19.1 – The Charting Software
Over the last 18 chapters, we have learnt many aspects of Technical Analysis. If you have read through all the chapters and understood what is being discussed, you are certainly at a stage where you can start trading based on Technical Analysis. The objective of this chapter is to help you get started by identifying technical trading opportunities.
Kindly note, the suggestions I have put forth in this chapter are based on my trading experience.
To begin with, you need a chart visualization software, called the ‘Charting Software’. The charting software helps you look at the various stock charts and analyze the same. Needless to say, the charting software is an essential tool for a technical analyst.
There are many charting software’s available. The two most popular ones are ‘Metastock’ and ‘Amibroker’. Majority of the technical analysts use one of the two charting software’s. Needless to say, these are paid software’s, and you need to purchase the software license before using it.
A few online free charting tools are available that you can use – these are available on Yahoo Finance, Google Finance, and pretty much all the business media websites. However, my advice to you is – if you aspire to become a technical analyst, get access to good charting software.
Think of the charting software as a DVD player; once you have a DVD player installed, you will still need to rent DVDs to watch movies. Similarly, once you have a charting software installed, you will still need to feed it with data to view the charts. The data feed required provided by the data vendors.
There are many data vendors in India, giving you access to data feeds. I would suggest you look upon the internet for reliable vendors. You need to inform the data vendor which charting software you have, and he will provide you with the data feeds in a format that is compatible with your charting software. Of course, the data feeds come at a cost. Once you sign up with a data vendor, he will first give you all the historical data, after which you will have to update the data from his server daily to stay current.
From my experience buying the latest version of a good charting software (Metastock or Amibroker) can cost you a onetime fee of anywhere between Rs.25,000/- and Rs.30,000/-. Add to this another Rs.15,000/- to Rs.25,000 towards the data feeds. Of course, while the software cost is one time, the cost of data feeds recurs annually. Do note, the older versions of the charting software may cost you much lesser.
Now, if you are in no mood to spend so much for the charting software & data feed combination, there is another alternative. And that would be Zerodha’s Pi.
As you may know, Zerodha has a proprietary trading terminal called ‘Pi’. Pi helps you in many ways; I would like to draw your attention to some of its features in the context of Technical Analysis:
- It is bundled – Pi is a charting software and a data feed package bundled into a single software.
- Great Visualizations – Pi helps you visualize charts across multiple time frames, including intraday charts.
- Advanced Features – Pi has advanced charting features and includes 80 built-in technical indicators and over 30 drawing tools.
- Scripting you strategy – Pi has a scripting language employing which you can code technical strategies and backtest the same on historical data. Please do note, on Varsity we will soon include a module on building trading strategies and scripting.
- Easy Opportunity Recognition – Pi has a pattern recognition feature that lets you draw a screen pattern. Once you draw, command Pi to scout for that pattern across the market, and it will do just that for you.
- Trade from Pi – Pi also lets you execute trades directly from the chart (a huge plus point for a technical trader)
- Data Dump – Pi has a massive historical data dump (over 50,000 candles) which means backtesting your strategy will be more efficient.
- Your personal trading assistant – Pi’s ‘Expert Advisor’, keeps you informed about the patterns being developed in the live markets.
- Super Advanced features – Pi has Artificial Intelligence and Genetic Algorithms. These are optimisation tools which help you optimize your trading algorithms.
- It is free – Zerodha is giving it free of cost to all its active traders.
The list is quite exhaustive, ranging from the basic to advanced features. I would strongly suggest you try out Pi before deciding to venture out for charting package and data feed bundle.
19.2 – Which timeframe to choose?
We discussed ‘Timeframes in chapter 3. I would request you to read through it again to refresh your memory.
Selecting the timeframe while scanning for trading opportunities is perhaps one of the biggest confusion a newbie technical analyst has. You can choose many timeframes from – 1 minute, 5 minutes, 10 minutes, 15 minutes, EOD, Weekly, Monthly, and Yearly. It is quite easy to get confused about this.
As a thumb rule, the higher the timeframe, the more reliable the trading signal is. For example, a ‘Bullish Engulfing’ pattern on the 15-minute timeframe is far more reliable than a ‘Bullish Engulfing’ pattern on a 5-minute timeframe. Keeping this in perspective, one has to choose a timeframe based on the intended length of the trade.
So how do you decide the intended length of your trade?
If you are starting fresh or not a seasoned trader, I suggest you avoid day trading. Start with trades to hold the trade for a few days. This is called ‘Positional Trading’ or ‘Swing Trading’. An active swing trader usually keeps his trading position open for a few days. The best lookback period for a swing trader is 6 months to 1 year.
On the other hand, a scalper is a seasoned day trader; typically, he uses 1minute or 5 minutes timeframe.
Once you are comfortable with holding trades over multiple days, graduate yourself to ‘Day Trading’. My guess is, your transition from a positional trader to a day trader will take some time. Needless to say for a dedicated and disciplined trader, the transition period is remarkably lesser.
19.3 – Lookback period
Look back period is simply the number of candles you wish to view before taking a trading decision. For instance, a lookback period of 3 months means you are looking at today’s candle in the backdrop of at least the recent 3 months data. By doing this, you will develop a perspective on today’s price action concerning last 3 months price action.
For swing trading opportunities, what is the ideal look back period? From my experience, I would suggest that a swing trader should look for at least 6 months to 1-year data. Likewise, a scalper is better off looking at the last 5 days data.
However, while plotting the S&R levels, you should increase the look back period to at least 2 years.
19.4 – The opportunity universe
There are roughly about 6000 listed stocks in the Bombay Stock Exchange (BSE) and close to about 2000 listed stocks in the National Stock Exchange (NSE). Does it make sense for you to scan for opportunities across these thousands of stocks, daily? Obviously not. Over a period of time, you need to identify a set of stocks that you are comfortable trading. These set of stocks would constitute your “Opportunity Universe’. Daily, you scan your opportunity universe to identify trading opportunities.
Here are some pointers to select stocks to build your opportunity universe:
- Ensure the stock has adequate liquidity. One way to ensure adequate liquidity is to look at the bid-ask spread. The lesser the spread, the more liquid the stock
- Alternatively, you can have ‘minimum volume criteria’. For example, you can consider only those stocks where the volume per day is at least 500000
- Make sure the stock is in the ‘EQ’ segment. This is basically because stocks in the ‘EQ’ segment can be day traded. I agree, I discouraged day trading for a newbie, however in a situation where you initiated a positional trade and the target is achieved the same day, there is no harm in closing the position intraday.
- This is a bit tricky, but make sure the stock is not operator driven. Unfortunately, there is no quantifiable method to identify operator driven stocks. This comes to you by sheer experience.
If you find it difficult to find stocks that comply with the above points, I would advise you to stick to the Nifty 50 or the Sensex 30 stocks. These are called the index stocks. The exchanges carefully select index stocks; this selection process ensures they comply with many points, including those mentioned above.
Keeping Nifty 50 as your opportunity universe is probably a good idea for both swing trader and scalper.
19.5 – The Scout
Let us now proceed to understand how one should go about selecting stocks for trading. In other words, we will try and identify a process, employing which we can scan for trading opportunities. The process is mainly suited for a swing trader.
We have now set the 4 important aspects –
- The charting software – Suggest you use Zerodha’s Pi
- Timeframe – End of Day data
- Opportunity Universe – Nifty 50 stocks
- Trade type – Positional trades with an option to square off intraday, provided the target hits the same day.
- Look back period – Between 6 months to 1 year. Increase to 2 years while plotting the S&R level
Having fixed these important practical aspects, I will now share my methodology of scanning trading opportunities. I have divided the process into 2 parts:
Part 1 – The Shortlisting process
- I look at the chart of all the stocks within my opportunity universe.
- While looking at the chart, my attention is only on the recent 3 or maximum of 4 candles
- While looking at the recent 3 candles, I check if any recognisable candlestick pattern is developed.
- If I find an interesting pattern, I shortlist this stock for further investigation, and I continue the scouting process. I always ensure I check all the 50 charts.
Part 2 – The Evaluation process
At this stage, I am usually left with 4-5 shortlisted stocks (out of the 50 stocks in my opportunity universe) which exhibit a recognisable candlestick pattern. I then proceed to evaluate these 4-5 charts in detail. Typically I spend at least 15 – 20 minutes on each chart. Here is what I do when looking at the shortlisted chart:
- I generally look at how strong the pattern is – I am specifically interested in checking if there is any need for me to be more flexible.
- For example, if a Bullish Marubuzo has a shadow, I evaluate the shadow’s length concerning the range.
- After this, I look at the ‘prior trend’. For all bullish patterns, the prior trend should be a downtrend, and for all bearish patterns, the prior trend should be an uptrend. I do pay a lot of attention to prior trends.
- At this stage, if everything looks good (i.e. I have identified a recognizable pattern with a well defined prior trend), I proceed to inspect the chart further.
- After this, I look at the volumes. The volume should be at least equal to or more than the 10-day average volume.
- Provided both the candlestick pattern and volumes confirm, I then check the support (in case of a long trade) and resistance (in case of a short trade) level.
- The S&R level should coincide (as much as possible) with the stoploss of the trade (as defined by the candlestick pattern)
- If the S&R level is more than 4% away from the stoploss, I stop evaluating the chart further and proceed to the next chart.
- I then look for Dow patterns, particularly for double and triple top & bottom formations, flags formations, and a range breakout possibility.
- Needless to say, I also establish the Primary and secondary market trend.
- If the steps 1 to 5 are satisfactory, I proceed to calculate the risk to reward ratio (RRR)
- To calculate RRR, I first establish the target by plotting either the support or resistance level.
- The minimum RRR should be at least 1.5
- Finally, I look at the MACD and RSI indicators to get a perspective if they confirm, and if I have spare cash, I increase my trade size.
Usually out of the 4-5 shortlisted stocks, at the most 1 or 2 may qualify for a trade. There are days when there are no trading opportunities. Deciding not to trade in itself is a big trading decision. Remember this is a fairly stringent checklist; if a stock is confirming the checklist, my conviction to trade is very high.
I have mentioned this many times in this module; I will mention this for one last time – once you place a trade, do nothing until your target is achieved, or stoploss is triggered. Of course, you can trail your stoploss, which is a healthy practice. Otherwise, do nothing if your trade complies with the checklist and do remember the trade is highly curetted; hence the chance of being successful is high. So it makes sense to stay put with conviction.
19.5 – The Scalper
For a seasoned swing trader, scalping is another option. Scalping is a technique where the trader initiates a fairly large trade to hold the trade for a few minutes. Here is a typical example of the trade done by a scalper –
| 1st Leg of the trade | 2nd leg of the trade |
|---|---|
| Time – 10:15 AM | Time – 10:25 AM |
| Stock – Infosys | Stock – Infosys |
| Price – 3980 | Price – 3976 |
| Action – Sell | Action – Buy |
| Quantity – 1000 shares | Quantity – 1000 shares |
Overall profit after applicable charges = Rs.2644/-
The overall profit is calculated considering that you are trading with Zerodha, the overall profitability would shrink remarkably if you are scalping with expensive brokerage rates. Containing transaction charges is one of the keys to successful scalping.
A scalper is a highly focused trader with a sharp sense for the price. He utilizes exact charts such with 1 minute and 5-minute timeframe to make his trading decisions. A successful scalper executes many such trades within the day. His objective is simple – large quantity trade intending to hold for a few minutes. He intends to profit from the small moves in the stock.
If you aspire to be a scalper, here are few guidelines –
- Remember the checklist we have mentioned but do not expect all the checklist items to comply as the trade duration is very low.
- If I were to handpick just 1 or 2 items in the checklist for scalping, it would be candlestick pattern and volume.
- A risk-reward ratio of even 0.5 to 0.75 is acceptable while scalping.
- Scalping should be done only on liquid stocks.
- Have an effective risk management system – be really quick to book a loss if need be
- Keep a tab on the bid-ask spread to see how the volumes are building.
- Keep a tab on global markets – for example, if there is a sudden drop in the Hang Seng (Hong Kong stock exchange) it invariably leads to a sudden drop in local markets.
- Choose a low-cost broker to ensure your costs are controlled.
- Use margins effectively do not over leverage.
- Have a reliable intraday charting software
- If you sense the day is going wrong, stop trading and move away from your terminal.
Scalping is a day trading technique requires a great presence of mind and a machine-like approach. A successful scalper embraces volatility and is indifferent to market swings.
Key takeaways from this chapter
- If you aspire to become a technical trader, ensure you equip yourself with good charting software. Zerodha’s Pi is my preference.
- Choose EOD chart for both day trading and swing trading.
- Look at intraday charts if you like scalping the markets.
- The lookback period should be at least 6 months to 1 year for swing trading.
- Nifty 50 is a great opportunity universe, to begin with
- The opportunity scanning can be done in 2 parts.
- Part 1 involves skimming through the charts of all the stocks in opportunity universe and shortlisting those charts that display a recognizable candlestick pattern.
- Part 2 involves investigating the shortlisted charts to figure out if they comply with the checklist.
- Scalping is advisable for seasoned swing traders
After reading the entire information provided in this module (esp the Finale), i just couldn’t stop myself from appreciating such a selfless effort from you sir…Thanks a lot! The charts, the simple explanation for every topic, the suggestions from your experience, all are very helpful..i am sure i have learned so many things from this module which i can apply right away into my trading…Looking forward to the other important modules…you guys are already changing the dynamics of this Industry, keep up the good work! Cheers! With Initiatives like this you will definitely achieve your goal of being one of the best brokerages in the world!
Glad you are liked the content 🙂
sir first of thanks for such a simple explaination of technical analysis.
will you please provide the module on elliot wave?its will be very beneficial for beginner like me.
Elliot Wave is not on the agenda anytime soon, but we will certainly have a section on this sometime soon.
Your modules are very helpful.. thanks a lot!
Happy learning!
Thank you for the invaluable information you have provided, Hats off to you for presenting the topic in such as simple way. Thank you Zerodha for having varsity.
Thank you for the kind words 🙂
Excellent stuff. The best content for learning I have ever come across. There are so many tips and ideas which the other trainers have not mentioned. Very in-depth. Thanks a lot
Glad you liked it, Rekha! Good luck and happy reading.
Hi
First of all thank you for the excellent material put up on varsity. It was very useful for me to understand the nitty gritties. I am an aspiring trader and opened an account with Zerodha. I wanted to download Pi but it’s not allowing me till I find the account. I would like to play around on the knowledge gained before doing a live trade. Please let me know if there is another link for practise sessions?
I’m glad you liked the content here, Rekha. Unfortunately, we do not have a mock terminal, you will have to set up an account first. Btw, the easiest way to do this is by trading 2-3 shares of stock worth not more than few hundred Rupees. This is better than mock trading 🙂
One word.. Excellent !!!
🙂
Nice work 🙂 keep going
Toooo good !I have gone through a good number of books in past on TA but the way you have simplified here is amazing!Looking forward for next modules.
Thanks Zerodha & the team for the excellent write up. Thanks to Karthik for the wonderful piece of writing.
Really wonderful.The Bible for my trades from 10th Nov
🙂
Dear Karthik,
Where we will get the data for eod candlesticks patterns,? Any website?
You need a charting software package like amibroker for this – check with these guys – http://www.neotradeanalytics.com/
Hi Karthik,
I see 3 targets T1, T2 & T3 being given for every call. How are these 3 targets being calculated?. Is it based on percentage of final target?. Ay T1 = 50%T3
I guess some of them use Pivot levels to achieve this. I personally find fixing on a single target and achieving it as a more peaceful way of trading. Remember the more variable you add in your trade design, the more de-focused one can get. This is just my personal opinion.
Would you please add SUPERTREND indicator in zerodha
Thx Bharath, maybe in the 2nd edition 🙂
Thank you Sir ji for your selfless effort in teaching us this concept. A new trader like me finds it little difficult reading it for the first time, though its in simple English, the jargons used are little bit difficult as Im new. Sir its not remark to your way of explaining, its what I alone found difficult.
Sir Ji, is Pi avaiable to us? if yes, where from can I download?
Once again thank you for taking time in between your busy schedule for helping us win.
Please feel free to ask your queries Phani. The community here will be more than happy to help you resolve it. Do not hesitate. Regarding Pi, I wouls suggest you contact the support.
Hi,
Got confidence after Reading Technical Analysis Module, and I’m able to take good trades. Thanks for the easy level of explanation.
Is Pi available for Linux OS?
Thanks,
Vinayak
Happy to hear that, Vinayak 🙂
No, Pi is no available in Linux. However, I’m guessing you may like our APIs, check out https://kite.trade/docs/kite/
Thank you Sir ji for your selfless effort in teaching us this concept. A new trader like me finds it little difficult reading it for the first time, though its in simple English, the jargons used are little bit difficult as Im new. Sir its not remark to your way of explaining, its what I alone found difficult.
Sir Ji, is Pi avaiable to us? if yes, where from can I download?
now, waiting for “option Theory” & “option strategy” module.
We are currently working on completing the module on Fundamental Analysis. We will start derivatives as soon as this is done.
Please send me download linke zarodha ta software
Please send me download linke zarodha ta software
Support it
Request you to kindly send an email to [email protected].
Hello sir,
Got a doubt while i was sitting infront of the screen today. All the patterns you have explained including the grand checklist at the end needs a prior trend for us to give an entry which is working fantastic for swing trading. Suppose i am an intraday trader who trade on 15min. chart and the trend has already established yesterday in a stock im interested in and i planned to give the entry today on a pullback. In that case, as the candlestick patterns here are reversal, can i use these patterns to find the end of pullback?? If yes, what else can i include in the checklist as an alternative to support and resistances for pullbacks.
Thanks in advance. 🙂
While looking at intra day chart, it makes sense to look at continuous charts wherein you will view the last 3-5 days intra day charts. By doing so you will get a better perspective on the price action. If you are using pull back, then please ensure the pullback is in on low volumes. Also, unfortuantely there is no alternative to S&R levels, at least that I can think of 🙂
Yeah. That pullbacks on low volumes, even i observed in today’s market sir and from my observation today, i thought entry on a pullback with low volumes to 50 EMA or a trendline which coincides with a Fib ratio is good to trade. Please correct me if im wrong. As a newbie, i dont know much about this and im articulating everything from the articles here and my observations in the live market. 🙂
Jagadeesh – yes trading on low volume pullbacks is indeed a good start. I would suggest you stick to 1 strategy master it and move to another.
Thanks for that sir. I ll keep that in my mind. 🙂
sir i want to know what is this pullback with volume or 50 ema being taught here. i am a newbee .plz help me understand
I’d suggest you read the earlier chapters for this.
I want trade with zerodha. I want open demat account . contect me on 9320982123
Thanks Sachin. Someone from sales will touch base with you on Monday.
I have zerodha account…how can i use zerodha Pi then..pls guide
Checkk this, Yogesh – https://support.zerodha.com/category/trading-and-markets/pi-and-other-platforms/articles/where-can-i-download-pi
Where is the Pi ? Is it WEB based or to be downloaded and installed ?
Pi is a downloadable software which enables you to trade and perform the TA. All you want to know about it is here – http://zerodha.com/pi/
Hi sir, i had one small query, if i start my trading journey by becoming a positional trader (holding positions overnight for a couple of days in case the target doesn’t meets the same day), if there is an equity stock which made a bearish signal (considering the checklist is meet), how are we suppose to short the equity stocks overnight as they automatically get squared off at 3.20pm everyday, are we supposed to buy respective stock options/futures in this case? Thanks in advance 🙂
You can carry overnight short position by opting for Futures & Options. This is a topic we will start discussing in Varsity very soon.
Hi Karthik, Excellent job done with Zerodha Varsity. CONGRATULATIONS
Just couriered my forms to open the account, look forward to relationship with Team Zerodha.
Thank you, and we look forward to you joining the Zerodha family. I’m confident you will love the experience 🙂
Dear Karthik & Zerodha Team…. Thank you very much for your initiative.
Thanks, and please stay tuned for more!
Just awesome. Thank you
what is the meaning of operator driven?
Sometimes a group of people operate together with a common understanding to either buy or sell a stock. Such stocks are usually referred to as “Operator Driven” stocks. It is difficult to operate stocks which have high liquidity.
Thanks Karthik for clarifying, in 19.5(The Scout)> part 2> 1.a you said ” I evaluate the length of the shadow with reference to the range” didn’t quite get this. Can you please elaborate with an example or a screenshot please.
Thanks for an excellent presentation of TA. I hope to use it soon, and get proficient at it. Your effort is very much appreciated.
Thank you so much. We have planned lots of useful material for Varsity. Please stay tuned.
SIR, THANKS FOR THE BASKETS OF KNOWLEDGE.HOW CAN I GET Pi/
Thanks. For Pi please email [email protected] for this.
Sir,
Thanks for your prompt answer regarding my query of MA. Last week I’ve registered @ Zerodha. My trading account is active but my DEMAT is not active yet.
I’ve seriously gone through the TA modules. Like other modules it is amazing, too, although as a new trader I’m facing some problems to identify the Candlesticks and patterns, which I think will be resolved in due course.
Can I start Fut and Opt trading with the knowledge of TA module?
I want to be retained in this market lifelong, so what will be my strategy EOD?
Eagerly waiting for your next modules.
With best of my regards,
Arunava Bhattacharya.
I’m happy to know that you have liked the course on TA & FA. Starting Futures just based on TA is not a great idea. In fact I’m working on Futures module right now, by mid Jan 2015 the chapters should be out. I would request you to read through that before you start derivatives.
Also, I would strongly advise you to start with EOD trading and then move to intra day.
Sir,
Thanks a lot for your guidance.
EOD trading means Swing or delivery only?
If yes, then shorting can’t be done.only long side are you recommending?
With best of my regards,
Arunava Bhattacharya.
Yes swing and delivery long trades for now, once you are comfortable with Futures you can short as well.
Sir,
Thank you so much.
With best of my regards,
Arunava Bhattacharya.
Hey,
So is it that if you are swing trader, better to look at Daily charts only and avoid looking at weekly charts completely??? Also, it would be really helpful if you can blend Technical Analysis along with Options Trading if possible in your options module….
Yup, for swing trading I would prefer to use EOD charts. However do look at weekly charts just to get a directional perspective.
Yes, both futures and option modules will be written keeping TA in perspective. I guess about 10th or 12 th Jan parts of Futures Trading will be up.
Excellent. Feels empowered while trading. When is your PI software getting launched. I am eagerly waiting for the same.
Thanks Rahul. I’d suggest you mail support at zerodha dot com for queries related to Pi.
sir, in the selection process you said you will look at the last 3 or 4 candle stick . what is the time frame of those candle sticks it means is it a min candle or day candle?
To begin with I would suggest you look at EOD candles.
thank you so much for these information!!
Bole to Ringappa Bhai, bahut kamal ka content hai tumhara!:-) 🙂 🙂 🙂
Shukriya, btw its Rangappa 🙂
Dear sir, could you plz let me know know, on how days candlestick to be reffered for swing trading and other indicators such as s&r ,volume,Bollinger band
For swing trading look at data for at least 30 trading sessions.
Hi Karthik,
Thanks a lot for all your effort! I have few questions (may be silly), kindly advice!
1. for intra day options nifty trading, do I need to take 1 min or 5 min candles? also how may candles we should take?
2. for intra day if I am trading only for few ticks, how effective will be to see the pattern and decide the trade… if so which indicators will be effective?
3. for options trading I should see the nifty and not the strike price chart right?
4. In Pi do we have options like flags for the patterns? (like the way we have in nseindia website charts?
My answers as below –
1) I would suggest you take 5 mins instead of 1 mins. Generally higher the frequency, the better the results are likely to be. So data for 5 mins for at least 5 trading session should be fine.
2) If you are a complete novice I would suggest you get a grip on holding the trade for sometime before you try your hands on tick by tick data.
3) Yes, its advisable to look at the stock price chart and not the chart of the strike price.
4) In Pi, there is a pattern recognition option.
what is this trading session here..is it in minutes or eod?
Market opens at 9:15 AM and closes at 3:30 PM – this is considered as 1 trading session.
Hi Karthik…you’ve mentioned “Keep a tab on the bid ask spread to see how the volumes are building”..how do I do this? Could you please elaborate?
You just need to look at the market watch/snapquote to track the Bid Ask spread.If the bid ask is increasing it generally indicates that the activity/volume is on the higher side for the given day.
Hi Karthik,
I have a doubt with the term ‘bid ask spread’.
Does the term ‘spread’ mean the difference in the number of buyers and the number of sellers at a given a time of the day?
I’d suggest you check this chapter – https://zerodha.com/varsity/chapter/the-trading-terminal/
sorry sir but i didnt get clear about the term bid ask spread?also in link that u share
kindly explain in comment box thanks
Can you tell me what is the confusion here?
i mean to saywhat does it mean,if bid ask spread is increasing? or decreasing?
here what actually SPREAD means?
Check section 9.6 – https://zerodha.com/varsity/chapter/the-trading-terminal/
Hi Karthik,
TA content is excellent and thank you for this initiative. You are so kind while answering every question with a vast knowledge. God bless u.
Many Thanks for you kind words 🙂
Do low priced stocks (less than 10 or 5 rupees) have any special tool to be evaluated? Or they too follow the same technical patterns?
Thumb rule – As long as the stock is liquid, TA can be applied, irrespective of whether it is a 100 or 10 Rupee stock. So make sure these stocks are liquid. If they are not liquid then exercise caution.
sir what is meant by a liquid stock in exact terms? if any stock is traded with higher volumes shall we call it a liquid stock
Thats right, Vivek. Stocks which have the high volumes are considered liquid.
Hello Karthik, could you advise how can I get an EOD chart using Pi. i am trying to use 8 hrs interval. but it doesn’t allow me plot more than 104 candles. Am I doing it correctly?
As far I understand, EOD charts are still not up on Pi. I believe the concerned team is working a patch to make this available as soon as possible. Request you to shoot an email to [email protected] to get better clarity on this.
I would like to add ICHIMOKU chart system….Please let me give exact time frame.
Can you please elaborate?
Please refer the below link:
http://stockcharts.com/school/doku.php?id=chart_school:trading_strategies:ichimoku_cloud
We will try and include this in the strategy module. Thx.
I was browing through the modules and I was keen to go through the Futures module as I trade in it. I found the guidance very useful and informative and good to follow. I will work on Pi and see how good it works for me. Thanks for your great effort in compiling and sharing this ocean of wealth….
Most welcome Umesh. Please feel free to post queries if any.
Hi Karthik, in India do we have some special accounts on the lines of american retirement funds account (i guess they call it IRA 401K) which would attract less or negligible taxes on our profits booked in stocks once our profit increases.
Maybe you should explore the HUF option, check this – http://tradingqna.com/2760/what-what-advantages-opening-trading-demat-account-which-huf?show=2760#q2760
Hi Karthik,
i am 2 months old in markets. Do i need to read any books after understanding all chapters? if yes then which one according to you?
Suggest you read all the content here Deepesh…I guess this is much more than sufficient to help you get started.
Hi Karthik,
LTP and CLOSE are different In historical data downloaded from NSE,why is it so? Google uses LTP value as CLOSE value to make a candle of that day so this will affect the candle’s structure. Which one should i use LTP or CLOSE ?
Thank you,
The close price is the weighted average of the last 30 mins whereas the LTP is the last price at which the stock has traded for the day. Both these prices are different. While doing EOD analysis it is always better to take the close price and not LTP. Also, I’m not sure if Google Finance is using LTP prices, they should not be.
Excellent narration of topics which cleared many doubts regarding how to use indicators. Thank you.
Glad to know that Anil 🙂
Hi,
Excellent.excellent and excellent…
Truly a commendable effort..
अन्न दानं महा दानं विद्या दानं महत्तरम् |
अन्नेन क्षणिक तृप्तिः यावज्जीवनन्तु विद्यया ||
For the benefit – gist,
To donate food is great, but to donate knowledge is paramount
While one can be satisfied temporarily through food, satisfaction achieved through gaining knowledge will be perennial ||
Thanks
Wow! Thank you so much for these very kind words. It means a lot to all of us at Zerodha.
GREAT !
Cheers!
Dear Mr.Karthick, It is indeed a great effort in simplifying the TA process. I got good picture of TA and the most required analysis patterns, indicators and trends. Sharing knowledge is very noble effort. I like the presentation style of yours. Keep up the good work.
Thanks
Thank you so much for your kind words Vimal, it means a lot to all of us at Zerodha.
hello Sir ,
i am very very thankful for all the content here. it is precise , self-contained and lucid.
regards,
Rajesh
Glad to know that Rajesh, please stay tuned for more 🙂
Dear Sir,
I have gone through all of your modules and they are really very much helpful. I want to ask one thing which may be little out of track. What is standard profit(in %) can a day trader make in intraday trading? I know this cannot be a straight answer as it will vary from one person to person. But still then from your vast experiance you can give a light on that as it will help me to judge myself where i stand and how much more I need to to improve myself.
Thanks Souvik. Like you said this is a tricky question as it depends on many factors. I will assume your day to day expenses are taken care off…so besides this if you manage to grow your capital in the region of 3-5% month on month, consistently then you are doing a phenomenal job! Here is an article that you should read – http://www.thehindubusinessline.com/money-wise/mutual-funds/how-stocks-became-their-bread-and-butter/article7095550.ece
I think it would not scan all , but from opportunity universe which we need to define . But again to define the opportunity universe itself (real time ) –we need some kind of historical data search ?-
Say Stocks that recently crossed 20DMA
Now when you say that – define the opportunity universe as it’s not worth s scanning entire 6000 stocks
You mean to say first do the Fundamental analysis and then technical , But this logic holds good pretty well for long term investors and not traders, day traders & scalpers- as even a stock at 100pe may move by 10%
Stock price doesn’t change according to fundamentals but , according to the perception of fundamentals
Anyways –how many stocks does it support in opportunity universe ?
Regards,
9986659576
I guess the best way to deal with creating an opportunity universe is by keeping a track on Nifty 50. Within that you can further scan for parameters like 20DMA crossovers etc. Yes, as you said there is no need to worry much about fundamentals if you are day trading actively.
Thanks for the prompt response . Your comments seems more like defending your product , which is not bad but in this forum we are trying to focus on solving the real problem /issue.
Actively trading or scanning nifty 50 ? are you really seriously giving this suggestion for day traders , Most of the mighty gainers are not from nifty50 and certainly not appear regularly . Now I am not referring to penny stocks .
I hope you can give a real solution. ?
Which product are you talking about, can you kindly elaborate?
Yes, I personally think scanning the Nifty 50 for daily opportunities is not a bad deal. I have done this for many years and I find it useful. Outside this basket you will have big movers, I agree…. but other problems like liquidity, margins etc crop up. Given this its best to stick to Nifty 50 and look for stocks that can move few % points here and there and trade them consistently.
If you want to explore opportunities outside the Nifty 50 then you will need to use scanners or write a little programming script that can evaluate opportunities. Data can be downloaded from NSE.
By the way, I have also used Metastock scanners which I think is quite good.
@Karthik,
I have never seen such great documentation on technical analysis and everything is well written. I will refer few of my friends to zerodha.
Thank you 🙂
Dear Sir, This is very easy to understand for even beginners like me. Thanks for post such good explanation. Please confirm by when we can get rest of chapter in PDF
Glad to know you are liking the chapters 🙂
We are working on converting the chapters into downloadable PDFs. Please bear with us for sometime. Thanks.
Dear Karthik,
If on any day I recognize a pattern fulfill with our checklist ,and I initiate a trade at 3.20pm on same day but on next day there is opposite candle but my stop loss not trigger . Then what should I do,either wait for another sessions with original SL or EXIT before closing.
Regards
Haridas
Once you initiate the trade exit only if your SL has been breached or if your target has been hit. Please do not consider any other option in between.
Dear Karthik Sir and Zerodha team, excellent job done by you for novice in stock market. I have gone through all technical modules and found it very useful. I have few question :1)While short listing a stock from nifty 50 , Is it a wise decision to check chart of particular sector for ex. Auto, IT to see which sector is out performing and then select a best stock from that sector?
2) which chart do I have to look for medium to long term weekly or monthly?
Thanks 🙂
That makes sense to look at sector specific charts and then the individual charts. I would advise you look at at least 3-6 months EOD charts for medium to long term for long perspective.
Thanks a lot for quick and apt reply Karthik sir 🙂
Welcome 🙂
You are awesome sir… TA content help me to learn a lot as a newbie…
Currenty i am trading in mcx energy future like crude oil.
So please give me grand check list for trading in commodity future for intraday trade. And which of technical indicator help most in commodity section.
Thanks
The same checklist applies to commodities as well. Remember learning TA is like learning to drive a car…on how does it matter weather you are driving a Santor or an Alto?
Hence you can use the same techniques on Commodities as well.
Dear Karthik
Great work. Got confused and skipped candle stick patterns and lost some before. After reading your blog things got clarified. Perfect materials for starters. Are these TA enough to become a full time trader ? If so what should be my investment ?
Thanks
Glad to know that Partha. These chapters on TA should set you up on a good path. Start with small sums, gain confidence and them move ahead.
All the six points in the checklist were satisfied by Bharti Airtel. Vol was above average. There was a shooting star formation after an uptrend. S&R confirmed the trade. Stock formed a double top as well and even indicators(MACD) confirmed the bearishness of this stock yet after all these factors the stock rallied upward. There was no significant news about Bharti Airtel. What could be a reasonable explanation for such behavior of this stock?
http://chartink.com/stocks/bhartiartl.html
On 05/06/2015
Well, when all the factors align (like in this case) the odds of setting up a successful trade increases but there is no guarantee 🙂
I would really like to thank you for providing the technical analysis material in PDF format. It will help me a lot in learning .
Regards
Purvesh
Most welcome!
Can you Pl post the link to download PDF materials.
Scroll to the end of the page to download the PDF – https://zerodha.com/varsity/module/technical-analysis/
Hello Sir, For 5 or 10 mins intraday charts, what should be the look back back period for S&R, Tops & Bottoms and whats the best combination of EMAs & what are the best indicators to look at? Please guide?
Look for at least last 30 candles as look back. EMAs, indicators etc depend on your trading style. I personally prefer 9 and 21 day EMA for intraday trading…and I also dont depend much on indicators for intraday.
Thanx a lot sir for guiding and special thanx for this wonderful TA module. One & all will be going to benefit from this. Never find such an elaborate as well as brief & upto the point material. Thanx once again sir.
Thanks for you kind words and encouragement Rishi. This motivates us to develop better content 🙂
Dear karthik sir,
Hope you enjoying writing of amazing article about share market, Sir I’m so happy & glad to inform you, My TA study is great going & Applying in live market, ha ha ha One by One is working, I’m dancing in my office…. Total I researched 21 Imagined indicators, My target 100 indicators….I never forget you karthik sir because given Beautiful ta article to all of us, It helpful a lot…. Once Again Thank you very much sir…I’m rocking always & I’m grateful for myself…Definitely i’ll share all my knowledge to everybody after myself satisfied. thank you… Have a wonderful day sir…god bless you
Awesome Girish! Very happy for you 🙂 When people take time to educate themselves and improve their overall knowledge, good things start to happen. Guess you are setting an example here for others. Good luck.
Thank you very much sir….
Respected Karthik sir.
Hope you are doing fine.
Earlier I use to research on shares based on Pi software, but I see that in Pi software we get only daily chart of a share.
Now, I am interested in buying full package of TA Software which provide weekly and monthly charts and data feed. I read your article in Zerodha where you mentioned two software ‘Metastock’ & ‘Amibroker’. And recently I came to know
that present users of Zerodha are eligible for a discount in Amibroker. As mentioned above i am intresed to buy full package of software which give me above details.
Could you please advise me which of the above software will suffice my need.
Thank you sir,
Girish, you can contact http://www.neotradeanalytics.com/ and give them your Zerodha client id. They will help you with a discount.
Thank you very much sir.
if i purchase other trading software, can i trade using that software under zerodha brokerage ,please replay
I suppose you mean to say “Charting Software” and not really trading software. But have you tried Pi? Its both trading and charting integrated into 1 software. Check out http://www.zerodha.com/pi .
Dear Karthik sir,
Great going ta research, Now i purchased Amibroker i was wonder there is quaterly, yearly chart also there, great fun, Please provide me link of equity data feed buy, I searched there is only f&o, Neotrade launch after 2-3 Month,
I like Eod, Weekly, Monthly charts only sir,
Thank you sir.
Dear Karthik sir,
Great going ta research, Now i purchased Amibroker i was wonder there is quaterly, yearly chart also there, great fun, Please provide me link of equity data feed buy, I searched there is only f&o, Neotrade launch after 2-3 Month,
I like Eod, Weekly, Monthly charts only sir,
Thank you sir.
i have a doubt can i trade using Amibroker software with zerodha brokerage ? how? please explain
Email Vivith from Neotrade (http://www.neotradeanalytics.com/) – [email protected] he will help you Sarath.
Email Vivith from Neotrade (http://www.neotradeanalytics.com/) – [email protected] he will help you Girish.
Thank you sir.
thanks karthik sir
🙂
hello sir for all the support in all terms
Now i am feeling some more confident after reading this module and waiting for strategy module.
i have lost nearly 3-4 lakhs of rupees since 2005 in trading and investment. and tried various methods to earn money from market (viz. advisory services, tips , expert advises of different channels)
but because of Technical analysis now i am following my own analysis and enjoying some profit.
now i am govt employee and willing to retired in 2022. (current age is 30)
i have studied a lot and still doing the same about market and technical analysis to achieve my dream (i.e.PROFESSIONAL TRADER )
so i need your help for the same
now firstly can i meet you to see you while trading or i wanted to spend some time with professional trader .
Next how to manage profit so that i can run my house on that income only because after 2022 my income source will be trading only.
thank u
and i can not disconnect myself from share market.
Ganesh – I do not actively trade anymore. Active trading is a full time job and requires lots of time…unfortunately I cannot afford that. I only make long term investments these days. My advice to you is start small and scale it up only when you know you are being consistent.
Good luck.
Well first off, i gotta say this is amongst the top resources for beginner traders that i have come across so hats off to you guys for putting this together. You’re definitely building a lot of good karma by helping out so many people.
On a completely different and random note, not sure if you guys are looking for typos but if you are, then there’s a tiny one at 19.5 – The scout, first line, second last word. Identify has been misspelled as indentify lol. Just thought i’d bring it to your attention incase you haven’t already noticed.
Cheers and keep up the awesome work!
Thanks for the kind words Virraj! …and thanks for pointing out the typos…in case you find anything other typos, please do let us know.
Wonderful introduction! After having emptied my 1 month’s salary in day trading on icicidirect, I wanted to try out a low cost brokerage firm. And I am really happy to switch to zerodha. Though I didn’t start greatly with zerodha, I tried using the candlestick charting explained here last week, and immediately saw the difference. I would really like to thank you for the time and effort in explaining the technicals. However, with respect to Pi, is there any future plan of porting it to linux or Mac?
Pi doubtful, but have you tried kite.zerodha.com on your browser? The charting is quite slick on that as well.
Oh, has it been launched already? I had tried logging into Kite a couple of weeks back, but it wasn’t available to me.
IF you are enabled on Pi, you should be able to log into Kite as well.
Thank You. for knowledge sharing.
I wanted one info about volumes.
What is the significance of Delivery Volume Percentage??
I have heard a lot about its importance in trading ,but have no idea about its influence.
Delivery volume % just indicates the number of shares taken in for deliver. So if the total volume is 100, and % delivery is 45%…then 45 shares is taken in for deliver. It is believed that higher the % of delivery shares, the higher is the bullishness in the stock.
hi karthik, wanted to know from you, if you track news flow in any particular order before our market opens? for e.g todays carnage in the market is attributed to certain global cues like, the chinese market opening weak and the usd/inr touching 2 year highs @66.30 plus. are there any data points that one should always keep an eye on before market hours? do let us know your views. thanks.
Madhu – I do read couple of newspapers (ET & HBL) daily…plus watch TV for few mins to figure out whats happening. Usually this is good enough for me.
Karthik, as you have mentioned after an increase ( mark up) in price the stock enters a distribution phase followed by a mark down or a decrease in prices. where as some say the stock prices after a consolidation( Distribution here) generally moves in the direction of the trend prior ( increase prices) to the distribution phase. isn’t that contradictory? also, trading intraday the candle patterns are a blur. in the sense one follows the other…is support and resistance the only way to filter them.
Raj – the general theory is cyclical….so it really depends on which part of the cycle one is referring to. S&R is a good technique to day trade…keep that as your central theme and identify patterns around it.
Karthik gud work with the technical lesson. I have a doubt instead of manual checking for the nifty50 or the 2000 odd NSE stocks is there any way to auto scan or short stocks based on ones person preference ?? After market hours using EOD or in the market hours using real feed.
Check this -http://zerodha.com/z-connect/tradezerodha/pi-tradezerodha/eas-for-auto-buysell-signals-pi and this – https://zerodha.com/expert-advisors/
EA your talking about is to generate AUTO buy & sell on the selected scrips only. But what I’m looking for is a system to Select the scrips out of the 2000 odd scrips. For example if my criteria is
1. Adx present > Adx yday
2. Close > sma 20
Etc…
I want to scan for the particular stocks which has fulfilled the above criteria for the pool of stocks.
Is there any way to do it in Pi.??
Kindly reply thanks in advance
Yes, this is certainly possible with expert advisers – please do drop an email to [email protected].
