Fundamental Analysis

Think about this, you’ve got ₹10,000 every month, a decent amount that you want to invest to grow your wealth. You’re scrolling through multiple apps like Groww or Zerodha, and a big question pops up: “Should I start a mutual fund SIP or try a stock SIP?” You check a SIP calculator, maybe even compare returns but the confusion remains. This moment is very common for beginner and even intermediate investors in India. Both investment options sound promising, but are difficult to choose which one fits your financial style and goals?   In this blog, you will understand everything — what a mutual fund SIP is, what a stock SIP is, their key features, differences, tax implications, factors to consider before choosing, comparison of their returns, and finally, which one might be better for you.  Mutual Fund SIP vs Stock SIP What is Mutual Fund SIP? A Mutual Fund SIP (Systematic Investment Plan) is a way of investing a certain amount of money regularly into a mutual fund. Instead of investing a lump sum all at once, you have to invest small amounts at regular intervals, such as monthly. The fund manager then invests this money across a range of stocks or bonds, thus helping to diversify your risk. You don’t need to pick individual stocks yourself, making it a hands-off investment. The number of units you will receive is determined by the NAV (Net Asset Value), which fluctuates based on the fund’s performance. This approach is great for people who want to invest consistently without having to actively manage their investments. Features: Automated Monthly Investing: Your money is invested automatically at a fixed interval, saving your time and effort. Professionally Managed: A fund manager takes care of your money so that you don’t have to. Ideal for Long-Term Wealth Building: SIPs work best for long-term goals like retirement or buying a home. Wide Range of Options: Choose from a pool of options like equity, hybrid, or debt funds based on your goals. What is Stock SIP? You want to invest in stocks of specific companies like Reliance or TCS that’s what Stock SIP is all about. It allows you to buy individual stocks regularly, just like a traditional SIP, but this time, you’re the one in control of picking which stocks you want to invest your money in. Apps like Groww, Zerodha, and Upstox offer this feature, making it easier for investors to buy shares over time. Features: Buy Shares Regularly: Invest in individual stocks at regular intervals, without worrying about the market’s ups and downs. Control Over Selection: You have the freedom to choose which stocks to invest in. Potential for Higher Returns: Stock SIPs can yield higher returns, especially if you choose the right stocks. No Fund Manager: Unlike mutual funds, there is no manager, you’re responsible for picking stocks. Key Differences: Mutual Fund SIP vs Stock SIP Feature Mutual Fund SIP Stock SIP Management Fund manager Self-managed Risk Level Lower (diversification) Higher (concentrated) Return Potential Moderate and steady High but risky Best For Beginners & passive investors Active investors & stock pickers Tax Implications Whether you invest through a Mutual Fund SIP or a Stock SIP, you’ll need to pay taxes on the profits when you sell no matter what. So let’s understand the tax implications. Mutual Fund SIPs: Equity Mutual Funds: STCG: If fund units sold within 1 year, gains taxed at 20%. LTCG: If held for more than 1 year, gains above ₹1 lakh taxed at 12.5% Debt Mutual Funds:  Purchased on or after April 1, 2023: Gains are taxed as per your income tax slab rate. Purchased before April 1, 2023: Held for up to 24 months: Taxed as STCG, based on your income slab Held for more than 24 months: Taxed at 12.5%, considered as LTCG (with no indexation). For Stock SIPs:   STCG (Short-Term Capital Gains): Stocks sold within 1 year, gains taxed at 20%. LTCG (Long-Term Capital Gains): Stocks held for more than 1 year and gains exceeding ₹1.25 lakh taxed at 12.5% (no indexation benefit as per Budget 2024). STT (Securities Transaction Tax): This tax is applied on every buy and sell of equity shares. It’s auto-deducted and does not affect capital gains calculation directly, but it adds to your transaction cost. What Should You Consider Before Choosing? Ask yourself these questions to make the right decision: 1. What’s Your Risk Appetite? Prefer safety & stable returns → Mutual Fund SIP Willing to take higher risk for higher reward → Stock SIP 2. How Much Time Can You Give? Don’t have time to track markets → Mutual Fund SIP Love following markets, reading reports → Stock SIP 3. How Confident Are You About Stock Selection? Not sure where to begin? → Stick to mutual funds Want to learn stock picking? → Consider learning through Vidfin’s Fundamental Analysis course 4. What Are Your Investment Goals? Long-term, hassle-free growth → Mutual Funds More aggressive wealth building → Stocks   Stock SIP Returns vs Mutual Fund SIP Returns Imagine you started a Stock SIP in January 2024, investing ₹10,000 every month. Over 4 years, this amount becomes ₹4.8 lakhs. If you had picked high-performing stocks like Tata Motors or Trent, which delivered around 40-50% annualized returns, your investment could have grown to approximately ₹8.5–9.5 lakhs (depending on market timing and consistency). Let’s calculate the post tax amount: Investment: ₹10,000/month for 4 years = ₹4.8 lakhsEstimated return: 40–50% CAGRMaturity value: ₹9–10 lakhs (before tax)Tax: LTCG tax at 12.5% on gains above ₹1.25 lakh Total Gain = ₹9.5 lakhs (final value) – ₹4.8 lakhs (invested) = ₹4.7 lakhs Taxable gain = ₹4.7L – ₹1.25L = ₹3.45L Tax = 12.5% of ₹3.45L = ₹43,125 Post-tax Value: ₹9.5 lakhs – ₹43,125 = ~₹9.06 lakhs   Now compare that with a Mutual Fund SIP in a Nifty 50 index fund, which returned 18–20% CAGR over the same period. Your ₹4.8 lakhs here would grow to about ₹7.2–7.6 lakhs, with much lower volatility and no need to

Investing in Mutual Funds vs Stocks Which is Better? Stocks and mutual funds are the most popular form of equity investing especially among retail investors. Mutual Funds collect money from various investors and invest the amount in a diversified portfolio of equity shares, bonds, and other assets. Investing directly in stocks can be done simply through a demat account. For a complete beginner with no prior experience, investing in mutual funds may be a good choice. But, for those wanting higher returns investing directly in stocks can be a better alternative. Now, choosing between stocks and mutual funds involves a couple of factors like risk tolerance, long-term investment goals, market expertise, etc. This article compares both so you can decide which one is the better investment option for you. Key Differences Between Mutual Funds and Stocks Both mutual fund investing and stock trading have their benefits and risks. The table given below contains a detailed comparison between the two: Investing in Mutual Funds vs Stocks: Risk and Return Comparison Both mutual funds and stocks cater to investors with different tolerance for risk. Mutual Fund investors can expect decent returns while being stable on the risk spectrum. stocks on the other hand cater to investors who can tolerate big risks and drawdowns on their portfolios. They can give multifold returns over the years but also come with huge downside risks. The various parameters to consider are mentioned below. 1. Risk Direct investment in stocks is very risky as the share prices can fluctuate heavily due to the company’s performance, economic conditions, and government regulations. Mutual funds are less risky simply because of the diversification factor involved.  To invest in stocks directly one will need to have extensive knowledge of the equity markets along with a thorough analysis of the associated company. 2. Returns Stocks can generate way higher returns than mutual funds but also require monitoring regularly. Stocks like Asian Paints, Eicher Motors, and Infosys have created huge wealth for their shareholders since their IPO (Initial Public Offering). Mutual funds returns are lower but more stable. It is advised to go with a direct mutual fund plan rather than a regular mutual fund plan to avoid commission fees. 3. Tax Implications Tax implications play a very important role when deciding to invest between stocks and mutual funds. Losses incurred can also be used to reduce the tax liability. The tax implications for both are mentioned in the table below. Investing in Mutual Funds vs Stocks? How to Choose Invest in Mutual Funds If: Invest in Stocks If: Final Thoughts Both mutual funds and stocks come with their advantages and disadvantages. It is up to individual investors how they make their investments. A wise investor must have a combination of both stocks and mutual funds to enjoy the benefit of both investment options. A proper risk management strategy should be considered before investing in any particular asset class. Investing in Mutual Funds vs Stocks Which is Better FAQ Which is better for long-term investing: stocks or mutual funds? Both stocks and mutual funds are good for investing when it comes to a long-term period of around 10-20 