Module 2   Technical AnalysisChapter 1

Background

View chapters →

1.1 – Overview

The previous module set us on a good plane with a basic understanding of the stock markets. Taking cues from the previous module, we now know that developing a well-researched perspective is critical for stock market success. A good point of view should have a directional view and should also include information such as:

  1. Price at which one should buy and sell stocks
  2. Risk involved
  3. Expected reward
  4. Expected holding period

Technical Analysis (also abbreviated as TA) is a popular technique that allows you to do just that. It helps you develop a point of view on a particular stock or index and helps you define the trade, keeping in mind the entry, exit, and risk perspective.

Like all research techniques, Technical Analysis also comes with its own attributes, some of which can be highly complex. However, technology makes it easy to understand. We will discover these attributes as we proceed along with this module.

1.2 – Technical Analysis, what is it?

Consider this analogy.

Imagine you are vacationing in a foreign country where everything, including the language, culture, climate, and food is new to you. On day 1, you do the regular touristy activities, and by evening you are starving. You want to end your day by having a great dinner. You ask around for a good restaurant and you are told about a nice food street close by. You decide to give it a try.

To your surprise, many vendors are selling different varieties of food. Everything looks different and interesting. You are absolutely clueless as to what to eat for dinner. To add to your dilemma, you cannot ask around as you do not know the local language. So given all this, how will you decide on what to eat?

M2-Ch1-title

Well, you have two options to figure out what to eat.

Option 1: You visit a vendor, figure out what they are cooking/selling. Check on the ingredients used, cooking style, probably taste a bit and figure out if you actually like the food. You repeat this exercise across a few vendors, after which you would most likely end up eating at a place that satisfies you the most.

The advantage of this technique is that you know exactly what you are eating since you have researched it independently. However, on the flip side, the methodology you adopted is not really scalable. There could be about 100 odd vendors, and with limited time at your disposal, you can probably cover about 4 or 5 vendors.  Hence there is a high probability that you could have missed the best-tasting food on the street!

Option 2: You stand in a corner and observe all the vendors. You try and find a vendor who is attracting the maximum crowd. Once you find such a vendor you make a simple assumption -‘The vendor is attracting so many customers which means he must be making the best food!’ Based on your assumption and the crowd’s preference, you decide to go to that particular vendor for your dinner. The chances are that you could be eating the best tasting food available on the street.

The advantage of this method is the scalability. You need to spot the vendor with the maximum number of customers and bet that it is good based on the crowd’s preference. However, on the flip side, the crowd need not always be right.

If you could recognize, option 1 is very similar to Fundamental Analysis where you research a few companies thoroughly. We will explore the Fundamental Analysis in greater detail in the next module.

Option 2 is very similar to Technical Analysis, where one scans for opportunities based on the current trend, aka the market’s preference.

Technical Analysis is a research technique to identify trading opportunities in the market based on market participants’ actions. The actions of market participants can be visualized, utilizing a stock chart. Over time, patterns are formed within these charts, and each pattern conveys a certain message. The job of a technical analyst is to identify these patterns and develop a point of view.

Like any research technique, technical analysis stands on a bunch of assumptions. As a technical analysis practitioner, you need to trade the markets, keeping these assumptions in perspective. Of course, we will understand these assumptions in detail as we proceed along.

Also, at this point, it makes sense to throw some light on a matter concerning FA and TA. Often people get into an argument contending a particular research technique is a better approach to the market. However, in reality, there is no such thing as the best research approach. Every research method has its own merits and demerits. It would be futile to compare TA and FA to figure out which is a better approach.

Both techniques are different and not comparable. In fact, a prudent trader would spend time educating himself on both the techniques to identify great trading or investing opportunities.

1.3 – Setting expectations

Often market participants approach technical analysis as a quick and easy way to make a windfall gain in the markets. On the contrary, technical analysis is anything but quick and easy. Yes, if done right, a windfall gain is possible but to get to that stage, one must put in the required effort to learn the technique.

If you approach TA as a quick and easy way to make money in markets, trading catastrophe is bound to happen. When a trading debacle happens, more often than not, the blame is on technical analysis and not on the trader’s inability to efficiently apply Technical Analysis to markets. Hence before you start delving deeper into technical analysis, it is important to set expectations on what can and cannot be achieved with technical analysis.

  1. Trades – TA is best used to identify short term trades. Do not use TA to identify long term investment opportunities. Long term investment opportunities are best identified using fundamental analysis. Also, If you are a fundamental analyst, use TA to calibrate the entry and exit points.
  2. Return per trade – TA based trades are usually short term in nature. Do not expect huge returns within a short duration of time. The trick with TA being successful is to identify frequent short-term trading opportunities that can give you small but consistent profits.
  3. Holding Period – Trades based on technical analysis can last anywhere between few minutes and few weeks, and usually not beyond that. We will explore this aspect when we discuss the topic of timeframes.
  4. Risk ­– Often, traders initiate a trade for a certain reason; however, in case of an adverse movement in the stock, the trade starts making a loss. Usually, in such situations, traders hold on to their loss-making trade with a hope they can recover the loss. Remember, TA based trades are short term, in case the trade goes sour, do remember to cut the losses and move on to identify another opportunity.

Key takeaways from this chapter

  1. Technical Analysis is a popular method to develop a point of view on markets. Besides, TA also helps in identifying entry and exit points.
  2. Technical Analysis visualizes the actions of market participants in the form of stock charts.
  3. Patterns are formed within the charts, and these patterns help a trader identify trading opportunities.
  4. TA works best when we keep a few core assumptions in perspective.
  5. TA is used best to identify short terms trades

366 comments

  1. HAWWA says:

    Wow, the way each and every phrase composed here is very easy to understand and interesting to learn further .
    Good Job….hats off!!!

  2. nageshsaru says:

    thanks you soo much zerodha for educating traders…

  3. iyengarnsv says:

    The lectures are vey good but it is very difficult to read the contents since the typed letters are very faint. Can you make it little dark. In my laptop my setting is ok.

