# Complete Trading Revision Quick recall of key concepts from the Technical Analysis & Trading Handbook. Use for exam-style revision and fast lookup. *** ## 1. Market Basics | Concept | Definition | | ---------------- | ------------------------------------------------------------ | | **Bid** | Highest price buyers are willing to pay | | **Ask** | Lowest price sellers will accept | | **Spread** | Ask − Bid; cost of round-trip | | **Market order** | Execute immediately at best available price | | **Limit order** | Execute only at your price or better | | **Stop order** | Becomes market order when price hits level | | **Liquidity** | Ability to trade without moving price much | | **Order flow** | Stream of buy/sell orders; imbalance moves price | | **Sessions** | Asian, London, NY; London+NY overlap = highest FX volatility | *** ## 2. Price Action | Concept | Definition | | ------------------ | ---------------------------------------------------------------- | | **Support** | Level where buying tends to appear; price holds/bounces | | **Resistance** | Level where selling tends to appear; price rejects | | **HH/HL** | Higher High, Higher Low = uptrend structure | | **LH/LL** | Lower High, Lower Low = downtrend structure | | **BOS** | Break of structure (break of prior HH or LL) | | **MSS / CHoCH** | Market structure shift; e.g. first LL in uptrend = bearish shift | | **Liquidity grab** | Price sweeps stops (e.g. below low) then reverses | | **Range** | Price between horizontal S/R; no clear trend | | **Trend** | Clear HH/HL or LH/LL; trade in direction | *** ## 3. Candlestick Patterns (Quick) * **Single:** Doji (indecision), Hammer (bullish at support), Hanging Man (bearish at top), Shooting Star (bearish at top), Inverted Hammer (bullish at support), Marubozu (strong body, no wicks). * **Two:** Bullish/Bearish Engulfing, Piercing Line (bullish), Dark Cloud Cover (bearish), Tweezer Top/Bottom. * **Three:** Morning Star (bullish), Evening Star (bearish), Three White Soldiers (bullish), Three Black Crows (bearish), Inside Bar (consolidation), Outside Bar (expansion). * **Context:** Always consider trend and level; confirmation (next candle) before entry. *** ## 4. Chart Patterns (Quick) * **Reversal:** Head & Shoulders (bearish), Inverse H\&S (bullish), Double Top/Bottom, Triple Top/Bottom, Rounded Top/Bottom. Trade **break** of neckline with confirmation. * **Continuation:** Bull/Bear Flag, Pennant, Ascending/Descending/Symmetrical Triangle, Rectangle, Cup and Handle. Trade **breakout** in trend direction. * **Breakout:** Prefer **close** beyond level + **volume**; beware false breakouts (retest or buffer stop). *** ## 5. Technical Indicators (Quick) * **Trend:** MA, EMA, VWAP, Ichimoku, Parabolic SAR. Best in **trending** markets. * **Momentum:** RSI (0–100; >70 overbought, <30 oversold), MACD (crossover, zero line, divergence), Stochastic, CCI. Use in **range** for overbought/oversold; in **trend** for divergence or pullback. * **Volatility:** Bollinger Bands (squeeze, mean reversion), ATR (stops, targets), Keltner. **No direction**—only size of move. * **Volume:** Volume profile (POC, value area), OBV, A/D, VWAP Anchored. **Confirm** breakouts and trend. *** ## 6. Advanced Concepts * **Order block:** Last opposing candle before strong move; zone for retest (support/resistance). * **Liquidity zones:** Above highs / below lows (stops); sweeps then reversal = liquidity grab. * **FVG (Fair Value Gap):** Three candles, middle doesn’t overlap first; often “filled” later. Entry on fill in trend direction. * **Wyckoff:** Accumulation (spring = false breakdown) → markup; Distribution (upthrust = false breakout) → markdown. Volume confirms. *** ## 7. Trading Strategies (Quick) * **Trend following:** Enter pullbacks to structure (HL, EMA) or BOS in trend direction. Stop below HL (long). * **Breakout:** Enter on close beyond range/pattern; stop opposite side; target = measured move. * **Mean reversion:** Fade extremes at support/resistance (and/or RSI overbought/oversold). Best in **range**. * **Scalp:** Short hold; small target; tight stop; liquid instruments; low cost. * **Swing:** Multi-day; structure and levels; 1:2 or 1:3 R:R. * **Position:** Long-term; weekly/daily structure; wide stop; small size. *** ## 8. Risk Management * **Risk per trade:** 0.5–2% (e.g. 1%). Dollar risk = Account × Risk%. * **Position size:** Size = Dollar risk / |Entry − Stop|. * **R:R:** Aim ≥ 1:1.5 or 1:2. Expectancy = (Win% × Avg win) − (Loss% × Avg loss) > 0. * **Drawdown:** Plan for 10–20%; reduce size or pause after hitting limit. No doubling up to recover. * **Correlation:** Diversify; avoid too many correlated positions. *** ## 9. Trading Psychology * **Discipline:** Follow plan and rules; don’t close early or skip stop. * **Fear/greed:** Fear → early exit, avoid setups. Greed → overtrading, overleveraging, hold losers. * **Revenge trading:** No trade to “get back” a loss; pause after loss. * **Overtrading:** Only trade valid setups; cap trades per day. * **Journal:** Log setup, entry, exit, P\&L, emotion; review weekly. * **Plan:** Written rules (entry, exit, stop, size, when not to trade). * **Biases:** Confirmation, recency, anchoring, loss aversion, overconfidence, FOMO—awareness and rules reduce them. *** ## 10. Backtesting & Algo * **Backtest:** Run strategy on history; include costs; avoid look-ahead and overfitting. * **Walk-forward:** Optimize in-sample; test out-of-sample; roll forward. * **Forward test:** Paper or small live after backtest; final validation. * **Overfitting:** Too many parameters; strategy fails on new data. Keep simple; test multiple instruments and periods. * **Algo:** Code rules → backtest → paper → live. APIs for data and execution; Python stack (pandas, backtrader/vectorbt). *** ## 11. Common Mistakes * No plan, no stop, size too big, chasing, too many symbols/timeframes, no journal. * **Indicator overload:** Use few indicators; filter by context (trend, level). * **Context:** Don’t trade same signal in all conditions (e.g. RSI oversold in strong downtrend). * **Overleveraging:** Cap leverage; size so one trade doesn’t blow account. * **Risk:** Fixed risk%, max daily loss, no moving stop against you, no adding to losers. * **Chasing:** Wait for setup; “no trade” is OK. *** ## Key Charts (ASCII) **Uptrend (HH/HL):** ``` ● HH / \ ● ● HL ``` **Head and Shoulders:** ``` ● RS / \ ● Head ● \ / \ LS \___ Neckline ``` **Bull Flag:** ``` ═══● Break │ ╱╲ │╱ ╲ Flag ●════ Pole ``` *** *For full detail, see the* [*Handbook*](https://github.com/nishchalnishant/TradingOverview/blob/main/Revision/stock-market-analysis/technical-analysis/handbook/README.md)*.*