Rubén Villahermosa - Trading and Investing for Beginners: Stock Trading Basics, High level Technical Analysis, Risk Management and Trading Psychology

Trading and Investing for Beginners

Advanced Financial Literacy, Stock Trading Basics, High level Technical Analysis, Risk Management and Trading Psychology.

Rubn Villahermosa Chaves

Copyright Rubn Villahermosa, 2022 - All rights reserved.

ISBN:

Independent publishing

Legal Notice:

The total or partial reproduction of this work, incorporation into an IT system, transmission in any form or by any means (electronic, mechanical, photocopying, recording or otherwise) is not permitted without the prior written authorization of the copyright holders. An infringement of these rights may constitute an intellectual property crime.

Disclaimer Notice:

Please note the information contained within this document is for educational purposes only. All effort has been executed to present accurate, up to date, and reliable, complete information. No warranties of any kind are declared or implied. Readers acknowledge that the author is not engaging in the rendering financial advice.

By reading this document, the reader agrees that under no circumstances is the author responsible for any losses, direct or indirect, which are incurred as a result of the use of the information contained within this document, including, but not limited to, errors, omissions, or inaccuracies.

This book is dedicated to my wife, Adriana,

the love of my life and my best friend.

INTRODUCTION

Trading, investing: sounds appealing, right? Well, before you read on, I have to tell you that everything you have heard about how to make money on the stock market is probably false. Just think about this: Some studies claim that more than 80% of traders lose money. The reason? Trading is simply not as easy as some have led us to believe. Statistics are not on our side.

Trading in financial markets is one of the most complex professions around. It is a world controlled by large financial institutions, which allocate enormous resources and hire the best minds engineers, physicists and mathematicians, to appropriate money belonging to other market participants. And you're going to have to fight them. It doesn't seem like an easy task.

But not everything is doom and gloom. If you still feel you want to proceed, your only chance is to somehow level the playing field. Instead of fighting them you need to try to trade alongside them. To do this, you need to become the complete trader and develop and follow the 3 main principles that will largely determine whether you are successful or not:

1. Build a winning strategy.

1. Implement solid risk management.

1. Manage your emotions appropriately.

But that isnt all. These three main principles are the core of this book and without a doubt represent the most important content; but there is added value to be found in the first part, on financial literacy, and in the final part, on business management and practical application.

Who should read this book?

Every trader and investor who is starting from scratch and taking their first steps in stock trading. We will look at the most basic and fundamental content that you need to know in the early stages of your training as a trader or investor.

The book will also be of interest to fundamental analysts who are looking for a real approach to technical analysis by studying methodologies that I have dubbed "high-level". There is a great deal of research that suggests that the timing of the market - the moment of entry - is of significant importance, and technical analysis can help you in this task.

Technical analysis is mistakenly associated with day trading and with methods that are based on tremendously subjective or illogical principles. This book will guide the investor by explaining approaches that can give them an advantage in interpreting the information provided by financial charts.

Why do you need this knowledge?

Simply because it is your only option. As I have already mentioned, the odds are against you. You need this knowledge, period. There is no alternative if you want to approach the markets in the best possible condition. That said, this content may be essential but it is not enough. This book will lay the foundations that you simply must have at this first stage, but you must remain steadfast in your commitment moving forward. Remember that it is not an easy task.

Why this book and not any another?

The content of this book is basic. You could even easily find some of this knowledge online. The advantage of this book is that it will save you time, effort and money. I have also walked the path you are now on and I know exactly what you need to know and the best way to explain it clearly.

I have tried to avoid using technical jargon in the book simply to ensure that each and every sentence can be fully understood. As you will see, there is no filler content and each of the sentences has an eminently practical and operational meaning, in an attempt to base everything on logical reasoning.

Moreover, I think its fair to say that this may be the most comprehensive book dedicated to beginners that you will find.

What will you learn?

This book will help you to develop the essential skills you need to trade in financial markets. Usually these are dealt with separately, but one of the major advantages of this book it that it takes a comprehensive perspective and covers all the key elements in a single, mutually reinforcing package.

We will follow this program:

1. The first part of the book will deal with a subject that is not usually covered in books like this but is inextricably linked to trading: financial literacy. If we want to invest or trade we need money. This section will introduce some of the most important concepts for becoming more financially intelligent as well as practical recommendations to improve our finances.

1. The second and third parts of the book focus on the core of the required theoretical knowledge. We will learn about the history of financial theories in order to determine the nature of markets, we will study the characteristics of the main investment products, the main types of market agents, and discover how prices are set, as well as all the fundamental concepts necessary to understand the way that markets operate.

1. The fourth part is the key topic of the book: technical analysis. This part aims to provide the necessary knowledge to build a winning strategy, the first of the three main principles that will determine our success.

We will cover the basics of technical analysis: chart types, the price cycle, market conditions, how to correctly draw lines etc. And we will also present the three methodologies that make up what I have dubbed a high-level technical analysis: Price Action, Volume Spread Analysis and the Wyckoff Method.

Obviously, we wont be able to go into the minutiae of each of the proposed methods, but the most important concepts will be explained so that the reader can decide which one they should subsequently specialize in.

1. The fifth part will deal with the second of the three fundamental principles, risk management. We will learn key concepts about money management that will help us minimize the risk of bankruptcy and we will learn to carry out more professional position management.

1. The sixth part deals with emotional management and with it we conclude the third fundamental principle that will help us tip the balance in our favor. Essentially, we are going to focus on creating a statistical mindset which is as objective as possible. To do this, we will identify the negative emotions that distract us from our goals as well as the positive ones that bring us closer to them; and we will gain an understanding of the main cognitive biases that we may fall victim to, so that we can avoid them.