  4. RP1600 says:

    Easy to understand

  5. avidan pell says:

    is there a way to download all the information in pdf format? like all the modules? I wouldnt mind paying a small fee for that

    thanks

    • Karthik Rangappa says:

      Hi Avidan…unfortunately PDFs may not be possible at this stage. Will keep you posted on it if we decide to do it in the future. Thanks.

  6. Rohit says:

    Fantastic illustration for the FA and TA concept ..simply loved it 🙂

  7. Satya says:

    Hi Karthik,
    Really appreciated efforts from you & Zerodha on this initiative.TA was rocket science for common retail trader so far but with this initiative it became a pocket science for us. Zerodha gonna surpass every player in this field in coming years for sure.
    Keep up the innovative work you guys doing.have a great year ahead.

  8. darb r says:

    complex jargons expalianed in such a simple manner that a layman like me can understand. it is much better than similar paid courses ( i had purchased one from hdfcsec). thanks a lot

  9. girish says:

    Dear sir..
    Doji robust strong uptredn indicator i searched is this correct na sir…….how to identify long bull run stock with a help of doji….recently i studied hitachi home stock, there i got doji open & close equal price……is this correct sir..? now i got in salzer electronics ltd same indicator..? how to confirm doji is strong bullish..?
    thanking you sir……
    regard’s
    girish

  10. metuladhia says:

    Hi, is there a way I can get a printer friendly version of any of the modules? It’s easier to read way. Do let me know.

    • Karthik Rangappa says:

      Not as of now. This is work in progress and as you may have noticed readers have been helpful in highlighting few typo errors. Over time Varsity will evolve and hopefully by then we should have a print friendly PDFs. For now, request you to stay tuned online 🙂

  11. iyengarnsv says:

    I have opened most of the lectures. The main problem is background colours are not good since letters are not clear. Even the lectures letters are very dim. Difficult to read. Please rectify.

    • Karthik Rangappa says:

      We are exploring an e-book or PDF option for Varsity, this will help I guess. Please give us some time for this. Thanks.

    • Ali says:

      Excellent way of writing Karthik – good read for both novice and experienced trader.

      Do you plan to add fundamental modeling of investment practice and programming for traders , and any other modules etc… originally mentioned in the zerodha varsity introduction post by nitin

  12. madhu nair says:

    karthik, was this a failed bullish harami? it was at support and the volumes were good too. the RSI is at oversold ,though the MACD crossover was negative. could it have failed due to the announcement of rights issue?

    • Karthik Rangappa says:

      Happy to note that you are following the checklist 🙂

      Yes, clearly this is a failed pattern. One rule that I personally follow – never trade a stock based on technicals when there is a fundamental news around it.

  13. Vikas.ghode says:

    To download printer friendly contents, copy paste contents once & create a book. Upload online & make me know abt. Also use google chrom > open this page > Cntr+P > select printer : ‘Save as PDF’ > Click ‘Save’ button > save in some folder > either read as PDF offline or take print outs( ignoring comments page, but they are also helpful, like questions of Arjun to Lord Krishna in ‘The Bhagwad Geeta’). This can be investors Geeta one day…

    • Karthik Rangappa says:

      Vikas as I said the official PDFs are going to be released soon, so please dont take the trouble of doing all this 🙂

      Also, not sure of this has the ability to become a Geeta for investors….but if it can lead investors and traders on the right path, helping them know what works and what does not work in the market then that will be the most satisfactory feeling for us at Zerodha!

  14. padwalshubham says:

    Please make this also available in pdf format. It will help a lot. I have poor Internet connection.
    Make this available in pdf format like the previous module 1.

  15. Haradhan Rishi says:

    when can we get the pdf? 🙂 much more convenient and handy. Loved the pdf for the 1st Module.

  16. RiaZ says:

    Hi can you help me abt swing trading – ichimoku lines, MACD etc

  17. I really like your blog! Very easy to follow.

  18. Yash Shekhar says:

    Can you please make these modules available in formats like .azw or .mobi for people with kindle to read your modules !
    Will be much helpful !

  19. RC Awasthi says:

    you Guys are rocking and i am so impressed with you the way you have given the candle knowledge.

  20. Shailey says:

    Kartik,
    Do patterns like wedge, pennant and double top have significance on intra-day charts too?
    PS- What percentage of capital can be possibly made on an intra-day basis? Today, I made 2.57% of my capital, would that be considered below average?

    • Karthik Rangappa says:

      You can use these patterns for day trading. By the way thats a phenomenal return for a day! I would consider this high.

  21. Shailey says:

    Karthik,
    How do I select stocks for day trading? Should I look for 52 week high/low?
    Please do a module on day trading.

  22. Kiran says:

    Sir,
    I’ve seen you talking about derivative trading in one of the previous modules. Would you please elaborate on the term?
    I could only guess that this is something different from normal trading(CNC)

  23. Mandar Pandit says:

    Do you offer this entire Varsity stuff in Print as a Book. If yes, where can I purchase.

  24. [email protected] com says:

    Sir where i get the hard bound books material please guide

    • Karthik Rangappa says:

      I guess you are talking about Varsity module. If yes, we only have soft copy Manish, no hardbound books.

  25. vinod says:

    kartik i would appriciate if you cud also add up topic how to identify supply and demand zones.by the way thanks a lot.u are wonderful

  26. vinod says:

    kartik i m yet to get a reply. i mean to ask u i have heard ppl trading using demand and supply zones which are known to be very effective. can you teach us the same

  27. vinod says:

    ok thanks kartik

  28. navin says:

    Technical analysis can be applied for trading in commodity as short term and intraday? which is best way to learn to trade with commodity ?please help..thanks..guide me best way approach to learn with trading in commodity..

  29. arvind says:

    karthik sir there are so many technical indicators , one gives buy signal while other gives sell signal & it gets all confusing . is there a way to keep it simple in real world ?