How long can I use Pi without actively participating in trade? I am preparing myself to trade and want to study the market and do mock investments for atleast 6 months. Can you refer me some charting softwares or websites that would help me in practising before I decide to trade?
Sudesh – Pi is now available for all, so no restrictions of any sort. Also, I would suggest you check out http://www.neotradeanalytics.com/ for charting software.
Wonderful karthik sir,
You inspired me about technical, Now candlestick became my passion, I love candlestick indicators and candlestick indicators loves me!!!
I hope you are doing great for sharing technical & fundamental knowledge to everybody! Happy to share you karthik sir, as i promised vision 130+ bullish indicator done! Oh my god, I am rocking in market sir, Life is so beautiful, Unlimited knowledge in technical!! Getting more spirit about ta! vikas global, vrl, so many stocks returned double!! one by one acting all 130+ bullish indicator!! not started bearish, Soon Sir, Own unique method research having more kick!!!! 2 indicators i have found technical fundmental(still researching deep)…
Thanks Karthik sir, You are always in my heart!!!!!!!!
THANK YOU! THANK YOU! THANK YOU!
TECHNICAL RESEARCH IS AASAAN HAI!!!!!
Your’s
Girish
World’s No.1 wonderful soul stock analyst!!!
Wow! All the very best Girish! Hope you have more success coming your way. Good luck and keep learning!
Thank you very much Karthik sir!!
Welcome.
Hey Karthik,
Just finished reading this. This is a great effort. Because
1. Minimal – You have focused only on what is truly important and left out the unimportant noise
2. Simple – I am fairly sure this gives a new user a sense of empowerment and confidence without confusing him
3. Well-written – I am already a fan of your language
4. Illustrated – Great clarity with examples etc.
Keep it coming mate!
Thank you so much Abid! Very happy and encouraged to read your comment 🙂
Thank you so much for the effort took to teach everyone what you learned.Really so simple to learn.Again tons of thanks 🙂
🙂
Thank you Karthik Sir,
This is really great learning module for beginners, it will be more easy if you provide it in Hindi Language also, so it will be more easy to understand, please do it for normal people like me.
Glad you are liking it Aman 🙂
Plz tell me if this all module will be available in Hindi Language also.. Plz sir there are lot of people intrested but could not go ahead due to language problem.. ? I hope you understand Sir ☺
Aman – thanks for the suggestion. We are exploring opportunities to translate the module in regional languages. Hopefully it should happen sometime soon.
Hi Karthik, thanks for the material. The ADX indicator is available in Zerodha Kite, but i did’t find in PI. Is there any other name for ADX indicator or is there any other indicator like ADX in PI. Please clarify.
ADX should be available in Pi. Can you please email [email protected].
Hi Karthik, First of all let me say big thanks to you because the way you are helping new traders is awesome.
kindly help me….. i am a new trader and bit confused about what kind of trading can give me more returns whether its option trading or cash trading and i would like to do on intra day basis.
Thanks for the kind words.
If you are starting and new to markets I would suggest you stick to swing trading where in you hold the trade for 1 or 2 weeks. Do these trades for a while till you get used to markets. You can move over to intraday once you are comfortable.
NIce work karthik sir, Hats off
feel like i found a holy grail
Holy grail is a myth 🙂
Sir
I want to do some technical analysis course.can you suggest some good courses available in market?do zerodha provide such type of course?can I use zerodha pi chart without trading with zerodha as first I want to gain confidence by detail studying chart
Rajeev – honestly the content here is more than sufficient for you to get started. Please do not waste money on these “technical analysis courses”.
I have attached the image file.does the attached kotak bank ,bearish harami.
Not really, the required uptrend does not seem very satisfactory.
prev trend is down. but can u say this as bearish engulfing?…
Prior trend should be up, this is an integral part of Bearish Engulfing. Absence of which the pattern becomes invalid.
does the pnb candlestick forms a
Form a ?
does the pnb forms a bearish harami. Also if u look at a last 5 days candle. If first 3 green candle goes little up and the last 2 shows a bearish harami..can u consider that as a fully formed harami .And if u look at last 5 days candle for a scrip which shows first 3 green candle little higer than each,and the last two shows a bearish engulfing.can we confirm that as bearish engulfing…
Kap – like I said for both the patterns the prior up trend is mandatory. Since the untrend is not really pronounced the pattern cannot be termed as harami or engulfing.
Your Chapters are nicely written. And its very useful for me . Now i m just using your whole chapters and trying to sharpen my basic skills in trading.thanks a lot for providing us such a wonderful work. thank u
Most welcome Kap. Wishing you all the very best.
Dear Mr. Kartik,
This is Dilip here RD1232
I am confused by your Vasity Module-2 Technical Analysis chapter point 19.4, part -2 evaluation process, you mention RRR (risk to reward ratio) to be at least 1.5. Do you mean for every one rupee risk the reward will be Rs.1.5 OR vice versa? In Scapler point no. 19.5, it is mentioned that RRR of 0.5 to 0.75 is acceptable. In this case is the risk higher than the reward? This is absurd. Why anybody will enter in trade where chances of loosing are more? If not more there should be at lease 50:50 chances of winning. I hope you have understood my question.
Well this is because while scalping you dont intend to hold the position for more than few seconds/minutes. For this kind of time frame a 0.5 or 0.75 RRR is acceptable. However for swing trades you got to ensure that the RRR is slightly higher (since you carry position overnight hence you need to be compensated for overnight risk as well).
Hello Kartik,
I have a small question,
Lets say If i Buy a ‘X’ company 100 shares at 100/- with stop loss 98, after placing Long position, price moved down and closed the day at 98.2, My stop loss is not yet triggered.
As there are gap ups and downs are common, if next day the opening price is 97.5, stop loss will be triggered right, Here my question is will my long position closed at 98 or 97.5
Please clarify.
Thanks in Advance
Uday – firstly you cannot carry forward your SL over night. Each day you will have to place fresh SL order. Also SL does not really guarantee an exit..in case of gap movements, SL will not get triggered.
hello sir
how to analyse the total buy and sell quantity of any stock or index
what is the impact i mean can i buy a stock or index which having more sellers than buyers,
Total Buy + Sell = Volume.
More on volumes here – http://zerodha.com/varsity/chapter/volumes/
and sir which course you will suggest to become a professional in stock market.
i m a graduate (b sc aeronutics) and doing trading since 2005
having some knowledge of technical analysis and indian & global economy and little about commerce
Please dont pay money for any course. Read up all the contents here on Varsity..and after that apply for a professional certification like CFA, FRM, CAIA etc.
I plan to start with 10 blue chip cos. & not put a stop loss in any. I will take delivery but will sell maybe intra-day if I’m making money. Is this a good idea ?
Nope, you need to be clear on what you intend to do – intraday or delivery. Tough to do a combo!
Sir,
How to identify the market/stock is in Trend (up or Down) or side ways.
Regards
Use simple moving averages for this.
sir how to identify formation of long or short position on index or stock
Technical Analysis module should help!
Sir,
In Intraday Trading what is the strategy for Stop Loss. Can u Please explain.
Regards
You can still use the support resistance as stoploss.
Sir,
Only technical analysis knowledge is sufficient for option trading
Better to have a broader perspective and not just rely on TA.
There are many patterns like bearish reversal,bullish reversal, Flag top, multiple bottom top breakout etc. There are about 6000 stocks listed in indian stock market. So is there any way of short-listing top 20 bearsish and bullish stocks of week where I can see any pattern is forming so that I can take decison to go ahead with trade or not?
There are various scanners that will help you identify these patterns , although in my opinion none of the scanners available for Indian markets are worth while. I would suggest you concentrate on Nifty 50 stocks and scan then for patterns daily. There would be 1 or the other opportunity in these 50 stocks on a daily basis.
How exactly will you calculate the risk reward ratio
Divide the expected reward over the expected loss and you get the RRR. For example you buy a stock at 100, with a target expectation of 110 and SL of 95, then expected reward is 10, and loss is 5. So RRR would be 10/5 = 2. Which means you expect 2/- reward for every 1 Rupee risk you take.
Wonderful Karthik sir!
1-1-2016 will give you prosperity, wealth, health, joy, cheerfulness, satisfaction, awareness, knowledge, amazing thoughts/great ideas! With all my heart Wish you happy new year to you & our Zerodha team! Zerodha makes me happy & learning about my real passion! God bless you! I hope Zerodha will be First place in worldwide! Thank you for constantly spreading Share Market knowledge!
Thanks for the kind words Girish! Happy New Year to you as well 🙂
Hi,
You have mentioned that once trade is initiated, one should not exit till target or stop loss is hit. What if in between other pattern is formed.
In the attachment I have initiated trade based on upfront falg candle break out pattern. But in between evening star patter is formed with bearish confirmation. So should I exit or stay till target/stop los is hit?
Rohan – this is a common occurrence. I’d suggest you stick to the original thesis and wait for the trade to unfold.
What’s your view about ADX? I am a fulltime day trader and continuously noted that if Adx increasing from 27 to higher levels the trade to be done in the trend side .if in between for eg adx@35 if iam observing a piercing pattern near the resistance and feeling to short..if I do so most of the time I ended up in loss..I read so many articles in the net Adx is the base for the trend but its not covered in ta..if adx is below 20 the candlesticks with s&r and oscillators are working fine..And also during trend reversal also the patterns are not working well..kindly clarify.
Here are some notes on ADX –
About:
The Average Directional Index (ADX), Minus Directional Indicator (-DI) and Plus Directional Indicator (+DI) represent a group of directional movement indicators that form a trading system developed by Welles Wilder. The Average Directional Index (ADX) measures trend strength without regard to trend direction. The other two indicators, Plus Directional Indicator (+DI) and Minus Directional Indicator (-DI), complement ADX by defining trend direction. Used together, chartists can determine both the direction and strength of the trend. Source: stockcharts.com
What should you know?
1) ADX system has three components – ADX, +DI, and -DI
2) ADX is used to measure the strength/weakness of the trend and not the actual direction
3) ADX above 25 indicates that the present trend is strong, ADX below 20 suggest that the trend lacks strength. ADX between 20 and 25 is a grey area
4) A buy signal is generated when ADX is 25 and the +DI crosses over –DI
5) A sell signal is generated when ADX is 25 and the –DI crosses over +DI
6) Once the buy or sell signal is generated, take the trade by defining the stop loss
7) The stop loss is usually the low of the signal candle (for buy signals) and the high of the signal candles ( for short signals)
8) The trade stays valid till the stoploss is breached (even if the +DI and –DI reverses the crossover)
9) The default look back period for ADX is 14 days
Apart from so many factors market movement is mainly due to supply and demand and can be notable through tbq and tsq..If TBQ>TSQ more demand is there the market can go uptrend and vice Versa but actually its not working fine..Even though mixing the same with ta..ur view pls..
TBQ and TSQ are transient in nature and not really dependable. So please don’t rely to much on this.
Remember, Even also some buy/sell orders is getting cancel when the trend change or depend upon the participant mindset.
Sorry, dint get that.
For swing traders the EOD data timeframe will be the best rather than finding the opportunity in 1hours/15 mins time frame..
Absolutely!
In the scalping guidelines u mentioned that we have to keep the view on bid ask spread with volume buildup..I hope u highlighted to point out the impact cost and it would be minimal in case of liquid stocks..I think the volume buildup is due to more supply as well as demand I.e some group of market participants are buying and the other group is shorting..by seeing the volume build up how can i arrive the decision as a scalper? Correct me if am wrong and kindly clarify..kindly correlate tbq,tsq(above query), volume buildup and bidask spared for better clarity..
As a scalper one must keep the liquidity in perspective all the time. The volume buildup shows us at which point the liquidity is maximum so that the impact cost is minimum. Also do note that the volume buildup alone does not trigger your decision to scalp.
Hi Karthik,
how to get market profile charts in kite? also is it possible to have a chapter on the same (understanding market profile)? By the way thanks a lot for all your efforts!
Poornima, no market profile is not yet available. I don’t know much about market profile, I need to learn it myself 🙂 Hopefully sometime in the future I can put up some material on it 🙂
Interest the TA module created is equivalent to reading a thriller!great narration with personalised touch,felt like attending a live session…great…hats off….btb…who all constitute the operators?is it allowed to form a cartel and rigging?should not the regulators intervene and curb if any such restrictive practice’s taking place?
Glad to know that 🙂
Cartel formation and rigging is certainly not legal, but unfortunately it does exist. Regulators are working really hard to clamp this down.
Hi karthik,the kind of correction undergoing in nifty,would it be right to go for contrarian view ?what about some chart patterns like pennant,triangle,cup and handle etc. Is than significant or just to ignore?
The problem with being contrarian is that the you could be eventually right but time may not be on your side. Being contrarian and investing is ok, but being contrarian and trading is quite a challenge. You need good timing skills here. Yes, indicator and patterns you have mentioned help in getting your timing right.
Thanks for teaching… TA
🙂
Hi Karthik, So on a daily basis I have to search for patterns approx between 2-3 pm only if we want to enter a trade on the pattern formation day and we are into positional trading?
Yup. You can prepare today for tomorrow’s trades.
I request you to excuse me for asking a question that has nothing to do with TA. After reading so many articles on stock market, I feel there is one method to make 3-4% month consistently. I discussed with some friends but they said that the return is too low and somehow evasive. I think that getting 3% per month is quite easy. If I buy one lot of SBIN shares at an approximate cost of 3.6 lakhs (@180 per share), I can sell a call option of April 2016 with a strike price of 190 at about 9 rupees. Assuming that the price moves to 400 on expiry, my profit of 18000/- on 3.6 lakhs will be with me in addition to the roughly 20000 (difference in cost of share bought and the strike price multiplied by 2000). That means I make a whopping 38k on 3.6 lakhs in 45 days without any tension. Of course there is a probability of the share falling down to say 100 or even less in the future but it is not expected to happen in a month or two and every time there is a fall, the price of acquiring it reduces to the extent of call option premium. Can you please tell me:
a) What is the flaw in my thinking because it looks too good to be true; and
b) Whether I can buy nifty future and do the same by selling a call option with a higher strike price than spot price?
Kindly let me know when you have time.
I’m a little confused on your P&L calculation considering the stock goes to 400, request you to share more details. Anyway, you are discussing a variant of Covered calls, which is a popular strategy. If you can consistently make 3% a month, then trust me you are sailing in a good boat!
Thank you very much for replying sir. If the stock goes above the strike price, the call option will rise too. Still the profit of spot price and premium received on the call option sale is with me. As I mentioned, I will have to sell the stock. If the stock price goes to 400 the call option will have to be purchased @ 210 (400-190 strike price). But that loss is practically covered since the stock price will fetch me a profit of 220 (400- 180 at which i bought). The 9 rupees premium on selling the call is still with me. That means the net PL is 220+9-210 = 19 per share or 38k for the margin of 3.6 lakhs blocked. I have no worry if the stock falls too because if SBI falls then banking industry will fall. God forbid. I have no tension about the margins or mtm etc.
Ah, got it. See the problem here is that you have assumed stock price will move by a large extent. It may not happen this way. What if stock price neither moves up or down…but sticks to a -5 to +5% range? It would be kind of tricky right? I’d suggest you play around with different expiry options to see how this goes….check out the excel models put up in Module 6, they will give you a sense of how to deal with such strategies. Also make sure you always evaluate P&L at 3 levels – Stock price moves up, down, and stays flat.
Good luck.
Thank you very much sir. I will go through the excel models as advised by you.
Please do. Good luck.
Thanks for the tutorial. You have explained price action in a very beautiful way and with enough examples.
Thanks for summarizing with the grand checklist(pattern, S&R, volume, trend, indicator and of course RR). I think this is the most important part of the tutorial to make a high probability trade.
Thanks Varun, I’m really glad you liked the content.
Hi Karthik, Again great piece of work by you and Zerodha. Thanks for bringing up such a useful training modules on Technical Analysis. I understand that purpose of this tutorials is to educate traders to learn TA and trade on their own successfully and it serves the purpose to greater extent. However, i felt you should have covered two more important topics which everyone should be aware of: they are 1. Divergences (RSI or MACD Divergence and how to use these leading signals along with other points covered in your checklist) and 2. Trendlines. Hope you agree with me they are important and consider them to add to this great tutorial when time permits.
I do agree with you. I need to re write MACD to include these topics, will be doing it shortly.
That’s great. Thanks, Karthik.
Cheers!
I am a day as well as swing trader since last 3years with the average returns in the market using technical analysis as well as hedging with options. Varsity gave a good base and regarding options theory learnt a lot from Sheldon’s option volatility and pricing and of course from varsity too and practically applying and acheiveing an average returns. Pls suggest the best book for technical analysis in order to get the strong and in depth knowledge to become a professional trader.
There are many books in TA, put I particularly like the Steve Nison’s book on candlesticks – http://www.amazon.in/Japanese-Candlestick-Charting-Techniques-Nison/dp/0735201811 . Quite expensive though.
Hello sir, in this statement that “If the S&R level is more than 4% away from the stoploss, I stop evaluating the chart further”, the 4% is with reference to range or the current market price.
Pleae clarify !!!
Thank U!!
4% refers to the price gap between the SL of the pattern to the immediate S&R level.
it means low of pattern if it is bullish and high of pattern if bearish?am iright
Yes, bullish reversals are found at the bottom and bearish at the top of the rally.
Thank You Sir.
Hello Kartik, a few questions about Pi:
1) Can I use a custom triple crossover MA script in Pi such that the 3 lines are visible on live chart?
2) Can I have the average volume line visible over the volume candles on live chart?
I can only see Expert Advisor here which actually generate alerts but the patterns are not visible on chart. Am I missing something?
Got it!! It’s under study now.. thank you 🙂
Cheers!
HI Aditya, can you please check with our support executives for this ?
Hi Karthik,
I have some questions about trading but apart from TA & FA , and hope you will put some light on it.
1) Is F&o trading is a business like any other business (like jeweler shop, kirana stores,restaurants, wine shop ,etc )
2)If yes how many people (aprox %) do this successfully.
3) Though too many peoples trades in market,why there are not open discussions on this business, like zerodha platform.
Thanks.
There are quite a few people successfully trading the markets, you may want to check this -https://zerodha.com/60-day-challenge/winners . There are many forums where people discuss topics related to trading.
Hello karthik sir,
thank you very much for such a nice modules on TA. it really very helpful in trading.
i would like to know which indictors r really reliable(as per your personal experience). i am asking this for not getting confused between so many indicators.
thank you very much.
I personally like the Moving averages – simple and easy to use!
Thank you sir for your quick reply…
Which moving average? and what time frame?
For day trading 9 min by 21 min…for swing trading 50 day and 100 day ema.
thank you sir.
Welcome!
Karthik,
Amazing effort!!
I have a very basic question regarding how to approach trading which I believe can be relevant to many
I have a day job and I love it. I am passionate about my day job so I at least put 10 hours on that. However I am also passionate about market as well and try to understand its nuances and of course make some money. I am moderately disciplined and risk taker, have ability to book loss. Most importantly I am passionate about developing a system to make money and not so much by pure luck. It gives me a kick when a system works rather than making some money by pure luck. The challenge is of course time. By reading your finale to become a trader one needs to put at least 3-4 hours only to shortlist nifty stocks which sadly I cant have. For me 1 hour is optimum. In this scenario should I strictly stay away from trading?
Once again thnx for helping us. You are a great mentor for all of us in the wild
Abhijit – glad you like Varsity! The idea is to spread the right knowledge and make people set realistic expectations. Nothing happens in a rush, I’d suggest you try out investing to begin with. Investing based on right ideas and eventually experiencing a multi bagger is a different ball game! This does not require as much time as day trading….but yes requires great amount of efforts in terms of understanding business. Of course you can always get into trading as and when you find the bandwidth.
Sir I’d like to know if shorting is for intraday or interday shorting ( delivery shorting ) can also be done ? Thank you .
You can short stocks in the spot market on a intraday basis…however you can short and carry forward the positions in the derivative markets.
For a noobie, What amount would you suggest to start trading with so as to get some hands on experience? Also where should one start, Equity (Intraday/ Delivery) or F&O (Futures/ Options)?
I’d suggest Equity delivery is best way to start. Once you are comfortable you could try overnight F&O…and finally intraday. You could have upto 25% of your capital for trading with the rest invested for longer term objectives.
how can one spot the end of a retracement? when does one start buying? is support and resistance the only way?
There is no way one can say when the retracement would end. S&R helps you in taking an intelligent guess, nothing beyond that.
Hi Karthik, If i use 5 min candlestick chart for intraday trading, then what is ideal parameter setting for stockastic oscillator & MACD
Switch to 10/15 mins time frame.
ok for 10/15 min time frame…but what will be corresponding ideal settings parameter for stochastic & MACD…like 5,3,3 or 9,3,3 for stochastic or 12,26,9 for MACD
This for you to estimate Ganesh! Remember the numbers which work for me need not necessarily work for you.
Hi Karthik – This is an amazing piece of information put up here.
I have a doubt here, how can I use the PI software in Linux machine having Ubuntu.
Puneet – I’d suggest you speak to our support executives for queries related to Pi.
Dear Sir, The higher the percent of deliverable quantity to traded quantity the better-
What it means and how to see. Thanks
It just means people are buying the stock and holding it in their Demat. Its empirical…in fact you can get the data from NSE and backtest it. If you do, please do share the results with all of us 🙂
please include elliott wave oscillator in Pi
Will pass the request to Pi team. Thanks.
First of all hats off to you guys for making this module. Now my question, I prefer to trade in options because of quick results and less investment, but I didn’t had success though I know options Greeks so now I have decided to base on my trades based on TA, do I need to know anything else apart from options Greeks and TA to be taste success in option trading.
I guess its good enough to get started, give it a shot. If there is something else required you will discover when you place an actual trade. Good luck.
Another question, what would be success rate if any one practice whatever you have taught and apply it properly. And in general how accurate is technical analysis in terms of prediction.
Difficult to comment on this Vishal, each trader has a different temperament.
sir
you have told that at least 500000 lk volume per day is good but every share of eq segment having more volume then 500000 per day ,for example marksans pharma it is also caring more then 500000 lakh volume/day. dose it mean that it is a good share for day trade or swing trade or
even long term
Higher volume just indicates that the liquidity is good, which is a key ingredient for day trading. However, you also need to pay attention to other things in the checklist.
Is there any way, by which we can get historical data of all stocks in NSE (Open, close, high, low values) for everyday, after market closing hours for free ?
You can download the data from NSE – https://www.nseindia.com/products/content/equities/equities/eq_security.htm
Thank you very much for explaining TA in such an understandable level to beginner. Excellent information…and the checklist you have developed….awesome!!!
Thank you 🙂
1.If a stock makes all time high with the formation of valid bearish candlestick pattern and also satisfying the 3-4 check list points. Can I short if so what’s the probability of success as per ur exp..
2.As per my exp..if a hammer(even if its red) formation during the uptrend is not working fine whereas shooting star is working well and vice versa in the downtrend.. Pls correct me if iam wrong. The pattern is validated after 3-4 checklist points.
Yes you can short. I cant pint point to a particular value, but my guess is that you could have a favorable outcome considering the fact that many traders would want to book profits at all time highs.
Yes, in a uptrend I prefer shorting on a shooting star as opposed to a paper umbrella.
While day trading iam able to predict whether the market is trending or trading with the help of adx in most of the cases. But how can I predict the same during swing trading. If I use adx the values are not even crossing 30 also(max).
What’s ur view about Elliot wave theory..
You should experiment this yourself. Give it a shot.
I’m not a big fan of Eliot wave.
how do u know a stock is moving up due to short covering? does it reflect on the charts? thanks karthik.
A sharp upmove after a prolonged downtrend is usually attributed to SC.
Sir,
S&R based trading , Suppose if i am going to buy a stock @ support level my confusion is where i would give SL , Considering Risk reward ratio & what are the thinks do i need to consider for giving SL ,for S& R based trading.
60 % of time hitting the SL and going my direction. How to solve this kindly mention your view point ?
Thanks
The beauty of support is that the support level itself acts as the stoploss level. You should only take trades which offer attractive reward to risk ratios after considering in the support / SL levels.
lets say i buy 10 stocks of tcs, product type CNC. now next day if i want to put a stop loss — can we do it like this. sell 10 stocks of tcs CNC LIMIT ORDER. will this act like a stop loss??
Yes, but you will have to wait for the stock to hit your DEMAT fist. Remember settlement happens on T+2 basis.
so is there any other way to put stop loss to the cnc product before it comes in our trading account?
Nope.
Hi, first of all appreciate for this wonderful tutorial and efforts that is given for it. I am very new to Trade world, i knew only that this is riskiest asset class. I have gone through lot of chapters of this module and i am confused on positional trading and swing trading difference. Also if we can hold stocks from week to months in this then it is similar to long terms investment in terms of blocking the money. Also may i know about margin money for swing trading or it is just full stocks money block?
Thanks for the kind words Tariq.
Hopefully this will give you the clarity –
1) Intraday – when you buy and sell stocks the same day
2) BTST – You buy today and sell tomorrow (I’m personally not a big fan of this)
3) Swing trade – When you buy today with an expectation of holding the trade for few days. This is a short term trade done with an intention of profiting from the short term momentum. Since you hold this position for few days, it is also ok to refer to this as a positional trade
4) Long term trade – When you buy stocks and hold on to it for more than 365 days.
Thanks for clarification, it really did clarify. What about margin money required for swing trade, i guess there is no margin money concept on swing trade. Is it same like hitting the stocks T+2 in Demat account because we are not sure about holding days, may be more than a week? But somewhere i had read that in swing trade we can sell stocks in same day so it should not be T+2 way , again i am confused. Can you clarify this also. Thanks in advanced.
You can do swing trading two ways –
1) In spot – here there is no concept of margins, you will have to pay the entire cash required to carry the position forward
2) In futures market – here you need to deposit the NRML margins. Check this to know which contract attracts what kind of margins – https://zerodha.com/margin-calculator/SPAN/
Can you please explain what you mean with ‘Keep a tab on the bid ask spread to see how the volumes are building’
Higher the bid-ask spread, the higher is the liquidity and therefore I’d assume higher volumes. Larger is the spread, lower is the spread and lower is the volume.
didnt get the spread term here,larger the spresd and lower the spread kindly explain in comment box
If the liquidity is high then the spread (i.e the price at which one wants to buy and sell) will be small. For example – you will find a seller at 100 and buyer at 100.25. However if the liquidity is low, then the same spread will be larger i.e 100 and 101.
i got it thanks
Hello there,
You mentioned that after you’re done analyzing the charts for recognizable candlestick patterns, you look for prior trends.
Let’s say that I identified a bullish engulfing pattern . Now the previous trend has to be downwards for it to work right? Could you please tell me how far back in time do you look for that TREND? As in do I need to check whether there is a downwards trend for the last 30 days , 60 days or what?
Thank you.
This again depends on the timeframe you are looking at. For swing trading where I look at the last 5 or 6 trading sessions (or at least 5-8%) decline. For intraday trading (5/10 mins candle) I look for at least the last 10 candles.
For a swing trader , last 5-6 trading sessions refers to last 5-6 daily candles ,right?
Yes, on a end of day basis. This means the last 5 or 6 trading sessions.
Dear Karthik,
First of all, thanks for a lovely module. I have few queries (for swing trading)
1. When looking for prior trend, u replied in one of query that u look for 5-6 last candles but then u said thay we need a look back period of 6months or 1 year for checking prior trend. Didnt get this? Also market move in waves, so we need trend of particular rise or fall or general trend of stock?
2. Volumes should be above 10D avg volume. Volume of which candle? If it is Doji or Hammer lets say then Volume checking should be on Doji or Hammer candle or on the candle following the pattern?
1) 5-6 days gives a sense of the secondary trend which is more on an immediate basis, however, 5-6 months gives a sense of the slightly longer term trend. You need to use both these in conjunction
2) The candle which creates the main pattern and the candle upon which you buy, both should have good volumes.
Hi Kartik,
I normally get deceived by the volumes of the bid and ask spread
How can THE BID AND ASK SPREAD be read with more reliability as an INDICATOR OF BULISHNESS OR BEARISHNESS OF THE STOCK. Explain with an exampl.
Well, from my experience its futile to read the volume of Bid Ask as its transient and very hard to make any reliable conclusion. I’d suggest you stick to the end of day volume instead.
Sir, i have read the module on TA. So should i start trading or read the following modules as well?
What startegy do you recommend for beginners regarding the full course?
The module on TA should alone be sufficient for you to trade in spot market. However, if you wish to trade futures, then you should learn how the futures instrument functions.
Sir, having completed the module on TA, what should be my approach towards the market? I mean should i be a swing trader or intraday?
Also, how should i start looking for patterns? Should i scan the Nifty 50 or something else?
I am absolutely new to the market and this will be my first investment.
Pl provide some guidance.
I’d suggest you look at swing trading to begin with. Look for patterns on a end of day basis in the Nifty 50 set. Execute trades with an intention of holding the trades for few days…once you gain confidence (over next 6 months to a year I guess), I’d suggest you venture to day trading. Good luck.
First of all thanks a lot for starting this learning session, i just wanted to ask you 1 think, trading is a business or gambling, i mean to say can we make a career in this
For the ignorant, its gambling, for the learned man its profession.
Hi Karthik,
Thanks for the well written information. I have 2 doubts-
1. From the information here I got a sense that if someone is trading stock X then he/she should only focus on the chart and characteristics of the stock X only. For example if bullish signal is generated and checklist is fulfilled for stock X then buy X. But in most of the cases when X is bought and nifty/market is down/weak it doesn’t performs as per expectation no matter how bullish is X. Same is the case when shorting but nifty/market is strong.
How one should take into consideration the nifty/market trend/movement when taking a decision to trade X based on checklist?
2. In general, its rule that we should go with trend. So if someone is dealing with individual stock trend, then how to take into account the market trend.? For example stock trend is +ve and market trend is -ve OR stock trend is -ve and market trend is +. I can understand that if stock+market both trend are +ve then it works OR stock+market trend are -ve then also it works. This positive+negative OR negative+positive trend happens most of the times in the market.
I hope you can throw some light on this based on your experience. And we can add this in your checklist while taking decision.
Thanks,
Vishal
1) Yes. However, you should remember that there are days when stock will continue to display bullishness/bearishness despite the weakness/strength in the market. Typically, this happens when the fundamental news surrounding the stock is quite strong.
2) Yes, I totally get your point. Unfortunately, this is how it works. Not all things will be perfectly aligned and presented on a platter to us :). However, there are days when things are aligned…thats when you need to have the conviction to go all guns blazing.
Hi Karthik,
they way you have made checklist for swing trading is ossom, it will be very helpful if you can provide few checklist for intraday trading
Will do that shortly, meanwhile you can adopt most of the checklist items for intraday as well.
I have configure TIME as start 9.00.000AM & end 9.00.000PM. for intraday local data file.
But metastock does not display all the data in the chart. It does from 9.15 to 12.59 & ignore data from 1 pm to 3.15 pm.
Pl advice how to configure. any body can help for the correct configuration
Thansk.
You will have to speak to someone from Metastock for this 🙂
sir, can someone rely on monthly chart for trading
Yes you can. Longer the time frame longer should be your holding period.
Return wise which is more profitable? Swing trading or day trading?
Depends on many things your trading temperament, strategy, risk management etc.
This is the best info on TA available in market. Hats off to Karthik for such easy to understand language.
Thanks for the kind words, we are happy you liked the content here 🙂
Hi Karthik, your information is great but still I have few queries to be sort it out.
1. As suggested charting software ‘Metastock’ and ‘Amibroker’ are they provide the volume of each buying and selling or just a combine volume of multi users at one time like zerodha pi chart.
2. Who decides the opening price of a stock and on what basis? is it company or stock exchange? and why one can’t buy a stock in the morning on the last day closing price?
3. Can I submit a cover order in the evening for coming day? and what time the order will execute would it be at 9am or 9.15am?
Please revert me in details as I am a day trader on zerodha and stuck with these things.
Thanks
Yoosuf
1) They combine the data
2) Traders place their bets, based on this, NSE decides an optimal opening price. NSE has an opening price algorithm which takes care of this on a daily basis. Last day prices is weighted average price of the last 30 mins. Please remember, opening price is not the same as the previous day’s closing price.
3) Cover order and bracket order are both intraday order types.
Thanks a lot for making such a great content available to us !!!!!!!!!!!!!!!!
Most welcome! Happy learning 🙂
Hi Karthik,
Can you please pass this feedback to your technical team that the comment writing textbox in this page is very narrow. We cannot see the full comment while writing. The bottom-right corner expansion arrow also does not work (it is supposed to enlarge this box when dragged, but it is not working).
—
Anyway, coming to the query, I wanted your help on 2 concepts. Thought this would be the best place to ask.
—
I am confused between 2 things – Delivered quantity and Open interests. Take for example, M&M Financial Services which I bought today at 293 and it retraced back to 275 – slowly over the whole day, no sudden fall as such. End of the day when I checked the Delivered %, it is showing very high. Totat traded vol is 426K and Delivered qty is 328K (almost 77%). This shows the delivery is taken by many people, so people might be bullish about its price. Then I checked the OI. The OI is reduced by 4.6%. When price is falling and the OI is also falling, I think it shows a bearish movement – pls correct me if I am wrong. The Delivered qty and the OI are somewhat in contradiction here. So what should I conclude, is the price expected to go up or go down in a short term ? The actual price can move either ways, but I am asking theoretically what do you think comes out of this data ?
Delivered Qty itself can be quite misleading 🙂
It also includes BTST transactions, which means traders buy today (as in take delivery), with an intention of selling tomorrow. Clearly, not a long term approach here.
Personally, I do not like to track any of these data points while trading. It consumes a lot of time and none of them are straight forward.
Hi Karthik,
By following the checklist as mentioned and choosing the right option strategy, can we take positions for options trading?
In other words, is the checklist only meant to trade direct underlying?
Well, you can use the checklist to develop a view and conviction on the trade. You can certainly use this to set up an options trade. No doubt about that. Check this chapter on the same topic – http://zerodha.com/varsity/chapter/getting-started/
Hi Karthik,
I have one doubt.
Suppose i buy a stock of xyz @200 and go long(INTRA DAY). Then if the stock goes downwards and suppose after some time it reaches higher than 200 so i book profit.
Is the same concept applicable in short selling i.e. if i short xyz at 200 and if it goes up but after some time dips below 200 can i buy back then. All in intra day.
Thanks in advance.
Yes, of course.
How can i connect with zerodha pi? I’m a client of zeordha. Is it free?
Yup, its free. I’d suggest you give a call to my colleagues at the support, they will be more than happy to assist you.
Thanks for suggest
Cheers!
Not just in this chapter, but in all modules and chapters, I find “I personally prefer”. I would like to know who this “i” is? Who in Zerodha has given these preferences?
Rakesh – that would be me 🙂
OK, thanks….?.
I have another question. In this module in chapter 19.5-the scout, under part 2 – the evaluation process, point number 7 says “risk to reward ratio”. But isn’t that reward to risk ratio? As said in the previous module.
Both are the same 🙂
how can both be same. It just changes the meaning completely. Because in reward-to-risk ratio, the reward is in the numerator and risk is the denominator. But in risk to reward it is exactly the reverse.
So, if they are the same, a reward-to-risk ratio of 1.5 should be a risk-to-reward ration of 1.5 as well. But this is not true, as the risk to reward ratio becomes 0.67(1/1.5).
How stupid of me to say its the same, guess my mind was else where when I responded to your previous query 🙂
Clearly its not. The idea is to figure out the expected reward for the given risk…so reward/risk helps us find this.
in this module, you request us to do swing trading for some time and then i may get enough confidence to do intraday trading like a scalper. But, my question is in swing trading where i hold the stocks for a few days, my CNC buy orders are carried forward to the next days as well. But what about sell orders? zerodha support call center just told me that sell orders are only intraday. Is that true? Can’t i enter a new position with a bearish view and hold that stock for a few days? cause only then will i be able to do swing trading which happens for a couple of days. Otherwise, all my swing trading will only be buy orders. Please help…………thanks in advance.
True, you can carry forward stocks in the CNC mode, but you cannot short and carry the position forward. For this you need to trade futures or options.
Hi Karthik, I want to create a zerodha account (include bank integration) can you help me ? or suggest me some one or any number?
Hi Ramesh, thanks – we will be happy to have you as a part of our growing family. I’d suggest you leave your details here – https://zerodha.com/open-account and someone from sales will contact you within 30 mins.
Hi Karthik, using that ling i sign up zerodha account. It asked my personal details(Pan no, aadhar num) and also Bank details(Account num,bank name). Is it the regular process for all? can i give my personal details? it will be safe and secure to give my bank details?
Ramesh, yes, your details would be safe. Else, you could also opt for a call back and talk to one of our agents.
hi, karthik……
1)i would like to know what must be the lookback period of an intraday trader,?
2)and while plotting S&R levels upto how far should an intraday trader lookback?
1) Really depends – can be as dated as 3 months to identify S&R or as recent as previous day. It depends on the stock, situation, and your expectations.
2) 3-6 months to get a sense of long term S&R and last 5 trading sessions to get a sense of the recent price action.
This module is really well done..Loved reading and learning every bit
Glad you think so, Omkar. Good luck and happy reading!
sir thank you for your effort
sir i am waiting for your advance book of containing gann theory, harmonics patterns and elliot wave
when will you share with us???
I’m not too familiar with these topics, Nitesh. If I learn them myself, I’ll be happy to share my learnings 🙂
Is there any way to screen stocks on Pi by using filtering criteria based on its its pricing and volume information at EOD everyday? for example if I want to check the list of all FnO stocks whose MACD line has crossed the signal line from below as on the end of trading day today or those stocks whose RSI is below 30 as on today, etc?
Yes, you can. Check this – https://zerodha.com/expert-advisors/
sir i we use pi bridge to connect to amibroker , do we still need to pay extra for data feeds to data vendors?
Not required I guess. I’d suggest you drop an email to [email protected] .
hi, karthik…
https://kite.zerodha.com/share/8BYWXVQFXT.png
the link above is that of a chart, my question is should i classify it as an uptrend or a downtrend, with respect to a swing trader and an intraday trader.
Primary trend would be bullish, the secondary (which is always counter to primary) looks downward. Remember, in a strong primary trend, secondary trend can be quite short and can reverse directions quickly.
Hi Karthik
Could you please suggest the ideal candlestick time frame to look at for intraday trading?
Thanks
Arya
If you are starting fresh, look for EOD data…however, if you have some experience trading the markets (intraday) you could look at 5 or 10 mins candles.
is it prudent to scan or analyse individually about 400 stocks about their chart patterns, candlestick patterns etc on a daily basis to look for potential profitable trades for intraday/swing trading? how can an individual trader do this because the number of stocks seems to be pretty high and time looks somewhat low? also, i mean that doing this by opening the charts in multiple time frames for each stock and not relying too much on screeners.(because screeners many a times fail to capture profitable patterns)
400 is impossible. 50 is doable. Good chart reading practice will eventually lead you to stage when you spend less than a minute to scan through a chart.
I want to trade with NIFTY futures.I have gone through the complete chapter of technical analysis and have good understanding of the Grand checklist.Thanks a lot for putting such detailed information in this training.
Can i go ahead and use this to start trading in NIFTY futures or is there some specific guideline to be followed for index future trading.Kindly suggest
You can trade Nifty futures. Good luck and stay profitable.
Respected Sir,
Thanks for wonderful modules.
[ Working on extended trade mechanism to convert (global/domestic) news, (global/domestic) market data/movements, street views, so on & so forth…… into possible stock price trend/direction predictions, followed by grand checklist at last, This will help active traders like me to model upcoming opportunities & to be ready accordingly. ]
Please suggest trusted (free) website(s) where I can find Weightage of stocks in their respective Sector Specific Index (like all BANKEX stocks with their Weightage in BANKEX, Nifty IT stocks with their weightage in Nifty IT) & more such data like Equity Stock Beta (BSE/NSE both), Equity/Futures Impact Cost (BSE/NSE both), Weightage of stocks (BSE/ NSE both) and so on?
Regards
James
NSE itself gives out this info, this is the most authentic source for Index information – https://www.nseindia.com/products/content/equities/indices/indices.htm
Thanks a lot !!
Reports are month-wise, hence required data gets changed every month, like there is difference in beta & weightage figures, even, by 0.1% in almost all stocks in every sectors.
1) If considering only last month data would be enough for … – or – what should be the Look Back Period for calculation of Beta, Stock Weightage in respective Sectoral Indices and/or in Nifty for precise sense/simulation of market movements for …
i-Scalping (purpose of about 12-25 trades a day for 1%)
ii-Trading (purpose of 1-3 trades a day 1%)
iii-Swing (purpose 2-3 trades a week for reliable trade for 2-3%)
iv-Short Term Investments (purpose 60-365 days for 6-10%)
2) Is there any link for same data in BSE too? I searched BSE site, but not got. Please provide, if any?
Thanks in advance !!!
Regards,
James
**I mean do I have to take mean of all Beta(s) & Weightage(s) from multiple monthly reports (Look Back Period) or just last month data would be enough for i – iv. [Better if there would be an edit button :-)]
No, not required.