years. In this period, both can give good returns to investors. Are mutual funds safer than stocks? Mutual funds hold a variety of stocks across different sectors which makes them diversified. This makes them a safer investment option than stocks. Can I invest in both stocks and mutual funds? Of Course. A good combination of stocks and mutual funds can potentially generate high returns with less risk. What gives better returns: direct stocks or mutual funds? Potentially stocks can generate multifold returns if selected correctly in comparison to any mutual fund. Mutual funds returns are less but the risk is also comparatively low. Should beginners invest in stocks or mutual funds? Beginners may find mutual funds a safer option, while experienced investors can explore direct stock market investing.

Investors often ask, “What are The Factors Affecting Stock Market Performance?” Multiple factors are responsible for shaping investor sentiment and driving share price movements, influencing stock market performance.  Understanding and analyzing these factors in depth can help traders, investors, and research analysts make informed investing decisions. This article explores key drivers impacting stock prices and overall stock market trends, from sentiment and economic indicators to geopolitical events. Factors Affecting Stock Market Performance Here’s a snapshot of different factors and their impact on the stock market performance: Performance Factor Impact Interest Rates High rates slow growth Low rates boost stocks Inflation High inflation can erode profits GDP Growth Strong GDP is supportive of market growth Corporate Earnings Increasing profits yields increase in stock prices Market Sentiment Market sentiment among investors dictates market trends Geopolitical Events Wars, trade policies, and elections create volatility Government Policies Changes in taxation policies and regulations impact businesses Currency Strength Impacts exports, imports, and foreign investment Commodity Prices Oil, gold, and metal prices influence stock market performance in both good and bad ways. Different Factors Affecting Stock Market Performance Several factors ranging from macroeconomic to stock-specific events affect the share price and stock market performance respectively. The considerable factors are discussed below. 1. Interest Rates and Monetary Policy The central bank of different countries implements interest rates and monetary policy. The monetary policy affects the stock market performance in the following manner. 2. Inflation and Deflation   Factor Affect on Stock Market Performance Inflation Higher inflation erodes purchasing power, leading to reduced corporate earnings. This creates a market slowdown and thereby hinders stock market performance.Moderate inflation indicates a growing economy and can be beneficial.The Stock Market remains bearish. Deflation Deflation (falling prices) signals economic distress, reducing investor confidence in the stock market.Stock Market growth remains slow   3. GDP Growth and Economic Indicators If GDP increases it reflects a country’s growing economy given an increase in corporate earnings. It also boosts the investor’s confidence in the stock market.   Factor Affect on Stock Market Performance Unemployment Rate Higher unemployment weakens consumption demand and in turn corporate profits. It causes the stock market to stay bearish. Manufacturing & Services Index (PMI) A strong PMI signals economic expansionStock Market usually goes up. Consumer Spending Higher spending by consumers leads to increased company revenues.It leads to a Stock market boom.   4. Corporate Earnings and Financial Performance Stock market performance depends upon the financial health of a company. Investors consider the following financial parameters to determine the performance of a company. 5. Market Sentiment and Investor Behavior Market sentiment often governs the market direction and perception among investors. A positive market sentiment boosts investor confidence and results in a bull run and vice versa. 