  30. Anil says:

    Superb explanation if lecturers had taught like this I would have become IAS/IPS officer hahaha

  31. Shekar says:

    Hats off Karthik Sir!! Very easy to understand.. You should write books on Stock Markets and related topics..

  32. bharat says:

    Pls, hindi or gujrati me bhi ‘technical analysis’ banaye

  33. kranthi says:

    I am PROUD customer of ZERODHA since 2015 and wish you to continue this good work and educate people

  34. kieron says:

    What are chances of success trade using technical analysis out of 100
    It means how much successful trade can be done using TA OUT OF 100

  35. Nikhil Thadani says:

    Hi, do you have video content for the sessions? I read through and find it interesting, but would be easier to watch videos on the go.

  36. Ayush says:

    How trading terminal software is different from technical analysis software?

  37. abhishek says:

    index futures are eligible for pre-market orders?

  38. Karan says:

    Hey Karthik. Do you really think technical analysis is useful. You know, I mean, markets are dependent on news, traders are so irrational especially retail traders, they just buy and sell any stock without any logic, something which i think technical analysis cant spot. I am finding it hard to get the motivation to do technical analysis. What do you have to say ?

    • Karthik Rangappa says:

      Well, many traders out there follow technical analysis. If you think it does not work, then its all the more reason for you learn TA…because you will get an insight into how other trades would react to a certain situation…and you can take the opposite view 🙂

  39. Ravi Kumar BA says:

    I fell for the Analogy given for TA & FA. Very well written…Looking forward to read other topics!

  40. Ravi Kumar BA says:

    Karthik,

    Am tempted to ask this for self motivation and for others and Since you are an experienced guy in Markets..
    For a person like you, how many Intraday trades can you get right, say for every 10 trades you do??

    (Even if i can get half of those trades right, i will consider lucky!)

    • Karthik Rangappa says:

      I cannot afford to do intraday trades as time does not permit. However, I do have a 5-year-old portfolio of stocks and it’s doing alright. The real test of this portfolio is when we hit a bear market, it will be interesting to see how the portfolio reacts to market conditions. I do take up short term F&O trades…these are highly selective and I take these trades once in a way…maybe once in every 3 or 4 months….and luckily these trades have worked out quite well for me.

      • Ravi Kumar BA says:

        Thanks for that honest feedback…

        One question. I plan to use Double Crossover EMA for day trading through my Custom Application.
        What other Indicators i can use in conjunction with Double Crossover EMA to make the trades more predictable?

        Also, which time frames are better for Day trading: 5 by 10 or 15 by 30 points of 1 min interval or something else?

  41. vipin says:

    Now that UI has changed….How can I download the material?

  42. Ankur Agrawal says:

    Hey Karthik!

    I desperately want to learn to trade and make decent money from it. I have read all the varsity material and have taken some trades in the past but just could not make a profit.

    I am having a hard time believing that someone can make a living out of trading. Tell me is it really possible?

    What can I do to get better at trading.

  43. Aliakbar Ujjainwala says:

    How to download the PDF of the modules so that I read during travelling?

  44. keerthan kumar says:

    Hi Karthik,
    Great Content! couldn’t be better for the beginners.
    I’ve read the entire module TA, FA, Futures, options, and commodity.
    I want to learn more about these concepts and want to excel, please suggest me books for Technical Analysis, Fundamental analysis, Futures, and Options, to continue from here. Hope you reply, thanks a lot.

    Regards
    keerthan

    • Karthik Rangappa says:

      Glad you like the content, Keerthan 🙂

      There are many books out there. If options interest you then check out the book on Option Pricing and Volatility by Sheldon Natenberg.

  45. Lakshman S says:

    sir please help me to get Technical and Fundamental analysis pdf link

  46. yash says:

    Module 1 gave option of downloading pdf
    Why it is not there for moduld 2

  47. rohan bhandari says:

    How to know that at the end of the day FII have bought shares or sold and how can I check this info online?

  48. hardik_u87 says:

    Please allow us to download all the modules at once in a PDF format.Videos would be much better if possible as it makes it very easy to understand but anyways as of now downloading all the modules as PDF at once would be of much help.

    Thanks
    Hardik

    • Karthik Rangappa says:

      We have updated the PDFs for all modules except 5 and 9. 5 will be done next week, and 9 when the module is completed.

  49. Mohnish Khedsiya says:

    Hello Mr Nitin Kamath
    My client id ZM6422
    I dint found your email hence forward issue to you please help. Not getting proper response from customer support.
    Your answer is not justify..Can you please give clarity on my extra charges deducted.. already provided screenshot.. I have checked all the statement for that trade book profit loss statement as well ledger statement but Its not tally with account charges. Not justify,Where extra charges deducted, where is my money gone.

    Also new issue arise I bought 61 shares of RBLBANK on 14Aug17 @498.75 then why my holding shows avg price 515.40.

    Also want to add I sell @514.70 (8 shares)& @514.45 (53 shares) & buy @ 515.40 (61 shares)RBLBANK Intraday on 17Aug17. Occurred loss, and square off position.

    Then why my holding showing 515.40, why should I have been charged in loss for Intraday dated 17aug17.

    Horrible experience….Not giving proper response, reply awaited with proper justification..

    Because of your poor service I am in loss , feeling harassing…
    Poor service.

    Please correct my holding price as 498.75 or else give the financial loss refund due to your fault also refund my excess charged amount of date 26-07-2017.
    Rs1804.1.

    please clarify..Don’t give unnecessary response, please give response with clarity and calculation part.

    Thanks,
    Mohnish

    • Karthik Rangappa says:

      Mohnish, I’d request you to restrict yourself to queries related to the topics discussed in Varsity. Else, it will dilute its purpose. I’d request you to email [email protected] for this and one of my colleagues from support will respond to you.

      Also, if you have experienced any inconvenience last week, I’d like to apologize. As you may be aware, Bangalore was flooded and therefore our operations took a hit – https://zerodha.com/marketintel/Bulletin/432

  50. vishal says:

    hey zerodha,keep forwarding files like this…very useful.

