Hands-on Workshop on Technical Analysis

A hands-on workshop on "Technical Analysis" was arranged for 3rd Trimester MBA Finance students on Monday, 1st February 2021, at 2.30 PM through Cisco Webex. Dr Binu P Paul, Head of the Department of MBA, who is an avid market enthusiast and consultant, was the facilitator of the session. 

The session started with Dr Paul explaining the need for investors to know the intrinsic value of shares. There are two techniques through which one could ascertain the value of stocks. They are a) Fundamental analysis and b) Technical analysis. In fundamental analysis, the intrinsic value of a stock is ascertained in three steps viz., macro-economic analysis, industry analysis and company analysis which could be done either through top-down or through bottom-up manner. Technical analysis focuses on predicting stock prices by observing past price movements. In technical analysis, price movements of a stock could be observed for different time frames viz., yearly, monthly, weekly, daily and even for minutes and seconds. Dr Paul introduced the basics of technical analysis and explained how traders could make informed guesses about future prices of stocks. Kite platform by Zerodha was used in the session to show how real time trading is conducted. The difference between a market order and limit order was explained by Dr Paul taking up real time trading through the platform. The relevance of having stoploss was explained further with examples. He further showed different chart patterns and various tools and techniques to be employed while taking trading decisions. Few chart patterns covered during the session include head and shoulder, inverted head and shoulder, cup and handle, double top, double bottom, wedges, pennants or flags and ascending, descending and symmetric triangles. The session also covered different type of charts which include line charts, bar charts, candle stick charts, renko charts, heikin ashi and point and figure charts. Dr Paul stated that even though there are different chart types, he finds candle stick charts comfortable to use. Candle stick chart was discovered by Japanese rice traders which was subsequently adopted by traders in the stock market. He went on to explain different candle stick patterns like bearish engulfing pattern, bullish pattern, bearish evening star, bullish and bearish harami, harami cross and rising and falling three. He further explained the terms like doji, long legged doji, dragonfly and gravestone doji through the chart. Usage of derivatives in trading decisions was also briefly covered in the session. Since stock market timing closes at 3.30 PM, he showed virtual currency trading through the platform trading view. Unlike the stock market where people can buy or sell a single stock, currency trading needs to be done in pairs. Normally, all currencies are priced out to four decimal points. Smallest price move in the currency market is measured through PIP which is the acronym for Percentage in point or Price Interest Point. He advised the participants that though technical analysis helps people to predict stock prices, traders must never have overconfidence that they will be able to beat the market. He stated that no one can beat the market as it is the market which rules. The session, which concluded at 4.00 PM was indeed a value-adding one for all the participants.