1) You should look at last 1 year data for beta. You should take Weightage as is from the exchange. If you are looking at constructing a portfolio and assigning weightages to stocks (porftolio optimization), then I’d advice you to keep track of the discussion happening here – http://zerodha.com/varsity/module/trading-psychology-and-risk-management/
2) For scaling you dont really need beta and stuff. You just need to keep an eye on the price and volume
3) For trading/swing – 3-6 months
4) For investments over 1 year, look at at least last 2 years of data
5) Not sure if BSE provides this info.
Thanks a lot Sir! This was the information I was exactly looking for.
Finished only 4 Modules & constructing the base portfolio for scalping+trading (can be for swing too). Will soon enter the live world of Zerodha & also reach to Module 9 soon. Will be looking for more help if needed.
Thanks Zerodha Team (and Karthik Sir) for this such a wonderful platform for us !!!
Good luck, James. Wishing you all the very best. Stay profitable.
Hi! I am going for a trading course where my professor strictly says that scalping is the best form of trading for huge profits with minimum loss! And trading must be done only in index options either Bank nifty or Nifty 50 and in scrips with maximum volumes preferably at the money or slightly out of money. He also charges a heavy fee of 1.5 lakhs for the below scheme assuring profits. (unlike Zerodha varsity which provides quality content free :)…. )
He instructs us to follow just the below guidelines
1) Use the slow stochastic oscillator with 7,3 instead of 14,3
2) Buy the scrip (Call or put) when the stochastic comes below 20 and takes an upward turn
3) Sell the scrip immediately as when u get a minimum profit of 25 paise or 50 paise and no waiting.
So he suggests if u can do 20 successful trades in a day then u can keep increasing ur capital easily!
So Sir, what are ur opinions about my situation and trading strategy tat i am asked to follow?
Firstly, you should not be paying to learn these things. And certainly not 1.5L! Scalping the good, but not advisable if you are newbie. Please start with doing few overnight trades. When you carry positions overnight, your learning curve is much better.
Since you have paid so much, why don’t you demand the guy to sit next to you and do a demo of placing 20 successful trades for 5 consecutive days. It would be impossible, I guess.
I’m not sure about his instructions, but on the face of it, it does not look good to me.
Hi,
I am a newbie and have been doing virtual trading .I ensure that atleast 4 points of the checklist are confirmed with utmost importance to candlestick patterns and volume.Though, i ensure that the analysis is done properly sometimes the market goes in the opposite direction or hits the stoploss.After it hits the stoploss i keep wondering where would i have gone wrong and doubt my analysis.So, is it normal even after analysis the market might go down?? .If so how can i learn from the analysis that have triggered the stoploss??
Yes, of course. You just need to do what is right. Even the most seasoned traders end up taking trades which can go wrong. Good luck.
Sir, what does stochastic oscillator mean?
It is an oscillator to identify momentum in the market. Many use it for intraday trading. I particularly find it very noisy.
Are indicators necessary for successful trade?
No.
In the part 2 (Evaluation process, Point #2): You have mentioned about the prior trend, for a bullish candle the prior trend should be downtrend and so on. However, as we studied all the patterns there were few patterns in which you mentioned that prior trend does not matter, for example, In Bullish marubozu the color is important (blue canldle) and not the prior trend, similarly for bearish marubozu. So when we identify such a candle, what should we do for idntifying prior trend?
Only Marubuzo does not require a prior trend. Everything else requires a prior trend.
How does the corporate actions such as stock split, bonus issue, rights issue, dividend payout, etc affects the reading of the price charts?
some of these events change the price of a stock significantly. can this effect the moving avgs, support and resistance?
As soon as a corporate event takes place, the chart gets adjusted for historical values. This is done to smooth out the chart and give an unbiased view of the price action.
Hello Sir. Will I get EOD charts in Pi ?
You can change the time frame from the chart settings widget.
That means my clicking on “1 D” time interval ? ( I am new. My questions may seem silly. Hope you won’t mind ..)
No question is considered silly here. We are all here to learn 🙂
1 D refers to the time frame, D stands for day, meaning you are loading end of day charts. End of day chart summarizes the day’s price action into 4 data points called Open, high, low, and close. Check out section 3.5 here – http://zerodha.com/varsity/chapter/chart-types/
LookBack Period (LBP)
We have read above that for swing trading (4-5 days) the LBP should be 6 months to 1 year, and for S&R can be upto 2 years. So does this mean that to identify a prior trend also the min LBP should be 6 months.? Or it should be 1-3 months.?
Also, continuing to the above question..
(A) should the LBP for a stock be based on whether a company is private or govt, as I have seen that various govt. owned entities like ONGC etc have a very range bound movement and to get a prior trend of such stock we may need to see more than a year.
(B) Should the volatility of the stock be taken into account to see the LBP? For instance a stock with high volatality, may require lesser LBP than a stock with lesser volatality
Topic: Mix of two trends within a time frame
Lets take an example of GAIL India LTD, (Sorry, there is no option to attach a screenshot, hence I’ll have to write and explain)
From Dec 2016 till 1 March 2017, it was in uptrend, But from 1-March till date, it is in sideways. So which time frame to select here, Dec – Apr (Mix of two trends Upward+Sideways) or March to April (Sideways). I want to keep the stock for 4-5 days?
Or we should start looking backwards from today till there is a trend change (with some minimum time frame like 15 days or so).
As in above example, My LBP could be from 1 March till date (1.5 months) which is a sideways movement.
I would look at it as a whole – an up trend followed by a consolidation. Good chance of a break out on the upside
A) LBP should be sector and ownership agnostic
2) Yes, it certainly helps to keen volatility in perspective
Longer the LBP, better is the perspective. For swing trading, I’d be happy looking at 6 months chart.
Hi Karthik,
I have prepared a simple matrix in excel which I am unable to upload as it in a tabular format. In the first line has the list of few indicatiors, LPB, etc. Second line has their default parameters, 3rd line onwards is the trading length duration and suggested parameters for the indicators. I wanted to fill the suggested parameters based on your experience & guidance. Please let me know if I could email this to you or how else I can upload the format so that you can edit. I am pasting directly here from excel, not sure how it will turn up for viewing.
Indicators MA – Single MA – crossover RSI MACD Bollinger Band (BB) LBP (# of candles) Candle Stick (EOD/EOW/EOM) S & R (In weeks)
Default Parameters None None 14 Days 12,26 days 20 days, 2 SD NA NA NA
Trade Length 4-5 days Suggested Parameters
1 month
2 months
3 months
6 months
Here the link to the drop box where the file can be accessed
https://www.dropbox.com/s/9s5rufj001i3lw9/Indicatiors.xlsx?dl=0
Thanks, will look through.
Can you mail it to ea @ zerodha dot com?
Emailed ..Thank you..
Cheers.
Hi Karthik, did you get a chance to have a look at the file that I sent..I think it would be really helpful for all the readers, hence worth your time.
Not yet, Manish. Will do soon.
Please let me know if my understanding is right… End of day data means the candlestick formation for one complete day..Hence when you say you look at the data of the last 3 or 4 candles it means one day candles of the last 3 or 4 days…Am i right?
Absolutely.
Hi Karthik,
If there are certain securities under ban from F&O trading or normal equity trading for whatever reason, but I mistakenly place trade for such securities on zerodha then what will happen? Is there any mechanism which zerodha provides to clients so that if there is any security under ban by sebi and the client unknowingly tries to place trade then that trade gets cancelled?
The system will reject the order and the reason for the rejection would be mentioned as “Security Under ban”.
I have recently opened my account with zerodha. I have not transferred any funds to my account yet and have not done any trades yet. However, when i opened Kite, my margin available was shown as -0.002(negative 0.002) and account value as -0.002(negative 0.002). Why is this happening?
Please check the ledger entries (across all the financial years) to know why you this debit.
Hi Karthik,
I missed your webinar today on “Volatality Based StopLoss” and unable to find the link for same. If possible would you be able to send me the link for the video.
Thank You
Ah, there was some problem and we ended up losing the video 🙁
Guess, we will do this again.
Hi Karthik,
Thanks for the wonderful writeups. Its very enlightening.
I am currently trying to apply your fundamentals and stuck at finding Resistance level for Tata Steel. Below is my analysis
Script Tata Steel (Last candle date 26-05-2017, 1D Chart with 2 year look back)
1. Formed Bullish Marubozu
2. Prior Trend was Bearish (semi) or flag formation
3. Volume is above 10 day average
4. Support around Rs 500 level due to triple top formation (or is it resistance)
5. Dow : Breakout from flag formation
6. Risk Reward Ratio (I am stuck)
Risk = 11.75 (511.75 – 500)
Reward = ? What should be target as this is a two year high
.
Appreciate Your Insight,
-Rasila Desai
It really depends on your holding period. If you wish to do an intraday trade, them you can probably expect a 2-3% movement in the stock. However, if you wish to hold on for a longer time, then look at the nearest resistance and measure the target. Considering we are in a bull market, you could probably expect the target to be achieved sooner than expected.
Hello sir
What should be look back period for a day trader especially when he is trading nifty futures?
For drawing S&R
Yup
You could look at least 15 days of EOD data along with 3 days of intra day data.
Hello sir
What is probabilities of mean reversion? I read it somewhere but the author didn’t elaborate it. Is it helpful for day trading? If it is, then i request you to write blog for it.
Thanks 🙂
If a stock has increased from 50 to 60, where 50 is the average price over the last 15 days, then there could be a possibility of the stock falling from 60 back to its average (also called mean) price of 50. This is called mean reversion.
Its so simple. Many people talked about it on quora but didn’t elaborate.
Thank you 🙂
Welcome!
Hi Karthik,
Thank You and Nikhil for “In Conversation with Nikhil Kamath” video. In this video Nikhil mentioned as a trader he mostly trades in Arbitrages and Hedges.
Q1. My understanding of Arbitrages is limited to taking advantage of decreasing price difference in two different markets ( NSE and BSE) by entering into short and long positions. Apart from this strategy, are there any other strategies. Also in addition, are there any other markets where we can take advantage of Arbitrage.
Q2. Regarding hedges, i understand it is a strategy where you make use of leverage to enter a position( for eg1: short) in reverse direction to that of what you entered in Cash market( for eg1 above : long). Are there any other strategies in addition to the above.
Q3. I have recently read about Market being opened at Gujrat Gift City which will be open for 16 hours. Though currently only limited stocks are available in this market, i am assuming all the Bluechip companies/Commodities/Forex will be soon launched in this market. Request to let us know if we can use Zerodha platform to trade in this market. Also request to educate if any Arbitrage opportunities can be exploited in this new market.
Once again, Thank You for your contribution towards our Education. Much appreciated !!
Kiran
1) Taking advantage of price difference is just one kind of arbitrage. There are other types as well – volatility arb, statistical arb, relative value etc etc. We will talk about these things in Varsity sometime soon
2) Suggest you read this with regard to hedging – https://zerodha.com/varsity/chapter/hedging-futures/
3) Indian retail traders dont have access to gift city, more on that here – https://tradingqna.com/t/why-isnt-trading-for-retail-indian-clients-allowed-on-the-international-exchange-at-gift-city/8606
Good luck and happy reading!
PS : For all the other here is the link for the video – https://www.youtube.com/watch?v=KvxRs6Ouyqs
Hello sir
Three weeks ago when Nifty was rallying high, analysts from Oswal and other financial firms were boldly confirming that it would go beyond 10000 mark and the then might be retraced back as a correction. Now the same derivative analysts predicting that it might go below 9200.
I doubt their intention if they really predict or just try to misinform the retail investors or traders.
I want to know your views.
Thank you
Varsity student
Well, the whole idea of Varsity is to empower you as a market participant so that you can develop your own views and not really depends on analyst to develop an opinion on markets.
Hello karthik,can u help me wide one thing? Suppose I want to create a universe of stocks which I will observe everyday for its performance…suppose 200 around shares….so wat criteria I should set while selecting the shares…..and how much shares should I go through each day…
I’m suggest you tack not more than 20 – 30 stocks at any given point. Criteria could be anything – highest sales, lowest PE, marketcap etc.
Hello karthik sir.First of all i would like to thank you for this amazing work. Its like a bible for a rookie like me.
Now i have one question, Sir i am student right now and currently doesn’t have any earnings and i am planning to enter stock market. Thats why i opened the account with zerodha. And doing paper trading for the past 3 weeks by learning from these modules. And now i want to do real trading but i only have 1500rs as savings. So what do you suggest. Should i go for intraday by taking the benefits of leverage or should i go with swing trading. But my problem is i have really low budget and in the coming year i may have some job but till now i want to support myself and ve financially independent. Please sir put some light on me. And if possible with reason
And btw i also have one more question related to you that , with the immense knowledge you have when i am going to see you on forbes list 😛
Hi Amam,
I’m glad you liked the content here and i’m happy you are learning well. Here is my honest feedback for you –
1) 1500 is indeed a small amount to start trading. I understand that you have learnt many things and have the itch to put in a trade. But please do not do it at this stage.
2) Avoid leverage at this point. Take it only when you understand the effects of leverage completely. You will understand this well only when you trade. But to do that, your capital is not really sufficient
3) Invest that money in a good stock and forget about it
4) Use this time to learn more and observe the markets – investing in learning is the greatest investment you can ever do
There are many knowledgeable people out there, but not everyone can feature in Forbes. For that, you need to do something beyond the ordinary. Hopefully, we all get to do that someday!
Good luck and happy trading.
Then should i go for direct mutual funds. As it reduces the chance of picking up wrong stock. And sorry to annoy you sir but as you said 1500 is very small amount then even if i invest it in delivery then also it can hardly become 3000 even after year. Then why don’t you suggest doing intra trading and earning small profits and then investing it again. Also through this i’ll be able to learn more things like you said one cannot learn swimming just by reading the book.
Direct MF is always a good option. You have assumed that you can make small profits trading intraday. This is easy said than done. If you lose all the money that you have, then how will you get back to markets? The idea is to stay in the game for long and make enough money in the due course, if you lose all your chips now, you will have nothing to bet later on.
Hello Sir
I would like to know the time frame of studying charts for swing trades.
Thanks in advance.
At least 6 months of EOD data.
In newspaper we get to know the amount FIP or FII or domestic institutional investors invested in the market. Also they give the vital info about the stocks they bought or sold. My question is how can we get the same info the time they buy or sell stocks of a company?
Thank you
Varsity student
It gets aggregated by market close. So real time info on this (yet).
What candlestick time freme, look back period, strategy and universe of opportunity to be followed for swing trading.
Thank you.
Please start with this very chapter, you will get your answers.
Hi,
I have always been interested in stock markets and have always tried to learn something new.
This is a very good website for learning technical analysis, but i still feel that this is not enough, becoz i have tried it a lot of times following your checklist and what i felt is that all these info. that u gave are related to when the trend changes which doesnt happen on daily basis, infact it takes weeks, sometimes months to happen. I want to know how the intra day trading works. How do the experts analyse that it will keep going up/keep going low on a daily basis.
Trust me, they use a similar checklist. It’s just that successful intraday traders know how to scale in a scale out of positions very well.
Its a kind of Corporate Social Service, being a part of this society I wish to thank you from bottom of My Heart.
Once again Thank You So Much…………………..!!!
keep it up Mr.Karthik and Mr.Nithin Kamath.
Thanks for the kind words, Kumar 🙂
DEAR SIR,
I am unable to find pdf download link for your modules, if you have removed it please provide.
Regards
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.
THANK YOU SIR
Welcome!
Dear Karthik,
How to put stop loss for share if you are planning it to hold for long maybe for 2 years, stock my go down and bounce back in 2 years.
Unfortunately, you cannot carry forward the stoploss.
how many days to active account in zerodha …
can you please what is the difference between the different time frame
If you have an AADHAAR number and are KRA verified, then the account can be opened instantly.
For time frames, check this – https://zerodha.com/varsity/chapter/chart-types/
your official told me to send details and would take around 10days …may be
Do drop an email to [email protected] if you are facing unnecessary long delays or if your sales manager is not responding quickly.
i have kyc veried with my bank account with my pan and i recently updated my mobile number still your website says i am not kyc varified
let me drop a mail
Check your KYC status at https://www.cvlkra.com/kycpaninquiry.aspx
Sure, request you to please do that. Thanks.
Sir, the content is really amazing and you explained everything really well. I have an account at Zerodha and I am using Pi to paper trade. I want to do swing trading and you said the optimum look back period should be 6 months to 1 year but I am not able to get the chart for more than 2 months with 30 min candle in Pi. Thanks in advance.
Glad you liked Varsity, Gagandeep!
Since you are starting off now, I’d suggest you look at EOD charts.
Dear sir,
In stock market people used to say that “operators and brokerage houses monitor your stoploss and they trade accordingly, that is the reason that a retail investor’s stoploss, most of the time, hits”. As I you explained in the intro part that how fair the game is, I believed that it is a rumour. But yesterday a incident happened to me:_
At 10:44 I bought 300 shares of IOC @436.95 and put a stoploss of 435, then later I revised it to Rs. 436
At 11:04 my stoploss executed at 436, but what astonished me is that the low price was above 436 in next three candles as shown in the chart, and to be more specific the price reached to 436 around 11:35.
Could you throgh some light on this aspect?
Regards
That is just a rumor according to me. What happened to you is regular market activity, nothing unusual about it.
When i look into the chart which time frame should i use? 5 mins or 15 mins or day. Please help me
Depends on your temperament. I’d suggest you use 9 x 21.
I am a scalper and i generally use 5 mins chart during trading session but when market is closed and looking into opportunity universe then which time frame should i use? Thanks
You could look for EOD chart and identify a larger trend. You can then strategies and plan your intraday trades.
Thanks Karthik 🙂
Cheers!
Hi Karthik,
Thank you! you were awesome at explaining these technical stuff in a very simple manner. I actually was trying to learn these things through different forums for last 8 years in vain. Your Varsity became a one stop shop. One advantage for Zerodha from this would be that the user would definitely be more confident and put more money into their accounts in Zerodha. 🙂 Keep doing the good work!
Coming to the questions part:
1. We should also keep a tab on the current affairs and news right? What if a bad news breaks about the company that you want to trade.
2. By the time we do this check list for many companies, won’t we miss the bus? Out of 1-5 in the checklist, can I omit anything since you are saying its a stringent list?
3. Say if I should surely consider few out of the 1-5 list, what should those be? Asking since, For sometime now I am trading just based on demand and supply zones and I was doing relatively well.
4. How far should the trailing stop loss be from the current market price? If we decided it was 4% initially, should we adjust it to be the same?
5. How to convert a intra day trade to a cash and carry trade in Zerodha Kite?
6. Should Scalper have a stop loss when he buys ? Asking since you said “successful scalper embraces volatility and is indifferent to market swings.”
7. At what time of the day do you analyse all the 50 stocks? I don’t think it is possible to do all these at 3:20pm. ?
Thanks again,
Ash
Thanks for the kind words, Ash.
1) Yes, you certainly should. When there is news (especially fundamental in nature), you need to respect that and be aware that TA theory won’t hold up during that time
2) Its better to miss a trade than regret taking up one, right?
3) Candlesticks, S&R, Volume would be my pick
4) Depends on the stock and opportunity you are chasing
5) Click on the position and opt to convert
6) A high-frequency scalper will not place SL, most of his trades would be ‘market’
7) On a EOD basis
You Rock Karthik, Thank You!
We all do, in our own little ways 🙂
Give me some checklist I want to start investing,
1) which time frame I should use for intraday trading or for 3-4 days?
2. important indicator for these type of trading?
3. can I only rely on candlesticks.
4. I want a strategy because I am not able to figure out one?
1) For intraday I’d prefer last 3 months EOD chart and at least last 3 days 15 mins charts
2) I prefer basic EMAs
3) I look at CS, S&R, and volumes
4) Sorry, you will have to continue your search.
sir,
your zerodha pi is just awesome, simple to use, easy to understand, stable
sir, i am facing problem in plotting S & R, sometimes either it is too much bellow CMP or too much above …
sometimes the difference is more than 10 rupees,
I am skeptical about it
The difference of 1-2% is not really much, Sangram.
sir which chart is preferable for s and r
EOD chart on spot is what I really recommend.
Dear sir,
I have ordered for your books “Finance Made Easey for Kids”, and made payement approximate two weeks before, but till date I have not received any communication from your side.
Please look into the matter.
Regards
Can you kindly drop an email to [email protected]? Thanks.
Hello Karthik,
I have a couple of doubts.
1. In section 19.5 Scout Part 2 Evaluation process you have said “For example, if a Bullish Marubuzo has a shadow, I evaluate the length of the shadow with reference to the range” , i did not get this could you please elaborate on this further.
2. If i encounter a Bullish/Bearish Morubozu which have shadows(say they both upper and lower shadows) what is the amount of flexibility i should be looking at, i mean what is the acceptable percentage of shadow wrt the real body.
Regards,
Nayan
1) This is a part of being flexible. Have explained this earlier in the module, Nayan. Can you please take a look?
2) Around 0.2 – 0.4% ? Again, depends on your trading temperament.
Will Take a look again at the earlier chapters. Thanks Karthik.
Sure, thanks.
1. How do we short stocks like adlabs, abfrl for more than a day, which are not in the derivatives segment? I don’t want to do intra day shorting. Please enlighten.
2. If we can’t then what other strategy can we follow to play these kind of stocks?
1) Not possible for now
2) If it is not derivative, then I’m afraid there aren’t any other options apart from SLBM – https://www.nseindia.com/products/content/equities/slbs/slbs.htm
As I had expected Adlabs fell like more than 6% but couldn’t help but just watch. :(.
I think if not for derivatives, a feature should be brought were we can short any stocks for more than a day, What do you think?
True that!
Hello Karthik,
I read about stop loss hunting and lost my mind over it. Please educate.
Regards .
Do not stress over it, Arjun. Stick to your conviction.
One of the best chapters!
Sir, what is back-testing?
You have mentioned it many times.. Have u explained it in detail somewhere in another module?
Back testing is basically checking how your strategy would have worked in the history. It will tell you how many signals were generated, how many were profits, how many were losses etc.
umm…any plans to discuss it in detail?
Yep, we will.
Hello sir,
For intraday trading, in the 15 min chart, suppose if the pattern and volume confirmed to go long, but in the last few minutes (last 3 or 4 min) the price is going down, can we enter the trade or should we refrain from it?
Depends on two things –
1) Your conviction on the trade
2) Stoploss for the trade.
Dear sir,
I hope you are having a great time as varsity professor …I have few doubt for your kind explanation:-
1.) What one should infer from high deliverable percentage over a period of time,but price is rangebound, is it a sign of range breakout or some bullish signal??
2) What does it mean if volume increasing, price decreasing, but delivery percentage increasing over a period of time say two weeks.
3) What is the role of “total traded value” in predicating a price movement, say if stock A has very high traded value but low on volumes as compared to stock B, which one should we give preference?
Regards
As long as the queries keep coming in, we will continue to have a good time 🙂
1) It is believed that higher delivery volumes is bullish
2) Perhaps someone is seeing value here and hence buying
3) Total traded value
What does it mean by total traded value? Is it different from total traded volume?
TT volume you will get the number of shares traded. TT value gives you the Rupee values of these transactions.
Is this checklist works well for nifty futures trading sir?
It instils a sense of discipline. I’d suggest you take a look at it.
Hi Karthik,
Just out of my curiousity, do you have any plans to update your trading platforms where we can trade from the chart itself. For Example you can see the cTrader trading platform where one can place the order from the chart just itself. And once the order is placed you can simple drag the line to put your stop loss and profit target and you can change it as many times as you want by just simple dragging the stop loss or the profit taking line.
it comes very handly when you are day trading and when you have multiple open orders. I just hope and pray that Zerodha will consider this and we will see these feature soon in the kite and pi platform.
Thank you
PS :- here is the link, please watch what i’m trying to explain
https://www.youtube.com/watch?v=jID9WZG_Nsk
Kite 3.0 will come with few updates, request you to wait for the roll out 🙂
Thank you for your reply. So, when can we expect Kite 3.0 ?? 🙂
I just saw that few of the brokers are already offering the feature i was refering to but anyways i’m a true lover of Kite and Zerodha’s products so it doesn’t matters to me what others are offering.
have a nice weekend
Glad to hear that, Ron! That already makes my weekend better 🙂
Kite 3.0 should be out soon.
sir…I have a few questions….plz guide me…
1)how should I take a swing trade in a stock which is in continuous uptrend or downtrend? Should I trade only in the direction of the primary trend in that case?
2)How to plot S&R levels in an uptrending or downtrending stock?
3)Is swing trading mainly suitable for range bound stock? or can we swing trade in a trending stock also?
Thanks in advance.
1) Yes, that would make sense. Stick to basic momentum indicators here
2) The same way as you would do at other time frames. However, if the stock is making an ATH or ATL, then I’m afraid there is no Resistance or support
3) Works for both. If the range is long, the stock can take few days to hit the upper or lower end of the range, which basically builds the case for swing trading.
Thank you sir for your reply….
Sir…can I use trendline and channel as a support & resistance in a uptrending or downtrending stock?
I would also like to request you to write a chapter on trendlines sir….as drawing trendlines can be confusing sometimes…your lucid explanation shall be very helpful for all of us sir..
Yes, both trendlines and channels help in identifying S&R – especially when the stock/index is trending. Will try and put up a chapter on this soon. Thanks.
Hi,
thanks for your prompt replies; it instils confidence and sets the right path.!
Can you help me for the following:-
The SQUEEZE INDICATER (formed by combining Bolinger band and Keltner channel),
is NOT FOUND in kite.Can you guide me how to get it, on kite??
thanks & regards.
You can add both Bollinger Bands and Keltner Channel in the chart using different colours. You can discover the squeeze when both the upper and the lower Bollinger Bands go inside the Keltner Channel.
hi,
thanks for your advise.But, I am aware of applying both Bollinger and Keltner in different colors.
My real quest, is how to get (in kite), the resultant SQUEEZE INDICATER (which will appear as a line with alternating volatility/momentum wave.The advantage,is,you can then dispense with interpreting from the different band containment,BECAUSE the end result is shown here ,neat and crisp visual.Also,it has MOMENTUM line in-built).
Kindly refer “makemo8”,
on google,(who is offering to e-mail it),
But,the question is how do I apply this on my chart in kite?? (since, I do NOT want to migrate from kite!!)
will appreciate your help.
thanks ®ards
The Squeeze indicator cannot be currently added to Kite.Although using BB and KC together on the chart, you can identify the squeeze.
Add the momentum indicator to understand the direction after the squeeze(choose same period as BB and KC).
However, the coded strategy shared by Topquest Trading is for MetaTrader4 which is a 3rd Party software.
However in Pi, you can set alerts for this strategy and the code is given in this Tradingqna thread: https://tradingqna.com/t/how-to-filter-out-the-stocks-that-have-bollinger-band-squeeze-setup-with-the-help-of-an-afl/6677
hi,
Many thanks for your reply, Faisal.
But,I was looking for a way, to directly apply these ‘third party’ charts,onto kite.
Is it possible to do so,by accessing, metatrader through Pi ??
thanks & regards
Not really, Chandra as the charting engines on both Kite and Pi belongs to 3rd party service providers.
hi,
thanks for your response.
i have few newbie questions.
1} what is stoploss for buy and stoploss for sell?
2) what is the difference between stoploss price, trigger price, Limit price and target price?
please help me clarify these concept in short. i tried to check on net but explanations seems confusing?
thanks
A price below your buy price should be you SL for buy and likewise, a price above the sell should be your SL for sell. Suggest you watch this video – https://www.youtube.com/watch?v=eXMrEMdQWrQ&list=PLkxTRam6E2V-okv6gwQlt6dLTsn0v6CD1&index=6
Is trailing stop loss concept explained in the later chapters?
I could see one of the paragraph in this chapter talks about trailing stop loss, which I didn’t find in TA module. Please let me know
Its explained in this module and I guess in Futures (CO/BO) module as well.
I think it’s not in this module… I have gone through this module once more just for that trailing stop loss.. Can u please point that to me
You could check section 18.2 and develop from here – https://zerodha.com/varsity/chapter/volatility-applications/
Thank you
Hi Karthik. Despite all knowledge, technical and fundamental analysis the biggest challenge is when to book profits. More often than not majority of profit position is wiped out due to indecision and greed followed by regret. In my view one should book profit if any scrip runs away 15 to 20% in a very short span in delivery because there is possiblity of quick retrace ment though sometimes it may continue to rise further. I hope you get my point. It would be very helpful if you include a specific module on booking of profits in intra day trade, delivery and f&o position.
Amit, if you are doing a short-term trade, then it is very important to know when to get out in case of a loss and when to book profit in case of a profit. This has to be decided before you get into the trade. I’d suggest you keep a track on the latest module, the idea is to discuss the complete trade setup in this module.
Hi Mr. Karthik…
Thank you very much for such a wonderful topic. As you said start with Nifty universe, I have observed that Technical indicators, S/R, Candlesticks work better on Largecap stocks than midcap or smallcap stocks..and Nifty50 contains all stocks which are mainly largecaps…I am confused hence asking to you that is it enough to have a look at Nifty50 stocks only when you do intraday trades..?? because there are about 215 stocks in FNO segment but not every stock is tradable. For example stocks like Infibeam, Tatacomm shows bullish morubozu and in next candle they start to fall very rapidly…but taking stocks like Reliance, VEDL when they show bullish morubozu, they respect it and tend to go higher… Although largecaps dont move much as compared to mid and smallcaps but they can provide more consistent profits…Well these are my own view and I want second opinion from you as you are the most eligible person to ask doubts..!!
The key is to trade liquid stocks because transacting in liquid stocks loss due to slippage is almost negligible. I suggested Nifty 50 because they are all liquid, and for a beginner, it serves as a ready list of liquid stocks. If you can spot liquidity in a small scrip, then fair enough, you can trade on it 🙂
Thanks for reply..!! You mean volumes by liquidity,right…??
Yes, liquidity.
Can you tell how to interpret stock’s news wheather expected or unexpected such as their results or any other matter coming at that time or it required to keep our television or any other stuff because everyday I observe a stocks suddenly rallies in a matter of minutes without any prior signal provided in chart.
You will have to get familiar with Fundamental Analysis for this. Check this – https://zerodha.com/varsity/module/fundamental-analysis/
Hello Sir, I have a query.
The patterns and indicators when volume confirmed can signal one to enter the trade(of course when it ticks the other points in the checklist). But I was wondering can one use the same signals to exit the trade instead of having a pre determined target? Or is absolutely necessary to have a target before entering the trade?
Thank you in advance
Yes, Ashish. You can do that. But I personally think keeping a target is much simpler and quicker.
Sir, one more query.
I recently read a trading strategy in Investopedia called The Reverse Scale Strategy.
The idea is to increase the position size when the trade moves in favourable direction.
For example, let’s say I buy 100 shares at 100 rs each, then my investment would be 10,000rs. Now when the prices increase by about 50% to 150rs, then I’ll buy shares for the same amount(10,000rs) i.e., 66 shares. The next buy point will be at 225rs(a 50% increase). This time I’ll get 44 shares. This goes on as long as the price increases. Now when the price starts to decrease and hits the previous buy point(in this case 150rs) then I will have to square off all of my positions, thus booking profits.
Now my question is, what is your opinion of this strategy? Do you think this is effective?
P.S., I guess this would only suit long term investors.
Ashish, this is something new to me. I’ve not experimented with this, but it essentially is a scaling technique. Will be nice to backtest to get some insights.
Hi karthik,
Why do we even use indicators? As most of the indicator lags..most of the Indicators signals price when the movement in Stock already up/down…While all the analyst in news always uses RSI, MACD, ADX, EMA&SMA etc etc… I mean what is the point of looking at the indicator, when it cant predict the movement in advance..
Everything i guess is dependent upon the news (good/bad)…?
I analyse on the basis of candlestick pattern, Dow theory, S&R, and fibonacci retracement..sometimes 2 or 3 matches And when i found the trade, all the indicator betrays… And what i hear in D-street, every analyst is predicting on the basis of indicators.. Analyst always predict opposite of what i thought.
And also which course should i pursue in TA as i want to develop my career in capital market.
Please dont suggest high professional course like CMT, as i am in a CA final and articleship period and there’s a high load from that.
Thanks for all the knowledge Btw… Notes are superb.
As I’ve mentioned, indicators only add as an additional source of confirmation. The original cue for a trade, at least according to me should be candlesticks!
Hi Karthik,
Small doubt – i’m an fno trader but i’m not able to select MCX december/november futures in marketwatch in kite. It shows all MCX products but i want to trade MCX futures itself. Please let me know how to go about it using Kite.
Thanks.
Try searching for ‘Multi Comm’, you will get it. Don’t use, MCX as the search key word.
EOD DATA OF FRIDAY
FII/FPI
Buy Value:
4564.70
Sell Value:
4258.59
Net Value:
306.11
DII
Buy Value:
2335.29
Sell Value:
2159.10
Net Value:
176.19
There was a net buying still the index (nifty 50) plunged more than 1%. Confusing. May you explain a little bit?
Thanks.
Well, you need to check what was being sold by these institutions. If they have sold the Index stocks (which is what I think has happened on Friday), then the indices will naturally crack.
Hi Karthik,
To buy a scrip at at predetermined level , say Reliance Buy above 920 we can use SLM order but we cannot put Target , so is there any method avlbl in Zerodha to Buy above n put our Target also?
What you are looking for is SL Buy on a bracket order. This will be available in Kite3.
Thanx anna!
ಕಾರ್ತಿಕ ನಿಮ್ಮ ವಾರ್ ಸಿಟಿ ರೈಟಿಂಗ್ಸ ಮಾತ್ರ ಭಾರಿ ಅದಾವ ನೋಡ್ರಿ , ಸೇಮ್ ಹ್ಯಾರಿಪಾಟರ್ ಸ್ಟೋರಿ ಓದಿದಂಗ ಇರ್ತಾವು!
ಥ್ಯಾಂಕ್ಸ್ ರೇ, ಅಜಯ್!
Good luck, Ajay 🙂
Hi,
First of all I want to thank zerodha for providing everything for a common man like me. Every product of zerodha is of immense help to me, let it be varsity, interview with zerodha 60 day challenge winners, kite, pi and not to mention about discount brokerage. Thank u.
I call myself a swing trader(?) In cash segment and into the same since 2-3yrs. What i have noticed is that break outs are more accurate when TA is applied to the stocks which don’t have futures and options. Is my finding true? I felt the stocks havings futures and options, move fast and difficult to predict the moves.
Hi karthik, good morning!
Good morning to you as well 🙂
Glad you liked all of Zerodha’s offering 🙂
Yes, your finding is generally true as the derivatives stocks are more liquid than others stocks, and TA works quite well when applied on liquid stocks.
Thank you karthik ☺
ಹೆಲೋ ಕಾರ್ತಿಕ್,
I want to know Promoter Stake Increase On a daily basis , which website shall i use to set alerts To Get Promoter Alerts?
The stakes dont increase on a daily basis. Maybe you can check out ratestar – http://www.ratestar.in for this.
Hi,
For example there are more than 2000 scrips in NSE , I want to know Only n Only the Changes in Promoter Holding Percentage[Other Corporate announcements,Updates less bothered] on a daily basis , kindly let me know which site/screener to use?
Thanks Karthik.
Not sure, Ajay. Will let you know if I come across a good site for this.
Sir,
While evaluating a day end candlestick pattern in a 6 month chart, after checking a pattern being formed by 3 candles(evening star),how many(minimum) candles shall we check to evaluate the prior trend?
I’d suggest you look at at least 6 months chart.
Hello,
how to evaluate a stock recommended by technical analyst is correct or not.
Dont waste time on that, Madhu. Instead, focus on developing your own analysis.
Hi sir,
I have few doubts.Kindly clarify them.
1.What if there is a longer upper shadow(shadow length= real body of P2) in a bullish engulfing pattern.Can this we considered as bullish engulfing,if all the item in the checklist coincide?
2.Should all the checklist point need to be ticked, for entering a trade?If not necessary what is the minimum number of checklist point to be ticked before entering a trade?What all those minimum needed points to be checked?
3.To enter a trade is average volume is itself ok? Because in volume chapter you have given that a need of above average volume but in this chapter “After this I look at the volumes. The volume should be at least equal to or more than the 10 day average volume”.Bit confused!!
4.In the dow theory perspective mearly checking for a flag,double/triple top/bottom is enough or primary and secondary trend also needed to be checked?Because usually that is not coinciding,what to d in this case !!
5.Usually when it comes to intraday trade RRR is always less than 0.75/0.5 !! Is it ok,r what to do?I found that , the resistance are very nearby and since we take up the position near to the close of pattern formation the RRR is very low.
6. Can the RRR be reduced by us, by trying to enter at a level below the pattern formation? Eg. If the entry point is Rs.50 and SL is 48 and target is 52, here RRR is 1 but if we try to wait and try to enter somewhere around 49.5 then RRR can we increased to 1.6.Is this can be done,in intraday and swing trading?
1) Yes, you can. Long shadows only indicate that day was volatile.
2) Yes, don’t compromise on this. The only thing you can ‘afford’ to be a little lax is the indicators
3) Like I said, volume should be at least equal to the average volume, nothing lower
4) The best trades are the ones where the Dow theory tenets coincide with the candlestick patterns.
5) This is completely your call – I prefer to take trades which offer a reward of at least 1.5 to 1
6) As I mentioned, its your call really
Hi Sir,
1)For my question “What if there is a longer upper shadow(shadow length>= real body of P2) in a bullish engulfing pattern.Can this we considered as bullish engulfing,if all the item in the checklist coincide?” – if there was some resistance at that point where the shadow started to form , still can we enter the trade?
2) Suppose we are in the secondary trend (down trend)and we are finding a bullish CS pattern then, you have said we should think twice before entering the trade,since the current trend is opposite to the trade direction.My question here is, can’t we consider that as the trend change from secondary trend (down trend) to primary trend (up trend)?
3)How can we find that in how many days( trading sessions) our target would reach?I usually find the tech analyst saying the number of trading session for target to reach, how do they do so !!
1) Yes, what really matters is the length of the candle. However, be watchful of the resistance level
2) Possible, but for this to happen a lot of fundamental factors should be brewing in the background. So keep a watch on this
3) This is very difficult to quantify and I think its hard to justify such claims.
Sir I am not interested in technical analysis so can I straight away start with fundamental analysis?
Yes, of course you can!
Are there any specific chapters in Technical Analysis which i need to go through before starting fundamental analysis
Not really, both are different.
Hi Karthik, thank you so much for providing such a wonderful platform to learn. I was so impressed by reading the material, that I opened an account at Zerodha recently and recommending my colleagues to go through the material.
I have a question with regard to carrying a future position overnight (like in the case of BTST) but the issue is, if the share price opens gap down next day the stop loss will never work and will end up loosing the big chunk of capital…..is there any way to hedge this risk ? And if I buy protective put then what is going to be moneyness of the same and the number of contracts, I need to buy…and is it still going to be a profitable bet ?
Welcome to the Zerodha family, Sudeep 🙂
I understand your concern about the gap opening. This is a risk BTST trader faces, unfortunately, you cannot really hedge this. You could probably try buying options but then, doing so will increase your cost and to some extent defeat the purpose.
Excellent content, Nicely explained with examples and a real practical approach.
Many thanks for the efforts you have put in.
Happy learning, Jignesh!
Hello sir
Considering i am a scalper i look back for 5 days of data to look for trading opportunities.
While plotting S&R being a scalper should i look back for two years of data or lesser period???
(However, while plotting the S&R levels you should increase the look back period to at least 2 years.)
If you are scalping then you can look at 5 days data to identify minor areas of support and resistance.
Hello Team Zerodha,
I am Zerodha user since 4 years. One suggestion and request that please provide Crossover synchronization option in multiple charts in kite3. Also please provide option to save all the charts with indicator in kite application.
Thank you..
Sagar, currently you have to select the crossover for each of the charts, will provide this feedback to the Product Development Team.
You can save views with multiple indicators and can use them across Kite Web/Android/iOS
For zerodha account holders is Zerodha Pi still free? And how frequently are the data updated?
Yes, Pi is free. Data is streamed real time from the exchanges.
Can you list some major difference between Zerodha Kite and Pi?
Kite is a simple web-based trading platform while Pi is a desktop trading terminal.
Here are some of the differences:
1. Pi provides OI, last traded quantity, upper and lower circuit limits while Kite provides just the necessary information such as OHLC and Volume.
2. Pi offers backtesting and alerts which is not available on Kite.
It entirely depends on the users’ convenience to choose what platform they want to use(both are available at no charge).
You can join the discussion on this topic on TradingQnA
Thanks. I will install it and see.
From where can I download latest version of Pi? The link here says July 2016. Is this the latest one?
https://zerodha.com/z-connect/tradezerodha/pi-tradezerodha/latest-pi-update-18th-july-2016
Ok. Sorry got it. I need to download from Q backoffice. It says 08/12/2017
Yup.
Login to Q and click on the section called ‘Pi’, you will get the link to download the latest version.
ಹಾಯ್ ಕಾರ್ತಿಕ್,
ಔಟ್ ಆಫ್ ಯುವರ್ ಖತರ್ನಾಕ ಎಕ್ಸಪಿರಿಯೆನ್ಸ “ಪ್ರೈಸ್ ಆ್ಯಕ್ಶನ್” ಗೆ ಸಂಬಂಧಪಟ್ಟ ಓದಲು ಒಂದು ಒಳ್ಳೆ ಪುಸ್ತಕ ಸಜೆಸ್ಟ ಮಾಡಿ..