  51. Nishil says:

    I am glad that you guys are sharing such an amazing knowledge on a click, which i had been searching for a long… your contents regarding stock markets are very point 2 point and in a legible Lehman language so that anyone can easily understand and that too without paying a penny(in 21th century!!!)… eager to read more such articles from you guys, it is worth more than money. Keep Educating US.

    • Karthik Rangappa says:

      Nishil, glad to hear that 🙂

      We love to educate our clients and share with them whatever we know, and we do it quite seriously 🙂

  52. muralidhar says:

    Hi Friends, im muralidhar … when i googling for the STOCK STUFF, i found your GOLD MINE… For new beginners like me , its like GOLD MINE , where we can Know Basics,Learn and Experiment our own ‘Test of Profits’. You enabled all the Paths, Code-Books all the Tools will help in Digging the mine. The only thing is , we just follow the things and work timely, then only get “The Taste”.

    Thank you – Zerodha

  53. Satish Singh says:

    I know it’s a little off the topic, but I just love the way things are presented here on this blog.
    Makes it so much easier to understand and follow.
    Is there a way I can use this theme for my personal blog?
    I did search online for a theme similar/matching to Varasity, but couldn’t find one.

  54. Manni00 says:

    Hi KARTHIK,

    First of all thanks of lot for doing such a wonderful job of educating us regarding financial markets and its various apects.
    I have gone through all of ur modules and they are the guidance which i was searching from a lot of time.
    I will request u to write a module on making systems and what should be the thought process behind making systems.
    As it is essential for a trader to develop own system for trading

  55. Deepu Pillai says:

    Compile all the chapters as a book. This is the next best thing any institutional investor needs as a pocket reader. I would personally recommend newbies to take a holistic approach towards every chapter, align your thoughts with the writer’s perspective, challenge it until you are satisfied with the answers and then run the first sprint towards investing.

  56. Dinesh Kukreja says:

    Thanks a ton !!! Keep up the Good Work

  57. Atul Gaur says:

    Thanks Karthik!
    Really great explanation….
    Things are made so simple and practical that I could absorb it maximum…..

  58. Manas says:

    Hey Karthik,

    Unrealted to the post,

    Are stop loss/ target triggers part of the active bids/offers that we see on kite?

    • Karthik Rangappa says:

      Yup. What you see on the bid-offer is just order placed on the exchange. They could be of any type – SL, fresh buy, fresh sell, disclosed, etc etc.

  59. Vemula says:

    Suggest best books for weekly trading of futures. (Holding period 2_4 days)

  60. Asim says:

    Hi Karthik ,

    are there video lessons also available for these classes?

  61. GOPALAKRISHNAN N says:

    Hi, Zerodha, keep forwarding files like this… Very useful.

  62. Jinal says:

    Can you explain: ‘Never trade a stock based on Technicals when there is a Fundamental news around it’

    Thank you

  63. james bond says:

    great analogy couldn’t be better, Zerodha please give the author a cookie 🙂

  64. Madhav says:

    Hi Kartik,

    How to read up or down movement for any particular script at 9.07 am based on pre-open market prices..

    • Karthik Rangappa says:

      You cannot, you will have to wait for the market to open to see the direction. However, you can get a sense of what may happen upon open if you track the news which impacts this stock.

      • Madhav Ketkar says:

        Thnxs for your reply. Kartik. just one guidance required…
        yesterday (05.01.2018) the movement in Yes bank–Indusind-Bharti-Tata steel-Bajaj finance has taken place during the day. How one can get into the “Moving Bus” …How I would have made money in above scripts yesterday or at what time should I have taken the trade or what are the tools to confirm the “Strength” in these scripts for yesterday trade. Did you get what I want to ask ????

        • Karthik Rangappa says:

          Madhav, you should have tracked the stock and initiated a position. Usually, when I’m in such a situation, I look for low volume retracements (probably upto the 9 day EMA) and try and get into the trade.

  65. Hemprasanth says:

    Hi Karthik,
    Why is there a difference between previous day’s close and today’s opening price of a stock? What happens during different trading sessions?

  66. Shamsher Bahadur says:

    I already have a demat account elsewhere, can also open one with zerodha? I mean can one use two demat accounts?
    If yes, do I need to inform old broker that I have started using another demat with other broker?

  67. NAJEEB T P says:

    Hello Karthik,
    Congrats to your write up in moneycontrol news.Expecting more write ups there

  68. prasanthbab says:

    Is it possible for you to prepare and upload notes about trends and patterns to have better clarity?

    • Karthik Rangappa says:

      Going forward, I plan to put up few notes related to markets on tradingqna. Request you to kindly keep a track. Thanks.

      • KR says:

        Could you please confirm when can we expect trends and patterns material along with valid combinations for entry and exit for longterm/midterm investors.

  69. Nitin joshi says:

    Dear kartik sir ur best in explaining . Which are indicators required for swing treading ?because there arelots of indicators.

  70. Rahul Pol says:

    Great stuff man. I really enjoyed the article. I have a technical request though, can you please enable TTS(text to speach) facility on the articles.

  71. sainathramesh says:

    sir,
    could you kindly clarify how to decide if the candle body is small or big. in your lessons it is said that if candle body is less than 1% of range or more than 10% range, dont trade. how to calculate this 1% adn 10%. i was not very clear from the varsity notes. kindly clarify

    thanks
    sainath ramesh
    12 may, 2018

    • Karthik Rangappa says:

      YOu need to calculate the range for this. YOu can do the same by taking the difference between open and close divided by open. Please be aware that there are other valid ways to calculate range, this is just one of them.

  72. juvin says:

    One suggestion:
    please include the Indian stock market timings and its categories.
    Like, per -ope , post open etc..

  73. Megha says:

    Hello Zerodha Team,

    Thanks a lot for your efforts to educate people in such a simple way. Each & every term is defined in very easy language which is
    very useful for beginners & creates interest to learn.
    Thanks once again.Keep it up.