6. Supply and Demand The fluctuation in the prices of stock often happens due to supply and demand variations. A higher demand among market participants increases the price while an increase in supply may lead to falling prices. External Factors Affecting Stock Market Performance 7. Geopolitical Events and Global Markets Geopolitical events like wars, government instability, regime change, elections, and terrorism also adversely affect the stock market performance. For example: 8. Government Policies and Regulations Government policies like tax implications, subsidies for business, etc tend to affect the stock market performance in either way depending on whether it is beneficial or not for the company and business. For Example: 9. Currency Fluctuations and Foreign Investment Currency fluctuations especially those of emerging markets like India have a significant impact on the stock market as they dictate foreign investments. High foreign investments are positive for the stock market while a decrease negatively impacts the stock market performance. 10. Commodity Prices (Oil, Gold, and Metals) Fluctuations in oil and gold prices affect industries and stock indices: Factor Affect on Stock Market Performance Oil Price High oil prices increase operational costs for airlines and logistics companies.Stocks of oil-dependent companies may suffer.  Gold Price Gold prices rise during uncertainty such as COVID-19, leading to investment shifts from equities to precious metals.The outflow of funds can lead to a bearish market. Final Thoughts The performance of the stock market is dependent on a variety of factors that have their contribution. While some factors have a small impact others can be big enough to stimulate a bear or bull market. Considering these factors before investing in stocks can prevent the downside associated with the stock market.  FAQ What factors affect the stock market? Different factors like government policies, supply-demand, and geopolitical events tend to affect the stock market positively and negatively. What affects the stock market the most? On a fundamental level, the factor of supply and demand is what affects the market most. Supply and demand are responsible for creating the fluctuations in the share prices of a company. What are the risk factors of the stock market? The financial risk factors include financial stability, fluctuation, and volatility, etc. These risk factors if on the negative side can drastically depreciate the share price of any company. What kind of news affects the stock market? Different types of news affect the stock market in small or big capacities. News like mergers and acquisitions, and the release of new products can have a major impact on individual stocks.

Market capitalisation generally called the market cap of a company can be understood as the total market value of the company. Market capitalization is used by investors all over the world to evaluate companies before buying their shares. There are three major types of market capitalization which are large cap, small cap, and mid cap. How Market Capitalization is Calculated? The formula for calculating the market capitalization of a company is given below Market capitalization = Current Share Price * Total outstanding shares For example, if a company has 10 crore outstanding shares, and each share is priced at ₹50, the market cap would be: 10,00,00,000 × 50 = ₹500 Crore (Market cap) The figure obtained represents the market value of a company. It helps in comparing companies with their peers and identifying potential investment opportunities. Categories of Market Capitalization Companies in the stock market are often classified based on their market cap into three categories: Market Capitalization Category Market Capitalization Range Characteristics Large Cap Above ₹28,000 Cr Very Stable, Bluechip Companies, Safe to invest Mid Cap Between 8,500 and 28,000 Cr Emerging companies, riskier than large-cap, the potential for growth Small Cap Less than ₹8,500 Cr Highly risky, high growth potential, small and relatively newer companies  1. Large-Cap Stocks Large-cap companies are often the market leaders in their sector or industry segment. Examples of large caps include blue-chip stocks like Reliance, HDFC Bank, and Infosys. Investors who are looking for stable returns and long-term growth often prefer to invest their money in large-cap stocks. 2. Mid-Cap Stocks Mid-cap stocks are the companies that have a market cap somewhere between 8,500 and 28,000 Crore. These have generally shown significant growth but still have enough room for expansion. They come with slightly more risk factors. Example: Castrol and Jubilant Food. 3. Small-Cap Stocks Small-cap stocks include companies having a market capitalization lesser than ₹8,500 Crore. They are the riskiest of the lot. But they also tend to have the highest growth potential shortly. Example: Bombay Dyeing and Godavari Power. Importance of Market Capitalization Market capitalization plays a significant role in shaping investment strategies. Here are some reasons: Risk Assessment From a risk point of