuation pattern. Window is a gap between two or multiple day candlesticks on the price chart of a security.
A window pattern happens where there is a gap between the high price of Day1 and low price of Day2.
A window with necessary confirmation during an uptrend of a security indicates that prices might move higher.Window usually acts as a support area.
For Downtrend, there will be a gap between the closing price of Day1 and the high price of Day 2. Window might indicate that prices will move lower and the window acts as a resistance area.
Psychology of Window pattern is that the gap/window on the chart is an area where no trading ( i.e buying / selling of the security ) took place. So it is considered as a continuation pattern pointing to the existing trend.
As like any other, piercing patterns require confirmation candlesticks in the following days. On a price chart of the security, if the window appears after an uptrend and prices subsequently close below the window and then continue downward then the pattern is voided and vice-versa if it happens during downtrend. 
The Upside-Gap & Downside-Gap Tasuki Pattern are three-day trend continuation pattern(s). The Upside-gap Tasuki is a bullish continuation pattern and Downside-gap Tasuki is a bearish continuation pattern.
Upside-Gap Tasuki happens during an uptrend. Day1 is a bullish candlestick. Day2 is a smaller bullish candlestick that gaps up from the previous day. Day3 is a bearish candlestick that opens within the real body of the second day and closes below the real body of the second day and fills in some of the gap.
The psychology of the Upside-Gap Tasuki pattern is that Day1 and Day2 candlesticks confirm the previous uptrend. Day3 close price bearish candlestick leaves a gap that will potentially act as a support or resistance. If this is confirmed in the following days then the upward trend continues.
Downside-Gap Tasuki happens during a downtrend. Day1 is a bearish candlestick. Day2 is a smaller bearish candlestick that gaps down from the previous day. Day3 is a bullish candlestick that opens within the real body of the second day and closes above the real body of the second day and fills in some of the gaps.
The psychology of the Upside-Gap Tasuki pattern is that Day1 and Day2 candlesticks confirm the previous uptrend. Day3 close price bearish candlestick leaves a gap that will potentially act as a support or resistance. If this is confirmed in the following days then the upward trend continues.
As with any other patterns, Task patterns require confirmation candlesticks in the following days. If no confirmation then the pattern signal can be considered as voided.