ಥ್ಯಾಂಕ್ಯು ಕಾರ್ತಿಕ್.
Try this – https://www.amazon.in/Technical-Analysis-Stock-Trends-Tenth/dp/113803200X/ref=sr_1_3?ie=UTF8&qid=1515905371&sr=8-3&keywords=technical+analysis
Dear Karthik,
Greetings for the day. Thanks for such a great write up.
I have a doubt. When you suggest, that for Swing Trader it is good if they look back data for about 6 months, that means for example I am looking at a single bullish candlestick pattern or multiple candle stick pattern for a bullish signal, whereby the requirement is that the stock is in downtrend, does it means that the stock should be in downtrend since last 6 months ?
When we say that the stock should be in Uptrend or a Downtrend, than how many days prior to today(the day we spot the signal) should be that downtrend or uptrend if we are looking at a signal ?
Ah, no – look back of 6 months is to give you a general idea of whats happening with the stock price – trending up, down, sideways etc. When placing a short-term trade, the emphasis is more on the last few trading session, maybe like the last 12-15 trading sessions.
Thanks a ton for your reply 🙂
Good luck and happy learning!
Dear Karthik, A big Thank you to your team for writing up these modules. They provide a great understanding of the market for beginners like me. I have a question – Does zerodha (or any one else) provide screeners that spot the stocks complying to the checklist you listed (inputs could be configurable like R&R etc, opportunity universe, timeframe for tradethe trade etc). If not all the criteria on the checklist, atleast pattern, volume and S&R compliance. I mean even eod reports (if not real time) of such would be of great help and save time. The decision to enter the trade would anyways be of the trader. Thanks for your time.
Glad you liked the content Ritesh. No, I dont think there are screeers for this. Although you may want to check this – https://screener.smallcase.com/
hi,
Is there any real time stock screener where i can get stocks whose rsi crossed below 40 or above 60 in 30 mins/1 hr time frames??
Maybe you should check this – https://screener.smallcase.com/
can i run Pi screener and kite3 at same time?
No, you will not be able to login to both the platforms. Pi will force logout
Hi, Recently i opened an account with ZERODHA. But I was surprised to know that I can not trade a stock for short period like 5-7 days, without taking delivery. But if I take delivery then I would not able to leverage my margin. Is that true? Then whats the point of discussing short term view of 5-7 days? why broking houses recommend the target for 5-7 days.
Yes, there is no leverage in delivery based trades. However, if you need leverage, you can always try the futures contract.
will DP charges applicable to scalping and intraday trading?
No, DP charges are applicable only when you sell shares from your DEMAT account.
Thank you for replying
I think intraday and scalping shares won’t go into demat account.
Yes, thats right.
Thank you… My matter is not related to this although please reply
1) when will account maintenance charges are charged…
suppose if I open an account today… will it be charged on the same date after 1 year or charged with starting of the financial year?
Both for demat and trading account
I want to start first with a small investment of Rs 5000 or 10000… I heard that taxes are more
2) Suppose if I end up in a loss in equity and swing trading… What are the taxes, charges that are levied on me? (including demat charges)
3) Can we hold sell order for 2 or 3 days in CNC or NRML? or we have to square off on that day itself?
The person in taxation module did not reply yet
kindly reply me, sir
thank you
It’s not equity its intraday…
1) March 31st is when the DP charges are charges
2) I’d suggest you check this – https://zerodha.com/varsity/module/markets-and-taxation/
3) Yes, you can hold CNC for however long you want
Yes, he is on a holiday for that long weekend 🙂
Thanks for replying..
It is not cash and carry sir… I mistyped it.. Can we hold sell order for 2-3 days?
Ah, not in the Equity segment, Raj. You can do that on Futures.
How to analyze a script on charts which has undergone a split?
You look at the split-adjusted chart and go about business as usual 🙂
How to predict the time horizon for the target price?
That would be a hard call, Rinkesh.
In backtest report, what should be the profit percentage to consider to use the EA in live.
Generally speaking, your profit should be at least 1.5 to 2 times higher than your risk.
In below backtest report, what is the meaning of percent profit & how to consider it. For easy marked *****(asterisks).
2/12/2018 9:15:59 AM to 2/12/2018 3:29:59 PM
Total number of trades: 14
Average number of trades per month: 17
Number of profitable trades: 5
Number of losing trades: 9
Total profit: 3.2000
Total loss: -3.4500
Percent profit: -7.812% **********
Largest profit: 0.9500
Largest loss: -1.4000
Maximum Drawdown: -0.2500
Maximum Drawdown (Monte Carlo): -0.2500
Compound Monthly ROR: 0.7500
Standard deviation: 0.00000000
Annualized standard deviation: 0.00000000
Downside deviation (MAR = 10%): 0.35000000
Value Added Monthly Index (VAMI): 1.00057176
Sharpe ratio (RFR = 5%): 0.00000000
Annualized Sharpe ratio (RFR = 5%): 0.00000000
Sortino ratio (MAR = 5%): 2.33333333
Annualized Sortino ratio (MAR = 5%): 2.33333333
Sterling ratio (MAR = 5%): 2.66666667
Calmar ratio: 3.00000000
Risk to reward ratio: -0.039
2/12/2018 9:49:59 AM,LONG,288.6500
2/12/2018 10:48:00 AM,SHORT,289.4000
2/12/2018 10:54:59 AM,LONG,290.0000
2/12/2018 12:30:00 PM,SHORT,290.1000
2/12/2018 12:34:59 PM,LONG,290.2000
2/12/2018 12:34:59 PM,SHORT,290.2000
2/12/2018 12:35:59 PM,LONG,290.3000
2/12/2018 12:39:00 PM,SHORT,289.7500
2/12/2018 12:43:00 PM,LONG,289.9000
2/12/2018 1:32:59 PM,SHORT,289.6500
2/12/2018 1:38:00 PM,LONG,289.8500
2/12/2018 2:40:59 PM,SHORT,289.8000
2/12/2018 3:02:59 PM,LONG,289.0000
2/12/2018 3:03:59 PM,SHORT,288.9500
2/12/2018 3:12:59 PM,LONG,288.0000
2/12/2018 3:13:59 PM,SHORT,288.0500
2/12/2018 3:27:59 PM,LONG,289.4500
I’m not sure about this because of the presence of the -ve sign. Where did you get these results, usually there is an explanation following these results.
I got this report from pi after backtesting on SBI. Actually my concern is, what should be the acceptable parameter value to consider a strategy for the particular scrip.
My bad, I should have guessed.
There are no fixed rules here. You just need to ensure the risk elements are not shooting through the roof.
Hello sir
It is little tricky to write script on time basis. I explain. For example i want to back test opening range break out on 5min candle bar within 30 minutes of market opening. For this i need to write script for first 6 candles of the day and run code for certain number of days. I have already written everything about candle length, wicks’ length, volume, gap opening etc. But i couldn’t figure out how to time the candle bar. My approach is only based on candle bar(price action), volume and S&R. I am not concerned about indicators. Please help me, sir.
Thanks
I understandg the complexity involved here, sometimes its best to do this visually.
Thanks a lot for such descriptive and easy to understand training material on TA.
Cheers! Happy learning, Nilesh 🙂
It’s just 2 months that I have started trading after opening a trading account in zerodha.
Out of curiosity I have seen so many videos on YouTube and all those are full of self promotion and shit.
Was always looking one place where I can learn some systematic approach to trade , finally I can say this is the best place and the most systematic approach followed without anyone selling some Ponzi software or a 40K course , also after completing the chapters in technical analysis I have done 2 -3 trades in profit ,will go through the whole series to get an insight of how market works.
Thank you for such genuine efforts.
Rahul, this is exactly what motivates us each and every day! Thanks for the kind words and happy learning 🙂
can i use this technical analysis for swing trading, BTST,
Yes, you certainly can.
Are candlestick patterns shows a valid signal in scalping(5 min chart)?
Yup, you can consider the same.
In section 19.5 : The scout, it mentions to keep the Time frame as EOD. So does this mean that for initiating a trade on a particular day, I will look at the candles pertaining for the previous 2-3 days ? How is the volume relevant in this case as I will be looking at the volume of the previous day ?
Yes, you look at the EOD chart to get a sense of the price action from a broader perspective. Volumes matter, more so on an EOD basis.
Hi Karthik,
Awesome modules, especially on options!
Have a query on pi. I want to backtest on a scrip and want to sell as soon as current day’s price > last day’s high * 1.01.
Taking an example, we have a scrip whose yesterday’s high is 100. I would like to sell it whenever it reaches 101 during current day.
Basis the tradescript, i understood following is the code: LAST> REF(HIGH,1) * 1.01
But upon backtesting, i saw the entry is not done at current price but at closing price.
Could you please advise where am i going wrong?
Thanks.
I’d suggest you reach out my colleague Srini for this – [email protected]
Thanks a lot Karthik.
Cheers!
Dear sir,
How can we set target when the nifty or equity stock is trading at all time high (long position)?
Similarly how can we set target when the nifty or equity stock is trading at all time low (short position)?
That would be really tough as there is prior data. You will have to trail your Stop loss here and ride the momentum.
hi kartik, i recently moved frm bangalore to chidambaram..but since stamp duty in karnataka is different from that in TN i wanted to update my address details in zerodha Q..upon enquiring wit the support desk i was told that some address proof of chidambaram is reqd. but all my documents are of bangalore address and so i plan to get a driving license. do you suggest that i wait till my address is updated on zerodha records to resume trading so that correct stamp duty charges can be applied or is it fine if i continue trading now also?
You can continue trading until you get your address updated but you will be charged as per Karnataka Stamp Duty rates.
Thanks for the reply bro!
Hi Faisal/Karthik,
1. Kite 3 – in marketwatch, red colour is assigned to scrips that are trading in -ve for the day and not on a tick by tick basis. Whereas in the earlier version, a scrip with down tick was assigned red (for that moment) even though it is 1% up and will show green for an uptick the next moment. In Kite 3, what this means is – if there is a sudden selling in a gap up mkt with all stocks 1% up, you cant notice the correction by the colour since the scrips are all in green but in the earlier one could see a red wave just because the previous tick was down. Hope i have made myself clear. I’m sure many are facing the same issue. Request to please switch to earlier form in this respect.
2. I’ll shifting to an overseas country and want to continue trading. What is the additional info i should provide zerodha? Will a new account be created? What about my investments? And how does my brokerage ,etc change?
Pratheesh, we had made this change out of popular request we received as the green tick on a negative scrip(and vice versa) was causing confusion.
However, I’ll record your feedback and have it forwarded to the Development team.
2. You can trade using your Account until your status changes from Resident to NRI. You will have to close this account and open a NRI Trading Account. Read more on that in this article
Faisal, Thanks for your reply.
1. Really not sure which professionals would want it this way. Surely, traders around me want it to remain the way it was and are having issues. Please do something about it urgently.
2. Will look into it, thanks
Hi, little confusion here. While screening stocks, you mentioned that you look opportunity universe which is usually 50 stocks, and in that you look for max 3-4 candlessticks to confirm recognizable pattern. My question is at what time of the day you explore these opportunity universe stocks ? Is it before the market starts or at 3:20 PM (which is the time you mentioned a lot in the module for placing orders). My concern is, if you are exploring the stocks for pattern before the market begins i.e before 9:15, you might miss some candle stick patterns. Like, if you are exploring CIPLA and it has one red candle the previous day, which is no big deal, so you ignore it, but it might be making bullish marubuzo which is a thing to be concerned about. And if you are exploring this universe at 3:20 PM , after the pattern has formed, you might not be able to explore all the 50 stocks to find the pattern, check the indicators and place the order. How do you deal with this ? Kindly reply and your modules are awesome, I have recommended to many.
I usually look at charts at the EOD, say around 6:30 PM. Shortlist the ones that are making interesting moves, make my reference notes (including price levels) and track only these stocks during the next day’s market session. With my notes, I’d be quite clear on what action to take at which price. Hence in a sense, my market action is pre-decided and therefore it eliminates random actions in the markets.
First thanks for writing such a easy to understand and in depth module in technical analysis. Its really helpful. But can you please add a module on Intraday Trading. I think people like me really need some good resource of knowledge for day trading. Or atleast some ready reckoner with reading list, tools needed and other useful details. If you can help someway i shall be obliged.
I’m discussing a couple of strategies here – https://zerodha.com/varsity/module/trading-systems/, you can use them for intrday as well.
Hey Karthik
it was great deal to read the articles again as its always a refreshment , every time i read i get few doubts clear and give birth to few new one as well;)
Anyways few questions
1) Most of the pattern based entries are on top or at bottom but then how to enter the stocks for swing trading which are already higher level as there is no candlestick pattern for running stocks so does it mean we should not enter and by this we loose many trading opportunities in momentum stocks
2) The way you explained trades based on candle sticks ( entry point stoploss target etc ) are there any good books which can be referred to explore more with similar contents ?
3) Zerodha PI has many good features but hardly anyone knows how to use them effectively , any webinar or recorded videos with example will certainly help all to make use of the PI effectively
5) Is it possible for you or Zerodha to share some good example of trades ( may be trades taken long back ) where reason of trade method of trail though process behind the same is explained so reference will be helpful for trades to build up similar though process.
5) last but not the least ( may be not relevant over here but as its zerodha platform ) , since last few weeks or 2-3 months facing so much of issues on kite which is getting regular now a days so any plans to get them resolved ?
1) You could check the dow patterns – such as the double/triple bottom or even the range-bound prices
2) Japananes Candlestick pattern by Steve Nison is one of the best
3) There are quite a few resources online (youtube), suggest you give it a try
4) We do once in a way on twitter – keep track on twitter.com/zerodhavarsity
5) We are always working on improvising and making sure you have better trading experience. Sorry, for any inconvenience caused.
Hi Karthik,
The information is very clear, precise and awesomely explained. Thank you so much for Varsity.
i have some queries.
1. Even after thorough technical analysis, the Candle stick Patterns, volumes, S&R and all that you have mentioned trader make Entry. Why still the market goes other ways? it hits the Stop Loss. Why? What is the base then?
2. To be a Full Time Trader, What are the qualities that one should have?
1) This is because there are no guarantees in the markets :). All these factors only enhance your probability of making a successful trade 🙂
2) Deep knowledge of markets and a deep pocket.
Hi Karthik,
Excellent tutorial. Simple and easy to grasp and your prompt responses to the queries is a cherry on the cake for learners like us! Really appreciate your efforts:)
My query is:
1. With TA, no matter what the strategy is, we can confirm it(candlestick patterns) at only around 3:20 PM(same day for risk takers and next day for risk averse after following Rule 1) You have provided us with an incredible check-list so as to re-assure ourselves before entering a trade. My question is, since we can confirm a candlestick pattern only at 3:20PM, how can we carry out other checks especially when we have multiple charts to look at within 10 min?
2. If you say that we can analyze the list of stocks on EOD basis and carry the trade tomorrow then doesn’t that mean we are in effect confirming the candlestick pattern(Rule 1) the next day and doesn’t it make all of us risk averse investors even if we aim to be risk takers?
3. Now suppose I am sure about a candlestick pattern at 3:20PM today but I know I can’t check other points in my checklist within 10min, then won’t that effectively make me miss out on today’s trade?
4. Suppose, I analyze say on EOD basis, again on the next day according to the tutorial, I will 1st make sure Rule 1 is valid at only around 3:20 PM and again I will be stuck will going through other checkpoints in my list within 10 min driving me to point no 1.
In short this makes me feel like it’s a recursive process which won’t end.
I am sure I am missing out on something over here and it would be really helpful if you enlighten me on the 4 queries that I have 🙂
Thanks for the kind words 🙂
1) By 3:20 PM, you will have all the data you need – volumes, S&R, reading on the indicator, RRR etc. So this is not really an issue. Also, the assumption is that the prices won’t drastically change between 3:20 and 3:30.
2) This is adding a bit of caution. If you can compute the data through the day, then you certainly can take the position during the day
3) For this, you just need to go back and change the candle frequency from 15 mins to a day chart.
4) No, with the confirmation on 2nd day, you are technically good to assume the position.
Hopefully, this should clarify.
Hi Kathik,
More of a question on personal front. I have a regular 9 to 6 job with a good amount of workload round the year. I learn that TA mostly consist of practicing intraday trade (which involves looking at 15min interval candlestick along ht entire day for eg) and some span to few weeks.
I believe that TA needs a lot of attention probably on a daily basis with frequent watch to the markets. How realistic is it for someone like me with a regular job to practice TA on a regular basis? It becomes really difficult to access trading terminal during the office hours and not to mention markets are closed on weekends.
Can you enlighten on how someone with regular job can practice TA?
You would need a lot of time in the initial days, but once you get the hang of it, reading chart becomes very easy and less time-consuming. Considering your situation, I’d guess the best combination would be TA + Options. Both can take a lot of time and efforts to understand, but it is worth the efforts.
Hi,
Zerodha seems to be completely customer focused! Good to know and kudos with the lucid explanation of TA. Enjoyed the module!
I am fed up with Sharekhan & its notorious CPU cycle consuming TradeTiger platform. Beats the hell out of my laptop. I want to try out Kite. Seems it is lighter than TradeTiger and more user friendly.
Zerodha team, please contact me on 8657111841. I want to close down on Sharekhan and open an account with Zerodha asap.
I cannot comment on Trade Tiger, as I’ve not used the platform. But I can tell you with all my trading experience – Kite is indeed one the best trading platforms India has ever seen! I’m sure you will enjoy trading on it 🙂
We will be happy to onboard you as a client, request you to please drop your details here – https://zerodha.com/open-account. Thanks.
Hi Karthik,
What’s the easiest way to know about below point –
The volume should be at least equal to or more than the 10 day average volume.
Thanks,
Vaibhav
Does Simple moving average on volume with 10 period will work? If yes then how to interpret it in chart.
It does especially on volumes. Volume bar above the 10-day average indicates higher than 10-day volume.
Plot a simple 10 day moving average on the volume and any volume above this line is considered above average.
Thank you very much Sir!!!
Again hats off to the your and Team Zerodha’s efforts for spreading knowledge.
Happy learning, Vaibhav!
Hi Karthik,
Does the ‘Pivot Points’ indicator give the correct S&R levels i.e. the next three Support and resistance levels ?
I’ve not had too much success with it, Laukik. I prefer the other way of plotting lines as I think S&R is more of a visual concept.
Hi Karthik,
My query is related to following section from above chapter -“If the S&R level is more than 4% away from the stoploss, I stop evaluating the chart further and proceed to the next chart”
Suppose a Marubozo formed with stock upward10% move. So in these case SL will be more then 4%, in these case one must avoid the trade? Can you please give an example of avoiding trade on above statement of 4%?
Thanks in advance!
Regards,
Vaibhav
Vaibhav, frankly this depends on your risk taking abilities. I’m a conservative trader and my tendency is towards capital protection hence these rules to safeguard against steep stop losses. However, this still does not guarantee a successful trade. So I’d suggest you evaluate your risk appetite and figure if you are comfortable with such trades.
Thank you Karthik Sir!
Welcome, keep learning 🙂
Hi Karthik,
I have few questions
1.You mentioned that for all the trades you take you check if a bullish candlestick pattern has a bearish prior trend and vice versa for a bearish candlestick pattern. Does this mean I should trade with TA only if prior trends are satisfied with the patterns?
2. If Yes, then what about Trading in range (sideways market)? If a stock trades in range for few months to many years, then it won’t satisfy the above criteria of prior trends even if I recognize candlestick pattern formation? What to do in these cases?
3. What if the Dow patterns (Double, Triple top etc) appear during a side trend for months and candlestick patterns are formed but prior trends are not bullish or bearish as markets are trading sideways. What to do in these cases?
4. How to trail stoploss? Consider that markets have a good bull/bear run after I execute a trade then my initial SL will become redundant as I will have to trail my SL to remain on the safer end. How do you recommend to trail SL effectively?
5.What if there is no dow pattern but all the conditions in the checklist along with RRR meet? Should I go ahead with the trade?
6.For swing trading, using EOD charts, all curetted trades for the day should be placed between 3:20 – 3:30 PM right? Any instances for swing trading when I can place trades using TA before 3:20PM?
7.Pi v/s Kite – What will you recommend for TA?
1) True if you are following CS patterns
2) Strictly speaking, this would fall under the Dow Theory. I usually combine dow and CS patterns. For example at the bottom of the range, i look for bullish CS patterns and vice versa
3) Like I said its best to combine both
4) You could check the technique discussed here – https://zerodha.com/varsity/chapter/volatility-applications/
5) Yup, again if the CS pattern agrees to it
6) Yes, as long as the trade qualifies your criteria
7) Both are great platforms but I do have a soft corner for Kite 🙂
Thanks 🙂
Sir,
What is the useful indicator for the Scalping?
idial chart time frame like 1, 3, 5 Minute?
any other tip for the same if you can suggest me than it would be great
I guess no indicator can be quick enough to help you scalp the market. Your best tool is to look at the order book and see how the liquidity is moving. Ideal chart time frame to scaly would be 1 or 5 mins chart.
If you are a newbie, I’d not advise you to scalp. It is very easy to get into the ‘I’ll recover my losses’ trap. This will also mean you end up paying more brokerage and other charges.
Thank you Sirji
Welcome!
Hi Karthik,
You had mentioned that retail investors have a very little to negligible control on the stock price. It is the smart money that has a significant control over the price.
But, you also mentioned that the huge block deals executed by smart money are OTC deals so they should not impact the market prices in general if they don’t go through the exchange and settle over the counter right? In such a case, how can we say that smart money impacts the prices of stocks if they execute their deals OTC ?
Maybe I should have worded this better 🙂
No one has any sort of control on stock prices. People or institutions can only influence the stock prices. Institutions (or smart money) certainly has a better influence compared to retail participants. OTC deals tend to rub off the bullish or bearish sentiment.
Hi Karthik,
With regard to Pi availability it is mentioned as ‘It is free – Zerodha is giving it free of cost to all its active traders’.
Active customers – may i know the max number of inactive days (i.e., days with no trade) to still consider myself as an active customer?
Thanks,
Guru
Guru, its available for all clients.
Hi Karthik,
As we know Intraday short position on stocks should be closed on the same day itself.
1. What happens if I forget to close intraday short position. What action will Zerodha take?
2. If I do not own a share and randomly place a sell order without the intention of shorting, will Zerodha execute the sell order? Is their any mechanism in place which will avoid such not-intended-for shorting? Any order types specifically meant for shorting?
3.Since I have to close intraday short positions on the same day, how will I get the benefit of a bearish candlestick pattern as a scalper? I cannot hold on to my short position more than a day. Does this mean trading on bearish candlestick patterns has to be intraday only? I am referring to stocks and not Futures over here.
1) If it is an MIS trade, then it will be squared off at 3:20 PM
2) Yes, this is shorting of shares. But make sure you close the position before 3:20 PM
3) Yes, you will be restricted to intraday if you are trading EQ. You can carry forward futures.
Sir ,
Thank you so much for putting so much of effort. Overall I have learned so any things and you gave insight of the market so well That i couldn’t stop myself from appreciating and thanking you.
with sincere and humble thanks ,
Jyoti
Many thanks for the kind words, Jyoti. Keep learning 🙂
Thank You Karthik and Zerodha Team for excellent and simple presentation of all the trading concepts and tools. You have democratized the the knowledge which was earlier with select few. Your work provides a strong foundation to many aspiring traders.
Happy to note that, Neerav!
Good luck and keep learning 🙂
Hello Sir,
How are charts in Kite and Pi different?
Are charts shown in Kite in any way inferior to those shown in Pi?
Where should I look for, Kite or Pi, for better trade?
Both are great. If you want convenience, I’d suggest Kite. I personally use Kite for everything.
Dear Sir,
I read the Technical Analysis chapter but I am still confused because Zerodha co-founder Mr. Kamath says here in an interview
(https://www.moneycontrol.com/news/business/hinduja-power-buys-alan-roslings-kiran-energy-for-rs-1000-cr-2-2567601.html)
that one should change his strategies every few years and that technical analysis is not the ultimate method for traders.
In his words:
“In the technical analysis, you are betting that the past will repeat itself. You are looking for patterns which will repeat itself in future. After a time you realize it is a hindsight bias. Overall, I believe the fundamental analysis is a better way to play it. So, currently, I have discarded technical analysis from my trading.
With time I have realized that market action is random. What happened in last 10 years will not happen in the next 10 years.”
So does that mean if I even study all the patterns and run the stock checklist as mentioned in the chapter thoroughly, even then I would not get the desired results?
Well, these are individual opinions, Maaz, but here is the thing – TA gives you a great foundation to understand price action. End of the day, whichever way you choose to look at the markets, price action will play a crucial role. So you don’t really lose much by giving yourself a good foundation 🙂
Hi Karthik
Please guide us little on Central pivote range (CPR). I think it is a important tool for day traders to identify markets trend for a particular day. Even I couldn’t plot CPR on Zerodha charts. Is it available on pi itself?
If wouldn’t then let us (traders) know where from one can get it.
Thanks
Rajesh, the indicator isn’t available. However, you can generate alerts by coding the indicator using tradescript on Pi.
The logic will be: SET A = (HIGH+LOW+CLOSE)/3
SET B = (HIGH+LOW)/2
(A-B)+A
Thank you so much Faisal sir.
Hi Karthik,
I bought stocks of a company few days back and the stocks reached my target price. To book my profit I decided to sell them. So I selected the stock and initiated a sell transaction on Kite (with the transaction type CNC).
I thought this transaction would sell the stocks that I bought previously but instead it kept the stocks in my holdings as is and appears initiated a new ‘sell’ transaction (like in Shorting – where you sell first and buy later in the same day). Thinking it did not do what I intended, I bought the stock back.
Question is – what would have happened to the ‘sell’ transaction I initiated had I not ‘re-buy’ the stock. Would it deduct the quantity from my holdings? Or would the sell transaction be rejected at the end of day if I don’t buy them by end of the day?
Kind regards,
Guru
Guru, if you have selected CNC, then the sell was indeed from the DEMAT and was exactly what you intended to do. However, your sell creates a position, which you may have gotten confused with. So what you did was essentially an intraday short trade, leaving your shares in DEMAT intact. I’d suggest you call our support desk and they will be happy to explain this to you. Thanks.
Hi Karthik,
Thanks for the reply.
Yes, I got confused as it created a new position when I initiated a sell transaction. These are my baby steps so I think it happens :).
Thank for the clarification and I’ll talk to support team.
Kind regards,
Guru
Good luck, Guru!
Stay profitable 🙂
Thank you for sharing TA, such a systematic and connecting way. Happy learner ?
Very happy to note that, Heer! Good luck and happy learning 🙂
Sir, it’s very nice reading your concept.
Can you please share the link or tell how to achieve the Target price in each case and how to set the stop loss (not based on RRR ) but technically in each case.
Hi Karthik,
Happy Zerodha customer. Good learning stuff.
Are these technical concepts can be used for intraday / weekly trading?
Just started learning.
Glad to note that, Vina 🙂
Yes, you can apply the same for short-term and intraday trading as well.
Upon finding a bearish candle stick pattern at 3 20 PM, how can I short the shares in CNC & hold the position for next few trading sessions? Looks like Short is possible only with Intraday MIS, If yes then how to get benefited from bearish candlestick patterns?
Saalim, you will have to take a position in the derivatives market here.
Very helpful sir..thank you very much
Sir I have questions
1.Is it possible to buy and sell delivery stocks at same day.
2.Is there any role of stop loss with delivery stocks
1) Yes, you can carry out an intraday trade
2) Yes, you can keep an SL just like the way you’d keep for any trade
Hi Karthik, hope you are doing great.
I went thru entire chapters for TA & now I have started putting baby trades.So I just wanted to cross check & with you on below trades.
Please guide me & suggest if understanding below is correct.
1.ApolloHosp
Bullish Engulfing Pattern with trend reversal on 15th June, Volume more than 10 days average.
I analyzed 12 months EOD charts for concluding S&R
Support around 997
Resistance around 1095
CMP is Rs 1033 around 3 20 PM on 15 June
SL = 961
Target I assume 1090 below enough Resistance with Risk to Reward around 1:1
2.MothersonSumi
Bullish Engulfing Pattern with trend reversal on 19th June, Volume more than 10 days average.
I analyzed 12 months EOD charts for concluding S&R
Support around 305-311
Resistance around 340-344
CMP is Rs 309 around 3 20 PM on 19th June
SL = 298
Target I assume 335 below enough Resistance with Risk to Reward around 1:3
So Please help me & validate if my analysis is in right direction.
1) Your thought process is perhaps on the right track, but I’m not convinced that its a bullish engulfing pattern 🙂
2) This makes sense.
Thank you Karthik for your reply.
Case1 : P1 close on 14th June was 969.9
P2 Open on 15th June was 969.9
and bottom of P2 green candle real body exactly matches with bottom of P1 red candle real body. hence not a typical engulfing.
I got you.thanks again
Yup, ideally P2 open should have been a bit lower than P1 close.
Hi Karthik,
At closing of the day around 3 20 PM, how should we identify the stocks forming a recognizable candlestick pattern e.g Bullish Engulfing so that I can put trade on the same day?
You will have to match the OHLC here. Closing will be an approximation considering the fact that the prices wont be too different between 3:20 and 3:30 PM.
Karthik,
Please elaborate how to get OHLC report for Nifty100 liquid stocks around 3 15 PM?
There is no report as such, Saalim. If you find a stock interesting, then at 3:15 or 3:20 PM, you will have to pull up the chart and look up for the formations to identify patterns and act accordingly.
First of all, I would like to extend my gratitude towards the extensive effort taken by you to explain such crucial topics in such an amazing way.
You talked about scalping in a very brief fashion here. Could you please create a module that extensively explains the thought process behind scalping, as I reckon it differs a great deal from swinging.
Or point me in a right direction as to where from I can specifically study about scalping and technical analysis related to it?
The bulk of the work in scalping requires you to study of the order book and see how the liquidity changes. TA has very little application here, or so I think 🙂
Can you tell me what is bloomberg terminal and is it useful for trading in Indian markets.
I’d suggest you request for a Demo from Bloomberg for better understanding – https://www.bloomberg.com/professional/request-demo/?utm_source=bloomberg-menu&utm_medium=bcom&bbgsum=DG-WS-PROF-DEMO-bbgmenu
Yes, if you can get a terminal, it would be helpful. I personally think its quite expensive for a retail trader, but for whatever its worth, give it a try.
I am very confused between Timeframe and Lookback period. Both mean the same thing to me- the time period which we use to prepare candlesticks and predict future price. What’s the exact difference?
Chirag, yes, they are used interchangeably.
Brilliant stuff Karthik!!!….please add me to your fan list :-).
Two things that would help
i) Is there any video tutorial that shows all the theory you have explained being put into practice using Zerodha’s suite of offerings?
ii) Is there anyway to do a dry run in a simulated environment
Thanks for putting together such excellent material and sharing with everyone
Lol 🙂 Happy to note that, Avinash!
1) No, unfortunately, there is no video content available.
2) No again, but then this should not be a problem. Whatever you learn, implement it directly in the market but with a reduced quantity. Something like 1 or 5 shares. Yes, you will end up paying (or even making) small bits of money here and there…but this is a far better alternative to the simulated environment you are looking for.
Good luck!
Tks bud…can’t help but share this analogy of how I feel, the car driving manual is brilliant, I am gonna hit the highway on my own :-)…would help if I had a driving instructor next to me…am sure you’ll nail this one in the near future…take care
Good luck, Avinash 🙂
Dear sir, (1)for swing trading, to look prior trend, how many days candles should be examine.
It is best if you look for at least 5 – 8 trading sessions (this is the minimum).
Hey, I have an issue on kite web that my charts are not refreshing/updating itself. Every time I have to hit on the refresh button to get next update in the chart, can you please help me to overcome this?
Vaishnavi, a couple of things –
1) Make sure your computer time and actual time match to IST
2) Make sure your broadband has no issue
3) Make sure your browser is updated.
This should fix the problem.
Hi,
Can you please respond to my below query.
Yesterday i.e on 11th July 2018, TCS has a very good movement in INTRADAY. Being a INTRADAY trader, at what time / based on which parameters one should have entered the trade and exited after a decent profit…Means what is a way to get judgement that,this script will be moving up only for the rest of the day.. ( Say after 11.00 am till ALL TIME HIGH)
Madhav, that would be impossible for anyone to predict 🙂
Hi
Can you please help
• At 9.15 am as soon as the market opens, I am totally lost / confused …Should I see here or there—up or down ..By the time the eyes are set on trading terminal, most action is over in first 10 minutes.
• Most action (up or down) happens between 9.15 am to 9.25 am. How one should get hold on the same. How to capitalize this early movement. How to jump in a moving train and get off quickly.
Madhav, this is not necessarily true. There are lots of scrips where the movement picks up during the day. Don’t look at the index alone…start tracking stocks as well.
Fine… but I want to enter the market by 9.15 and out by 9.30. Then let the market go anywhere and let any stocks go anywhere. i need to have one trade and i will not look at the market till next morning. What will you suggest.
If this is the objective, then I think Index option is best suited. Stock options can have wild swings.
Thnxs Kartik,
Can you please make it more elaborate it further. How to go about it…
I suggest this since you intend to trade just for 15mins at the open. Stocks can be more volatile compared to the index. You don’t want to be in a situation where you place an order and soon the SL triggers.
Sir, It is a great effort by you & very easy to understand by everyone who read it iam reading it in bits & pieces but could not Implement fully to get 100 percent benefits many thanks for a great unselfish efforts SWAMY
Good luck and happy reading, Swamy!
Dear Sir,
Zerodha Varsity is great knowledge for us who are beginners. I have gone through all modules. Thanks for writing in simple and explaining ways. I have downloaded Pi on my laptop. But when I open pi in evening technical indicators (charts) are in disable mode. Is it enables only in trading hours??
Thanks for the kind words about Varsity.
The indicators should work. Btw, have you seen Kite? If not, I’d suggest you login here and check out Kite – Kite.zerodha.com
Hi Sir,
A) Say if all the checklist item coincide and we have taken up a trade and the trade works out as per our directional view and our target is yet to hit in a day or two.But what if the Q results are going to be announced very soon before our target is hit (say tomorrow).
1.Can we exit the trade before the Q results with whatever profit we are in without our target being hit.
2.Or can we wait for the target to hit with the view that market discount everything and so the results might be good henceforth the rally started previously to it?
B) Say if all the checklist item coincide and we have taken up a trade and the trade DOESN’T works out as per our directional view and our SL is yet to hit in a day or two.But what if the Q results are going to be announced very soon before our SL is hit (say tomorrow).
1.Can we exit the trade before the Q results with whatever loss we are in without our SL being hit with the view that market discount everything and so the results might be bad henceforth the fall started previously to it?
2.Or can we wait for the SL to hit ?
3.Or can we wait for our trade to work out ,with the view that the market is discounting the bad result and once the result is announced the market may move up as it had already discounted the bad result?
A) Like I have mentioned earlier, when the fundamental event is around the corner, the technicals do not have a play
1) Yes, you can – especially in case you realize you are not in a situation to understand the fundamentals at play
2) Depends on how well you understand the fundamentals at play
B) There are no guarantees in the market
1) I guess the replies to (A) should answer these questions as well
Hi, Karthik sir,
First of all thank you , for your great insight and inputs.
Sr like you have explained these modules , can you please put some glance upon MUTUAL funds…it’ll be helpful for accessing zerodha coin.
Yes, Amandeep, a module on Mutual Fund is long overdue. Will work on it. Thanks.
Hi Karthik,
I have a query about Scanner and AI in Pi. Based on the module, I have set my chart setting “Periodicity” to Day and “Months” to 12 Months. This chart shows me a candlestick, per day for a year. Now at 3.20 pm as you have said in the module, I open the chart and try to identify the pattern. Thanks to your wonderful explanation I have now started identifying the patterns.
My default Market watch windows is of 10 stocks. So it is not much of a bother. But if I have more stocks, then I thought, maybe I will have to use scanner option in Alert menu. So I open scanner, type the script, Let’s say Bullish engulfing pattern script, but I am lost with the data source window. When I click on “Periodicity” it shows me “minute” and “hour” as option. There is no “day” option in the drop down. What should be the settings here(In the data source window)?
I want an alert that will identify stocks from my Market watch that have made Bullish engulfing pattern at 3.20 pm and then maybe I may buy those stocks. Is this done through scanner or through AI? For AI, I have to open the chart for that stock, so do I have to open all the charts and run Script for “Bullish engulfing pattern” on all the charts?
Regards,
Siddharth.
I’ll pass this query to my colleague, Srini. Maybe he will respond to this, Siddharth.
In Pi, the scanner works only in live market with LTP ticks, it does not have daily time frame as the scanner works in intra day basis. It is not possible to scan daily candles
Hey Karthik,
How are you? We have interacted earlier as well. Hope you remember.
Karthik, I am in need of a bit of motivation as my morale is quite down. I have been trading in the commodity market for a couple of weeks now, and honestly speaking, I have made profits and I have made losses but in spite of rigid position sizing, a streak of losses have started eating my capital. What I need to know is…
1. Is it possible to generate consistent monthly income from trading alone? I mean trading and not investing. I am not focusing on capital growth as of now. Are you able to do so? I am asking because if your answer is YES, I can rest assure that it is actually possible and I can keep going else quit altogether.
2. How much capital do you think would be required to generate a monthly income of 20-30k from trading alone?
3. I am a purely a technical trader. And I primarily use Price action + Pivot points + Divergence in my analysis. How may trades do you think I should take before I can confirm that maybe my strategy is not that efficient and try something different?
4. I currently trade risking 1% of my capital with a maximum risk of 5% meaning I won’t take more than 5 trades at a time. Now if I suffered subsequent losses and about 5% of my total capital is lost then what is the next step? Do I continue with same position sizing parameters or I decrease or increase the risk %? Basically, what should we do if our maximum risk % is hit?
5. If the higher time frame is showing a bearish divergence but the lower time frame is showing a bullish divergence which one should I be focusing on?
6. Also, let’s say that the immediate lows/highs of the oscillator and the price are not diverging but the lows/highs far behind in time are diverging with the current lows and highs then would that divergence be still valid? Like, for e.g., there’s no divergence in todays lows (of both price and oscillator) with that of yesterdays but it is diverging with lows formed three days ago. So is that a valid divergence?
I am not sure whether I have put up question no. 6 in the right way but that’s the best I can articulate now. I am sorry there are many more questions as I feel kinda lost. Btw, you need not answer questions 2-6 if your answer to question 1. is ‘NO’. 🙂
Thank you very much Karthik.
~Abudhar al Hassan.
Abudhar, I’ll be honest with this –
1) The answer is both yes and no. No, because I was never able to do this myself. My trading income was never consistent. Yes, because I know people who are doing this. When I look back as to why I was never consistent – probably the reason was stress. Because trading was my only source of revenue and I had to cut it every month. This is the ultimate source of stress for a trader, I sense you are in a similar position. My trading has improved a lot more once I got out of this stress. I now trade only when I’m absolutely convinced to place a trade, I don’t trade to make money every month.
2) If you are a very good trader, maybe you can make 3-5% of your capital in a month. So you can do the math. By very good trader, I mean a trader who is consistent and not lucky.
3) Experimentation in markets can be a very expensive affair. Ideally, you should backtest your strategy even before you trade. Try this platform to back test – https://streak.tech/
4) Take a break, look at what is going wrong. Increasing the %risk is like giving yourself an allowance to trade more. Be critical when it comes to trading.
5) This is a personal choice, I’d place more faith in longer time frames
6) I’m not sure if I understand this well, but please don’t place so much faith on an indicator. Look for price action patterns 🙂
Good luck, don’t stress out too much. Take your time to reflect on what is going wrong and right for you. Be critical of your trading strategy. Most importantly, the key to successful trading is when you trade for a valid reason and not for a living.
Hey Karthik,
Thank you very very very much for the honest reply. Yeah you are right, maybe I should take a break.
The problem, that I could infer is this: unable to identify potential S&R zones. What is annoying is that the trade does more or less happen in my favor but not before hitting my SL, which btw I do place strategically. If I place the SL even further beyond what the charts are suggesting my R:R wouldn’t allow me to take the trade. More often than not, the trade goes in my favor but returns without hitting my target. And it is just not possible to keep scanning multiple charts for the whole day and then not take a trade. Anyways, enough of my nitty-gritty. Let me apologize beforehand, and bombard you with more questions…
1. I checked out Streak. Was sad that I missed the till-July-free-offer. I wanted to know, when Streak would be available for commodities? MCX?
2. Is it possible to backtest on Streak even if your Equity funds are nil? Just backtesting, without running live algos. Or is there a minimum fund limit? I am asking because if that’s the case, I would rather wait till Streak includes MCX as that’s where my funds are.
3. So far, based on what I read from Varsity, I think arbitrage trades seem to be the ones that involve minimal risk with more surety of gains. Do you think sticking only to arbitrage-based trades would be a good idea?
4. a) This is slightly off-topic. Could you suggest an investment option which can give 4-5% return on the capital I invest (ON A MONTHLY BASIS)? I know I can get tons of info on the internet but I tend to rely more on personal reviews and advice.