  74. Mangesh Baxi says:

    One suggestion to you Karthik. Often people ask some high funda questions about which nothing is mentioned in the content. This puts unnecessary confusion in minds of newbies like me. At times some incorrect notions may also be formed. Thus rather than providing these people a link (to your other module) , kindly shift the question all together to that module.

  75. rishav singh says:

    how can i watch vedio lectures?

  76. ABHINANDAN SHARMA says:

    i do intraday trading how to use candle sticks means what time frame i use for single n multiple candle sticks

  77. Ravikumar says:

    HI Karthik,

    Your way of explaining is really good, Hence I must say ur a good Writter (Teacher). so get deep into this if you have written a book on this let me know or if you could assist a book with comlete or wide information could really help me.

    Thanks
    Ravi

  78. Saurabh says:

    Can you write all modules in Hindi for Low Level English Student.

  79. Manikanth Reddy says:

    This is a great initiative from your end. Information here is crisp and could be understood easily.
    Hats off for your efforts.! Keep up with the great work .!! 🙂

    Thank you

  80. vikram jain says:

    Hello Zerodha Team,

    Thanks a lot for your efforts to educate people in such a simple way. Each & every term is defined in very easy language which is
    very useful for beginners & creates interest to learn.

  81. Chaitanya Nimavat says:

    PDF Copy are updated with latest changes. Can i use this ?

  82. divyesh patel says:

    Hi Karthik sir
    How personally you recommend Technical Analysis to be worked on the scrip price
    if a person having good TA knowledge, how well he can perform
    and yes, Really TA works on Scrip price ?
    How well do you personally recommend it…
    hoping a descriptive honest answer from you sir instead of generic answer…cheers thanks btw for content

    • Karthik Rangappa says:

      Divyesh, as you can see, the concepts are quite straightforward. The success of this really depends on the way you implement this on the scrip.

  83. Suresh says:

    Do you have a book which is having complete zerodha varsity? can I get it ?

  84. Bhavya says:

    The phrasing of the text is excellent and the examples given is also vey good.
    Hope you continue to educate the traders

  85. Dr A P Sarath Kumar says:

    please let me know where i can find the educational videos of technical analysis
    regards
    sarath

  86. Ron Kalra says:

    Hi Karthik,
    Hope you doing well, It’s being long time that I have not bothered you with my stupid questions 🙂
    Here, I’m back with my silly questions
    I just want to know if it’s a good idea to have Target Profit when I’m trading ( may it be Futures, options, or stocks ) or is it better to let your profit run.
    Also, Does the depends on the timeframe I’m trading ( like is there a different strategy to follow with different timeframe is used to trade ) ? Have target when trading smaller timeframe and let the profit run when using higher timeframe ? I’m really confused about the situation.

    Not sure if it happens to other but when I know the target price and still try to let the profit run, the price reverses from my target point. It makes me upset that I didn’t sell although I knew the target price. But on other occasion when I sell on the Target price that I have, the prices crosses and goes high above.

    My point is what should I follow in my trading ? What is best to do ? Should I have my Stop loss and Target profit for all my trades with proper Risk/Reward ratio ? Or should I have my stop loss in place according to Risk/Reward ratio and then move it up ( trailing stop ) as my trade goes in my favor.

    Sorry to ask you but I would appreciate and would like to know what’s your way of trading ? Do you follow trailing stop or do you have fixed stop loss and Target profit for your trades? Also, do you have any preferences based on the timeframe that you are trading.

    Once again thank you very much in advance and hope to hear from you soon.

    Thank you

    Regards
    Ron Kalra

    PS :- Any recommendation on where can I find best information on Risk/Reward ratio, Positioning of trades etc

    • Karthik Rangappa says:

      “or is it better to let your profit run” —> always a good idea to let the profits run. You can do so by trailing your SL. This is irrespective of your time frame. Btw, it is always advisable to have the RRR in perspective before any trade. I personally prefer to trail my profits.

      Not sure of any websites which gives you the RRR.

  87. Ron says:

    Hi Karthik,
    I’m sorry to bother you again. As you said you personally like to let your profit run. So, when do you exit your trade and on what basis. What kind of Trailling stop do you follow ? As you know when the trade is moving in your direction and a slight move against you, panics you and makes you close the trade, just to find out later that the trade again moved in your direction and touch the sky.

    So, basically I just want to know how to control one’s emotion when you are in a trade which is in your favor and don’t panic about the small retracements. ( what should I look for to make sure that it’s a retracement and not a change of direction).

    Also, does it happens to you that you were in a trade which was in profit and you were following your rules of trailing stop ( if the trailing stop is too far) and suddenly the trade was in a loss. Do you face this problem often ?

    What’s an ideal trailing stop ? How and and on what basis should I decide my trailing stop to make sure its not too close or too far to be placed ?

    Also do you think having a moving average as your trailing stop a good idea ??

    Sorry to ask you too many questions and bother you but your feedback and answers have always helped me in my trading and improving my trading style. I have really admired your trading style and would like to be a trader like you one day.

    Thank you for all your do and thank you very very much for your time that you give to all of us.

    Best regards
    Ron

    • Karthik Rangappa says:

      Ron, all the points you’ve mentioned are valid. I usually have a deep trail. For example, if I have entered a position at say 100, my initial SL will be placed at 95 or say will wait for it to hit 110, and increase the SL to say 98….at 115, I’ll move it to 100….so on and so forth. The idea is to trail the SL, lock in small profits and ride on it. This works quite well in stocks which have a good momentum going.

  88. ritik says:

    hii karthik, where can i get module 1 ..??

  89. Abhishek says:

    Hi Sir,

    There are so many stocks in the market. How to identify which stocks to study (especially low price stocks) for TA/FA ?

    • Karthik Rangappa says:

      Abhishek, you will have to develop your own opportunity universe for this. The opportunity universe is simply a list of stocks you’ll track all the time to figure out where the next trading opportunity lies. If you are completely new to markets, I’d suggest you look at the Nifty 50 pack as your opportunity universe. You can build on this over time.