view, market cap becomes important. It tells which companies are less or more prone to risk based on their market cap. Large-cap companies are the least risky followed by mid-cap and small-cap. Diversification Strategy A diversified and balanced portfolio containing stocks of companies with different market caps allows one to take advantage of each market cap category. Liquidity Consideration Market capitalization is an important factor when it comes to assessing liquidity. Often low market cap companies or penny stocks do not offer the required liquidity for investing confidently without the fear of being stuck. Growth Potential Market cap can very well tell the growth potential of companies. Large-cap companies have already seen the maximum expansion phase while mid-cap and small-cap companies offer a high growth potential and therefore returns. Limitations of Market Capitalization While market cap is handsome down a very useful indicator, it comes with certain limitations: Does Not Reflect Debt Levels: Market capitalization ignores the debt level of a company. It poses a limitation as a company with high market capitalization can also be under a high debt level. This would make it an unfavorable investment despite having good market capitalization. Ignore Profitability: Market capitalization does not take into consideration the profitability factor. Often companies with a very high market cap can have none to very low profit as in the case of some modern startups. Market Fluctuations Impact Valuation: Due to sudden fluctuations in the share price the market cap can take a severe hit. The market cap can drop significantly while the company tends to do well. Financial Metrics to Consider Alongside Market Cap To make well-informed investment decisions, investors should also analyze other financial metrics along with market capitalization: Price-to-Earnings (P/E) Ratio: It tells whether the market is ready to pay a higher or a lower price for a stock. Earnings Per Share (EPS): It is a measure of the company’s profitability. A higher EPS indicates the growth of the company. Debt-to-Equity Ratio: It helps in understanding how much debt a company has compared to its assets. A good debt-to-equity ratio is considered to be between 1 and 1.5. Revenue and Profit Margins: Analysing the revenue and profit margins is important as it can provide insight into the growth potential possible for a particular business. Final Thoughts Market capitalization is an essential tool to understand the market size and project the future growth potential of a company. But it has its limits. It therefore requires a combination of other financial metrics to get a crystal clear picture. If utilized in the right manner it can point out great investment opportunities that can prove to be even multi-baggers in the near to long term future. FAQ

If you are connected to the financial or business world, chances are you would have heard about exponential growth. This concept is generally used for representing an increase over a specific period.  A lot of professionals have been using exponential functions to comprehend variables in their studies, support diverse business decisions and discover factors that are influencing enough for a gamut of data. However, before anything else, it is essential to understand how such an increase can occur exponentially, especially if you are working in a certain industry that repeatedly depends upon statistical information.  In this post, let’s explore the meaning of exponential growth, who can use it, why it is essential and how it can be calculated with an example.  What is Exponential Growth? Exponential growth is referred to a data pattern that shows greater increases with time. Thus, it creates an upward trending curve on the graph, known as the exponential growth curve.  In the field of mathematics, when a function includes an exponent (or a power), the calculation will increase exponentially. For instance, if hens laid eggs thrice every year and tripled per year, in the second year, the number would be 27, and it will be 81 in the third year.  Understanding Exponential Growth In the world of finance, compound returns lead to exponential growth. The power of compounding is one of the powerful forces in this industry. This one concept lets investors create more considerable sums with minimal initial capital. One of the most common examples of exponential growth is market-linked investments carrying a compound interest rate. Your investments see exponential growth because of compound interest when you invest money in a market-linked investment option for an extended period. This shows how you grow your investment exponentially with minimal initial outlay. If the account offers a compound interest rate, you will get interested in the principal and the interest amount received from the preceding period. For instance, in the first year, you might get 8% interest on a bond with a face value of Rs.100  that matures in 30 years. Thus, you will get Rs.8.  