4. b) I did read about mutual funds and was particularly interested in Systematic Withdrawal Plans (SWP), although I fail to understand how is it any different from withdrawing money from your savings account. I mean how is it an investment? For instance, I invest 6Lakhs lump sum in a debt fund and request a SWP of 10k per month, my capital would deplete at the end of 5 years right? So then what is the benefit? Will my capital increase with increase in the fund’s NAV? I just couldn’t find enough material on this online.
5. Just renewing an old request. Please enable GTC/GTD orders in Kite/Pi.
Many apologies again for all the questions. And as always, I truly appreciate your replies.
Thanks and Regards,
Abudhar al Hassan.
I can relate to the chart pattern with S&R behavior you mentioned. I’d suggest you paper trade for a while, and try to calibrate your trades.
1 & 2) They are working on it, suggest you write to them here – [email protected]
3) Yes, it does, but the world is getting competitive. There are fewer opportunities out there
4a) 4-5% per month or 60% a year 🙂 there are none my friend. Even if you find such a scheme, run far away from it or dig realllly deep to know the risk elements
4b) People do SWP for a specific reason – invest 6L in a debt fund, pull 10K every month and deploy that in an equity fund.
5) Hopefully very soon.
Hey Karthik!
I am not getting option of changing theme under Display. Tried everything – Popping out the chart, doing ctrl, shift & R but it is not showing up. I am just getting option of chart style and multiple charts.
I want to use night them
This is sorted! Ignore pls
Glad its sorted 🙂
I started my journey from this month and made 19k in week following your guidelines… Thank you sir☺️
That’s amazing, Wasim! Good luck and I hope more profits roll your way 🙂
Thank you sir.
Thanks Karthik for your amazing blog, and support,
My queries are,
1) You said for bullish pattern, we should look for bearish prior trend, and vice versa.
For swing trading (2 to 7 days), how many days should we look back for that prior trend on EOD chart ?
2) What would you prefer for swing trading (2 to 7 days), Just look at one time frame for entry and exit , say EOD time frame,
Or , would you prefer to look at another time frame also ?
3) For swing trading (2 to 7 days);Say pattern is bullish on EOD chart ,but on 1 Week or 1 day chart ,it doesn’t confirm that bullishness.
So, we should depend only on one time (here EOD for swing trading),or consider other time frames also ?
Thanks.
1) Ideally at least 15-20 trading sessions
2) Yes, I’d prefer EOD data for this
3) Ideally both the time frames should confirm, but this is not so easy. Given this, I’d always give more weightage to EOD data.
Thanks for your reply.
1) Suppose,stock has traded from 500 to 520 on EOD chart seeing last 15 candles.
But, what if ,in between 15 days ;stock remains side ways for 3-4 days,or stock reaches 515,but comes back to 510 for 3-4 days.
But, ultimately it’s journey is 500 to 520 in upmove within last 15 days on EOD chart, and now bearish pattern has formed.
Should it’s prior trend been seen as uptrend or not ?
2)Most of candle stick patterns are reversal based what you have shown in varsity.
But, many stocks are traded sideways for many days.
So, for swing trading (2 to 7 days) ;should we avoid side ways movement and trade on reversal patterns only, or can we do some thing ?
Thanks.
1) Yes, always look back at the prior trend. Do not violate this rule, Dipak
2) Agreed, for sideways I’d suggest you look at the support and resistance or in fact even the dow patterns.
Sir, how to save the drawings (trendlines, fibonacci etc.) that I have made on chart in zerodha pi? Also when I change timeframe, all the drawing goes haywire…how to fix this? Plz help….
THANKS A TON
THIS COULD NOT HAVE BEEN EXPLAINED IN A BETTER WAY
LOVE U GUYS
Happy learning, Nishant 🙂
Sir, how to save the drawings (trendlines, fibonacci etc.) that I have made on chart in zerodha pi? Also when I change timeframe, all the drawing goes haywire. how to fix this? Plz help….
Yes, you can save the drawings using the Save to Disk option available.
Changing timeframes, shouldn’t affect your drawings, can you contact Support team if it persists?
Thanks a lot….I will try to contact zerodha team…btw my PI is up to date…dont know why this problem is happening
Sure, I’d suggest you speak to the support desk. Thanks.
Sir i got one more issue while analyzing the chart..how do i confirm that trend is still weak or still bullish on daily chart..its too much noise on daily chart should i go for weekly or monthly chart to confirm the trade?
Daily charts are good, not much noise in it. You can always use the good old moving averages to figure the strength of the trend or even the ADX. More on ADX here – https://zerodha.com/varsity/chapter/supplementary-notes-1/
Sir, among Horizontal Support & Resistance line and Trendline, which has more significance? Please guide….
Sudipta, one is not a replacement for the other. Their application happens under different circumstance. Both are quite useful in my opinion.
Thanks sir for your guidance…
Happy leraning!
Sir,
1. While shortlisting stocks, is it acceptable, if a candlestick pattern is formed, in any of the 3-4 candles that we examine,
or is it mandatory for the pattern to be formed, in the latest i.e the candle of that same day?
2. Yesterday, after some initial, sessions, suddenly Bajaj Hindustan showed all zeroes in the Offers column in the depth section. So no one was able to buy. Why does this happen?
3. In the charts of many companies, there are only Dojis visible and without upper/lower shadows, in a trend. From what’s visible we can say that either there wasn’t any trading or that buying = sellling. But then how does the trend form, in that case?
Link: https://drive.google.com/file/d/17vqHG4Xyd_2xAYxvB6absjrUSKBe6H_a/view?usp=sharing
4. What is the meaning of “consolidation” in the market. As in if someone is consolidating their position, what are they actually, doing? <- Forgive this one, if it's a little naive. 🙂
Thanks.
1) The more recent the candle, the better in terms of its influence on price movement
2) Was this post-market close?
3) These are stocks with very little liquidity, no way you can trade these 🙂
4) Consolidation means the price sticking to a tight range for several trading sessions.
2. No, in fact yesterday, in sessions after lunch and today around 11:30 a.m. One thing I noticed, is that volumes are very high and for the last 2-3 days it has a gap up opening.
3. Then how do trends form in such stocks, since the price moves higher and higher.?
Thanks.
2) I need to check this, the market depth is not supposed to show zero, especially for a stock which has liquidity. Let me check this
3) These stocks have very low circuit limits, so even if one buys for small amounts, the stock can hit circuits for multiple days.
2. Sure. I thought, this is because of it reaching the upper circuit. Is trading suspended in that case?
3. Ah, Okay.
1) Not suspended, it sits at the circuit until an opposite trade occurs
Amazing work sir,,,selfless effort ????
Happy learning 🙂
sir is it better to trade stocks or nifty options for intraday?
Stocks.
Thanks
Hi Karthik Sir,
Can I short a stock while I am still holding a certain amount(say 25 shares) in a long position?
Thanks.
Yup, you can. Remember, when you short, you’d do so under MIS and not CNC.
Dear Karthik,
Thank u for a very handy module. I posted one query but i guess its gone missing somewhere. I hv query for swing trading (EOD timeframe) that volume should be more than 10D avg volume but volume of which candle?
If we have Engulfing pattern then its clear that the volume of Bullish/Bearish candle i.e. P2 is under consideration but if we have Doji/Hammer lets say then volume in consideration is of Doji/Hammer candle or next candle following the pattern?
I guess I answered this query earlier 🙂
Anyway, the volume on the day of you initiate the action should ideally have good volumes.
Dear Karthik,
so u mean if i m risk averse trader then I should have good volumes on confirmation day irrespective of the volume on the day pattern being formed? If its Bullish Engulfing for ex. then Volume of Day 3 shall be above avg even if volume of engulfing candle is below avg?
No, you need to ensure the pattern day also has good volumes and not just the day you initiate action. For example in a bullish engulfing, I’d like to see good volumes on P2 and the next day.
Dear Karthik,
Just to re-confirm, if it is a Doji, then too the volumes of Doji shall be above avg?
Yup.
Sir, When will you put up a module on scripting trading strategies?
https://zerodha.com/varsity/module/trading-systems/
Thanks a lot..
I read each chapter a day and traded the next day.. Now at the end.. I am quite confident.. Thanks for giving me a sense of direction in chaos
Happy to note that 🙂
Happy trading!
Great Brainwash Module!!. Most simplest form of trading explanation. Thanks a Ton! Zerodha Team.
Happy to note that, Harsh! Good luck and happy learning 🙂
Hi Karthik,
you had mentioned in one of the earlier comments that stop loss order type is not carried forward to the next day. In case of positions which are maintained over multiple days, how should I ensure that my stop loss is automatically maintained.
Let’s say I buy a stock @Rs. 100 on day 0, my stop loss is Rs. 95, let’s say after day 2 the stock would be sitting in my demat account. What sort of alert or order would I need to setup to ensure that the stock gets sold if price hits 95? Would I need to do this every day till I exit my position?
Thanks!
Siddharth
That’s right Siddharth. Hopefully, soon we will have ‘Good till Cancelled’ (GTC) order which will help you do this. Meanwhile, you can always use https://sentinel.zerodha.com/ to keep real-time price alerts.
Hello sir,i am going for End of the day charting software but i am confused between between Metastock and eSignal advanced get,though esignal is very costly due to its proprietary features,what would you suggest to go for? Are the features of esignal are that good enough to pay for?
I’ve personally used metastock for many years and I found it useful. I’ve not used eSignal, so I cannot really comment. But I stopped using the software ever since Kite 🙂
Do you prefer any add ons to be purchased in metastock,which they charge seperately for it?
I’ve never used any add-ons. Of course, I was also subscribing for their data feed services.
Does any charting software provide authentic elliot waves signal?
I think esignal provides this.
Hi sir,
I need help in pi platform for back testing and for live screening also.
the command/script is “MAX”.
i want to screen the scripts in which “LATEST PRICE” crosses the “HIGH” of previous 5 or 10 candles.
or i want to “BUY” when the script CROSSES the HIGH of previous 10 candles in back testing.
please help me regarding this.
You can drop an email to [email protected] for this. Thanks.
Hii Sir,
Thank you, for explaining such complex concepts in very easy and simple way. I am very new to Technical Analysis of stocks. I have one doubt…..Please clarify…
Lets assume a Stock is trending bearish and at bottom Bullish Hammer is formed (Vol. is around 10 days average.), the bottom point is coinciding with Support (3 same price point Support in 1 year range). Also, the next day Bullish Marubozu is formed. According to theory, i should go long….right??
But, because the trend is bearing, many indicator [like Moving Average Crossover (25 vs 50), MACD is also little lagging] is not showing entry point. I think all trend Indicators will not show entry point (Go Long) in such kind of situation. In almost all Single/Multiple Candlestick pattern, Entry point is always bottom of bearish trend. Many Indicators will not show trading signal in these situations. What should i do?? What Indicator should i use of support of the trade?? or Should i not start the trade?
Thats right, Ankit. You will go long because most of the factors are in place. The indicators are only additional confirmation (like I have explained earlier on). I personally prefer to look at CS patterns over indicators.
Hello Sir! When I read this material, it was like great and gave me the confidence.. But when I open the kite, I don’t know which stock I should select to invest or analyze them to invest.. How to do that? Help me please..
Here is a suggestion – start by observing 5 stocks only, start with a small amount of capital. Buy and sell say 1 or 2 shares and figure how the orders work. Warm up and then put a larget step, Santhosh.
Good luck!
Thanks sir. But.. The problem is which 5 should I choose.. 😅
Pick any 5. Remember, this is still a learning phase and the names do not really matter!
Sure sir.. Thank you so much
Welcome, Santhosh.
Dear Sir,
How to interpret the bid-ask margin for volume and the trade direction, A little bit on that pls?
Check section 9.2 in this chapter – https://zerodha.com/varsity/chapter/nifty-futures/
Hi, is there any difference between EOD charts and the charts on kite? If yes, where can i find them?
Also, although you mentioned that to be able to identify operator driven stocks, novices need experience, but could you share if there’s any little thing that could help us out here?
Kite gives you option to see the charts across many timeframes including EOD charts. Stocks which are illiquid, often hitting upper/lower circuits are perfect candidates for operator activity. Usually, these stocks do not have any fundamental backing their existence in the market.
Hi Karthik Sir,
Please find below, an attempt at finding a trade:
https://drive.google.com/file/d/1snZaJ7sUWb0Jc-gHfmrpD6f5fwE4CUhJ/view?usp=sharing
Details:
Tgt: 63
SL: 81.9
RRR: 2.4
Volume: 126k against 70k(avg volume)
CMP: 76.35
Pattern: Bullish Engulfing.
Would highly appreciate your thoughts and comments on it.
Thanks.
It is a dark cloud cover pattern and a bullish engulfing pattern, Apurva. This is a great example on paper. But I’m not sure if you can trade this as there is no futures contract and the stock of this kind will not move 17-20% on an intraday basis.
Of Course, Sir.
I analyzed it since I thought it would be helpful to check at least the accuracy of procedure.
Thanks.
Good luck!
Hi Karthik Sir,
I attempted to find a trade as below:
https://drive.google.com/file/d/1snZaJ7sUWb0Jc-gHfmrpD6f5fwE4CUhJ/view?usp=sharing
Details:
Scrip: SMS Pharma
SL: 81.9
Tgt: 63
RRR: 2.4
Vol: 126k against avg volume of 70k on P2
Pattern: Dark Cloud Cover
Could you share your thoughts on this?
Thanks.
Ah, I see you have corrected the pattern name 🙂
I have shared my thoughts in the previous comment.
Please guide me on CPR – central pivot range. Thanks.
I need to figure this out myself, will try and do that and update.
Hello sir,
Can you give details on hardware requirements for
Daytrading, algo trading and for effective back testing and to take full advantage of pi and other real-time charting software.
Thanks in advance
Ashokkumar
A simple desktop/laptop should work, Ashok!
Hi Karthik,
I have attempted to find a trade – could you please confirm if my thought process is right
Thanks for taking the pain to handhold and guide lot of newbies like me.
Stock: ZEEL
Pattern: Bullish Piercing
SL: 415-420
Entry: Around 430
Target: 470
RRR: 3+
Other checklist points
Prior trend: Downwards
RSI: 38.66
Dow theory:
Primary trend: Bullish
Secondary trend: Choppy – Possibility for market to correct from current position
Dow Pattern: Double bottom?
That’s a good spot, Bharani. However, I think 470 is slightly an aggressive target. I’d look at 450 types, post which I’d trail. Also, I think the market itself is not too conducive for long trades, so I’d not compromise the SL.
Good luck!
Thanks a ton for the quick response….
Good luck, Bharani.
Im 17 years old and i do not have PAN for sign up in kite please help!
To open a trading account, you need a PAN card Hiten. This is a mandatory document. Btw, it is easy to get one done.
I think leverage is not discussed in previous chapters….
Am i right?
Its discussed here – https://zerodha.com/varsity/chapter/leverage-payoff/
Hi Karthik,
Would the checklist be different if I were to trade in cash (instead of F & O)?
If yes, could you please advise on the changes?
Thanks & Regards
Bharani
Not really, you will have to look for the same parameters. Remember, the checklist is in place to only enhance the probability of the outcome, no guarantees here.
Thanks once again for all the support and guidance
Good luck!
I want to thank you for publishing this content. I have gone back and forth on whether to get into trading or not but these articles are so interesting and easy to understand that I want to take this further.
One question, could you recommend a paper trading account for the Indian stock market?
Thanks.
I’m glad to hear this, Indranil. Glad you like the content here 🙂
By the way, I’m not really sure about any good paper trading account for the Indian stock market. I’ve looked at NSE’s Pathshala, used to just about ok. Maybe you should give it a try.
Alright. Thank you for your reply. I’ll take a look.
Good luck!
When are u gonna add central pivot points indicator ………………………………………………………………..
Not on the agenda for now. Hopefully, I can do this sometime soon.
While looking at the closing price of 1 min and 1 day chart of any stock on any particular day, the closing price seems to differ.
So while trying to find the support/resistance zone on 1 min and 1 day chart, the zones will differ because of these price differences. Is there any solution for the same?
For this reason, its always best to keep these two points in perspective –
1) Plot S&R on an EOD basis
2) Consider S&R as a price zone and not a single price point.
Hi Karthik, other than Google News & equitybulls, is there any other website that a trader should keep a watch for market news?
Have you seen this – https://pulse.zerodha.com/
Yes thanks. Forgot to mention that.
Sure, good luck!
Hi ,
Where i can download the PI,i search but not able to get any download link ? Even Q login also redirect to console window. Is PI still working or Streak replaced the PI?
Streak is a different platform which is used for backtesting strategies. Pi is an execution platform. You can download Pi from here – https://drive.google.com/file/d/1yUYIOj1E-UGKsDKMZDeam9nYiNQ_1WwR/view
After lots of search and dead links from past zerodha’s guide (https://support.zerodha.com/category/trading-and-markets/pi-and-other-platforms) I found your comment. Thank you for the link.
Though I have one question, why zerodha doesn’t show the download option on any of its official site? have they revoke support for it?
Support.zerodha is an official site 🙂
“Positional trades with an option to square off intraday, provided the target hits the same day”
How does one do that sir? With MIS product type the trade will auto square off at end of the day. With CNC one has to keep the stock for a few days and it has to come to one’s demat account.
Not necessary, AJ. You can initiate a CNC trade in the morning and square off by end of the day. It will be treated as an intraday trade.
Thank you so much karthik. Appreciate your response… Also you’ve really made trading concepts and techniques so easy.
1. Another Q I have is, do all that you have told about candlestick patterns and indicators etc hold for intraday trading too? Ie. If i see a marubozu or engulfing pattern in the miiddle of the day on 1 hr candlestick chart or 5 min chart, can i take that as an opportunity to initiate position In the next 1 hr or 5 min respectively?
2. Related doubt- can i look for a candlestick pattern on one kind of interval chart ( EOD or 1 hr chart) and trade based on that pattern on shorter interval chart – say 5 min or 1 min?
1) Yes, all TA patterns are applicable across different time frames and assets
2) It makes more sense to trade at the same interval.
Thank you so much sir🙂
Hi Karthik,
While trading in Futures, should one look at the futures chart or the underlying stock’s chart?
Thanks,
Anusha
Underlying stock’s chart, Anusha.
Hi Team,
Thanks for the easy to understand and simple content. It has really provided me clarity on analysis of charts.
My question is: while we hunt the stocks which comply with the above check list,and if I am a intraday trader using 15 min candle, it might be too late to take a position as the opportunity will be lost by the time I zero-in on a particular stock.
Can you please suggest any way fasten up the scouting process
Thanks,
Saurav
Basically, I want to know how to speed up the evaluation process to identify a potential trade
Thanks,
Saurav
Like I said, keep doing this and over time you will gain expertise.
Unfortunately there is no faster way, Saurav. Over time, with more experience, you will know where and what to at.
Thanks Karthik,
The tutorials are really helpful. I am into trading/investing for 1.5 years now.
But the way things are explained over here are really helpful and have never came across easy to understand material ever before.
It has helped me understand the concepts and gain insights.
Thanks to you and the team.
Glad to note that, Saurav. Happy reading 🙂
Hi Sir,
Please find this attempt at DELTACORP:
Link: https://drive.google.com/file/d/1Y_tes_geSoqgQzWANcTfyon4G8FhV4g6/view?usp=sharing
Pattern: Dark Cloud Cover.
Entry: 255.45
Target: 238.48
SL: 265.9
RRR:1.62
1. Here the RSI shows in the overbought zone and the MACD, still shows bullish sentiment(the MACD line is still above the signal line).
So can we still go ahead with shorting?
2. Does this look like a good trade?
Thanks.
I’d pay more attention to the price action and the candlestick pattern, Apurva. Unable to figure, but do you see above average volumes?
Right. But this time I thought maybe I could apply the indicators and see.
Sorry, forgot to mention volumes.
1.26 mn against 1.04 mn avg.
Alright, the volume seems decent too.
How to do swing trading for particular index (like nifty or BN ) using KITE .
How much margin required for that and how to put SL in swing trading.Can you provide me some information.Thanks.
You can use any of the candlestick patterns to identify a trade for this. Ensure you are looking at an EOD chart.
Thanks for your reply…
Actually my question is in swing trading will i get any kind of leverage or i have to buy in NRML type and in swing trading can i buy/sell automatically using KITE or i have to do it manually everytime.
Do upload one video regarding swing trading if possible..
Shankar, you will not get any additional leverage for swing trading, you will have to buy under NRML only.
Karthik,
First
Is it safe to choose stock from Nifty next 50 and Nifty Midcap 50 or for that matter from morning news(can be any stock of NSE) which is sticking to 6 checklists you mentioned for Intraday movement capture? I repeat that my perspective is only intraday and 6 checklists are confirmed.
Second
Question is that do we get live ticks on Kite platform because candle formation after refreshing the page changes sometimes.
1) Yes
2) Yes
Sir
What to include checklist for trading in BTST? Anticipating for your reply.
Rohit, the same checklist will work.
when I want to view EOD after selecting look back period as 2 years in Pi software but the chart is being viewed from 19th oct 2018. How to view chart of 2 years. Pl help me.
Rohit, I’d suggest you call the support desk for this.
In continuation to above question, I am not finding average volume in study menu list in pi software. Pl help me.
Its best you call the support desk, Rohit. They will help you.
Hello sir, you have mentioned that one can use 6 month to one year look back period to understand the price action, this may sound naive but what should look for? is it the strength of the trend?
for example I have found a Evening Star pattern with two spinning tops in TATASTEEL, in last one year it has fallen from 630 to 440 and now risen to 515, also on 11th and 12th Feb volume was very high. Found a strong resistance near SL and support around 495. Also it seems to form a double top with 530 acting as a resistance.
other than these what one has to look at sir? Is it possible for you to look at the chart and point out the things that I might have missed?
You need to look for trend, support, resistance, and the overall behavior of the price movement. Ensure there aren’t wild swings in the price.
Hi Karthik,
Request your views on the 3 trades I entered – would like to confirm I have done it right.
All are future trades, executed 1 day after formation of candle pattern
Trade setups given below.
a. Bullish Marubuzo formed on 11-Mar-19.
BUY Tatachem 1 lot @592.15 on 12-03-2019. SL: 580. Target: 650+.
Hit SL on 13th Mar but subsequently it has come up and future trading at 594 now 🙁 – should I have not sold the contract?
b. Bullish Marubuzo formed on 11-Mar-19.
BUY Tata Global Bev(TGB) 1 lot @205.75 on 12-03-2019. SL: 194. Target: 215+
It did hit 211 twice; currently trading around 201. I am hoping it will hit the target and still holding onto it. Your views please
c. BUY M & M 1 lot @681.4 on 7th Mar. SL: no specific target as per candle pattern; keeping it as 665. Target: 730+
It went up to 705+ and then came down. currently trading at 690. Request your views on this one as well
Regards
Bharani
1) Bullish Marubuzo formed on 11-Mar-19 – there is nothing much you can do about SL triggering. However, I think 650 was an aggressive target.
2)I’d not trade on extremely large candlestick patterns as the SL gets too deep. Good luck, though.
3) What pattern did you see here?
Thanks for the quick response Karthik.
On M & M, 5th Mar was a hammer followed by a spinning top. Also it seemed to be coming out of a downtrend. So I thought it may be a good time to enter..
Regards
Bharani
Got it. Good luck on the trades!
Hello Sir, what you think about SRF bearish pattern sir, Volume is good, RRR is also good, previous trend was a healthy uptrend, does it make a good candidate for shorting sir?
I dont see a bearish pattern, Mani. Which dates are your talking about?
yes sir, there is no visible bearish pattern, but last bearish pattern is so strong and has closed below low of last 4 days and below 10 day EMA, also bearish pattern has formed after 3 days of indecisive pattern, also in weekly chart a bearish candle has formed sir.
I didn’t take a position sir, I am paper trading, but it seems keeping the last 6 month candles in perspective there seems to be some weakness, so a short term correction might be possible sir. Let us see how it goes sir
Sure Mani, paper trade this for a while…especially since this is not a recognizable candlestick pattern.
I think I read in market wizards that a single trade is a luck but a collective of trades isn’t, from your experience how many trades I should take to test my setup sir?
I vouch for that completely. Trading ideas should be repeatable and measurable. Thats when you get consistent.
Thanks for making technical analysis simple.
Happy reading!
if a security is under ban (f&o security) then can I trade the stock in cash segment in intraday?
Yes, you can. The ban is applicable only for the F&O position.
hello sir,
for swing trading how to find volaitly stock ( mean which stock give daily 4 to 5% movement ) ?
Pretty much all the Nifty 50 stocks have that kind of volatility, Vishant.
Thank you sir for your fast reply and thanks for providing such kind of knowledge….
Good luck and happy reading Vishant 🙂
Hello Kartik ,when we buy and sell delivery stock on same day ; You said’ the trade will consider as intraday trade . How ? You mean all the taxes & charges ?
Yes, you will be charged intraday brokerage and the applicable charges. More details on charges here – https://zerodha.com/charges
First of all thanks a lot sir .. My que is
Is this much knowledge of T.A enough to become a full time trader?
I can assure you it is a great start, you can always build on this 🙂
Hi,
For Swing Trading, at what time should the evaluation of the stock universe be done?
Should it be Before the market opens? or During market hours? or Just before market closes?
regards,
Divesh.
You identify the opportunity post-market, for the next trading day.
My query is about the RSI indicator in TA. Recently i anaylised a stock ( Titan) and calculated the RSI for a 14 day lookback period. The RSI value was above 70 which would mean that the stock was overbought and was ready for a trend reversal. But instead of the price going down, it rose even higher. So i wanted to ask that is there any kind of exception to the RSI indicator, does it have any more conditions, or is it me that would be making some kind of mistake?
Sumeet, for this specific reason, many traders tend to use RSI as a contra-indicator. Meaning, when the RSI hits 80 and remains there, then it is assumed that the momentum is built and therefore buy (and ride the wave) instead of shorting the stock. Guess I have discussed this in the chapter. I’d suggest you draw your trading decision based on candlestick patterns and not really based on indicators such as RSI.
I am a student who has to attend regular classes, almost everyday when the market is open. I can perform after-market analysis only. The only thing I can do during market hours is place the orders, as there is no time for analysis for me because of college in real-time.
Please suggest what should I do. I have been doing after-market analysis on EoD charts and shortlisting stocks that almost always has the potential to make profits in the next session, but I miss most of them because of gap-ups and my entered order at entry price (usually at prev. close) is never fulfilled.
If possible, also please guide me as to how I should quickly recalibrate my entry, exit and stoploss in case of a gap-up.
Stick to EOD analysis and incorporate the gap up/down as an expected outcome in your daily analysis. This will help I guess.
How do you suggest I incorporate the gap-up/gap-down?
I’m blank.
Fritz, in my opinion, gaps, are a regular trading phenomenon, I’d not pay any special attention to it. But do bear in mind that a large gap is an emphasis on the trend.
Hi Karthik Sir,
If a stock is near it’s 52-week high and forms a single candlestick pattern, then the target will be unknown since it’s a 52-week high.
Therefore, it’s also not possible to calculate the RRR. So, what should be the course of action in a situation like this? I meanBuy – because there’s a strong likelihood of it crossing the high.
No action – since the Target and hence RRR can’t be calculated.
Or something else.
Reference:
ICICIBANK: Intraday (15m)
Date: 28-May-2019
Thanks.
I get your point. I usually end up buying the stock and trailing the SL and locking in the profits.
Right. Needed to hear this.
Thanks a tonne, Sir.
🙂
Good luck, Apurva!
Dear Karthik,
You have mentioned previously that there is a 6 point trading checklist. I am unable to find the same.
Can you please share the link where I can find the same?
Regards,
Hari
The checklist is discussed in this chapter – https://zerodha.com/varsity/chapter/dow-theory-part-2/
Karthik, I am facing a bit of issue while executing trades despite following the rules, recognizing the patterns, looking at indicators may be because of fear, lack of confidence or such things…can you help with this problem?
And I Thank You for sharing your wisdom.
Yogesh, the only cure for this is to execute a trade with conviction and learn from its success or its failure. Nothing can replace practical experience.
Suppose i identified a candle,confirmed by s&r and indicators.so should i initiate my position at the right beginning of the market or wait for some time.
If i get confirmed about a previous day eod candle and s&r so i waited for the first candle to appear after the candle what should be the checklist for following:
1-opening candle is a gapup with more than 1% range of previous day eod and made a bearish pattern.
2-if a recognisable pattern is found but not followed by 6months s&r
3-if recognisable pattern found with lower volumes and no indicator confirmation.
This depends on your risk appetite. If you are a risk taker, then perhaps you can initiate the position at the same time, else you can wait till the end of day.
1) The trade is valid as long as it does not cross the stoploss point
2) S&R is an additional confirmation which is great to have, but not all trades have to stick to the the S&R criteria
3) Ignore the trade
Urgently Respond
improve as Scalper I want to ask some question to kartik sir .
Please Sir share your own trading experience while answering
1) Successful trader How much trade in one day as Scalper trade
2) How much amount should be in account to get maximum profit as Scalper trading
3) RRR of scalper should be 0.5 to 0.65
It means Entry and exit difference shoud be minimum 5
But my question in sideways market up & down many time in one range Then is it Wright to RRR as mention above
4) What do you think Future trading or option trading shoud use as scalper
5) For successful scalper Do you think that Heding compulsory if any trader perform plane vanilla Then what success rate change
Please share your own experience while answering Kartik sir
1) Depends on your capital and the liquidity of the stock/contract you wish to trade.
2) Same as above
3) No, it means for every 1 Rupee of risk, your reward expectation is 0.5 or 0.65
4) Options is tough to scalp, but you can with Nifty futures. It has good liquidity
5) Scalping is best done with naked directional trades. Hedging will increase your costs
Actually I want to ask How much minimum amount to start scalping trading
One can scalp with any amount. There is no minimum as such. The problem is actually the other way round, if you have too much cash, then scalping becomes tough.
like
https://canabodial.co.uk
Karthik Sir,
I would like to ask is there a way to spot candlestick patterns?
Like get alerts when a candle stick pattern forms.
I’m not sure if CS pattern alerts can be set up. You should check with this – https://www.streak.tech/
Thank you for the quick reply sir,
So the only way to scout for trading opportunities would be manually searching through all the charts in our stock universe?
Hence the need to ensure you have a smaller, manageable stock universe.
Excellent information. I admire your selflessness. Hats off to you sir.
Happy reading, Ray 🙂
Hi Karthik,
Most of the time, it happens that when I take a trade (suppose Long trade) , it comes down, hits my sl and then moves in the direction of my actual trade and hits my predefined target. And because of this, I close my winning trades earlier. Sometimes when I am long in trade the price comes down towards my SL I close the trade even before it hits my sl (to reduce the loss) and here what happens, it doesn’t hit the sl and moves up. Actually I am good at technical analysis and in finding good trades but because of this problem I can’t get good profit. Can you suggest anything for this problem?
Aryav, you may have to relook at the way you are setting the stoploss. I prefer to set my stop loss at least 0.5 to 1% below the SL identified, this way it gives me an extra buffer to accommodate for all the drama that would occur at key price points such as the support or resistance.
Got it. Thanks
I have 2 Question
1)For swing trader after all the checklist can i include a Market direction i.e nifty 50. or i need to ignore.?
Please correct me “if market in uptrend we need to go long,if market is in downtrend then we need to go short”.
2)Whether market direction applies in intra day while trading?
1) You can. The trick in trading is to keep calibrating your ideas to find your own edge 🙂
2) Yes, it certainly does.
I have seen this behavior with few stock when nifty candle is red then most stock forms a red candle do you agree.
Yes, Nifty after all is the market, which dictates the market direction 🙂
Dear Karthik Sir,
I am unable to download my TA completion certificate. Please provide a download option for it. Thank you!
I guess you are talking about the app. Let me check this, Samik.
Hello Karthik ,I need my old kite chatt verson . who updated ? or it”s by default ? i am not comfortable with the new verson. i had saved all my settings to my convenience in oldone. It happend today. Please help…….
We updated the app, Anita. I’d suggest you try the new version, its just about getting used to it. I’m sure you’ll enjoy using it.
OK, Trying…..bt in ADX ( new verson ) there is only one line , where are other two Llines (indicaters) ( -ADX +ADX ) ?
Anita, I just loaded the chart and I can see 3 lines (ADX, +AD, -AD) in the indicator.
where is supertrend indicater ?
Its available in Kite.
sorry , got it ( super trend ) .what does it mean length -10 , factor-3 ?
Anita, check this chapter – https://zerodha.com/varsity/chapter/supplementary-notes-1/
Hello karthik , i can’t see, You mean ,those 3 lines are in DMI indicater ( Directional Movement ) ?
Yup, thats right.
I think , you should also update the Technical Analysis Chapter ( Supplementary Notes 1).
Hi Karthik
Let’s suppose that as per technicals we have received a signal for initiating a trade . Is it necessary to wait for an hour or so after market opens to enter into trade. Some say there is more than normal noise from 9 to 10 AM. Is it true or a myth.
My question is with regard to intraday trading and stock specific trading,not index specific.
Thank you.
Not really, Sunil. You can take the trade as and when the opportunity presents itself.
Makes sense. Thank you Karthik.
By the way,really grateful to you for recommending Thinking..Fast and Slow…
About to complete the book.
Tc
Glad you liked the book, Sunil 🙂
Hi Karthik
As you said opportunity universe for swing traders is Nifty 50 with all the required attributes.
For intraday trading, can we go with NIFTY 50, Nifty next 50 and Nifty midcap 50 as an opportunity universe assuming that one is comfortable tracking 150 stocks daily.
Regards
Sunil, Nifty 50 is one of the opportunity sets you can create for yourself. Yes, you can consider these as well.
Thank you Karthik !
Good luck, Sunil!
Excellent work Karthik !
For the beginners , is the Kite platform enough for doing TA? I cannot install Pi on my Ubuntu?
Yes Nikhil, thats more than enough.
great experience all together, great way of teaching, and thanks for the extra suggestions or opinions on every perspective,thank you
Happy learning 🙂
Just want to know if anyone is strictly trading based on grand checklist specified here? And what are the results?
Thanks for asking. I’m curious to know that too 🙂
Hi Karthik,
What do you mean by end of the day EOD chart. I use both Kite & Pi for getting candlestick chart but i didn’t get any EOD time interval. Please help me understanding it.
Thank you,
Vikrant
EOD is end of day or daily chart, it is available on both.
Hi Karthik,
Can we short a stock in swing trading?
I mean, suppose, i am bullish on a stock, so i sold it today and on tomorrow my target got achieved, so I bought it. Is it Possible?
I know, we can do it in intraday, but what about holding a shorted stock for more than a day?
You can short the futures contract and keep it overnight, Vikrant. You can short only for the day in equity market, you cannot roll this forward.
Dear Karthik,
If the stock is trading at all time low and validating all the points from the checklist except stoploss near support.
What should one do in such scenario?
You should consider buying 🙂
Sir,
Pivot points are available on kite and PI. But can we plot CPR. where do we get .
Unfortunately, the CPR indicator is not available. Let me check with the team anyway.
is there a way i can scan/find all those stocks out of nse 200 that meet my criteria of bolinger band breakout. I want to use this feature on eod basis to find stocks for swing trading.
You can use Sentinal’s alert feature for this, Amit – https://sentinel.zerodha.com/
which application out of your basket of applications can help me find/filter out stocks from nse 200 group meeting the following conditions:
1) scrips where pin bar candle has formed at day end
2) scrips where there is a bolinger band breakout on eod basis
3) scrips where traded volume and delivery volume are more than 10 days average on eod basis
4) scrips where there is a gap up in price on daily candle
Amit, these are possible across Streak and Sentinel, here are the links –
1) Streak – https://www.streak.tech/
2) Sentinel – https://sentinel.zerodha.com/
Hello sir, if I want to do swing trading with cnc, even all the checklist satisfied I can trade only long and can’t short sell. Suppose a bullish engulfing pattern form on Monday, other checklist are ok, and If purchase shares, those will be credited in demat on (T +2) Thursday. If target is achieved on Tuesday we can not sell. So this strategies are more useful in f & O trading? Can it will be useful in cnc swing trading..
Hmm, you can always switch to Futures, Roshan.
Can we use those check list for CNC swing trading ?
Of course, you can use the same for swing trading, Roshan.
Sir
you speak about a good charting software ,data feed .. Etc… . I am a newbie . Will you please explain what about kite , streak , Zerodha PI , how do they differ ? .
please explain how do we initiate a trade using a charting software like Metastock’ and ‘Amibroker ? , an we use zerodha on those softwares like Pi ?
How do we use streak ? How do we write strategies and back test them . And depoy .
I a a complete ignorant so please have patience to explain .
Kite and Zerodha PI are trade execution platforms. You use these platforms to place trades in the market. Streak is a different company altogether and is used to backtest your trading strategies. I’d suggest you write to Streak to understand how the system works, they would be the best people to explain this.
Sir, If i am a government employee how can i do trading or investment in share market…..
I’d suggest you read this – https://support.zerodha.com/category/trading-and-markets/trading-faqs/articles/can-government-servants-trade-in-stock-markets
Hi
In your post you ask to take a position to buy or sell (if criteria met) after a candlestick pattern is formed say bearing engulfing on the same day itself for risk taker.
1. But at 3:20 how would one know that from the universe which stock is creating that candlestick pattern?
2. The two phases of stock screening, what time do you scan through the stocks to identify the pattern and run the checklist? At the end of the day or during the stock market live hours?
3. Also most of place it is mentioned to by stock same day P1 at 3:20 or next day P2 3:20 I guess. Is it also possible to buy at P2 early hours say 11 am when things seem stable so it is somewhere between risk taker and risk averse? Because if he buys the same day P1 3:20 hours and if fundamental change overnight next day there could be a gap up in opposite direction. So can be on a safer side but not complete risk averse as well so as not to lose out on opportunity?
Pls suggest.
1) This is the reason why one has to keep a manageable number of stocks in the universe. Know the previous day’s price levels and during the day get a sense of whats happening with the prices and guesstimate the likely pattern for the day.
2) Both
3) Yes, this is also possible. Remember, one of the rules is to be flexible, quantify, and verify 🙂
Hi,
1. If I am identifying bearish patterns, then I will have to short the equity. But I cannot hold them for a day right? In which case is it worthwhile to identify bearish patterns based on EOD data?
2. Is it generally a good practice to scan stocks in the night for candlestick patterns and run through the checklist to shortlist the main ones. And buy the next day at 11:am hours once you see that there is no major gap-up etc?
3. how do I scan stocks for pattern at 3:20 pm if I have to be a risk taker? Are there screeners for these?
1) Hmm, you can always short in futures
2) Absolutely. In fact, I’d suggest doing all the homework on an EOD basis
3) I guess I’ve answered this in your previous comment
Hi,
Few more.
1. Should another checklist be ‘domestic or global events’ happening. It happens many times that next day some important announcement is to happen (e.g.like recent gdp figures are coming out) and all goes haywire in expectation of that figure going down or up. Likewise US job market data also affects. Is there a calendar that we can have for all this events one should take care of?
2. What has been your trading success. Out of 10 trades how many are successful.
3. You mentioned somewhere about that of course you see primary and secondary trend line but could not find a detailed explanation on it. Am I missing something?
4. How do I find the stocks that are in trend? As most of the candlestick patterns apply to those in some trend can that be known to save time?
5. I find it difficult to set targets, somehow not good at figuring out resistance and support. Can you see EOD Wipro chart there is a bulling engulfing, should one buy and what target and stop loss one should set…?
Thanks a lot.
1) Absolutely, tracking macros is an important factor. One should be aware of this
2) This does not matter, the quantum of profits over losses does. I’ve been fairly fortunate on this front, I’m still surviving in the markets 🙂
3) This is a part of the dow theory, have explained the same in that section
4) Simple moving averages do the trick of finding the trend
5) I’m unable to spot one
Hi,
Thanks for the answers.
In response to the 5th point, there is a bulling engulfing right (end of 4th dec) at a downtrend.
There is a double bottom as well.
Do you mean there is not a trading opportunity?
The RR ratio is not good or the volume is less?
Ah, I dont think it qualifies as one. The opening of P2 is not below the close of P1.
Hi,
To complement the earlier question, can you put in 3-4 chart of your recent or not so recent trade so we know how you see the trading opportunity. I know you have explained at various points, but not all at one go..I think that would help.
Not sure how to add attachment to comments else would also want to attach one.
Thanks.
I’ve not taken up a trade in a while, Ankit 🙂
Hi,
1. How do I calculate if avg volume is greater than last 10 days avg volume.
2. I am finding it quite tough to find the right stock. Saw 10-15 different charts where some pattern was formed at EOD but looking at them they don’t look promising mainly because of the volume bit or because it is a sideways wherein these patterns don’t say much. Also hardly find risk reward ratio more than 1 if at all. It happened yesterday too…Can you show a couple of patterns like asked earlier which were good to enter for trade. Where can get a feel what really trading opportunity is like…?
Thanks.
1) You can plot a simple moving average on the volume
2) This is where experience counts. The more you evaluate the chart, the more you trade, the more experience you gain.
Hello karthik
first of all thanks for sharing such wonderful knowledge here i am completely fresher in a trading world so what right now i know or learned is completely because you and zerodha. I want to start trading in commodity in a crude oil, silver and gold and i analyze a lot using MA crossover, MACD, RSI and Candlesticks also after analyze it i feel that i should take all this indicators and if 4 out of 4 going in a same direction or work same so i go with the trade and if 4 our of 2 works i bet half. MACD,RSI,CANDLESTICKS and MA CROSSOVER is it really a good strategy or i should work more on this technique ?