  90. maneesh says:

    sir,
    In kite application chart are not showing uptodate ie showing upto 23 Aug candle but today is 27 aug. plz help.

  91. KUMAR PATEL says:

    THE CONTAINS ARE NICE TO LEARN THANK YOU ZERODHA FOR THIS
    as i want to knw the can i put this certification on my resume???? as i m a fresher

  92. Shubham P Upadhyay says:

    Hi Kartik,

    What Reading/Studying matrial you would recemmond specifically for the Indian Stock Market?
    Other than Varsity. I like the content very much of Varsity, but i want to deep-dive further into the trading & investing.

  93. Shubham P Upadhyay says:

    ok, but if you can suggest some Books, it will be much appreciated.

  94. Ashutosh says:

    Hi Karthik,

    A very basic question? Who all can write or talk about technical indicators of a stock on social media like twitter or youtube? likecan someone write or speak. “ABC bank is trading above 50DMA and MACD line is crossing the signal line hence we can look at buying the stock”?
    can anyone do so or are there certifications required to be undertaken ?

  95. Rishabh says:

    Thankyou Zerodha and Kartik sir for all the insights…If he didnt know the local langauage how he asked first about a good restaurant?
    the very next line you have mentioned he could not ask for which to choose ..so its fishy!

  96. Rahul Jain says:

    Your explanation and subtle point of “Setting Expectations” just drives the concept home. Awesome!

  97. abhishek K says:

    Karthik,

    I have seen few videos, read few books and took few seminars. Read your complete Technical Analysis chapter. Nothing is as crisp with the ease of understanding as seen here and nothing is as detailed. Please do consider doing few detailed videos on Coursera,Udemy, YouTube etc. and let me know if there exists something like this already. 🙂
    Gained a lot of knowledge. Trying to implement this stuff while trading but fighting with emotions. One day I believe I will get there. Thank you very much!!

  98. Chetan Mundada says:

    Hi Karthik Sir,
    Take a bow for your sincere efforts in bringing out the most comprehensive material for understanding various aspects of stock markets.
    I am grateful to you & your team for the resources and knowledge shared to the public at large. I further appreciate your kind gesture for enlightening their financial intellect.

    Thanks a lot and keep bringing out more such stuff….

  99. Suhas says:

    I have read few chapters and written in very lucid manner. I am familiar with FA and I felt I got some decent foundation on TA as well. I am just wondering is there are any paid course which is explained something similar to this as I found there is still lot more to learn or do you think TA here would suffice to start trading. Please advise?

    • Karthik Rangappa says:

      I’m not sure about paid course, Suhas. But I do think that this is a good enough base to start your journey 🙂

      Good luck!

  100. Abhijeet says:

    Hello Karthik
    This stuff is absolute gold for a novice entering the stock market!
    Would it be fine if I skipped to Fundamental Analysis directly or would I be missing on something crucial here ?
    Because I have a very hectic day job and wont be checking the stock market every now and then, I will be holding stocks for at least a couple of months if not more. So, is any part of TA necessary for a long term investor ?

  101. harshit says:

    Thank you team zerodha for varsity content.
    language simplicity makes it blissful.
    though I want to ask , the content/coverage of topics in ‘varsity’ app and site are different?
    is there more content on website ?

    if yes will the same be covered in the app version soon?

  102. Saurabh says:

    Hi Karthik Sir,

    Thanks for such a nice explanation, I m planning to learn TA from a very long time. Finally, I m doing it.

  103. Mads says:

    OFW here and newbie sa pgbili sa stocks!
    Big thank you for sharing your experience and knowledge..
    Really love all your example! 🙂
    Invested a xtra amount of money and hoping for a positive return in the future.

    Thank you so much and godbless!

  104. Akshay Bhat says:

    This is great. Nice place to learn thank you Zerodha team 🙂

  105. Amiya says:

    I failed in technical analysis. How can i reappear the exam again?

    • Kulsum Khan says:

      Hi Amiya, there are 5 chances given to appear the quiz if you have exhausted all 5 chances we regret to inform you it can’t be reset. Alternatively, you can register with a different email ID and appear the quiz.

  106. Md Khalil says:

    Hi,
    Good morning. I have a suggestion which would help, small traders, who, being working professionals, cannot give time during Market Hours.
    The suggestion is, please add BO like order placement facility (all three orders – Buy/ TRG/SL) to the GTT system.
    This would help traders as well as ZERODHA to generate more revenue.
    Thanks
    Md Khalil

  107. Mani says:

    Hi sir, I’m new to the market and have been picking up some pattern. The stock with higher price (for say: MRF) moves drastically when compared to the stock with lower price (for say: YESBANK). But in terms of percentage it is more or less similar.

    My question is why do these high prices stocks moves drastically, why do we use percentages as the unit of measurement for the price changes.

    • Karthik Rangappa says:

      When you say drastic moves, you mean the absolute Rupee value. This is because the Rupee value of the stock is high. You should use the percentage return instead.

  108. SHUBANKAR MAHAPATRA says:

    I understood sir/Madam

  109. ARUN KUMAR says:

    Can I integrate my Tradingview paid subscription to Kite? So that I can give order directly from Tradingview site to Kite???

  110. soumen says:

    i went to buy your this book.

  111. Selvaganapathy says:

    Hi Sir,

    I have started to invest in Stock Market & in Mutual Funds and it’s quite interesting. Going through the resource provided by Varsity is Mind boggling. I have started to read book by Benjamin Graham ( I hope you too have read it years before ) and also following Rachana, Anand & few more.. Believe me i never read books and now started reading for hours. I feel something just pulling me into this. I love to play cricket and would love to train hard but as like many others i buried my dream & passion as i don’t see myself moving forward to a better position. I am an IT guy working in xxx firm earning something to survive. I failed with my first chance in cricket and now it’s something just pulling my interest into this stock market. I want to learn and practice hard to be good professional. If i fail i can say i have tried atleast. I always tell myself hard work always pay off. I want to fully migrate myself into Stock Market Professional. Any professional learning path/suggestions from you.