In the following year, this 8% interest rate will be applied to Rs.108 and not Rs.100, keeping in mind the interest payment you received in the previous year. Hence, with every passing year, interest payments continue to amass and will be considered in the calculations of yearly interest payments by the time your financial instrument reaches maturity. Exponential Growth Formula On a graph or a chart, the exponential curve begins slowly. It remains closely flat for a time before swiftly increasing to become almost vertical. The exponential growth formula is as follows: V=S×(1+R)^T where,  S is the starting value  R is the rate of interest and  T is the elapsed number of periods Importance of Exponential Growth  Data that generally increases exponentially is vital for several careers. Apart from this, it is specifically essential in the following domains: Finance and accounting Business and data analytics Scientific studies Research and development Jotted down below are some additional (but equally important) value-added points of exponential growth: Encourages Technological Innovation A lot of applications in the information technology and computer science industries depend upon statistical information for growth analysis. When developing artificial intelligence processes, machine learning algorithms, and automated software, programmers and data scientists may calculate exponential increases in results over time for a specific input in an environment that is surrounded by digitization.  For example, if a developer uses a specific algorithm as an input to create outputs over a certain period, calculating the growth can help comprehend whether or not the increase in value is an exponential function. Assists Professionals in Discovering Trends Whether in finance and business, technology, science or health care, exponential increases in any sort of information can communicate growing trends. For example, clinical researchers might use this factor to graph an increase in positive health results with new medications. On the other hand, business leaders might also use this function to discover trends in consumer markets, costs of advertising and brand development. Evaluates Important Financial Metrics The accounting and financial industries generally depend upon growth functions to figure out return projections for specific periods. One of the metrics is a compound return. It is an investment return type that accumulates on starting investment principal and any growth the investment comes across.  When compound returns accumulate, your investment account increases exponentially every time there is an increase in the principal. Such an exponential increase can also occur with loans in case of the interest compounds over time and is at an adaptable rate.  Exponential Growth Uses Often, exponential growth is used in financial modelling. While the concept is quite common in a high-interest savings account, the interest rates do not fluctuate or waver as much during several economic situations. But, when keeping stocks in mind, returns aren’t as smooth as anticipated.  Not just that, the technology sector uses growth rate calculations, such as AI design, machine learning and software development. Moreover, researchers and scientists use mathematical concepts, like exponential growth, to experiment and study several data.  This factor helps in: Classifying factors and trends that can cause a multiplying increase in varying financial metrics, such as assets and liabilities, expenses, revenues, investments and compounding interest Overall, the models of exponential growth are beneficial in predicting the returns of an investment when the growth rate is consistent and doesn’t oscillate recurrently. Final Thoughts Regardless of the industry, it is evident that exponential growth is a highly essential factor that helps you draw conclusions to varying hypotheses. It does not just help financiers but scientists and IT personnel as well, among others. So, whenever you wish to take a huge business or investment decision regarding growth, make sure you consider the exponential growth formula and calculate it thoroughly. 