Rajesh, thanks for the kind words. There are no definite answers here. You should start with what you think is right, ensure you stick to basics, learn from the outcome, calibrate, and evolve the technique. This is the only way to get better at this.
Hi Karthik,
I have been implementing TA for over 2 months now and I want to expand the set of candlestick patterns that I use and also the universe of stocks I want to apply these on.
For the stocks, I simply expanded from NIFTY50 to NIFTY100. Is there a better option that this?
Also can you suggest me a reliable source to learn a few more candlestick patterns that I can apply on these stocks?
Thanks,
Nikhil
Nikhil, yes, Nifty 100 is a good set to track. The only good book on this subject (at least that I know about) is Steve Nison’s Japanese Candlesticks pattern.
Query: In Equity can we Short Sell a stock for Delivery basis?
If so? How
You can do this via SLB, slightly complicated though https://www1.nseindia.com/products/content/equities/slbs/slbs.htm
Hi Karthik,
Now that I have completed the TA module, I tried reading charts and identifying trading opportunities purely based on the knowledge gained from here. What I came to realize (maybe I’m just wrong) is that more often than not, clear reversal patterns at the top or bottom of the trend have already occurred and stocks are at the start of a new trend. But the chart patterns we have studied and the checklist we have seem to suggest we only trade when a reversal occurs and not when the trend has already set in. Am I missing something here? It would be great if you can share some recommendations on how to identify trading opportunities in a trend that has already begun.
Regards,
Gokul
Hmm, the patterns do indicate a trend reversal Gokul. Especially patterns such as the hammer, engulfing, stars etc. The entire TA module is kind of my thoughts on how to identify trading opportunities 🙂
Btw, if you are in the middle of a trend, the best is to wait for a pullback. Flag formation (retracement with low volume) is usually a good opportunity to enter the trade, in case you missed the initial rally.
Hii Karthik,
Can you please tell me how do we increase our opportunity universe from NIFTY 50 stocks to further more , so where to start from if we want to take more stocks into consideration from so many registered stocks
You can look at Nifty 250, Dhruv. This includes both the large-cap and mid-cap stocks with sufficient liquidity.
Thank you very much karthik😃
Hi karthik,
What time frame do you suggest for intraday trading and how do we plot s & r for the same
I’d suggest you look at 10 or 15 mins time frame for intraday. The procedure is the same for plotting S&R.
THANK YOU SIR, APPRECIATE YOUR TIME
Happy learning!
Hi Kartik ! Been reading up on Varsity a lot and about to take my first position ! A little doubt, when looking at EOD charts, do you scan for patterns towards the end of the market day (at 3:20, for instance) only to get accurate readings ? Also, this whole screening process, starting from the 50 stocks in NIFTY to filter it down to one or two, is this something we have to do everyday ? Thanks a lot.
Good luck for the position 🙂
1) Yes, I prefer to do an EOD scan for positions for the next day
2) Yup, you need to run this exercise on a daily basis to figure the trade opportunities for the next day.
Hey that reply was quick ! 🙂
In regards to the above question, assuming I’m a risk taker and I wanna take up the position the same day, will I be able to go through the entire checklist (from identifying patterns to running indicators) for 50 stocks in a span of 10 minutes (3:20 – 3:30) ?
Excuse me if the question is stupid haha
10 minutes maybe a challenge, unless you’ve built some sort of screener for this.
Hello Sir, can you please suggest few books on price action trading.
The profit on the above trade is 4000. How did it get reduced to 2653? What were the charges precisely?
Hmm, not sure how that number appeared, must be some mix up 🙂
Will check and update.
Apart from brokerage, there are few more charges applicable on a trade, you can calculate the same and check the list of charges that may be applicable on any trade on our brokerage calculator. The link is below:
https://zerodha.com/brokerage-calculator
Hi Karthik,
How to set up stop loss for intraday.. I see many times if we put stop loss after SL crossing again stock reverse the trend.. how to handle this and how to use stop loss effectively…
Thanks,
Gurvi
Gurvi, for this reason, we need to have meaningful SLs. Shallow stoploss levels get easily taken out…so make sure you estimate the volatility and then decide on the SL. I think I’ve explained this here – https://zerodha.com/varsity/chapter/volatility-applications/
Thanks Karthik…
One more question… how to set daily S&R in kite?? I see only monthly S&R are appearing.. would S&R gets changed automatically based on time frame we select??
Thanks
Gurvi.
Change the timeframe to daily and plot the same, you will get the S&R.
Hi Karthik,
Do we have any videos on how to understand these daily S&R as well as how to determine stop loss points for intraday ??
Thanks,
Gurvi
No video as such, but you need to check this – https://zerodha.com/varsity/chapter/support-resistance/
And also I see the SR values are different for 10 mins, 15 mins and 1 day… when compare to 10,15 mins the day SR values are far away.. kindly enlighten me.. I am making huge losses as am not getting this stop loss concept…
Thanks
Yes, the SR changes when you change the time frame. Do let me know which part you find difficult.
Thanks Karthik.
As you suggested I am considering mainly 10 and 15 mins time frame candles.. so to set target and stop loss shall I consider SR which is showing for 10 and 15 mins time frames?? And shall trust these SRs for Intra day trading and enter and exit trades??
Thank you so much for valuable suggestions … actually I am approaching all YouTube videos for stop loss set with garbage knowledge…
Thanks
For intraday I’d suggest you look at EOD candles to get a perspective on the longer-term S&R and then look at the S&R for the time frame you are interested in. This will give you an overall perspective.
Hi Karthik,
Thank you. Is it really necessary to place BO orders with predefined stop loss and target for intraday?? Or I shall choose to place at that time when I understood the market going in reverse direction??
And if I place BO order can I change my target or SL after enter into trade?
Thanks
Gurvi
Yes, BO works on the premise that you are placing SL and Tgt.
Sir
I have completed this module. I have 2 questions:
1. For S&R levels, is their a reliable source or I have to plot it myself only?
Asking because printing 6 month of chart and plotting on it gonna be tough. How traders practically do it?
2. For RRR level, how shall I define my target? I mean, the more the price go up after I buy, the more profit comes, the better it is. I am not being greedy. I want to know what defines my target ?
1) Its best if you plot this yourself. I don’t think there are any reliable places to get these values.
2) For long positions, look for the immediate resistance levels. For short positions, look for the support levels as the target. This is the easiest way to identify the target.
How to trade in extremely volatility like right know especially in commodities. Becz price action movements are so quick.
One needs to have a deep stop loss in such situations, no other way to deal with this volatility.
Not a single point of time did I feel that the modules are getting theoretical in nature…Everything is practical knowledge and 100% useful. Karthik Sir…Excellent work!!
Happy to note that, Mihir 🙂
Hi,
This is great content to go through for a beginner like me. I have just one question, you are saying all the trades should preferably based on the closing price and if its bearish and I initiate the short trade that day only (risk taker) or the next day(risk averse) then I would have 10 mins only (assuming I execute the trade at 3:20) to square off ?? Am I right or have I missed something obvious here?
Ayush, to short you can do so using futures or options, which you can carry forward overnight.
If you are a Beginner and really interested in learning the Trading and stock market this is the best course you have. It starts from ABC and explain you everything in a systematic way. Do not spend your money on courses just read and understand this and watch some You tube video if you want more clarity to the subjects. It is Excellent of Zerodha’s team for providing such a detailed and free course.
Thanks a lot.
So happy to note that, Yogesh! Happy reading 🙂
What a selfless efforts!!!!
Great job done sir!!! Keep on educating people….!!
God bless u….live long.
Happy reading 🙂
Its been a very long time since this article was written and technology has changed significantly.Do u still recommend buying a charting software or even using pi for that matter?given that kite has become much better and investing.com provides almost all of what was taught.
You can use Kite, gives you option of both ChartIQ and Tradingview.
Hii sir, do you recommend intraday trading in current market conditions as it is difficult to find candle stick patterns nowadays
If you cant carry overnight risk, then you should stick to intraday trading.
Kartik sir, you said not to do intraday as a beginner but If I will short a stock for some days, I’ll have to do it through options. But, derivative segments requires a income proof or a 6 month bank statement. Given that I am a student and I don’t have much balance in my account, how can I activate futures and options in zerodha?
I have already activated equity in zerodha. Please also tell me the procedure how can I opt for futures and options now in zerodha.
As of now, we are not mandated to check the value in your bank account. As long as you have income proof its ok. But yeah, as a student, I’d suggest you exercise maximum caution while trading F&O.
Sir,
where have you covered the topic of trailing stoploss?
Guess in the Futures module.
Hi Karthik,
Greetings!
Hope you are doing fine.
Enjoyed your course on Technical analysis. Can you help me in resolving following query:
Suppose I am evaluating Nifty 50 stocks after trading day has ended. I have shortlisted some stocks with recognizable candle stick patterns & prior trend. Now while evaluating volume, which day volume should be evaluated? Suppose the closing day is 2nd day of probable evening star pattern, then should i wait for 3rd day to check the volume or can I discard the shortlisted stock based on low volume of 1st & 2nd day itself.
Regards,
Nitin
You should take the current day’s volume, Nitin.
Hi,
Suppose I want to become a risk taker trader in nifty 50 stocks. At what time should I start trade shortlisting so that I can review final 1~2 trades at closing time ie 3:20 pm.
Regards,
Nitin
Yeah, EOD is good enough to shortlist the trades for the next day.
Hi Karthik,
Can i consider below as the case of bullish engulfing in downtrend. Although price is moving sideways for quite sometime but in long term it was in down trend.
https://www.tradingview.com/x/YCgRXLy6
Regards,
Nitin
Not really, the prior trend does not confirm.
prior to Zarodha, I used to trade with another ‘costly’ broker, in ur words. one of my friends suggested Zarodha. I found the platform Great and simply superb. I must be thankful to you and my friend. I desire to have Pi software to start before scalping. please let me know how to get/upgrade to Pi . I use lot of tools and charts. As of now I use tradersview platform; but orders could not be placed directly from it. Pl do the needful. now i feel i m in right hands. Tq
I’m glad you are here 🙂
I’d suggest you use Kite instead, its much faster and lighter. You also have Tradingview within Kite.
Hi Karthik,
First of all, thanks a lot for this course. I utilized my curfew time well.
Karthik, I am unable to find any recognizable patterns in nifty 50 stocks or maybe I am not very convinced with the pattern.
Are the patterns actually not there or Is it just me ? :p
Also, I am feeling tired checking all stocks everyday with no result.
Can you suggest any way to narrow down the universe within Nifty50 ?
Like with help of NSE stock watch or something? I mean some indicator in NSE stock watch, which can give me an idea on stocks which can have potential candlestick pattern.
I hope I am making some sense. I am a noob here.
Patterns do exist. You just have to train your eyes to spot them. Actually, the problem is the other way round, once you train your eyes, you will see patterns everywhere, even if it does not exist 🙂
Narrow your list to the top 20 0r 25 stocks. You will find it easier to get started.
LOL.
Will look closer then.
Thanks for your reply Karthik 🙂
Good luck!
Hi, Karthik
I got to know a lot from Zerodha varsity
I just want to know what is the best time frame for BTST trading
EOD candles work good for this Biplab. Do experiment and see what works.
Hi Kartik, I have gone through the module 1 & 2 of varsity and the explanation done is v.simple, easy to understand. Thank you for making this for us beginners. However, I’m stuck at where do I find Zerodha Pi and what tools can be used for charting in it ? If possible please write a chapter on Zerodha Pi.
Looking forward for your reply
Thanks & Regards
Kunal Sehgal
Kunal, you should look at Kite, its much better than any other trading platform out there. Do check this – https://kite.trade/docs/kite/
hi… I am newbie. I am unable to understand set trigger, set stop loss and set trigger(from GTT , in terms of % as it there ). while setting trigger price the window pops up saying ” trigger price cant be higher than price “. if I set trigger price lower than price then again it says ” Trigger price for stoploss buy orders should be higher than the last traded price”. plz help me how to set these. I have gone through basics from varsity. kindly explain with taking one small example. thank you
Have you read this, Bhagat – https://zerodha.com/z-connect/tradezerodha/kite/introducing-gtt-good-till-triggered-orders
Although, I am from Finance background but a beginner to the Stock trading. I really appreciate the way you have designed the content for new comers. Thank you Karthik.
I may have few questions on practical trading for you in future posts. Thank you in advance for that as well!
Hello Karthik Sir, can’t thank you enough for such a wonderful course you provided to us. It will surely help us in our trading career to become successful.
I have gone through TA module completely and the way you have explained everything is itself a beauty. Your explanation has made my mind such a way that if someone wakes me up from sleep in midnight and asks to find a pattern, within seconds I can tell him that hey this is bullish engulfing pattern and that is piercing pattern 😆.
In entire module i came across only one doubt on which I need your help. In our grand checklist, one parameter we check is S&R to qualify for trade. Most of the times stock has already rallied and S&R goes beyond 4% from SL. What if we can draw price action pattern instead of S&R? Will it help to get trades easily? For example, if we draw triangle pattern then at the end of contraction the distance between S&R will always be less than 4% and moreover we will get good rally in the stock (Either breakout or breakdown). Can you please guide me on same? Correct me if I am wrong.
Thanks sir.
Very happy to note that, Ajinkya 🙂
The advantage of S&R is that you incorporate the trading history of the stock. You lose that advantage when you take candlestick for identifying S&R.
Hi Sir,
I want to hold stocks for some days (upto 2 weeks).So which timeframe should I use for TA? Daily or Weekly?
Daily is good enough.
Hey Karthik
Grateful for your efforts on the lessons till now. Thoroughly enjoyed the concepts. I am just a week into this content and a complete newbie here. I have a few doubts at this point:
1. For a beginner swing trader:
1. will it be ok to look at daily candles and shortlist candle patterns based on past 6-8 trading sessions?
2. I know you said the lookback period needs to be 6 months to one year.. I understand this is to form a view on the primary and secondary trends right? or min 6 months trend on the days candle?
3. For a risk-trader whos taking a position at 3:20 pm based on multi or single candle stick patterns, should I look at 5min or 15min or 30 min or 1hr candle along with the entire day’s candle or only the day’s candle?
4. ALso for each of the candles in a multi-candle patterns do the volumes have to be greater than the last 10 moving average volume? or 2 out 3 or 1 out 2 candles with high volumes is OK?
5. For drawing S&R you said the look back period should be 2 years.. then do the price action levels need to be spaced at some minimum interval.. say 2 weeks/months etc.
6. Most importantly how do I take long and short positions on the stock on Kite… Using GTT or intraday MIS order and how to actually take them: BO/CO or Market/Limit/SL/SL-M. Is there a suggested way for diffent scenarios?
1) Yes, daily candles are fine. I’d suggest you look at at least 10-15 trading sessions
2) Generally speaking the more the better, but you need to tweak this according to your trading requirement. For intraday/swing setups, a 15 day look back is good starting point.
3) 10 or 15Mins is what I’d suggest
4) Higher the better as this would emphasis the price action
5) Yeah, they need to be well spaced in time (sounds weird, I know), so look for at least 2 weeks gap between the price action zone
6) You can take simple positions by pressing the buy or sell button on Kite. The order types you’ve mentioned are all used for different circumstances, you will understand them better when you on your own figure a use case for it. Start with a simple buy-sell activity, get comfortable, and then move ahead to discover other order types. This is like first learning to drive, and then figuring out all the features you have in the car 🙂
Thanks for the replies Karthik. Means a lot! Will apply these recommendations but at this point I have a few concerns..
After 3:20 pm how do I take the positions for the next day? If I take MIS – BO or CO, then they wil get squared off the same day right?
I believe in the 6th point you are suggesting me to use the normal CNC orders but if I take CNC then I can’t play on margins and have to buy all shares and that may not the most favourable option sometimes. Also, I could long with CNC but what do I do for shorting? I feel these specifics are the most confusing for a newbie swing trader and I haven’t found any easy video or blog by zerodha or otherwise clarifying how to actually go placing these orders on a zerodha terminal. Even, the ones posted by zerodha on youtube are not very good for layman understanding and I feel they don’t cover all scenarios.
For instance now that the BO orders are banned due to high volatility, I have to resort using a CO order for intraday to be able to play on margins and have no clue on how to set an target based exit order for CO trades. THe result is I have to stay glued on to the screen to wait for a favourable price and I am not enjoying this part of the WAIT game. There has be an easier way out. Please guide.
Karan, you can always take the position in CNC or derivatives. Yes, CNC has no margin benefit, hence futures helps…btw, you can short as well with Futures/Options. Placing orders is the easy part, I’d suggest you call the support desk once.
Hi Karthik,
Please suggest me some good books on Elliot Waves for Beginners.
I’m not sure about Elliot waves, Manish.
Hi sir,
1. How to confirm if the prior candles to the pattern form a trend? As a rule of thumb, Is there any way to validate the presence of a trend? ie, minimum number of prior candles to be checked for a confirming a trend or anything like that.
2. Also, for setting targets for short term trade, is S&R the only reliable option or any other method can be followed?
1) YOu generally have to look out for the last few sessions and see the price change and the pace at which it is changing.
2) Yes, it is one of the better things to look out for.
sir, ever since i started in stock market , i am unable to recognize any candlestick patterns. Is it because of my own shortcomings or is it because of the current market conditions amidst the pandemic that i am unable to recognize any candlesticks pattern. Please guide me sir.
thank you
YOu just need a bit of practice, Yogesh. Keep studying the charts and you’ll get it soon.
Sir one last question
What is the difference between the time frame and lookback period?
If I want to do swing trading then, what should be the period from where the trend starts?
They both are used interchangeably, they roughly mean the same. For swing, I’d suggest you look at a minimum of 20-30 days of data.
Hi Karthik Sir, really loved your explanations!
I have a doubt regarding ‘identifying support and resistance’ for positional/swing trades.
You have mentioned that while identifying S&R for positional trades , the look back period should be 2 years!
but while identifying S&R on chart(Kite), when i choose 1 year look back period on chart(Kite), the timeframe of candles changes to 1 week instead of EOD
so while plotting S&R for positional/swing trades, candles timeframes should be 1 week or EOD?
Select daily charts and load more data, this will help you plot the S&R easily, Rohit.
Hi Karthik,
First of all, thanks a lot for such an comprehensive content..I guess, we are reaping benefits of all your hard work over the years.
I have one query, suppose I am going for positional trading and the primary trend is bullish and secondary is bearish.
Now for the below two cases what would you suggest
1. A bullish candlestick pattern with secondary trend being bearish is formed
2. A bearish candlestick pattern with secondary trend still being bearish is formed
In above such cases, if we are always giving priority of candlestick pattern. Then what is the role of primary and secondary trends in such cases. A bit confused here
TIA
Depends on the time period of your trade. If you are looking at short term trade, then look at the secondary trend, primary otherwise.
Hi sir,
If the stock trades at record high/low, how to set target, as there will be no prior price action zones at these price levels for determining S&R ? Any other method to be followed in those cases?
Unfortunately, you cannot set targets and SL for stocks which are at all-time high because there is no reference price points. You can use trendline for this.
hi all your modules are extremely well written, a suggestion can you plz add sources for reading more on the relevant topics of your modules especially books. like good books to learn technical analysis.
I’ve done that in most of the modules.
Sir can . you please explain how to do that
What does it mean by stock should be liquid, and to use margins effectively.
Liquid = easy to buy and sell shares when you place market orders. Also the loss due to the impact cost should not be significant.
Hi Sir,
Thank you for so much valuable information.
1) I wanted to know the time frame of charts which we should be looking for intraday ,swing trading and long term investment for candlesticks pattern.
2) If the time frame for intraday is 15 mins then shall we plot S&R on the same 15 mins chart for lookback period of 3 to 6 months?
Thanks in advance
1) I’d suggest you use EOD charts
2) That will be a lot of data, suggest you look at EOD charts.
Thank you for your answer.I have few doubts:
1) EOD charts of daily,weekly or monthly for intraday and swing trading?
2) Also what should be the look back period which we should use for intraday and swing trading.
3)Also to identify the consecutive sticky points, the diff between them should be for how many days or weeks?
1) EOD for all if you ask me 🙂
2) At least 6 months if you are looking at EOD charts
3) Not sure if I understand this query completely. Can you please add more context?
hi kartik , want to ask
is it a good idea to trade stock future using only exponential moving avrerage example 9day EMA and 21day EMA ….i mean only moving average and nothing else no candle stick pattern or other indicators .
reason i asking this is , after going through many charts i find moving average much reliable indicator and want to make my trading style simple and less stress full …. want your opinion….thanks
Yes, you certainly can. Requires a lot of patience and the discipline to stick to the strategy.
Hi there sir , it has been a great experience to learn about stock markets from varsity. I thank you and zerodha team for the selfless service towards us it really means a lot. Also, I am a bit confident now after completing this chapter and all thanks to you my myths are getting cleared about stock market and trading.
I am a complete novice into the markets and have never even invested or traded a single penny in the market .
Also sir as I am a student now and I dont have any earnings all I have is my savings so would you recommend me to start trading now or after completing all the other modules.
Thanks for the kind words, Suya. I’d suggest you learn as much as you can, paper trade for few months, gain confidence, and then start to invest/trade. Since you are young, you have a lot of time in the markets 🙂
Good luck!
Hello Karthik
I have identified a strategy that works extremely well for Bank nifty and Nifty F&O, but doesn’t work well on other stocks.
So my question being is it normal for this to happen that a strategy working excellent for BN & Nifty but not doing well for other stocks?
And should I keep using this strategy with BN & Nifty? OR should I drop it as it is not working well for other stocks and create a new strategy that that works for everything?
Thank You.
Yes, not all strategies work on all the stocks. In fact, you will have to backtest and develop a sense for this.
So should I keep using that strategy for BN and NIFTY?
Well, if you are comfortable using BN and Nifty 🙂
Hi,
I would like to clarify my doubt on setting stop loss.I will brief you the scenario,If i buy 100 stock of ‘X’ for 250 Rs at 10clk and stock price goes up to 285 Rs. at 12 clk at this stage there are no sellers only buyers are present. If i set stop loss at 251 ( just wanted to take safety measure even if it go down don’t want to make any loss) here my question. If i put a stop loss, will it suddenly intimate to the market, that some one is ready to sell the stock @ 251? in such case,the moment i put stop loss the stock price suddenly come down to 251 and trading will happen for the 100 stock and then return back to 285?
Regards
jai
At any given point, you can see the top 5 bids and asks. So if the stock is liquid, I’m guessing the top 5 prices will be around 285, so your 251 prices won’t show up. But it may show up in 20 depth or level 3 data. Yes, if there are no other sellers, the price may come down to your sell price.
Thanks for your reply. in such cases, some one can easily manipulate the market right?
No, market manipulation is not easy 🙂
if some one holding 1000 shares of stock “X ” and there are no sellers only buyers are available.If he can create panic among the sellers by bringing down the price by setting ‘SL’ much lesser than LTP. Also note , he sets SL order in such a way that , 40 numbers of selling orders for 25 lot with fractional difference between each lots, so that he can cover the market depth also. Meanwhile he can utilize this situation to enter the market and buy back more shares @ lesser price.
Is it possible to do? or market has any course of action to prevent such activities.?
Regards
Jay
But why would you want to sell when there is so much demand to buy and ppl are willing to offer higher prices 🙂
thanks for the content zerodha.
Happy reading!
Sir, what should we exactly analyse in the “Look Back Period”
Do we need to analyse the candle pattern that are formed earlier? If so, how can we use that information for our trade.
kindly explain in detail, Thanks 🙏
Stalin, the lookback period is basically the period you select to analyse the trend of the stock, this depends on the type of trade you intend to do. For example, you may want the lookback period of say 6 days for an intraday trade, 20 days for a swing trade. So on and so forth.
Sir, I expect you would teach us about “Stop loss Hunting” 😕
If possible kindly explain them sir
Do check this thread Hemanth – https://tradingqna.com/t/a-query-on-stop-loss-hunting/38650
after 3 years of my struggle am able to find a good guide as Varsity , i could understand all the nitty gritty of stock markets.
Only doubt i have is how to short the stocks for a positional trade (holding for more than a day), doing that in intraday is possible which am doing currently but i doubt can we do that for a positional trade as well (selling the stocks without holding them in first place and buying back after a week to book profits) , please help me how that can be done from positional trade perspective.
Bhaskar, for this you need to short the stock or index in the futures market. In the futures market, you can short and hold the positions overnight.
Thank you Karthik
dear sir,
what is the look back period for Support & resistance for an intraday trading opportunity?
thanks.
At least 5 – 6 trading session.
Do note, on Varsity we will soon include a module on building trading strategies and scripting. Sir when can we expect this module? If i am from non IT background and if want to learn about coding to make my own strategies how to start?
Check this Jigar, https://zerodha.com/varsity/module/trading-systems/
Good day Karthik,
With reference to section 19.5 above, kindly clarify –
1.The scout (swing trader) – In the shortlisting process, you said your attention is on the recent 3/4 candles. I am guessing you are referring to the daily time frame?
2. Is this process being done the night before for next day trade? If so, which volumes are you looking? Is it the volumes of the last 3/4 candles that you looked at initially?
4. Don’t we have to look at volumes in real time while taking the trade? Or do we just take the trade irrespective of real time volume, since the volume was high during the selection process?
Thanks a lot.
Shashanka
1) Yes
2) Yes, you draft your plan anytime before the market opens. Volumes emphasis should be more on the day the pattern forms and you decide to trade
3) Depends, if you are doing EOD chart, then look at volumes the previous day, else real-time helps.
Hello Karthik,
Stock Selection process for Swing Trading (based on TA) and long term Investing (Based on FA) has been explained beautifully at Varsity and has been really helpful to me. 😀
Can you please share some of your insights on stock selection For Intraday Trading as well.
Thanks.
Thanks, Sharan. For intraday, I’d prefer to track a few set of stocks daily, say the Nifty top 25. At the end of the day, I try and see what patterns are forming and decide for the trade next day. A good practice is to ensure you have a few long and short trades the day…but of course, don’t force yourself to find these trades. It has to feel natural…not sure if that means anything 🙂
Sir, I haven seen many videos or other training module but they way you have articulate step by step guide it is best.
Each chapter full of information starting from basic to application.
This is really helpful and rich articles by you.
Only one question I am unable to find Zerodha Pi how to get it or is there any alternative
Thanks, Kulbir. Do check this – https://support.zerodha.com/category/trading-and-markets/pi-and-other-platforms/articles/where-can-i-download-pi
Hi Karthik,
Could you please elaborate on operator driven market ?
Operator driven markets are basically stocks in which manipulation happen. These are obscure companies, whose share prices are illiquid, low market cap, and often rendered as a penny stock.
Hi Kartik,
I am a bit confused here.
If a lower bid-ask spread indicates higher liquidity (Good for trading positions), then how come the 20-depth/Level 3 data come into the picture ?
Doesn’t Level 3 data implies that the bid-ask price spread is big (thus decreasing the liquidity) ?
No, level 3 only shows you bid-ask beyond the top 5 shown elsewhere. Level 3 does not mean higher liquidity.
sir how can we construct a system / strategy, kindly share some examples.
Do check this here Mano – https://zerodha.com/varsity/module/trading-systems/
Hey Karthik,
I want to do daytrading, as you said I should observe nifty 50 stocks. But, there are 50 stocks that can’t be observed at once in one day. How to select few stocks specifically from these 50 stocks for one particular day for intraday ?
Hemant, you will have to scan through each chart at the end of the day to spot opportunities for the next day. Or you can set up preconditions and set alerts using an alerting system like Sentinal, check this – https://sentinel.zerodha.com/
How to find trending stocks one day before ? Like the stocks in which there will be strong trend the next day ? Do we need to use fundamentals(news about that stock) or technicals ?
You can use a combination of technical tools for this, like range breakouts + MADC or Bollinger bands.
Hi,my question would be basic one, as am new to this trading.I appreciate that you encouraged to do swing trading for newbies with small capital.But I think shorting is not possible in spot segment.But than how can somebody do swing trading by taking short position in spot segment.Doing swing trading in future segment would be a costlier affair for new entrants with small capital.Please let me know if am missing something here.
Thats right, if you are not open to shorting in Futures, then the only option is to stick to long spot positions.
Really Amazing Content… Feeling like God after compleating all the modules😂😂
ThankYou So much sir
Hahah, happy reading Sandip 🙂
Hi Karthik,
what is bid ask spread? Is it explained somewhere that I can read again?
Yup, you can find that here. Section 9.6 – https://zerodha.com/varsity/chapter/the-trading-terminal/
Dear Karthik,
Greetings. Why do people screw themselves while trading when there is so much of rich knowledge available as VARSITY? Please give me your insights so that i can understand their errors and optimize myself.
Grateful to you
It’s free, so probably they think it’s not good enough and need something else 🙂
Dear Sir,
I have thoroughly gone through this TA module and thanks to your skills of making tricky concepts easy, I am able to learn a lot which I didn’t know before.
I have one question though.
There are thousands of listed companies on the exchanges. If I want to select a trading opportunity, how would I know which company’s chart should I read? Because it would be impossible to look up charts of every company.
I would look at FA, but I guess that is for long term investments. I want to look for short term trades, like for a week or so. Which companies should I look for that and how to select those companies?
Please reply.
Thank you.
Amit, that’s the reason why you need to have a tracking universe. For example, I focus only on Nifty 50 stocks and not don’t really bother much about what’s happening outside this list. Tracking universe makes life easy 🙂
Sir, is there any opportunity for internship with zerodha for learning purpose:p
Not for now, Mohit.
Dear sir,
I have recently opened an account with Zerodha.
I want to know what is the difference between Pi, Kite and Zerodha trader.
If you could tell me what these three platforms do, I would be able to select on which platform to work on.
Thank you.
Pi and Kite are both trading terminals, Kite is browser-based, Pi is a desk top application. I’d suggest you use Kite. Its fast and feature-rich. Zerodha Trader is discontinued.
Dear Sir,
Where can I find the option of 10 day SMA of volumes in Kite or in Pi?
I am unable to find that option.
Pick the volume from the study and plot that on the volume pane. You can select any frequency that you need.
hi ,sir best indicator or oscillator for scalp trader
sir why VWAP indicator not plots on 1min chart in nifty 50 index
Hard to use indicators while scalping, best to stick to price action. I need to check about the 1 mins chart.
Respected Sir, This is great stuff and really helpful. I have identified a few trades on the basis of the checklist, would appreciate if you could provide your feedback on the same.
Please see the trades below:
https://drive.google.com/file/d/1coIyaQ90ALzx5mO1-8pUTcZqsD2kdHPG/view?usp=sharing
I also have a question on the prior trend part. What is the timeframe that we should look for in identifying a prior trend? Is 10 days good enough?
Was not able to check the values, but saw the patterns –
1) ICICI is not convincing
2) Other patterns are identified correctly
3) Its a bit late to initiate trades on any of these patterns
4) 10 trading days is good enough for the prior trend.
Also, how much shadow can we tolerate on Marubozu’s shadow length? As you mentioned, we have to keep the pattern criteria relaxed a bit. Does that mean a Marubozu can have both upper and lower shadows? if yes, how much in terms of percentage of the body length?
Thanks in advance!
Not really. I’d be a bit hesitant if the shadow is more than 0.2% or 0.25% of the entire day’s rally.
Thanks for your reply. Really appreciate it. Yes, I agree it’s a bit late to start these trades.
So what period should I look at for the prior days trend? I am basically aiming to begin swing trading, holding for a few days or a week sometimes.
For swing, I’d suggest you look at EOD candles with at least 10 or 15 trading session data.
Dear sir,
I asked how to see 10 day SMA of volumes in Kite or Pi.
Your response was “Pick the volume from the study and plot that on the volume pane. You can select any frequency that you need.”
Sorry sir, but I didn’t get that. Could you please elaborate.
Thank you.
Amit, I’d suggest you call the support desk for this, they will guide you through this easily.
hello sir ,
sir if a stock is going flat and suddenly after market close a news in favour of stock announced which is expecting to drive a share by 20% and above . Then on next day when market opens , will the first 5 minute candle be negative , as those who were on short position will square of their position driving share to form bearish candle of first 5 minute ?
No, in all likelihood, the stock will open positive and surge through the day.
Hello Karthik,
What are your thoughts on finding the target in stocks that are trending upwards and breaking their all time highs or close to it. For eg, Britannia, LTI, TCS in current market. If I see a bullish marubozu on strong volumes, it gives me a buy signal but I am unable to decide on a target in this case since there is no historical graph in this range.
Thanks in advance!
Its hard to set target, however, you can trail your profits.
In the checklist, No. 1 point states that you look for strength of the candlestick pattern. How do you look at the strength of the pattern ? Do you prefer longer bodies of candle or shorter shadows for its strength ?
General thumb-rule = long green candle indicates strength. Long red candle indicates weakness.
Dear Sir,
I am just starting my journey as a trader. I daily observe charts of all the companies in Nifty 50.
1. I usually don’t find candlestick patterns. Does this happen a lot that there aren’t any trading opportunities lot of days?
2. And I did find 2 patterns but those too gone bad for me.
Recently I went long on a Bullish Marubozu, (that candle just had very little upper and lower shadow, rule 2, flexible applies here), but I hit stop loss. Again, I went long on Bullish Engulfing, that didn’t work out in my favour as well. Volumes were high in both the cases.
Am I doing something wrong? Or the success rates of trading on candle sticks aren’t that much high
1) Quite possible, opportunities are quite hard to come by 🙂
2) These things are quite common Amit. You need to train your eyes to spot opportunities. This will take time until you get a hang of it. This is the reason why you need to ensure that the capital you deploy for trading during the initial days is lesser.
Hi Karthik, Suppose there is a bullish marubozu with small shadow (O-220, L-219, H-228, CMP-227.5 at 3:25PM), Can i consider it as a Mozubozu given there are shadows? How much i need to be flexible(quantify) in % terms, also as mentioned by you flexibility must be 0.3% or less for shadow and 1% for entire candle. Do i need to calculate % w.r.t Open,close or w.r.t Range of candle?
Yes, you can consider this as a bullish Marubuzo. The difference between high and close should be less than 0.25% of the day’s range.
Q2.
While looking for DOW theory while evaluating check list. how can i identify primary trend and secondary trend?
Consider HERO Motor Co ,this stock has been in uptrend from Jan 2016-Sep 2016(from ~2450 to ~3700) and in downtrend from Sep 2016 – Nov 2016(from ~3700 from ~2850) and again rallied till 4000 (till Sep,2017)with minor fluctuations in between. Here primary trend is from Jan 2016 to Sep 2016. what is the secondary trend The following down trend or second Uptrend or those minor fluctuations in between? Could you please clarify this?
That’s right. The secondary trend is a counter-trend to the primary trend, usually, the moves are on the back of low volumes. You will have to invalidate the primary trend if the secondary trend showcases strong momentum backed by heavy volume.
Q3.(Since my questions are long I’m Asking each one separately)
Q3.(Since my questions are long I’m Asking each one separately)
I recently started my trading journey with Zerodha. I used varsity as much as possible to learn. Now i have clear picture of TA. Thank you Karthik for spending time to curate these wonderful easy to learn modules for us.
Coming to query is there any module to learn about back testing , trading strategies ? and can we practice back testing in Kite?
Thanks, Satish. Nothing on backtesting, but you can check this for trading strategies – https://zerodha.com/varsity/module/trading-systems/
Part of Q1.
Can i consider candlestick as a bullish Marubuzo if the cadlestick has both upper and lower shadow and the difference between high and close , Open and low are less than 0.25%(not combined for both shadows) of the day’s range.
Yep, you can consider that Satish.
Dear sir,
Today, the share of RIL was trading high and then the news of AGM came.
The prices plunged very quickly afterwards.
According to me, the announcements made in the meeting weren’t much negative.
So why did this happen?
Buy on the rumor, sell on news 🙂 The only answer is that it was all baked in the news 🙂
can the checklist be applied to 15mins chart?
Yes, you can.
How many swing trading opportunities on an average, we will get based on this checklist in a month out of 50 stocks ?
Hard to quantify, but based on experience, you’ll get something on every other day, if not daily.
Hi karthik, These days charts are forming new lows and new heights. I think because of volatility due to covid and any other issues. My question is,Suppose there is a morning star pattern formed and volumes are good, prior trend is down trend of around 10 candles , Indicators are also positive. Because of new lows and high there is no support and resistance. We can use Bollinger bands, But is it reliable as standard S&R? What can we do in these times. Is there any way to overcome this?
Yes, BB is good, but not a replacement for S&R. These are two different things and should not be treated as a replacement for one another. But I do get your point, you can use BB.
What are the odds of winning trades versus loosing trades (in percentage) after strictly following the checklist for swing trading ?
Based on my experience, the odds significantly improve, unfortunately, I don’t have a % here.
I think you must be doing swing trades based on this checklist. So, can you please tell me how many trades out of 10 are successful means ones which hit target ?
You can at least do by checking your tradebook.
Ashish, I’ve stopped trading completely. No more short term positions, except for few occasional ones. This is a company policy 🙂
Hi Karthik,
While selecting stocks for stock selection, if the stock is listed in both BSE and NSE which one should one track and trade on?
It does not matter. You track the company and its fundamentals, not really its price. Price matters only at the time of executing the trade. By the way, all else equal, the price different is not much between these two exchanges.
Dear Sir,
I have a question and I am unable to understand why is this happening.
A lot of companies are posting their Q1 results these days and even after they are having an increase in various aspects on YOY basis, why after their positive results their share prices are falling.
I mean if the results are good than at least the prices should remain same if doesn’t rise..
Please help me understand this.
Markets have factors in the prices already, Amit. Remember, buy on rumour, sell on news 🙂
Hello Sir, Completed the module & just have one major clarification:
While we are searching for patterns should we use 1D candles, 1W or 1M candles?
Depends on the strategy Nandan. For most cases, 1D candles will work.
Hi Sir
Amazing contents, and your way of explaining in sequence is mind blowing.
Thank you 😊 Thank you 😊 So much Sir.
Best wishes to you and your team for the upcoming Success.
Happy learning 🙂
You said that you establish the primary and secondary trend. How do you do that ? I mean, do you use moving averages (of which periods) or trendlines ?
Trendlines plotted over say 3-year data gives you the primary trend…and over say 1-year data gives you the secondary trend.
So, which type of trend we should give importance to for swing trading ?
Secondary trend since the swing trades are usually short term in nature.
Suppose, I took a swing trade based upon all the criteria of checklist and negative news came upon after placing the trade. Should I stay calm and just watch it till SL or target hits, or should I exit the trade ?
That depends on how well you can analyse the -ve news and estimate the worst-case impact on the stock price. If you feel it is just a short term affair, hold on. If you feel it will crack through, then exit.
Hi Karthik,
Thanks for all the lucid explanations which makes your readings easy to grasp and understand.
I would like to start off my Trading and want to be strictly positional with atleast months or two months horizon. I dont want to get into sell within a month at any cost. So in this pretext what the chart time frame do you suggest i need to look into?.. Is it Monthly or Weekly ?…And what should be the look back period to analyse..An Year ?..Please suggest
Ravi, that is a good way to get started in the market. End of Day charts are super versatile, they suffice for both long term and short term holding period.
So I will look at Daily Charts with a look back period of 1 to 1.5 years then. Thank you Karthik!
That works, Ravi.
Hi sir, Can you please tell me, what is the different between chart available in kite and Pi.
Kite charts are super fast, loads faster, snappy, and a pleasure to use 🙂
Dear sir,
I bought ADANIPORTS on 28 July, 2020 after seeing a morning star pattern at 318.
It has started going up but I am unable to set a target. I have looked charts of 1,2 and 3 years but still remained unsuccessful to set a target.
Could you please help me setting up a taget?
Thanks in advance.
If there is no immediate resistance then you can also try to have a % target. Like a 5% or 10% target.
I look for short term trades, 15-20 days long
1.Consider I have identified a CS pattern from the EOD charts fulfilling all the checklist criteria. Can I place the trade next day in the morning (volumes are not that great in the morning) or should I wait till 3:20 to confirm the volume of the next day?
2.Also if there are above average volumes on the day CS pattern is identified and if the volume on the next day is below average. Should I still continue with the trade?
Kunal, the most important criteria is the price action itself followed by volumes and all the other checklist items. So give it priority likewise.
In the candlestick lessons, you have mentioned that risk takers should buy at 3:20pm the same day and risk averse traders should buy on next day at closing time. If I have 50 stocks in my opportunity universe then as a newbie it will be difficult for me to go through the checklist in a short period of time. What do you suggest I do as a beginner?
Sudhir, what you need to do is to ensure you have a small tracking universe like the Nifty 50. Now on an EOD basis, when the market closes you need to go through the charts and identify stocks in which an opportunity lies or likely to come by. Say out of 50, you figure 3-4 interesting stocks. The next day during the market you only track these 3-4 stocks and not worry about the rest. At the end of day, you repeat the same process.
Thanks for your reply !!
I had one more question.
Is there any way to find entry point in case the stock is already in uptrend or downtrend?
Because except for Marubozu all other CS patterns discussed require the opposite prior trend.
You can wait for a retracement with low volumes. Have explained this in the module itself.
Oh yes !! Found the explanation under Fibonacci retracements.I think this topic is not included in the mobile app.