    Thanks,
    Selva

  112. Deepak Patel says:

    Hi Varsity Team,

    Your Content are very Superb, Please convert into Video Format in Hindi Languages so easy to understand and upload on YouTube..Like You are uploading Ticker tape in Hindi and English….Also Create Video in Hindi how to use Kite Application …
    Please do the needful ASAP.

    • Karthik Rangappa says:

      Deepak, video content will consume a lot of bandwidth from our end. Will see what best we can do. Thanks.

  113. Kamal says:

    Sir, Let me know whether is there any difference between applying technical analysis on spot and futures chart?. Which will be more accurate?

  114. Mustafa Doctor says:

    Very informative

  115. Ravi says:

    Do you video course??

  116. NAGESWAR says:

    sir the way you explained full article really awsome thanks a lot

  117. Srini says:

    Zerodha & Karthik should enter the education sector. If you can teach such a complicated topic so effectively, just imagine what you can do the younger generation. Excellent

  118. Mohit Jain says:

    Sir, while swing trading, looking at the trends, when i saw the 6 month chart to tata motors the trend was uptrend, while looking at the 5 year chart tata motors trend was downtrend. So, what is the time frame that we should look at while swing trading and intra day for finding the trend.

  119. Mohit Jain says:

    Sir, this is my first trade-
    https://www.tradingview.com/x/8GUbLfsW/
    Buy price-137 on 26th August, Stoploss is around-118, Target is- 162.
    Any feedback or suggestions regarding this?

  120. Mohit Jain says:

    Happy teacher’s day sir! One of the finest teacher i have ever met. Thank you for the knowledge that you are providing:)

  121. Anuraag Singh says:

    Thank you so much,I am gonna learn whole series you have made in investing.

  122. Surya says:

    What is required first to read technical analysis or future and option Steragy.

  123. Mohit Jain says:

    Sir, i just set up another trader and need your review regarding this-
    https://www.tradingview.com/x/pIicJ1UG/
    Buy price- 32
    Sell price- 36
    And if the volume and the momentum is high while the range breakout, then possibly i can hold the trade and then 36 acting as my stoploss.

  124. Saurav Garg says:

    Very good and easy learning stuff offered in free, great going zerodha.

  125. Roli says:

    plz recommend a few books to read on technical analysis and candlestick patterns.
    thanks.
    Zerodha Varsity has most certainly built the best foundation though.
    for further deep diving recommendations would be very helpful!!
    regards

  126. Anuj says:

    Firstly, I would say that you have done a great job here making all the content open-source and I really thank you for all your efforts. I can understand how much effort might have gone into it. And one suggestion as a user, can you have login service as you have in the mobile app? That way we can read and appear on test directly from the website. And also I have seen that some contents are updated in the mobile app but not on the website. Thank you.

    • Karthik Rangappa says:

      Thanks for the kind words and suggestion, Anuj. About the login, we deliberately removed the login to ensure there is no restriction on users in any possible way. The content is largely the same on the app and web.

  127. Janesh Suthar says:

    Karthik/Nithin,

    We all know that delivery based stocks move the price.
    & Does intraday trading moves the stock price?

  128. Janesh says:

    Dear Karthik,
    As NSE website states that

    “The higher the Percent of Deliverable Quantity to Traded Quantity the better – it indicates that most buyers are expecting the price of the share to go up.”

    Wipro 375.25 INR +15.80 (+4.40%)
    But as of 9- October -2020 Wipro price upside but on % of Deliverable Quantity to Traded Quantity is only 14.85 %

    The 14.85 % shows less buying interest & trader exited before 3:30 PM, i am little confuse here that why it went up with so less delivery percent??

    • Karthik Rangappa says:

      I would not agree with that. Even if I intend to do BTST, the % deliver will increase, does not mean the stock price will go up.

  129. Karan Joshi says:

    Hi Zerodha,
    Please upload Technical Analysis videos on YouTube, It would be more comfortable to watch video.

  130. Ankit sharma says:

    Ok just starting to grab all this free of cost knowledge hope I will do better in my future. And yes I will keep giving feedbacks to you Karthik sir.

  131. Sukanta debnath says:

    It’s really amazing.easy languages to understand.thnks guys.

  132. Gautam says:

    Can I first complete the fundamental analysis module and then come back to technical analysis or do I need to know anything discussed in technical analysis for the fundamental analysis module.

  133. Gurinder says:

    I am an investor, not very comfortable with short term trading. This chapter is very interesting to start with. Thank Z Team.

  134. Pankaj Joshi says:

    The way you teach the topics is really amazing. Anyone who asks me what to read for investment, I suggest varsity. Like many have suggested, I too would like to suggest you to prepare video courses. Thank you.

  135. shubham says:

    best examples for understanding

  136. satish Jain says:

    Hi Team,

    Can you please share video link for Technical and Fundamental Analysis, if there is any learning video availiable.

    Thanks for all the learning

  137. Ganesh Sundar Rao says:

    Explained in a very simplified manner

    Especially the option 1 food cart example trying each and every food cart is fundamaental Analysis

    and option 2 Observing in a corner and watching which food cart has maximum custumers .. Technical Analysis ..for short term trade and entry exit point for frequent short term buying opportunities

  138. Samarth Sharma says:

    Good knowledge

  139. Adarsh kumar singh says:

    Good job ✌

  140. Adarsh kumar singh says:

    There is assumptions in TA?? It may be right or wrong.

  141. Uday Dwivedi says:

    Hi Team Zerodha, My best wishes to you all. You are going very good job.

  142. Raj Thakkar says:

    1st module complerted, and this also seems nice as previous one…great job !

  143. Hariharan says:

    Hi zerodha team all pdf are good if it’s available in Tamil it’s very usefull for all Tamil people.