Developed by Gerald Appeal in the late 1970s, Moving Average Convergence Divergence (MACD) is a popular momentum indicator or tool that is prevalently used in technical analysis. This tool helps understand the momentum and the directional strength by evaluating the difference between two time periods.  For those unfamiliar with this tool and who wish to make the most out of their trading and investments, this article covers MACD in detail. Let’s read further and find out more about this tool.  What is Moving Average Convergence Divergence? Moving Average Convergence Divergence (MACD) is a technical indication tool that is majorly used to discover moving averages that indicate a new trend, whether bearish or bullish. With the help of a MACD chart, you will get to see three numbers used for the settings. The first one is the number of periods that helps calculate the faster-moving average. The second number is that of periods used in the slower moving average. The third one is the number of bars used to evaluate the moving average of the difference between slower and faster moving averages.  For instance, if there were 14, 26, and 9 as the MACD parameters, you will interpret it as: The 14 signifies a moving average of the last 14 bars. The 26 signifies a moving average of the last 26 bars. The 9 signifies a moving average of the difference between the two moving averages as mentioned above. What is MACD in Stock Market? In the stock market, the MACD is used to interpret the positives and negatives. In the chart, whenever the 12-period EMA is above the 26-period EMA, the MACD offers a positive value. And, if the 12-period EMA is below the 26-period EMA, it offers a negative value. The more distant the MACD is below or above the baseline, it signifies the growing distance between the two EMAs.  Often, MACD is showcased with a histogram, which outlines the distance between the MACD and the signal line. In a situation when the MACD is above the signal line, the histogram will be above the baseline of the MACD. If the MACD goes below the signal line, the histogram will also go below the baseline. When to Use MACD? If you are waiting for the best time to use MACD, know there is no best time. The MACD offers insights on possible divergence in any given time frame on the chart. Also, the best time frame you can use with MACD depends on the instrument, trade type, and stock you wish to create and execute a strategy for.  Moving Average Convergence Divergence Formula (MACD Formula) The formula to calculate MACD is: MACD = 12-Period EMA – 26-Period EMA This indicator is calculated by subtracting the long-term EMA, 26 periods, from the short-term EMA, 12 periods. An Exponential Moving Average (EMA) is a kind of Moving Average (MA) that puts a greater weight and importance on the latest data points.  The EMA is also known as the exponentially weighted moving average. It reacts more suggestively to the latest price changes than a Simple Moving Average (SMA), which smears an equal weight to every observation in the period. How to Calculate MACD? The MACD showcases the changing relation of short-term exponential moving averages to long-term exponential moving averages. In a MACD chart, the short-term and long-term moving averages come close together (converge), move apart (diverge) and cross over each other. This equation is used to calculate the moving average convergence divergence.  Typically, analysts and traders use closing prices for 12-day and 26-day periods to create EMAs used to evaluate the MACD. After this, a 9-day moving average for the MACD line is plotted along the indicator that acts as a signalling line, helping to illuminate when a market might be turning.    The image above specifies the MACD line, the signalling line and the MACD histogram. These represent the difference between the MACD and the 9-day moving average. The histogram turns positive when the MACD Oscillator line crosses and moves beyond the 9-day average, which is the signalling line. On the contrary, the histogram turns negative when the MACD goes below the signalling line. 12-period and 26-period values are used settings to evaluate the MACD. Any change in the time period used for the calculation can be made to put up the specific trade goals of a trader or a specific trading style. MACD Trading Strategy Traders generally use MACD to discover changes in the severity or direction of a stock’s price trend. At first glance, the entire concept of MACD may turn out to be a complicated one as it depends on extra statistical concepts, such as EMA.  However, primarily, MACD assists traders in finding out when the latest momentum in the price of a stock might signal a change in the underlying trend. This, in turn, helps traders decide when to enter, exit or add to a position.  Using MACD with other Indicators Since it is a versatile trading tool that helps reveal price momentum, MACD is also helpful in determining the direction and price trends. Although the MACD indicator is strong enough to work as a standalone tool, its predictive functionality isn’t absolute. Thus, MACD can improve your advantage as a trader when used with other indicators. If you have to comprehend the trend strength and a stock’s direction, overlaying the moving average lines onto the MACD histogram will be extremely useful.   Conclusion Now that you have understood the meaning of moving average convergence divergence and know how to use it, you can move forward and calculate to comprehend how stocks are performing. This way, you bring momentum and trend into one indicator. As an investor, you can apply this trend to daily, weekly and monthly charts. 