Thanks for the amazing content and also for your active presence on this forum 🙏
I’ll check this Kunal, I think its there in mobile, but let me reconfirm. Thanks.
Hi,
I am a beginner in equity trading so I am thinking of starting with Swing trading. When we say that we should look back at at least 6 months or 1 year data for plotting S&R, we are talking out candlesticks on a daily basis, or weekly basis or any other time frame?
Thats right, I’m talking about CS on a daily basis.
Dear sir,
Is it possible to buy shares at one exchange and sell them on another one?
Can I buy shares on BSE and sell the same shares on NSE?
Yes, you can do that.
Sir, what is the reason behind people trading more on NSE and less on BSE?
And it’s not also like the difference is not that much, the volumes of same stock are very different every day.
Why does it happen?
NSE is more liquid and liquidity chases liquidity. It is just that 🙂
You said that we would get swing trading opportunities if not daily then on every other day. But, after strictly following the checklist, I haven’t got any opportunity from last 2 weeks. What is It’s solution ?
How can I get at least two opportunities per week ?
Increase your tracking universe, maybe from 10-15 stocks to Nifty 50 or 100.
Dear Sir
You mentioned above that a for getting success we need a good charting software. Isn’t KITE a good charting software?
Sir, I found the stock which check all the check line, Today I bought PowerGrid @ 189 with SL @183,
but the scrip starts moving opposite direction. Am I missed anything, kindly explain 🙏
Vikaranth, following the checklist ensures the odds are higher for a trade to work in your favor. But there is no guarantee in the market 🙂
I traded based upon the checklist in ZEEL on 21st Aug,2020. But, my stopless gets hit. I’m not able to find out the mistakes. Please explain what are the mistakes. And, why stoploss is hit ?
Hemant, the checklist prescribed is only a way to increase the odds of your trade to get profitable and not a guarantee. In fact, there is no guarantee in the market. So even when you think you’ve followed the checklist to the T, you could end up with a loss. This is how the market is 🙂
I understand there is no guarantee in the market. But, this checklist is very strict and follows almost every aspect of technical analysis. And, if it fails, Does that mean technical analysis don’t work ?
No, it just means the odds did not favor you this time.
Hi Karthik
Thank you 🙂
Just wanted to say this.. This is the 3rd time im reading Varsity technical analysis.. First 2 times were 3 months back when i started the trading .. Now that i have 3 months of trading experience, when i read it again i feel i am understanding things much better..Each time i read this it fills my heart with lots of joy and hope
I don’t know how to express my love for Varsity.. I am a young chartered accountant never really read such a high quality content explained in such a simple way
Thank you Varsity
Lots of Love
Thanks so much, Unnikrishnan, your comment means so much to us 🙂
Hi Karthik,
As usual top content from you, Kudos!
Read in some comments but still need confirmation, so basically if one is newbie then doing day trade is not a good move and as per you one should start with swing trading then below are the challenges right?
1. All orders for swing trading would be CNC that means no leverage and if target/SL is reached within T+2 days then how to handle this since BTST are risky and not suggestable.
2. Since there is no leverage, need considerable capital for swing trades. Now this is also a challenge and drawback compared to intraday.
3. Swing trading is only applicable for buy trades and shorting is not applicable, one more drawback.
4. I understand we can do all these in Options trading but as a newbie is the only option to go for swing trades? Not sure how one can develop stronghold in intraday since swing trades doesn’t cover complete shorting concept itself.
1) You can swing trade with futures also, this gives you leverage, but you need to have deeper pockets to suffice for M2M issues.
2) Like I said, you can use futures. At a more advanced level, you can also use options as a proxy for swing positions
3) If you shift to F&O, shorting is not an issue
4) As a newbie, I’d suggest you get comfortable with the long positions in spot market. Hold positions for couple of days, and then graduate to futures.
Really nice, sir, for the new ones.. !
Happy reading!
Really good information for the new ones sir.. !
Thank you for providing valuable details. Can this Zerodha pi software be downloaded in android mobile/ some app is available for same.
Hi Kartik sir,
Sir, I want to ask you two questions plz give the answers.
1) What is the difference between a scalper and an intraday trader? and
2) Which parameters and indicators should be used in the scalping? Because, I think, it is impossible to use all such parameters there, which you told in checklist (candlstick form, volume, S&R, indicators and Dow pattern), due to less time period.
1) Scalper initiates multiple trades, holds the position for few minutes, closes and then re initiate the same, several times a day. Intraday trader usually has 2-3 trades a day.
2) Scalping is more based on gut and price action, very hard to rely on indicators for this.
Ok, Thanks Kartik sir.. !
Good luck!
Why bracket orders are still not allowed in Zerodha ? CO orders are useless as one cannot set any Target. And, MIS orders are executed three times, also there is not facility of (One Cancels Other) so we have to do it ourself. If you have any issue with risk management system, then don’t give 20x leverage. We will be happy even in 5x leverage. But, please allow BO orders. They are really very comfortable for day trading. I shall be highly obliged for your kind act.
Leverages are anyway capped. Btw, BO is allowed right? Which contract are you talking about?
BO is blocked ? I’m talking about equity. Here it states https://zerodha.com/marketintel/bulletin/249809/latest-intraday-leverages-mis-bo-co
Hey Ashish, this is due to the expected volatility in the market. There is no point having BO/CO under highly volatile market circumstances.
But, you’re allowing CO, then why not BO. And, if there is high volatility, then don’t give leverage. What is the point of blocking BO ? Also, BO is a stoploss order, so there is a calculated risk.
Both are blocked right?
No, CO is allowed. Only, BO is blocked. Please read the complete bulletin https://zerodha.com/marketintel/bulletin/249809/latest-intraday-leverages-mis-bo-co
Hey Ashish, my bad. This is because in volatile markets, BO both the SL and target orders tend to get executed, leaving at least one order open with no counter order. This is a risk for both broker and client. For example, last Friday you must have seen how bank Nifty moved right? Hence BO is blocked.
Hi Karthik,
1. In one of the exam, it said Marubozu doesn’t require previous trend, can you you confirm this? As per my understanding all the candlestick patterns should have prior trend for decision making.
2. Also while explaining candlestick patterns, you have always used either lowest/highest value of the candle as the Stop loss and target would be corresponding support/resistance. In this chapter you are using S&R for SL?
3. Also if there is no S&R for target then how much percent should be my target for positional trades?
1) Yes, thats right. Marubuzo is the only pattern which does not require a prior trend
2) Thats right, to illustrate the fact that there were two ways set SL and targets 🙂
3) You will have to use other techniques, something like a quantitative approach.
Hello sir,
A big thanks to you sir. You are responding to so many queries selflessly and tirelessly since 2014. There are so many repetition of queries from various chapters of different modules still you are responding patiently. Hats off to you.!!
Its a pleasure, happy reading Roshan!
Hello sir,
I have few queries (suppose all criteria are fulfilled)
A) Regarding timing
1. For risk taker trader – he had to trade at 3.20 pm,
2. For risk averse – he had to trade at 3.20 pm on next day
For both timing SHOULD be 3.20 pm
B) Regarding opportunity universe
1. For risk taker trader – he has to scan during market hours ONLY (before 3.20pm)
2. For risk averse – he may scan AFTER market hours but trade next day at 3.20pm
C). Volume
1. For risk taker trader – on trading day volume should be above 10day SMA
2. For risk averse – what should be volume on trading day (next day of pattern formation) SHOULD it be above 10day SMA like pattern formation day
Thanks
A – 1) & 2) No, as you advance and make progress in stocks markets, you can change the these timings and initiate trades at a point that you think is good enough.
B 1 & 2) – Both can scan on a EOD basis
C 1 & 2) – The volume for the day, the trigger for the trade is initiated should be high.
But, BO is a kind of order that cancels the other order if the anyone gets executed. Then, how would both SL and Target get executed ? Also, we definitely need to place both SL-M and limit(target) order by ourself, because we cannot trade with stoploss and target. And, that is a 3 step process. First we need to place the actual order then stoploss then target. But, BO is a one step. Also, when we place 3 different orders there is not any system of one cancels other. So, we need to monitor that positions window. Because, if stoploss gets hit, we need to cancel the target by ourself. Sometimes, we get busy in other stuff, and stoploss gets hit and we forget to cancel limit(target) order and then price starts going in our direction and target gets executed. Now, that becomes an open order and does a huge loss. So, better it is to allow BO. And if there is problem related to volatility, then design BO in such a way that the difference between SL and Target (limit) should be at least 2 % of the stock price. I don’t think then both the SL and Target gets executed at once in BO because price doesn’t change more than 2 % in 1 second. There might be stocks outside of Nifty 100 that could go 2 % in one second. Then, don’t allow in BO outside Nifty 100. You also understand that there won’t be any loss to broker in allowing BO in Nifty 100 with SL and Target difference between 2%. So, it’s a very kind request to allow BO. It makes our daytrading very smooth.
Thank you
I have query related to
B) Regarding opportunity universe
1. For risk taker trader – he has to scan during market hours ONLY (before 3.20pm)
2. For risk averse – he may scan AFTER market hours but trade next day at 3.20pm
Reply
B 1 & 2) – Both can scan on a EOD basis
My question is how risk taker can scan on EOD as the pattern is already formed, so what would be difference between risk taker and risk averse
You scan on an EOD basis and be prepared to trade the stock the next day….provided the opportunity comes by.
Thanks!!
Good luck!
Hi Karthik Sir. I have been doing swing trading in NIFTY 50 stocks and now have moved to intraday trading. I seem to have found out this approach where I identify patterns in EOD chart( 1 day timeframe). I make sure pattern, volumes, S & R, indicators confirm to the trade. I also look for possible dow formations. Based on this if everything confirms to this checklist I select that stock for trade. Suppose if I have a bullish view on that stock based on analysis on the next day after market opens I buy futures of that particular stock or directly the stock itself and when the price goes up I sell it( intraday). Likewise I repeat this everyday. My approach is that after the stock confirms to all points in the checklist to a swing trade the next day it will move up( green candle day) and I will sell it at high. I am doing analysis for swing trade and using it for intraday. I find that the stock is moving in the direction of the EOD (1 day analysis). For example there are two patterns.
1. Evening star in 1 day chart. All points on checklist confirm. bearish
2. Bullish engulfing in 15 mins chart. All points on checklist confirm. bullish
Next day the stock price goes down in favour of 1 day chart eventhough the buliish engulfing pattern on 15 mins is very strong with SL near support and high volumes.
My question is is this a good approach because you have advised to follow 15 mins chart for intraday but I seemed to have developed an entirely different approach by analysing on 1 day chart and carrying out intrday trade the next day.
I place SL at low/high of previous day pattern in 1 day chart. Target I usually exit with 3 or 2 points movie because a profit of around 3 to 4k is decent for a day. I have attained a max profit of around 8k by using this method.
All the trades i placed using this method have succeeded and I did not face any loss. Even if the trade goes against me by a great extent it almost reverts back confirming the previous day pattern. Also I find even if all points of checklist are satisfied in 15 mins chart the price is still moving in opposite direction. But all trades I took using this approach of analysing on 1 day chart and using it next day have succeeded. ALso I find I almost hit the target in the first 15 mins of market open itself 90% of time or else in 2nd or 3 candle itself.
Is this a healthy aproach for me to follow going forward. Will I be able to make profits in long run using this aproach. Or should I stick to using 15 mins chart for intraday trading.
I’m happy to read your comment, Aravindh. Your approach is perfect, in fact, I too would like to do the analysis on EOD basis and then initiate intraday trades. I have mentioned this as a reply to several queries as well. So, do stick to this method and develop more on this.
So please go ahead with conviction and strengthen your process. Good luck!
Hi karthik,
Can you suggest me a good book for intraday trading which will enable me to gain some knowledge about intraday trades and it is as good as zerodha’s Varsity. I personally am attracted towards intraday trading but I want to do it with proper knowledge and trading techniques.
Like I mentioned, your approach is correct. Eventually all your lessons will come from markets itself 🙂
Dear Karthik,
I am very happy to hear this from you. Coming from you it is a very big motivation for me at this point of time. I am amazed by the efforts and time you took to create Varsity which gives solid education for all traders who are new to markets like me. When there are lots of people and resources which confuse with complexities and also charge money for mentorship and teaching you have provided this simple and effective content for free of cost. Hats off to you. Also you are responding to all the comments posted without expecting anything in return. May god give you all the health and wealth. Once again thank you for your efforts and time.
Thanks for the kind wishes, Aravindh. Good luck with learning and trading 🙂
Hii Sr,
Sir, I am little confused about Timeframe and look back period.
What is the difference between them?…..Sir
Timeframe – 1, 5, 10, 15, 30 minutes, or 1hr, or EOD candles.
Look back – loading 3 months, 6 months or 1 year data.
Sir,
How can i use the timeframe?
For ex- Look back period is used to study the candles…..But timeframe…..?
If you want to trade intraday, then you need to look at intraday candles i.e. 5,10, 15, or 30 mins timeframe. Else you need to look at EOD timeframe.
Is Zerodha’s Pi still available?
Yes.
First of all thanks a lot for explaining TA in simple words.
Can you explain us how does Indian market react on Global market means Global Market session
Markets follow sentiments, weakness in global markets tends to rub off on local markets too.
Sir, as you mentioned in the article that for a beginner its difficult to avoid operator driven stocks and suggested us to trade in only nifty 50 listed stocks. So along with that can I also trade stocks listed in NIFTYNEXT50. Also sir how to find out which are operator driven are there any indications to find it out.
Yes, you can do that as well. The idea is to ensure that there is adequate liquidity in the stock that you are trading so that there is no scope for operator activity.
Who has the most control over price action? FII,DII or retail investors
As of now, the ball is still with the FIIs, but this will go as the market gets bigger.
Question continue-for long term and short term
Sir till which index listed stocks is it safe to trade as in we can trade those stocks without fear of those being operator driven. In my previous comment you said its safe till NiftyNext50 listed stocks in NSE. Can there be a gurantee if I trade in stocks beyond that index suppose I trade in stocks listed in Nifty 500. Also sir stocks in Nifty 100 are equal to stocks in Nifty 50 plus Nifty Next 50 or not??
There is no guarantee in the markets 🙂
Yes, Nifty 100 is both that.
Karthik, thanks a lot for this excellent tutorial series. The explanation is clear and lucid.
In the article, you mention several capabilities of Zerodha Pi as a charting software. Are the same available in the Kite Platform?
Or does one have to download Pi? It seems that pi has not been updated for a few years.
All that and more is available on Kite 🙂
Sir , thnx for the sharing the valuable information.
Sir, can I use classic S1, R1 support and resistance level as immediate stop loss or target when I notice any candlestick pattern?
Yes, but ensure you’ve plotted them yourself and not fetched through a pivot calculator.
Hi Karthik,
I have a question where you have mentioned that those who want to intraday can refer to intraday charts.So my doubt is that where to find those intraday charts of a scrip? Should i open the charts of a scrip from market watch or from somewhere else?
You can look at the intraday chart on Kite itself. Open any chart and change the timeframe to either 5, 10, or 15 minutes and that gives you intraday charts.
Wow, that’s really good news.
One more question. Is there a simpler way to draw the support and resistance? Should we just use the pivot tool or should we attempt to draw it manually? What is your opinion regarding the same?
YOu can use Pivot or CPR, but I prefer to manually draw them by looking at the charts.
Thank you Karthik for your guidance.
Good luck!
Plz let me know that , on EOD chart how many candles should I look back to find the trend?
At least for 2 years or so.
Love these Articles
Happy reading!
Hi Karthik,
I would like to know when I am viewing a 5min intraday charts of a scrip and looking for a trading opportunity on it then what should be the look back period of the candles for intraday trading opportunity on a 5min chart?
At least 2-3 days of 5 minutes of intraday data.
Is it applicable for scalping as an scalper would be using a 5min chart of a scrip and also as you have mentioned that 2-3 days candles of 5 min chart did you meant those 2-3 previous candles on a 5 min chart where a recogniseable candle stick pattern has been formed or you are saying that I should look for the 1day(EOD) charts as we get days in 1day charts even for scalping.
For a scalper, what really matters is the assessment of price movement on very close intervals. Other factors don’t matter much.
Thank you Karthik..I would also like to know if i can view the hangseng index charts on kite as I am not able to locate it on kite
Not possible since we don’t get the feeds for the same from the exchanges.
So from where shall I follow about global indexes as you have mentioned that a scalper needs to keep track of global markets ?
Marketwatch is a good place to keep track of global markets.
Marketwatch from the news..have you meant that?
Yes, this one – https://www.marketwatch.com/
Hi,
Is there a tutorial on using Zerodha’s ChartIQ platform?
Thanks.
Hmm, not particular to CartIQ, but TA as such in the form of this module.
First of all thank you 🙂
i feel When the whole market is trending (Either upward or Downward) like last week, there is risk in taking trade looking at the candle for that particular stock.in a trending market Most of the stocks will be bullish marubozu or Bearish Marubozu as the case may be. This is in line with the trend of Nifty. But if Nifty reverses the trend of the stock also completely reverses irrespective of previous day candle.
Should we be looking at the trend of Nifty also while taking the trade ? Please share your thoughts
Thanks a lot for Varsity
Yes, thats right. You need to keep the large trend in perspective.
Hello Karthik,
I am using a 15 min chart so it’s necessary to plot S & R in 15 min chart. Can we plot S & R in 1 Hr or EOD chart and using 15 min chart for TA.
Yes, you can, no issues with that.
what do you mean by S&R level is more than 4% away from the stoploss? For example the Support is 100 should it be 4% below (i.e 96) or higher (i.e. 104)? for it to be an acceptable S&R confirmation.
Support is always lower, so 96.
Likewise on the resistance of 100 my acceptable stoploss when going for a short trade would be at 104? thank you & I appreciate your reply.
Yup. Good luck!
Hi Sir,
Kindly Answer below questions :-
(1) Do we have module for building trading strategies and scripting ?
(2) Most of the candle patterns we have learnt is 1 or 2 days patterns. In swing trading we have to hold stock for at least 3 days, by the time pattern will disappear. How to solve it ?
(3) As i am buying equity to hold for few days but if target acheieved within a day then i will sell it within a day. Should i select Longterm (CNC) for purchasing share ? will it work in both the case ?
Thanks in Advance.
Regards
Ishwar
1) Scripting no, strategies yes, check this – https://zerodha.com/varsity/module/trading-systems/
2) That’s ok. YOu act on the pattern today, once you initiate the trade, wait for it to either hit the target or SL
3) YOu can choose MIS, worst case if the plan does not go according to the plan, then convert it to CNC, check this https://support.zerodha.com/category/trading-and-markets/margin-leverage-and-product-and-order-types/articles/how-to-convert-mis-to-cnc-nrml-and-vice-versa
On the S&R level when it is more than 4% away from the stoploss, is my understanding correct on the example below.
Support-200
Stoploss- 208 or 192: in this case are both acceptable SL?
Resistance-200
Stoploss- 208 or 192: in this case are both acceptable SL?
Thank you for the Reply.
is my understanding correct on the example below.
Support-200
Stoploss- 208 or 192: in this case are both acceptable SL?
Resistance-200
Stoploss- 208 or 192: in this case are both acceptable SL?
Thank you for the Reply.
If support is at 200, SL is around 192, not 208.
If resistance is 200, SL is 208.
Hi Faisal/Kartik,
I could find below in comment section :-
1. Pi provides OI, last traded quantity, upper and lower circuit limits while Kite provides just the necessary information such as OHLC and Volume.
2. Pi offers backtesting and alerts which is not available on Kite.
My question is if Pi provide back testing why user will go for Zerodha Streak ? Is there any basic difference ?
Streak is better in terms of both functionality and ease of use.
Hi Kartik,
(1)How to find out weather a chart has sufficient liquidity or not ?
is there any ratio or indicator available for this ?
(2) Does daily volatility of stock is available somewhere without doing manual calculation ?
(3) Where to find latest list of nifty 50 stocks. Is this correct link ? https://www1.nseindia.com/content/indices/ind_nifty50list.csv
Regards
Ishwar
1) You need to look at the volumes, higher the volume, higher the liquidity and tighter the bid-ask spread
2) Not sure
3) That’s correct. The same link should give you the volatility also.
What is the difference between scalping and day trading or they are just synonyms. I also try day trading but it’s very quick process as you above mentioned. So I cannot take decisions very quickly and there are 50 stocks in Nifty and it generates too many signals in a single day so I completely freeze while trading hours.
Scalping a form of day trading. I can buy a share in the morning and sell it by noon, this is day trading. I can also buy and sell within a span of few minutes. This is also day trading. If I buy and sell within few minutes and do this several times during the day, then its called scalping. I’d suggest you don’t do scalping, it can be quite taxing and often leads to capital erosion.
Stick to 1 or 2 stocks and concentrate just on that. Cut out the rest.
Thank you Karthik for your helpful reply, can we also apply your above mentioned checklist to identify opportunitys in day trading. And after selecting 3-4 stocks we are completely devoting this 3-4 stocks and concentrate only on that.
Yup, that will be a great start 🙂
Kartik ji, really doing great work. I really salute zerodha team on education front. I m just learning trading ,opened a trading account in zerodha, I just want to know how and where to place coding for stop loss in back test window of pi
Shashi Kant Ji, I’d request you to please use Kite, its much better for trading 🙂
This content is brilliant, Karthik. Thanks a lot. I have been watching my father getting into trading without any knowledge about how TA works. He has been simply reacting to Zee Business calls and news, and have been failing. On the other hand, I am fed up of my 9-5, and this tutorial has aroused an interest in me to give an attempt to Swing Trading.
Thankyou so much.
Good luck and tread carefully in the markets 🙂
As you guided in checklist if current market price is 4% away from the S & R so you quit the stock. Is that mean the gap between S & R is not more than 8-10 % ?
No, not more than 4%. How did you get 8%?
It’s my typing mistake sorry I want to tell you is that 4% away from the resistance and 4% away from the support that means combine percentage of s & r is 8 % for eg. 100 is resistance and 108 is support. I know it’s not possible that current market price is always in the middle of s & r. And my another question related to this topic is
– if there is a long trade and resistance is around 4 % away that means definately the target price is around resistance and support is away more than 10% so what is the SL in that case ?
Its possible for the price to be in the middle of S&R, it is just that you don’t have an advantage trading such scenarios.
In such a case, the risk to reward does not favour you right?
How to calculate liquidity of a stock ?
The right way to do that is by calculating the impact cost but the easier way is to look at the bid-ask spread and to gauge how tight the spread is.
I have been doing day trading in stocks for 10 months and I’m profitable too. I want to scale my profits. So, I want to ask, what is the maximum amount(with 1x leverage) with which I can day trade in Nifty 150 stocks without having larger impact cost ?
Without leverage, the only way to scale is to add more cash. Maybe you can plough back the profits to your trading activity.
No, I am using leverage. But I want to know if Indian market is liquid enough to place orders worth more than Rs. 20 lakh(or 1 lakh capital with 20x leverage).I want to know what is the maximum capital I can place orders with for intraday without much impact cost. Can I place orders worth 1 crore(5 lakh with 20x leverage) in cash equity ?
This is stock dependent. You can do that with highly liquid stocks like RIL or Infy, not so easy with small and mid-cap stocks.
Sir thank you for the content😊
My question..at the end of down trend evening star is formed..bulls manages to gain the streak for two trading sessions and at the third day Bearish reversal is formed..will it work
If you have taken a position, then you need to wait till your target or SL is hit. Btw, if the bearish reversal were to happen, you’d need to ignore as there is no prior trend for the reversal right?
valuable lessons
Outstanding stuff! . Thanks a lot Karthik& Team Zerodha..
Happy learning, Rakesh 🙂
Hi sir..firstly the content provided by is really helpful.. Where I was not able to pay so much money for learning about stock market the modules prepared by you helped me a lot.. Thank you for that♥️
Sir my question is about opportunity universe in Nifty 50 stocks.. Where some PSU fundamentals will be worst can we consider buying such stock because fundamentals + technicals make a better combination.
Sir lastly I’m waiting for your financial model video i hope it comes soon and expecting more webinars form you..
If you are buying from a short term perspective, they yes, you can. But do not invest for the longer term. Will do the financial modelling module soon 🙂
Hi Sir,
How to deal with Gap Up and Gap Down in Intraday Trading ?
(1) We are expecting share price will go up but it opened with GAP DOWN ( Today’s opening price y’day opening price)
Regards
Ishwar
If you have an overnight position which is not hedged, then there is nothing much you can do. The best you can do is to take corrective steps at open.
Thanks for the wonderful information. i really liked it.
Where can i refer patterns like head & shoulder , Falling wedge, Asymmetric triangle, Flag etc?
Have included a few that I think were important in the Dow theory chapter. I’ll try an include a few in supplementary notes.
Hello Sir,
good Morning. From 9:15 am – 9:20 am volume is very high. And price moves very quickly sometimes in one direction but both direction many a times. This seems like a tempting opportunity but very difficult to make entry. Kindly advice how to make use of it or we should avoid first 5 minute ?
Have a good day
Regards
Ishwar
Its better to avoid the morning volatility, Ishwar. You don’t want to get stuck with positions, especially if you are new to trading.
Dear sir,
If a company declares dividend on the shares I hold, will the dividend amount be credited in my trading account?
And if so, then after how much time?
It will get credited to your bank account.
Sir for intraday how should I select stocks, and when I draw support and resistance whenever the stock breakdown or breakup they’re is more chance it is fake breakout which I’m observing how can I avoid it
Chandu, for intraday also, the procedure remains the same. Instead of EOD chart, in intraday, you look at 10 or 15 mins charts. Every attribute of plotting S&R remains the same.
Sir, no explanation on stop loss. I have a few doubts. If I place a stop loss limit order and the prices drops below that, will it get executed or it will wait until the specified price is reached? I read that in stop loss market order it gets executed immediately. Can you shed some light on that?
You can use a GTT order for this, check this – https://zerodha.com/z-connect/tradezerodha/kite/introducing-gtt-good-till-triggered-orders
Ehhh, sir, I checked the link you have shared. It’s a tad confusing for me. Stop loss limit doesn’t get executed if the price drops below the specified price and is in holding until the price reaches back?
Thats right, you need a trigger for the SL.
Now I understand the tag line of Varsity. Curated with Love. Indeed, this piece of step by step guidance, has increased my faith in Zerodha manifold. Many aspiring traders, who loose so much of money initially in learning phase will be benefitting from this guidance. Content has forced me to write this comment just out of respect. My salute to the writer and whole team for coming out with such a good quality material.
Thanks Varun, your comment means a lot to me 🙂
Thanks for the excellent work
One question
I did not understand “If the S&R level is more than 4% away from the stoploss, I stop evaluating the chart further and proceed to the next chart”
What do you mean by 4% away from the stoploss? How would you calculate this?
Kindly explain.
The closer the identified SL (i.e. the low of the candle for long positions) is to the S&R, the better it is for the trade. The further away it is, the trade gets difficult.
Thank you karthik sir,
For intraday is it must to have support at SL of the pattern?
Nope, go with the price action flow.
Sir how to identify the trend
A simple moving average will help you establish the trend.
I am so glad that I come across the wonderful material you have developed sir. I wish I should have read this earlier. Neverthless, it is never too late. Thank you very much for such a detailed explanation and simplified language for a layman to understand quickly. Many Thanks & Regards, Nitin
Thanks so much for the kind words, Nitin. Glad you liked the content here on Varsity.
“Keep a tab on the bid-ask spread to see how the volumes are building.”
What is the motive behind the bid ask spread analysis? Should it comply with the candle like, for bearish candle sellers should be more and vice versa?
Please explain karthik sir..
Ah no, it is basically an indication of the liquidity available in the system, higher the liquidity higher is the ease at which you can trade.
Ok.. 😅😃
I am, not able to use Pi. is it discontinued? I can open the application but chart and tool option is disabled. can you pls help??
Not really. It still exists. I’d request you to please contact the support desk for this.
Sir, I’m a newbie and have some doubts about the multiple timeframes.
A short timeframe gives a detailed view of the market for entries n exits n a long timeframe indicates the trend.
From my experience, I always see higher timeframes confirming the entries I see in short timeframes but my friend was telling that sometimes the confirmation can’t be found on higher timeframes. How is it my possible since shorter time frame candles forms longer timeframes candles?
Thank you.
Not really, you can get info across all time frames. It really depends on what you are looking for and your trading horizon.
Hi Karthik Sir,
As part of the Evaluation process, you mentioned that you look at the MACD and RSI indicators to get a perspective. RSI is leading indicator and MACD is lagging indicator. Is there any possibility that both give the same signal. Suppose the stock is in down trend and trading at support level and formed bullish Engulfing pattern with RSI may be at 30, I think MACD won’t give any buy signal in this scenario as this is lagging indicator and may take time to give the signal. Could you please provide and example where both RSA and MACD gives same view.
Sir found an opportunity to swing trade at Bharti Airtel 611 was resistance,since today feb3 the company is going to announce results I was quite bullish I decided stock is going to break out the resistance so I thought of entering early at 600 with a stop loss of 587
I watched your video on volatility based stop loss
I followed the step and calculated for 1 year
Since trade was swing I got a sd of 6.2% for 5 days my question is if I followed that my new sl would be @560
I will share my pic of the chart
Should I go ahead with 587 as sl or should I follow 560 which is really big sl
Which level does your capital permit? You need to ask yourself if you would be able to withstand if the SL were to trigger at 560, if yes, go with that, else 587 🙂
https://drive.google.com/file/d/18tM1G0kRtrusGz-8pXNcN6LYdvxAF39y/view?usp=drivesdk
Sir, you mean the trend n the confirmation is the same across all different chart timeframes, correct?
No, I don’t mean that. What I mean is that the different timeframes can signal different things and it really depends on your trading horizon. For example, a short term trader needs to put in more emphasis on short time frame charts like say last 1-2 months and an investor with 2 years horizon needs to look at 2-3 year charts.
Ok, I can understand you. What multiple moving averages do u suggest for a intra day or a day trade?
What multiple moving averages do u suggest for swing trading n positional trading?
Your posts have helped me considerably, thank you sir.
Start with a 9 x 21 combination and see how it goes.
Hi Karthik Sir,
As part of the Evaluation process, you mentioned that you look at the MACD and RSI indicators to get a perspective. RSI is leading indicator and MACD is lagging indicator. Is there any possibility that both give the same signal. Suppose the stock is in down trend and trading at support level and formed bullish Engulfing pattern with RSI may be at 30, I think MACD won’t give any buy signal in this scenario as this is lagging indicator and may take time to give the signal. Could you please provide and example where both RSA and MACD gives same view.
They give similar signals when there is momentum in the stock and moves in a certain direction.
Hi! I tried using the Pi software, but the chart doesn’t open for the stock. So I right clicked on the symbol and selected the chart option but it doesn’t open.
Ankita, I’d suggest you switch over to Kite, it is much faster and efficient.
Hmm how about 5,8 13 for intra day, sir?
And for mid term multiple moving averages?
You could try, these are combinations which you have to experiment with and arrive at which one works best for you.
Sir, while choosing moving averages it’s should not be too short nor high, right? Bcz for short term u can’t use higher moving averages and for long term u can’t use short moving averages bcz it won’t stick closer to the current price movement, is my strategy correct?
It depends on what trading or investing activity you are trying to do.
If I chose 5 ema on monthly chart it shows past 5 months data?
If I choose 5 ema on 15 mins it shows me past 5 15 mins data?
Karthik sir, I am still new to trading please don’t mind these trivial questions 😊.
This is not trivial, people get heavily confused with this part. Yes, that’s absolutely correct, Vishal 🙂
Oh haha so many get confused. Sir, if I choose 5,8 13 EMA on 15 mins it’s past 5 mins, past 8 mins n past 13 mins . So if I choose these Ema’s on 1 min, what data will it show? This is confusing.
Vishal, so there are two things – the time frame, which can be 1 or 5 or 10 or 15 or EOD candles. Over this, you can choose to overlay any average. Let’s say you choose 5 minutes candle over which you overlay 20 EMA, what you will get is the 20 period average of the last 20, 5 minutes candle.
How to differentiate between correction and Trend reversals like how to identify
Not possible Rajesh. Both of them have similar characteristics, hence tough to distinguish.
Hi Karthik,
You are doing a great job in putting things so simple.
I am a little confused about plotting the S&R as mentioned in point 5 (for confirming with stoploss) and point 7 (for setting Target) of The Scout’s checklist.
Does it imply that for every trade I need to have both Support and Resistance, one to confirm if it is near to the LTP and the other to set the target ?
That’s right Sumit. Although not necessary, the odds of the trade working in your favour improves if you follow the checklist.
Sir, I took some time to assimilate wht you said but I got it. Thank you so much❤. Sir, I have another doubt. On hourly charts, the RSI shows oversold but in daily it’s not yet oversold n this is bcz of 14 days average of different timeframes but sir, if I am swing trading for 5-7 days , how should I go abt it?
Vishal, if you are swing trading, then go with what the daily charts suggest.
Thank you sir. Sir, if a cup b handle pattern forms but goes side ways for a few days(later it went up), can we say the pattern failed bcz if it were real it should have broke out at the handle. Is my analysis correct sir?
Depends on how many sessions the market went sideways. If its an extended session, then yes, it failed, but if it is just for few sessions, then maybe not.
so sir there is nothing like that the cup and handle pattern should break out at the handle or anything?
Not really, dont spend too much time on these Dow patterns. Get the price action drift and that is good enough.
sir, during consolidation , volumes are low? can there also be a situation where volumes are highly during consolidation? please explain,sir.
Yes, Vishal. Volumes can also be high around consolidation.
Ok. thank you sir.
Sir, I have finally started getting a better idea of reading the charts. But this thought is bothering me. On an hourly chat, if the bollinger band has touched the upper line and on the daily chart its moving between the upper and lower band how can the price go up on a daily chart as what happens on a hourly chat must also happen on a daily chart? I hope you got my question,sir. kindly give a good explanation.
Vishal, that is because the numbers of data points of hourly are different from a daily chart right? So the behaviour is different across both the charts.
Yes sir, this I know. When an indicatoe gives an hourly data, it’s only applicable to that hour but the next hour depends on the previous hour, right? So if it’s oversold in the first hour, I assume it should continue to the next hour as well. I hope you are following me, sir ☺.
That wont be true, Vishal. Think about it, these indicators derive inputs from the price, but if there is a sudden spike in the latest price, that will influence the entire chain right?
Hi Karthik,
Thanks a lot for explaining things very clearly.I have gained a lot of confidence in trading after reading your modules.But,I am really confused on selecting the stocks.Even if the stock comply with the pattern,average volume,most of the stocks does not have the support(within 4% of the Stoploss).I am right now calculating the support level using the action points as you have explained in the module.
1.Can you guide me on any other way of calculating the support level other than action point.
2.Is it safe to trade stocks that dont comply with the support level.
1) Apart from the manual way, the only other way to calculate S&R is by using pivot levels or CPR indicator. But I’d prefer the manual way on any given day
2) Yes, it is, as long as you have sound logic backing your trade.
superb sir, slowly my doubts are getting cleared. Sir , if I am into swing trading, should I only draw trendlines on hourly and daily or I can also connect dots on weekly and monthly? Thank you so much, dear sir.
Yes Vishal, if you are swing trading then look at hourly or EOD charts. No need for weekly or monthly.
sir, I mean to say the price action and trendlines seen on different time frames on applicable to all the time frames unlike indicators ,right?
Thats right, but there can be micro trends within larger timeframes, you need to be aware of this.
Sir, yes larger timeframes show clear n reliable patterns . Thank you for the reminder. Sir one of my friends says before taking a trade it’s important that macd is showing upward trend in all the timeframes but my question why should I consider this while I am only into swing trading?
Thats not really true, Vishal. Indicators like MACD, RSI etc are all small independent systems, which has its own behaviour. I’d suggest you draw conclusions based on what you read in that chart as opposed to the indicator readings.
Excellent write up. It feels encouraging. Need to practice these. Thank you.
Happy learning, Chandra.
Sir, suppose on a daily chart it’s an uptrend n indicators r positive, but ion a hourly timeframe its retracing or may a slight downhill n indicators r negative, what should I do, sir? Should I enter the trade ?
Look for the longer-term time frame, so in this case, I’d value daily chart more than the hourly chart.
Sir, still a few doubts regarding this. On a daily if indicators aren’t giving sell signal but in hourly n 15 mins they are, I should wait until all 3 timeframee confirm?
Not needed, if you are trading intraday, then go with the hourly chart.
Ok sir. If daily is my higher time frame n hourly is lower, can I use 15 mins for entry, sir? If yes plz explain it’s advantages.
But in which time frame are you trading? I’d suggest you go with one time frame instead of mixing up the time frames.
Karthik sir, I am in a fix right now n I will tell you why. My friend said never buy or sell if tide, wave n tripple don’t confirm. All three have to give u buy signal. Sir, what is your take on this? And do you follow the same method?
I just go with the pattern and what the price action suggests, Vishal. That’s all that matters 🙂
Oh so u hardly rely on indicators. So how is my friend’s method? As said, he says only buy if tide, wave n ripple confirm. Sir can I use this method? Most importantly is this correct?
Yeah, I prefer to look at price action rather than indicators.
I can see that, sir😊. But my method is also correct, sir?
Yes, you can give that a shot. Good thing is that market is a great place to quickly understand if you are right or wrong 🙂
sir, my friend only looks at the MACD on higher time frame(tide) and not the oscillators, hmm should we also not look at the oscillators?
Not really necessary.
Sir, you said trading by looking at multiple timeframes can confuse me, so should after the entry should I monitorn my trade in wave timeframe?
Thank you sir.
If you have set up the trade by looking at the EOD chart, then you should stick to the complete trade by referencing the EOD chart.
Karthik ji, a very nice write up. I have a query regarding the price action. when we see price action in a timeframe its only applicable to that chart or it will certainly continue over to the other charts? Indicators are specifically confined to a timeframe. I am kinda baffled with the price action. can you please clarify?
Thank you karthik ji.
It is restricted to the scrip that you are evaluating and won’t be applicable to other charts.
Got it sir. sir, we use tide timeframe to only check the direction of the trend with Macd can i also use moving averages? i know we normally use tools n indicators in wave as its the execution timeframe but how about using MA to check the direction of the trend in Tide timeframe?
I’d suggest you stick to MA for this.
My bad, my question was vague. I meant is it restricted only to that timeframe or it continues over to the other timeframes?
Thank you.
Largely restrict yourself to the same timeframe.
You have done a great job in providing such valuable information in simple yet effective way
Can you suggest some strategies for Tadawul stocks
Thanks in advance
Thanks, Mohsin. Unfortunately, I’m not too familiar with that market. But by and large, the principals remain the same and won’t change much. Good luck!
sir, we check tide for the direction of the trend along side the price action and patterns, but in wave in do all the activities like using MA, FIBB Retracement, volumes n other tools, so my friend says I dont have to look at the volumes in tide, I dont agree with that? what do you say, dear sir?
Thank you.
I’m not sure about the tide bit, I guess you are talking about Elliot Waves here. But generally, its good to keep an eye out on volume.
No, sir talking about tide, wave n ripple timeframes. We use all the tools and do all the execution in wave timeframe, right?
Hmm, not sure Vishal. I think we are talking about 2 different things. These don’t feature in candlesticks or Dow theory.
sir, when the price is going up I know the resistances are tested but if there is a previous support while the price going up, are they normally tested as well?
Thank you sir.
Thats right, Vishal. Support and resistance points are interchangeable based on the current market price.
So sir, if I see a support zone approaching, I should be careful as I am carefull with a resistance zone?
Careful as in, you need to be aware and take a stance as per your original trade plan.
Wonderful sir. Sir, any morning stars or bullish reversals aren’t considered effective if found in an uptrend, but what if they r found in sideways trend?
I’d still not pay much importance given that there is no prior trend.
sir, why arent bullish reversals if found at the top arent considered effective? Can you please explain?
Thank you.
Because the market is in a bullish state anyway.
Hello sir,
First of all, a heartily thank you for such an amazing work. There is not a single source on internet that can match this. So, Thank you.
Secondly we had discussed mv, macd , and other indicators for strong trend, but what about sideways trend. Can you suggest some indicator or some strategy for sideways too. Like how should we approach that.
Thank you
Thanks for the kind words, Shekhar. I guess for sideways mkt, I’d prefer tracking ranges like double, triple tops. Also, Bollinger bands may help.
sir, if I dont change from my highertime frame daily to weekly n when there is good momentum in weekly(still stay in daily), what are the consequences?
Thank you.
Nothing really, if you are on the right side of momentum, then you will ride the profits 🙂
hmm so the only difference is by shifting to weekly, I think I dont have to monitor it daily , correct sir?
Hmm, but I’d personally prefer to track the daily charts.
Good morning sir,
Sir I have been trying to use technical analysis in future market. Since this is simulator i can easily take risks in order to understand. Below is the future contract of federal find future.
https://imgur.com/a/zVJW1Nq
To quote another example for my question this is contract of lois June 21.
https://imgur.com/a/jAYNjaH
Sir which ever contract I lookup, there isn’t definite strategy i could form. For example, in federal contract,
volume is quite good in last 6 days, momentum is -.5 , macd line is slightly below signal line. No proper candle is formed. rsi is 42 so there is no correction.