  144. POSINA CHANDRASEKHARAREDDY says:

    please provide videos on above chapter

  145. Asresha says:

    Karthik Rangappa Sir, the content is excellent but I see that it is published few years back, Is it updated with time to make it highly relevant to today’s market?

  146. Upal Chatterji says:

    Karthik ,
    I stumbled onto your content by chance . Without any hesitation , I would like to thank you for the wonderful content. Its lucid and so well explained and works well for an engineer like me who has been investing in the market based on tips and hunches. Have lost money ,sometimes made money but what has rankled is that I have not been making informed and considered decisions.
    Now I am recently retired , am taking up stock investing more seriously. Your modules couldnt have come at a better time
    thanks Bro ,

    Upal

    • Karthik Rangappa says:

      Thanks for the kind words and for letting me know 🙂

      Happy reading and let me know if you have any queries.

  147. Harshawardhan Agarwal says:

    I have started reading zerodha varsity recently. It has been very well written. Thanks for the great content. Just one suggestion- Prepare case study based tests at the end of each chapter or module and at the end of entire course and provide certificate to people passing the same.

    • Karthik Rangappa says:

      I’m glad you liked the content. Please do download the app, we have a certification program on the app.

  148. Shekhar says:

    Hello sir,
    o=127 h=129.55 l=126.3 c=120.5
    Sir how do we calculate upper candle and lower candle wick length percent individually ?
    ty

  149. Ihesh says:

    Hello sir,
    Hope you are in your good health. I have some doubts.
    1.) can 1 day candle be considered for swing trading ?
    2.) you said in finale reading that you look for 2-3 candles, if I am seeing 1 day candles should I do the same , seeing 2-3 days candles (for swing trading) ?
    3.) If candlestick have pattern and vol is little less should I go forward with checking other things ?
    4.) current vol: 4.17 avg 10 day vol 4.83 . should it be considered ?
    5.) current vol: 4.1 avg 10 day vol 5 . should it be considered ?
    6.) open =424 high 436.3 close 434.55 low 422.24. can it be considered bullish marzbou ?
    7.) ohlc = 1004 , 1004, 978.95, 975 . can it be considered bearish marzbou ?
    8.) if last 3rd candle shows sell should it be considered ?

    I have been stuck in these a lot. Any help would be appreciated.

    Thanks in advance.

    • Karthik Rangappa says:

      1) Yes. Ex – Marubuzo
      2) End of the day, its a personal choice, I’d feel comfortable looking at few candles
      3) Yes, do see how its faring on other sides
      4) Yes, as long as other variables is giving a strong signal
      5) same as above
      6) Yeah
      7) Yeah
      8) Yes, but do check other variables 🙂

  150. Ihesh says:

    Sir can you explain this. I came in kite today while trading.

    “You are trying to buy back a stock that you have sold today. If you have used the sale proceeds for any other trade today, this can result in a peak margin penalty. ”

    I bought 200 share of pnb yesterday. sold them today. again shorted them today and bought them back. When i am trying to go long it is showing this error.
    Please help.
    Ty

  151. murugan says:

    Very good comparison of TA and FA

  152. Krishna Khanna says:

    Thank you for creating this wonderful learning resource. One quick suggestion to improve the navigation: please add page-wise next and back buttons at the top and bottom of the page so that it’s easier to navigate the lessons within a module.

    • Karthik Rangappa says:

      Thanks, Krishna. We have that at the bottom of the page, will try and check with the team if we can the same at the bottom as well.

  153. Amit Patnaik says:

    Hey Karthik,

    I have been toying with an idea about TA in my head for a while and would love to know your thoughts.

    I think TA works only because people believe it works. If enough people believe in the existence of TA concepts and buy/sell on those signals then those signals will indeed influence the underlying. A self fulfilling prophecy.

  154. Priyanka says:

    Understood

  155. Hemanth says:

    Guys can you please add the ability to create folders in the portfolio section for kite.Beacuse as our portfolio rises it is becoming difficullt to scroll through these huge list. Like some stocks are for dividend and some some for long term.If we can separate into individual folders it will be so easy for us to manage them.Hope you guys add it Plz plz add it.

  156. sreelakshmi says:

    Hi,
    the stock market content is really awesome , but i hav one doubt why do we hav to buy on strngth and sell on weakness? we are buying the share with the expectation of price would increase, then only we can make profit by selling it . so is it contadictory to your saying ? pls clarify

    • Karthik Rangappa says:

      The idea here is to ride the momentum and not go against it. So if a stock is going up, we buy (we buy when there is strength) and likewise with sell.

  157. Manoj Paul says:

    Nice explanation, especially the visit to the market example

  158. rakul says:

    as per above comments video is good to learn !!

  159. Sharn says:

    Sir I am opened a Zerodha demat account. But now I am not able to login. They were not sent the login credentials.please help us

  160. Aditya says:

    Hi, please make an option to login…. like it is available in the mobile app.

  161. Anjani says:

    Absolutely brilliant content. It simplifies seemingly complex topics into understandable concepts. Schools/Colleges should aim to teach finance like this.
    You’ve earned a fan.
    Keep it up!

  162. Anup says:

    Tum sach mein Jabardast Ho yaara. Cheers Rangappa!

  163. Naveen Ramakrishna says:

    Mobile Varsity app
    -Technical Analysis
    – Beginner Module is not accessible
    error message saying : Cards for this topic are not yet available

  164. Arvind says:

    Hi Karthik,

    Fab job in lucid explanation. Do we have any modules on QA?

  165. babu says:

    Sir I have doubt, In previous chapters you explains that stock will reach DEMAT account, t-2 or t-3 days ….then how can we trade a stocks in intraday or other short term trading sir ? are we buying and selling the share which we don’t have yet ? please explain me in detail sir.

  166. babu says:

    thankyou so much sir .

  167. senthilkumar says:

    very simple to understand trading. No one can give better than this explanation

  168. Vinay V Pillai says:

    Is it a right strategy to identify Fundamentally strong stocks and enter in swing trades based on technical analysis?

Post a comment