International trading is nothing but trading between two different countries. It is one of the most important factors in raising the standard of living, creating employment and providing consumers with various goods and services that are not easily accessible in their home countries. International trade has been there for generations, but in the past few decades, international trade has become increasingly important in increasing the GDP of a nation. A large part of our country’s GDP depends on its imports and exports. Let us now understand what international trade theory is. What’s the International Trade Theory The proposition of international trade simply explains how international trade works in different ways. Trading is the exchange of goods or services between two or more parties. The purpose of trading is for people to profit from the business. The goods or services may be demanded or wanted by them. International trade is the cross-border exchange of goods and services. Over time, several regulations have been developed to cover domestic dealers and the trade itself. The international trade proposition is dominated by how countries use their resources efficiently. Export and Import  Products vended on the global request are called exports, and products bought on the global request are called imports. The imports and exports are recorded in the current account section of the country’s balance of payments. Global trade allows developed countries to use their resources like labour, technology, and capital more efficiently. Different countries are endowed with different means and natural resources, similar as land, labour, capital, and technology. The efficient use of resources allows countries to produce some goods more efficiently and at a lower cost. However, if a country cannot produce an item efficiently, it can be obtained through trade with other countries. This is known as international trade specialization.  How International Trade Works? International trade is carried out along incredibly intricate supply chains that connect the countries which supply the raw materials, the manufacturing countries that make and process those materials, and the consumer countries that use the finished goods.  An import is a product that is purchased from the global market, whereas an export is a product that is sold to the global market. The network of supply routes, suppliers, processors, and consumers behaves like a living thing when trade is allowed to flourish. The chain will be affected when any one link changes, such as when an iron ore miner declares bankruptcy or when the price of the metal suddenly rises.  Numerous stimuli have the potential to cause change. The most frequent ones include shifting consumer demand for products, technological advancements, and new methods of transporting goods around the world. Why do we need international trade laws? In cross-border transactions, two or more entities trade internationally with each other beyond the territorial limits of a country or transact in a domestic trade where one or more of the parties is located outside the country of the transaction. Here are some of the reasons why countries need international trade laws: For financing cross-border transactions A cross-border financial arrangement is one that crosses national boundaries. The terms of this agreement include loans, letters of credit, banker’s acceptances, bank guarantees, depository receipts, etc. that require international trade laws. Buying or selling products or services It involves buying and selling goods and services. We need international trade laws for production and sales that take place outside the jurisdictional borders of a country. Combined research/shared services etc. Increasingly, businesses are utilizing shared services. To accomplish this, joint research programs are being established as an industry cartel or chamber of commerce. As these shared service centers provide services across borders, they are concerned with international trade if they are located in different parts of the world. Why is it important?  International trade theory explains and promotes international trade. A wrong or unwise view of international trade can seriously affect a country’s long-term financial stability. For example, various international trade theories compete over the idea that: Can countries ban products from other countries – through slavery or child labour? A trading theory focusing solely on financial ratios and statistics favours such businesses. Another trade theory would argue that the long-term effects of child labour would cause more harm to both countries involved in the trade. A third trade theory argues that trade based on slavery and child labour is inherently neither good nor bad for traders. Rather, it depends.  International trade theory is a very controversial and powerful theory, so it is important to study it well. Policymakers should be familiar with all possible theories and apply the most appropriate ones to their country’s specific circumstances.   Benefits of International trade Let us now understand some of the benefits of international trade laws: It creates job opportunities  International trade has the primary benefit of creating a wide range of job opportunities. Through international trade, new industries are developed to meet product demands in different countries, resulting in more jobs. Countries will certainly be able to reduce unemployment rates under this condition. Therefore, it will be easier for someone who does not have a job to find one. Leads to the prosperity of a country Each country’s income is also increased by international trade. In other words, the goods they need can be sold and obtained by countries that have advantages and disadvantages of an item. It is through international trade activities that needs will be met, and income will be increased. As a result, a country’s income will increase due to its prosperity. The needs of life are easier to fulfill International trade will also aid countries in meeting their needs if those needs are not produced in their home country. Having a wealth of natural resources is a necessity for every country. First, we must consider the geographical conditions, the climate, the level of skill and knowledge in science and technology, and so on. In the future, countries can produce their own products. Expanding markets and increasing income In addition to expanding the market