So how should i evaluate this. I could go with momentum, vol , macd, rsi. but this the values are not meaning nothing. for example momentum is -0.5. so this means there isn’t much interest. so how can I take this. Should I take values into consideration ?
My major problem is i am unable to process this info into something useful. as values like momentum can go +ve as its -0.5 but there is equal risk of value going more negative. similarly macd is very near to signal line. so there is chance the macd can cross signal line and vice versa. there is only 3 month data available in each contract.
Sir can you please guide me how should I approach these contracts.
Thank you
I get your point Shekhar. This is the reason why one has to be selective about trades. Good trades come by after sever factors align. Also, I think its best if you do your analysis on the spot market chart rather than the futures chart.
Good morning sir,
Sir i have been trying to apply this technical analysis into future market. the time frame i am using is 1 day. Below is the federal fund contract.
https://imgur.com/a/zVJW1Nq
But the problem is there is no to very less liquidity in 5 , 10 ,30 ,60 min time frame. So no candles are being formed. So sir, what should i do with these kind of contract. there is liquidity only around announcements.
And my second question is, when i am trying to make decision based on rsi, macd, momentum, i am not able to make a definite decision with them.
For example:
the momentum is -0.5 so there are equal chances that the momentum might decrease or increase. Similarly for other indicators too. for eg macd, value is very near to signal line.
SO how should i take this forward.
Thanks a lot in advance.
Are you sure there is no liquidity? Maybe you should check the real chart on Kite? I just checked and there is quite a bit of activity.
Sir if the candle gap ups above the the previous close but within the wick of the previous candle, can u call that candle a support?
Not really Vishal. Support (and resistance) has specific ways of identification.
Hmm sir from what I know a gapped up candles low is called support, am I correct?
I’d personally dont believe that, especially the price gapping bit.
Yes sir I have checked them twice. there is little to no Activity in 5 min , 10 min , 30 min chat. I am attaching all three charts.
https://imgur.com/a/36FVEuW
So since there is no candle formed at many times, I am not able to use ta.
Kindly tell what should i do in this.
Reply this this ques and answer
”
Shekhar Lohach says:
March 2, 2021 at 11:22 am
Good morning sir,
Sir i have been trying to apply this technical analysis into future market. the time frame i am using is 1 day. Below is the federal fund contract.
https://imgur.com/a/zVJW1Nq
But the problem is there is no to very less liquidity in 5 , 10 ,30 ,60 min time frame. So no candles are being formed. So sir, what should i do with these kind of contract. there is liquidity only around announcements.
And my second question is, when i am trying to make decision based on rsi, macd, momentum, i am not able to make a definite decision with them.
For example:
the momentum is -0.5 so there are equal chances that the momentum might decrease or increase. Similarly for other indicators too. for eg macd, value is very near to signal line.
SO how should i take this forward.
Thanks a lot in advance.
Reply
Karthik Rangappa says:
March 2, 2021 at 12:55 pm
Are you sure there is no liquidity? Maybe you should check the real chart on Kite? I just checked and there is quite a bit of activity.
“
To get a sense of activity, please check the market depth window on Kite. You will see how many trades occur on a real-time basis.
Hello sir,
If we are using daily candles , what much time can we expect to see its effect. Like can its effects be seen within 2-3 days ?
Thank you
Unfortunately, you cannot time the market and expect to see the results within the stipulated time frame, that does not happen.
sir, if the price comes to support level, we call it retesting but if it starts taking support of the support line n consolidates can we still say its still retesting?
Thank you sir.
We can consider this as testing the level.
Nice! sir, if indian markets open high or low, what are the factors i should be looking at? I am sure some stocks or indices play a role.
No factors as such. YOu just need to follow the trend and position yourself accordingly.
sir my friend tells if US market falls, indian market falls. IF nifty 50 falls or rises , other stocks fall or rise respectively, you agree, sir?
Its generally true, but not always 🙂
To some extent yes, but there are times when Nifty 50 is down, but midcaps and smallcaps rally.
sir, if I find a bullish reversal chart pattern at the top, will it be as effective and do its job like it does at the bottom?
These are just patterns and indicators, Nikhil. Depends on how the overall markets pan out.
sir, in short would it be correct to say bullish chart patterns and bullish candle reversals at the top n bottom respectively arent as effective or wont make the same kind of impact they do at top n bottom respectively?
Bullish should appear at the bottom of the rally and bearish at the top of the rally.
right! but if we see a bullish reversal candle at the top it not as effective as it is at the bottom, right?
The reversal has to happen at the bottom of the trend, so yeah, not effective.
nice module sir. where in the world everyone are taking money for this courses u are providing for free. Great respect to you sir.
Happy learning, Sravan!
When I see a high wave candle, what does it indicate, sir?
Thank you.
Not sure what a high wave candle is, don’t think we have discussed it here.
High wave candle as in a candle with long wicks but the body is at the middle like a spinning top. Sir, how is this different from a spinning top or neutral candles? Does it happen during bad news?
It can happen on any day, generally indicate that both the bulls and bears have exerted equal influence on the price. Somewhat similar to a spinning top.
Sir even a big red candle can happen on any day or during bad news or panic selling?
Yes, it certainly can happen, Vishal.
Sir, With due respect to your efforts and initiatives I would like to ask whether the strategy mentioned in 19.4, 19.5 and the one mentioned in scalping is backtested on softwares like Amibroker/Metastock ? If so could you disclose the outcome ?
You can easily do this on streak.tech , customize it according to your risk tolerance and you can instantly see the results.
Hi Karthik,
As a novice trader I am so glad to read the modules to improve my knowledge in stock market. Really your efforts should be appreciated.
Also, I request you to explain the multi time frame analysis and how it’s done.
Thanks, Adithya. The good part about candlestick patterns is that the same techniques can be seamlessly adopted across multiple timeframes, nothing really changes.
As you said, you pay a lot of attention to prior trends. For all bullish patterns, the prior trend should be downtrend. But, What kind of downtrend you mean to say: I mean should it be very steep or downtrend should have a a lot of corrections ?
Also, please look at the chart of ITC, there is a hammer formed today. Tell me, Is it a good downtrend(in the chart of ITC) we should consider or it should be more bigger and steep ? I am really very confused about the downtrend we should look for before any candlestick pattern.
If the stock is trending down from the peak for over 5-8 sessions with over 10% correction, then that can be considered as a downtrend. Yes, that’s a small downtrend in ITC, maybe good enough for carefully crafted, quick intraday trade.
Thank you so much. I first thought you would not see ITC chart or just answer on the surface level. But, you actually cleared my doubt. Thanks a lot.
Good luck, Hemant 🙂
sir, what is margins in futures? depositing some sum of amount before making an investment?
Yes, the minimum required before taking up a futures position.
Got it sir. Now what is premium in options, sir? I have heard you got pay premium? Please explain with an example, sir.
We have an entire module on options, do check that Vishal 🙂
Hi Karthik,
As you have mentioned that for day trading we need to have a good charting software like Amibroker or Metastock so now my concern is Kite not enough for technical analysis or day trading?
Kite was not around when the content was put up, a lot of changes since then. Kite is more than sufficient now 🙂
Thank you Karthik for your response however can you suggest some names of reliable and genuine data feeds vendor as I am not able to find one as I am thinking of purchasing a charting software as I wanted to be a scalper.
True data was one good vendor that I can think off. Else, look for NSE approved data vendors on NSE site itself.
While analysing stocks, how much importance do sector analysis hold? I have come across many videos talking about sector analysis while planning a trade and in our module we haven’t heard about it from you. So just curious that while planning a trade should we do it on sector specific or stock specific?
Also, if sector analysis holds importance kartik sir can you please elaborate on it a bit how to do it.. Your way is lucid as compared to other technical gurus.. Would like to hear from you! 🙂
It does matter, Dhananjay. This is something that I’ve been meaning to do for a while. Will try and do it sometime.
Hi Karthik,
Can you give me the link of the data vendors on Nse as I scrolled every possible pages inside Nse but am not able to find it.
Check this – https://archives.nseindia.com/content/press/List_data_Vendors.pdf
sir, I am not able to comprehend what maintenance margin is, can you please help?
Thank you.
Think about margin as a whole as the minimum amount you need to have in your trading account to take a futures position. The maintenance margin is a part of how margin is calculated.
Thank you Karthik for your help.
Good luck!
eagerly waiting sir!!
sir, why is the strike price always higher than the spot price?I am unable to figure out. Please help.
Not really. The strike prices are evenly spread with respect to the current market price.
Hello sir,
Please correct me
1. To look recognize candle stick pattern – look most recent 3 or max 4 candles
2. For prior trend – ?? How many Eod candle should be seen
3. for s&r – for long term and swing trading 12 to 18 month eod candles
For short term and intra day 1 year
4. Volume – above or near equal to sma of last 10 days avg volume
5. Sl and s&r – max difference should not be more than 4%
6. Reward to risk should be at least 1.5
Thanks
1) Yes
2) At least 8-12 trading sessions, if not more
3) Yes, this works
4) Yes
5) Works
6) Yes (or better)
Very nice explanation…
But
Is the Zerodha Kite & Pi same?
They are two different trading platforms, Vishram.
sir, can you please tell me why the In The Money strike price has more premium than ATM OR OTM? I cant figure out.
Premium is proportional to the moneyness of the option. ITM has a lot more moneyness compared to ATM or OTM, hence more premium.
sir you mean because of more intrinsic value the premium will be more?
That is correct, Vishal.
sir such a beautiful subject explained in simplest form understandable to everyone.
Shows your love for teaching and liking for this subject.
You are great.
Would like to meet you in person some day.
Also these are 2014 notes . And I am reading in 2021 have you any latest version or plz guide accordingly.
Thanks again
Thanks for the kind words, Parag. I’m glad you liked the content. The nature of the content on Varsity is such that they are evergreen since these are the founding blocks of understanding the topic. Does not really need constant updation as such.
so sir if my ITM strike price is 1460 n spot is 1480 with premium of 10 then its more than Rs30 right? bcz 20 intrinsic +10 premium, correct sir?
It depends on the time to expiry also, but the min premium should be equal to the intrinsic value i.e. 20 at least.
Thanks for the precise & excellent information Sir. I have read it the first time. It has boosted my confidence & I am going to read all topics at least one more time keeping Pi side by side to look out for some examples. At the end of the day, we are entering a market full of risks & opportunities where we can definitely lower our risks by gaining the knowledge & applying it. Nothing is risk-free in this real world.
I agree with you, that’s what makes the market an interesting place 🙂
Sir one more thing what I have been noticing in options there are buyers n sellers way in OTM n way out side OTM, something we can’t do in futures or equities, u can only buy at the present price. Right? Sir but why do people sell OTM strikes? What is their point of view ?
They sell OTMs with the hope that the option remains OTM till expiry and they can pocket the premium.
Sir we have to look at options from sellers point of view. I understand in calls we can look at it from sellers point of view and the same for put? bcz they r bulls so I am confused . Please clarify sir.
The same thing holds true. With puts the view on the market is different but the profile of an option seller remains the same.
wow, amazing sir. Sir, I am unable to trail sl without entering the target n SL in Mis n CNC. It’s become impossible to do so. Anything wrong sir?
YOu cant trail in a regular MIS and CNC order type Vishal.
Hmm but sir, I don’t see trail stop loss option in Regular.
sir suppose I bought call at 2200CE and sold call at 2500 CE, if the price ends below 2500, I will be making money from buying calling as well as selling call(premium), right?
Yup, thats right.
sir, I checked once again, even in Regular there is no option to trail stop loss. please help.
Yes, you will have to manually do this.
hmm no idea how to do it manually,sir. If you dont mind can you plz guide?
Thank you.
sir, when I rolling down rolling up sold calls , will there be any change in premium?I mean the premium I have already bought at is what I will maintain during the time of roll over?
YEs, premiums change every instance in the market, Vishal.
Hello Sir,
Using technical analysis one can identify a breakout like Daily RSI crosses over 60 with a good candlestick pattern and a moving avg cross over. This is just random.
My question is how does one identify a target?? How far ahead does this stock go?
Like for example HUL was trading at 2380. I bought 2440 call option. Now HUL closes at 2476, and my CE option is ITM.
You had mentioned that one should close positions when they become ITM as that is the best gain strategy.
How do I capture the further potential upmove if I end of squaring off my 2440 CE option?
Entering a new trade is risky as now I’m not as confident as I was before, I made a trade on a breakout earlier. Now I don’t know if this stock would correct or not?
Salem, one of the easiest thing to do is to lock your profits, trail your SL, and let the position continue. In this case, you continue to be in the position and at the same time locking your profits.
Sir,
Is it safe to say large cap stocks/mid cap stocks and futures do not gap up/ gap down the way Nifty and Bank nifty do everyday.
Stock may gap up/down due to some big news which is very rare. Nifty and Bank nifty tend to gap up and down almost every day correct?
Not really, Nifty/Bank nifty also do 🙂
Hello Sir,
I’m saying Bank nifty and Nifty tend to gap up/down very often compared to stocks.
I’m trying to understand whether one should go about option writing in index or stocks?
Stocks tend to be more stable than indexes in gapping up and down right?
Sorry, I guess I misread that. Yes, while they do gap up/down, they also offer ample liquidity which kind of offsets the slippage with stocks.
sir, if I have paid a premium of 40/- at the strike price of 880CE and I decide to roll up to 900CE which has a premium of 20/-, will I lose 20/- of premium?
2. Will I suffer any loss if I roll up?
Thank you!
Your P&L depends on the actual buy-sell prices of the premium Vishal.
Hi Sir,
What are your thoughts on Gann square of 9 and gann resistance etc?
Also what about elliot waves analysis?
Have you heard of the software advance get that does auto elliot wave for you?
Not a big fan of these Jasonnas.
sir, before trading in options, I should first do all my analysis on a spot chart, then set my SL on options chart, but now should I still monitor the spot chart?Please explain your view.
Yes, that kind of helps.
Hello sir,
Is there a reason why you are against gann squares and elliot waves?
Hmm, maybe I’m not against it. Its just that I’ve not used it as much as I’ve used Candlesticks.
sir, if ATM strike price becomes ITM does it delta decrease?
Yes, it does.
karthik sir, Suppose I do a covered call strategy that is sell OTM call and buy ATM call(to reduce cost), will there still be premium decay for atm bought call?
Premium decay will be across all strike, not just the bought option.
across all strikes as in ATM, OTM and ITM, sir?
Dear Karthik,
How does one trail a stoploss overnight..
For example I bought 10 shares of stock X at 100. My target is 115 and max loss is 92 (determined using volatility).
Stock moves to 125 and closes at 122. I kept a stop loss of 116 which means my target has been achieved and i’m just trailing my profit. Since my stop loss did not hit, I did not exit the stock. However my stop loss order expired.
Next day stock gaps down or moves down quickly due to some news and reaches 108.
What could I have done? My stoploss order expired since those orders are only valid intraday.
You can always use a GTT order – https://zerodha.com/z-connect/tradezerodha/kite/introducing-gtt-good-till-triggered-orders
Reading this material in 2021. Got to know that Zerodha has discontinued the Pi software. Can you please let me know the alternative to it (if any).
Please do check out Kite – kite.zerodha.com.
how to downloand Pi zeroda app
Hi Karthik
While analysing daily candlestick, last traded price is different from closing price.
So does that produce any abnormalities?
And when should we analyse our opportunity universe because ChartIQ updates NSE bhavcopy after 12am(Enquired Zerodha support)
And why is it that tradingview and chartIQ display different information regarding candlestick prices And
which one would you say is more accurate and to trust.
It won’t, make a difference, Soban. YOu need not have to wait for the close prices, in most cases you can make do with the charts available by close time. I like both ChartIQ and TV, no preferences there.
sir, today I was doing virtual opting trading on sensibull. the spot was 14400 and the call sold was 14500 at 138(BEP 14638), sir but when the premium went above 138, it was showing loss. should not the loss be above 14638? Please help.
Yeah, anything higher than 138 should be a profit considering you paid 138 as a premium.
First – great content, thanks for taking the time and effort to create this. I have a question on the topic of ‘Charting Software’. Now that Pi isn’t available, does Kite (online) does all that is listed in that section. For ex, pattern recognition, genetic algorithms, etc. If not, is there a resource which lists down all the differences between Pi and Kite?
Kite and Kite’s eco system have all that Pi offers and more. Do check Sentinal, Streak, Sensibull etc.
Sorry if I had asked this in the earlier chapter, but asking again as the question fits better in this one.
Is there a way to auto-recognize patterns in Kite? If not, are there any other charting tools you’d recommend for the same? I came across Tradingsignal after a websearch, but unsure about paying for a tool which may or may not be compatible with Indian markets.
Amit, please do check my previous comment.
Thanks Karthik. I explored the candlestick pattern study in Kite and it is indeed a very helpful too.
If I may bother you some more, would you know of any tool/platform/methodology which can give a ‘user alert’ on candlestick patters for a pre-defined universe of stocks (say Nifty 50) and a pre-defined timeline (say hourly) on a real time basis?
Thanks in advance.
Hey Karthik,
Can you please tell me the time of the day at which we should analyse the charts for trading if we are taking EOD data. As patterns are formed by the EOD data. So we should analyse during trading hours, before that or after that? please suggest any ideal time for it.
Thank you!!
You can look at EOD charts, analyse before market, set your plan and execute during market hours.
sir, can you please let me know futures n options brokerage charges? I am unable to find it anywhere.
20 per executed order.
Almost i feel confident to start my trade. But i have few doubts please clear.
1. In look back period you mention
a) 3 months for today trade
b) 6 to 12 months for swing trade
c) 5 days candle for scalpers
d) 2 years for find out S&R
My doubt is here which candlestick pattern should i refer ? is it 15 min, 30 min,1Hr, 4 Hr ,1 week etc? For above mentioned look back periods..
Please give me brief explanation about when should i see 1 week candlestick pattern, when should i see day candlestick pattern, when should I see hour candle pattern , Min candlestick pattern etc..
2. In evaluation process you told that
a) check support for long trade
b) check resistance for short trade…
What my understanding is,
for long trade we are buying at support leave it till it break resistance and achieve new high and support is our stop loss
For short trade we buy at support and sell at resistance and again support is our stop loss.
Am i right ?
Thank you for your efforts to share your knowledge for free and
Thanks in advance to answer my questions.
1 a.b.c.d – Time period is alright. You can look at EOD charts for all, except for scalping. For scalping, you need to look at intraday charts of say 5 or 10 mins. EOD charts work for most cases.
YEs, you are right about other things.
Hello sir,
I am doing paper trading from a week now, and i applied technical analysis. below is the screenshot of appltd stock. It was showing bullish engulfing(date 3 may and 4 may) with vol > 10 days avg. Rsi(45) and obv was normal. So the sign was clear to buy. But the stock behaved in completely different manner. I couldn’t understand why.
Can you tell was my observation correct and if yes then why it behaved differently.
https://ibb.co/qY90JfS
Ty
This happens, Ihesh. These are all based on probabilities of the expected outcome to occur. There is no guarantee as such.
sir if I hold my position will I be charged additionally other than 20/- per trade?
No, there are no charges if you choose to hold your trade.
Hi Karthik,
If we want to trade in NIFTY options, how to check the volumes which is important in checklist ?
Thanks & Regards
Satya.
You need to check the volume of the strike that you intend to trade.
Hello sir,
Sir, what does it say abt a stock when stock price remain almost same for 3-4 days continuously. Should i be careful in trading that stock.
And sir my second doubt is I can easily use s&r for swing trading to set target. but how can I set target for intraday. My target is always either too short or not achieved.
TY
Stock can remain in the same range for more than a few days. It just implies that the stock is consolidating. A stock stuck in a range with established S&R offers great opportunity to trade. Set the target near the resistance for longs and support for shorts.
Sir,
you talked about 2-5% earning goal, SO did you talk about it daily , monthy or yearly ?
ty
Monthly 🙂
Sir, do we have to set SL n targets on futures or options charts n after that monitor the trade on spot chart?
I had started falling in love with Pi while reading this, but it seems like Zerodha has broken up with Pi! 🙁 Does Kite have all features from Pi like built-in AI and trend signalling?
Yes Pranay, Kite has all the features and more, I’m sure you’ll enjoy this new relationship better 🙂
Hello Sir,
What do you think this software advance get? It is frightfully expensive.
But it comes with auto Elliot waves, JTI indicator and MOB indicator?
I’ve not used it, and I don’t see a reason to use it as well 🙂
With Zerodha Pi being discontinued, What are other ways to automate these strategies?
Please do check streak.tech, full automation wont be possible anyway.
Great content. Thank you so much for it Karthik.
A small doubt.
In the checklist shouldn’t there be one more point:
– There should be no fundamental news in the stock
You have mentioned this point in modules preceding the checklist module.
Ah, yes. This one matters too. Will try and add this to the list.
Just a small further question.
All the examples(price charts) you illustrated point to a particular thing. For example they show you a bullish marbuzo, they show hammer, they show dow thoery patterns, they show rsi level. But as per the checklist we need a braod combiabtion of them all to make a trade. Can you give 2-3 examples of charts where the checklist is being fulfilled???
(P.s. The doubt is arsing from the fact that its a stringent checklist. I have been looking for opportuinities in the market(Nifty 50 stocks) for quite sometime now. Unfortunatley I was unable to find one. So I just wanted to make sure that if I was applying the principles/ checklist items correctly. Giving examples where stocks have followed the checklist would be of great help)
I’ve not been looking at charts for a while, so won’t22222 be able to do this Garg. Of course, I agree that finding a trade that complies with all the checklist items can be tough, but that is the idea. Find few trades, but solid ones.
Also Karthik a slight personal question. Do you have your own community/ part of a communuty where stock traders discuss ideas based on price action/ candlesticks?
If yes, is it a public or a closed community?
Nope, I’m only active here, on Varsity discussion board 🙂
Karthik sir you are no less than Bahubali. The knowledge that you are providing is priceless. That is the irony of these modules. And without charging a single penny. Thank you so much.
Thanks for the kind words, Neel. I hope you continue to like reading on Varsity 🙂
Karthik thank you so much for answering all my queries and that too such quickly. I am truly humbled.
Happy learning, Aditya!
Had a doubt.
In the modules its mentioned that a risk taker can initiate a trade at about 3:20 pm on the same day. This makes perfect sense as we should wait till the very last(market closing) to confirm if our desired candlestick is being formed. I too was dooing the same way but I found a samll problem in following this.
Before initaiting a trade at 3:30 you have to folllow the 2 step proces of SHORTLISTING AND EVALUATION. This has to be done for the Nifty 50 stocks(50 stocks). Given the fact that shortlisting and evaution has to be done for 50 stocks it takes time. Evaluation in itself comprises of multiple checklist items which take a lot of time.
I on an averwge take about an hour for shortlistig and evalution for the 50 stocks.
Now the probelm arises here. Since I take abou at an hour; I have to strat the process from about 2:20 pm.
Few problems faced in the above scenario:
1) The candlestick patterns on the basis of which I selected stocks may not remain till 3:20 pm. ( So I have to reject them and thats okay)
2) Some stocks which I rejected; may have formed a suitable candlestick pattern at 3:20 pm but not when I was selecting them say 2:45 pm. ( Now this is a missed opportuinity)
3) The above argument can be applied to volume as well. I may have rejected stock because of low volume but by 3:20; the volumes in stock stock may have incresed.(This happens very often as the market is very volatile and volumes increase very much near the closing of the market).
How do I tackle the above problems??
The easiest way is to reduce my number of stocks to say 10 instead of 50 so that I can start my shortlist and evaluation preetly late say by 3:00 pm. But doing this; I am reducing many opportuinites for myself. (ALready the opportuinities are lees because of the stringent checklist)
Aditya, for this reason you need to do your post market analysis and identify the stocks that are likely to form a certain behavior. So during market hours, you keep a tab on just the stocks and not others. This will help you save a ton of time and leads you to a focused approach.
Also how to draw target levels for stocks tarding at all time high or near to all time high?
To draw a target level(horiontal line) ; you need price action zones touch that line. Since the stcoking is almost trading near to all time high; you wont price action zone touching that line.
(This problem is more of a practical nature than theoretical. As of now manyNifty 50 stocks are trading at all time highs and even if i see a bullish candle being formed I am unable to take the trade because of absence of a target level.)
Targets cant be set using conventional methods when the stock is making a ATH. Hence the best way to deal with this is by trailing the SL and moving in the direction of the trade.
Also what are your personal views about channels? We have discussed about horizontal support and resitance levels. Is there a particular reason you left out support and resiatnce on a tilted line?
Channels are an extension to the S&R concept. You can use this to trade stocks which are trending and also making all time high.
*for this reason you need to do your post market analysis and identify the stocks that are likely to form a certain behavior.*
Karthik how exactly should we do this? HAve you made a separate module on this as well?
No separate module as such. If you are tracking Nifty 50, all you need to do is look at the chart of each of these stocks and see whats happening. It may sound daunting, but with practise it takes about 3-5 mins per chart. If you notice anything interesting, mark that for further review. Once you finish looking at all the 50 charts, then re look at the ones marked for review and chart out a plan.
Hi, Please suggest good books which have MCQ S on technical analysis esp. candle stick patterns for intraday. I need to understand concepts and test skills before I actually get into intraday. Also I tried free stock simulators like money bhai, but did not find it to be so useful for a beginner like me. So I thought a book/resource with questions would help.
Please advise.
Have your tried downloading the app? I’d suggest you do as it has a lot of quiz questions towards the end of each level.
Hi Karthik, pi is not available anymore with Zerodha, right? Kite is having all those facilities? Or we need some other software equivalent to pi?
Yup, I’d suggest you use kite, its much better and faster.
Hi Karthik,
Thanks a lot for all the write ups. Is there anyway to know the support and resistance directly form some app? Making it by myself as I am just the beginner can be wrong.
YOu can try using indicators like CPR or Pivot points, it gives you the S&R levels.
Thanks a lot Karthik. Will try that.
Good luck, Arpita!
Hi Karthik,
Just wanted a clarity from your side.As I am a beginner and I am interested of doing scalping,do I need to purchase a software like Amibroker or Kite is good for scalping as well as kite also have 1min,5min timeframes?
Kite is good enough. Also, if you are a beginner, I suggest you stay away from scalping, it’s really hard to make money.
Thank you Karthik for your response 🙂
Sir,
A swing trader should use EOD charts. But how should the candles be seperated- like 1 min candles, 10mins, candle, hourly candle etc.
Just select ‘ 1D’ from the drop down (top left, 1st option in Kite).
Hi Sir,
Stocks are usually more volatile than indexes like nifty and bank nifty.
But we mostly see Gap ups and gap downs in nifty and bank nifty and rarely see them in stocks. What is the reason for this?
Thats because these indices are heavily traded compared to individual stocks.
Thank You for the amazing content you post. It’s great learning. Keep doing a great job.
I want to know for example nifty50 scanning if it is possible to take a report or download which share is doing how with some filer options.
YOu can look at the daily Nifty 50 movers here – https://www.nseindia.com/market-data/live-market-indices
Excellent teaching sir,very useful for all traders.Gives feelling of classroom.Thanks.
Happy reading, Anil!
Dear Karthik,
I have seen many people who have CMT on their resume/background etc.
Is CMT required to do anything in the stock market? Even if I want to become a Sebi registered analyst, would I need CMT?
Not required, but if you want to look for jobs, then maybe.
Hello Sir,
A big way to be successful in this business if you have an additional source of income along with this correct?
If I treat this as my only source of income, it can be very detrimental to my capital correct?
What do you say?
Yes, that’s absolutely correct.
Is Pi not available anymore?
We are not supporting Pi Mehul.
Hello,
When Using ATR do you use it with the low and high of the days candle or with your entry price.
Example if IDFC first bank has an atr of 2.
Low is 57, high is 61. Assume I bought at 60.
Do I place my stop loss at a price below 55 for a long position and above 63 for a short position?
I’ll look for placing the trades in and around the ATR itself.
Hi Karthik,
Nice to have such a wonderful study material on each topic of TA and the entire trading concepts. I would like to thankyou and the entire team for the efforts taken for the simplified way of teaching the stock market concepts.
All the best to Zerodha and team.
Keep updating such new topics and experinces for us to learn the way forward…
Happy Trading..
Thanks
Happy learning, Sachin!
Dear Sir,
I don’t understand what you mean by this ‘I’ll look for placing the trades in and around the ATR itself.’
Could you provide an example.
Can the ATR replace volatility based stoploss as it is much easier to use than calculate the volatility everyday during market hours?
Lastly for ATR, lets say I enter the trade on day 1 while the ATR was 5. Now day 4 ATR is 3 how should I place a stop loss accordingly?
As in I look for long trades at the lower band and short trades at the upper band. Yes, you can use ATR instead of volatility based SL. Yes, you can trail the SL.
Hello Sir,
Oh so you are using the ATR bands. I usually use bollinger bands so I don’t need to Use ATR bands.
But If were to use ATR to enter a long position, do I place my ATR from the low of the candle or the price I bought the stock?
Both are very similar, Hajim. Low of the candle will probably be a better idea.
Sir, why we need Pi software, If I have Zerodha Kite platform?
Zerodha kite is not enough for Trading?
I am confused.
Kite is more than enough, you don’t need anything else 🙂
Hello Sir,
I hope you are doing well.
My issue is when to use each time frame for making positions and stop losses.
Assume I have bought 100 shares of HDFC bank at 1500, Daily ATR is 31 points. So I keep a Stop loss of 1468 points.
Now assume HDFC bank moves to 1468 during the day, do I sell HDFC bank now or do I only sell if HDFC bank closes below 1468 as my analysis was done on a daily chart.
Similarly with hourly weekly and 15 min charts, what should be done?
I’d prefer to wait for a close below 1468.
Hello Sir,
Let say I use the daily ATR and wait for the close to below 1468 to exit my position.
It is likely that my stock continues to move lower resulting in my have a very large stop loss or total loss.
What about times when things free fall and again rise quickly again?
That’s right, Siddhant. Both the outcomes are a possibility. Personally, I prefer to wait and watch. Its a decision you need to take based on your risk temperament.
Sir, I don’t want to trade now, I just want to practice chart reading. How can I do that? What step should I follow?
You can do paper trading, Saurav.
Hello Sir,
I am looking to make educational videos on the topic of Finance, specifically using the content of Varsity. Can I make those videos and publish them on YouTube for free. Am I allowed? 🙂
Yes, but please do share credit with Varsity 🙂
Hi sir,
Thanx for this excellent stuff.
can we use kite TradingView instead of zerodha pi Software? Whats difference betn these both platforms?
Yes, I’d suggest you do that. They are two different technologies, you’ll know when you start using.
Hi Karthik,
First of all thank you so much for all the content !!
It has been really really useful in my trading & investing journey. I still face difficulty in picking stocks one day before trading, so can please provide a video @Zerodhaonline (YouTube)
Thank you !
We are looking at this, Laxman.
Thank you so much for sharing such high quality experience.
I have a question. The Scout is a long process and is time consuming. In the earlier chapters, you have mentioned the that risk taker executes the position towards the end of the same day. At what time of the day one should do this process?
Usually around the close of the day.
Hello Sir,
You have mentioned that you usually place swing trades over a period of a few week/months and do not make short positions.
On what basis do you make these trades?
Could you provide a basic setup of your thought process before initiating such a long term trade just based on technical analysis?
Few examples –
1) Stock is trading at 2SD below its mean, I expect it to revert to mean over the next week or two
2) Stock is trading below its fair price (using any valuation method), expect it to bounce after the quarterly announcement
3) Stock is exhibiting momentum, want to hold till the momentum wanes down
These are basic examples, but I hope it gives you a sense of the thought behind these ideas.
Hello Sir,
Thank you for sharing examples.
For the 2SD mean example,
Do you personally calculate it for NSE 500 stocks or just a select few? Sensibull generally shows the SD range for F/O stocks.
But how many days of data would you consider for the mean, 1 week, 1 month, 3 months or yearly?
For the fair price valuation method,
When exactly do you exit for the said stock?
I’d suggest you take the values from Sensibull. But if I were to calculate, I’d take 1 year data. I’m not sure about the fair price valuation method you are referring to, possible to share more context? Thanks.
There are stocks having volume in millions not having 100% delivery in nse site their market cap is in billions but still they are blocked for trading in ZERODHA . Why ?
Which one are you talking about, Ayush?
Hello Sir,
To follow up, wouldn’t the mean of 3 months be better?
Also you mentioned you would use a fair price valuation method to enter and exit swing trades.
Why do you think so, Nithin?
Hello Sir,
I mean 3 months gives us a more realistic idea about how a company is doing compared to one year.
If you take a YoY on most stocks on the NSE they would roughly be the same since covid dropped their prices, however, if you take a 3-month return you could see the said stock is gaining substantially.
Yes, I do agree. Perhaps you can backtest with both data sets and see which one gives a better result.
For yesterday it was WABAG I remember and on 15 Jun it was ACE . It happens daily like all I also use tradingview stock screener u can have a check on that maybe there is some issue in ZERODHA
No issue, Ayush. Please do create a ticket if you feel it is wrong.
sir when analyzing charts if I found bullish engulfing pattern in the trend few days before , example if I found bullish engulfing one week before can I get a position there by believing prior trend or we must entry with a fresh pattern ?
Not the best thing to do Babu. Ideally, the pattern should be very close to your actual trade date.
then is its okay if the patter is yesterday sir or the day before ?
Yes, that’s perfectly fine.
Sir I really want to tell you one thing , by your teaching I learned a lot of valuable things ,thanks a lot for that sir as well as I already tried to learn this things in YouTube and other platform, but luckily I found this gem , the best part is your still reply to every comment that is so kind of you sir I have never met any mentor in my entire life puts this much effort for the their followers . I don’t even know, whether u reply comment or your team to everyone , for doing this I salute you all . I am really love to complete the entire course by your guidance . thank you so much sir and I don’t even know you sir, but your are also one of my favorite mentor in my life sir.
Please bless me to have a great stock market journey sir .
Thanks for the kind words, Babu. I do try to reply to comments at least twice a day, its become a part of my daily routine now 🙂
Wishing you all the very best. I hope you get to complete the course easily. Good luck.
I really appreciate the great effort from zerodha team to create such a wonderful university..! Same time if we keep updated with the latest details and its much better…! Ex. Charting software ( Zerodha -Pi) mentioned is no more available, Its obsoiete..!
I understand, will try and do fix that aspect.
Hi Karthik ,
What are the reasons for stock being blocked for trading?
Do you have a context for this?
Kudos for this great module on Technical Analysis. Although I’ll suggest editing the Pi module, as Pi is no longer provided by Zerodha for trading, hence Pi’s explanation being replaced with Kite would be better for novice learners. 🙂
Yes, that makes sense. Hopefully, we can do that in the coming days. Thanks.
CAN WE USE KITE AS CHARTING SOFTWARE
Yes, you can.
Thanks a lot sir. It would be of great difficulty to learn by myself. Though there are a lot of books its not simple as you have written. I thought learning through reading would be difficult instead of videos but you proved it wrong. Wish you all the best in your future endeavors sir.
Glad you liked it, happy reading, Sankara 🙂
thank you sir for sharing such a vast set of knowledge in compact plus short version. :]
thankyou to you again and varsity.
Happy learning, Sumit!
Nice presentation. Best part of content is your personal touch to implement rules of TA. Thanks a lot
Happy learning, Doc 🙂
– Can we use the same short-listing process mentioned above for Intraday with a shorter time frame of 1 hr (Instead of 1D) & will it still be effective ?
– Are there any other points to be considered ?
Thank you !
Yes Sir, you can.
It seems there are ways and signals to figure out if a stock is operator driven or not, but it hasn’t been taught in any of the module. Need more clarification on this.
Usually, the volumes and price action is a giveaway for operator activity, I’ll try and document it one of these days and put it up here.
your entire module of TA is really helpful and your experience shared is an added gift.I learnt a lot.thanks very much.
Happy learning, Hiren!
Thank you so much Mr. Karthik for such quality of teaching in clear and simple words. I’ll feel confident enough when I setup my next trade and stick to it with conviction. Both the modules on TA and FA are Bang On!! Kudos to you and your team for making it a free source and presenting it amazingly.
Happy reading, Anurag!
Going through this module, it definitely seems like short term trading involves significant time and energy. Given that I have a fairly involved job, how advisable is it to trade?
For people who have full time jobs, would you recommend TA based trading or are we better of doing other kinds of investments?
Thats right, Kaushik. It is a lot of effort. You can consider swing positions where you hold positions for few weeks. Such trades does not involve active monitoring.
You have literally sold your system, thank you for being so generous…
Happy learning!
This kind of knowledge these fake stock gurus are selling for upwards of 10-15k and it is present here for free for more than 5 years. Thank you for your generous work.
Please explain what is secondary trend according to DOW theory which is there in point 6 of evaluating process, primary trend is bullish or bearish trend but i could not find what is secondary trend.
Arindam, any trend that is counter to the primary trend is considered a secondary trend. The secondary trend is short and can last up to few months. Primary trend on the other hand can last multiple years.
Excellent content. One question, you mention Pi as a charting s/w, but zerodha support documentation says that they don’t support Pi anymore. What could be a free alternative (for zerodha a/c holders) in that case? I’m hesitant to go for the 2 paid options, being a newbie.
I’d suggest you start using Kite, its way better than Pi anyway.
when this will come Karthik sir?
“Please do note, on Varsity we will soon include a module on building trading strategies and scripting.”
Check this, Yathish – https://zerodha.com/varsity/module/trading-systems/
Im a Accounts manager by Profession and I wanted to do trading… but do not know where to start, fortunately one of my friend in Quora has recommend me to study Zerodha material before I start trading.. And I started with perseverance and the quest to learn, and you guys at Zerodha did an excellent work, really appreciable, you made my learning easy. My HEART FULL THANKS to your team effort.
I have completed first two modules.. and now entering Module 3 “FA”
Happy to note that, Suresh. I’m glad you liked the content and I hope you will continue to do so 🙂
I have no words to describe how well and systematic are writen and placed all these article…..
Happy learning, Neelam 🙂
Glad you liked the content here!
I have one more query.. Hope you will clarify this.
1. There are many other patterns & indicators we have to learn (which are skipped by Varsity for specific purpose as stated in Ch.18.7), do we need to learn that patterns & indicators too?? to become a successful trader. If yes I request you to please recommend the best standard books.
2. I has completed Introduction , TA and now entering FA. and after completing FA, Im planning to Skip Modules 4,5,6 & 8 (FnO, Options strategies) and jump into module 7, 9 & 10 which Im thinking it will help me to start trading. later after getting some grip on the market I will plan to study the skipped modules of 4,5,6&8. what advice would you give me , study whole modules first and then go for trading or stick to my plan.?? please advice.
Thank You.
1) Not really, it is important you understand the price action and its impact. In the long run, this is what matters, not the number of patterns that you can identify
2) Thats absolutely ok, Suresh. No problem with it.
why charting software required? why we cant use chart of zerodha kite and investing.com?
YOu can use these, no issues.
Hi sir,after long back heading back to varsity!
My question is,till now I was only looking nifty 50 as opportunity universe,now If there is no opportunity in nifty 50
I search for trades in midcap 100 and nifty next 50 and look for trading fundamental catalyst,Am I not following my rule of just trading nifty 50 or it is acceptable to trade any stock and keep going.
Welcome back, Chandu. Nifty 50 is a good starting point for most traders, but once you gain ground, you can expand the universe.
Hai sir,
This module was extremely helpful and motivating. Can you suggest some books for day trading.
Happy learning, Sachin. I’m not sure if there are any good books related this. Will get back on this.
Hai sir,
From where can I download zerodha Pi
Not available anymore.
Bullish Marubozu
Sir, consider a Bullish Marubozu candlestick with open=low=100 and close=high=200.
Day 1(Bullish Marubozu day): Now Risk taker enter this trade around 3.20pm at price 200. so his stoploss is around 100.
Day 2:Risk Averse trader enter this trade on next day.
1.is Risk Averse trader enter this trade on Day 2 around 3:20pm or he will enter early like morning or afternoon if the day 2 candle is green
2.What is the stoploss for risk averse trader? is it low of bullish Marubozu that is 100?
3.If stoploss is 100 isn’t risk averse trader risking more than risk taker?
(sorry if there is any grammer mistake is present)
That’s correct. But in the particular example that you mentioned, neither of the traders should take the trade as the SL is too deep 🙂
Does NSE provide the information about all kind of orders(including Stop Loss orders) in their Tick by Tick Real Time Data ?
No, tick by tick is only price.
sir i am confused between chart and lookback period . as you told see EOD chart and 6month to 1 year lookback period for positional trading . plz clarify.
Look back period is the data points you want to load to analyze the chart. For example, I can look at 15mins charts for the last 5 days. Here timeframe is 15mins, look back period is 5 days.
Hi, sir.
I have been learning technical analysis for 2 years. I have read so many books and watched videos. I’m really confused because of too much information about it. I have not lost any money. But, I am not making any money too. I’m following risk management with proper stop loss(risk of 0.5% of account per trade) and following my rules to the point, still after a sample of 50 trades, I am just at breakeven or little loss after brokerages. I have done so much trial and error, and backtesting. But, nothing seems to work. What should I do now ?
The fact that you’ve not lost money even though you’ve actively traded for 2 years is quite commendable, Shivam. I’d suggest you start focusing on individual scrips, and the price movements, along with the patterns it forms. This itself will give you some additional insights and leads you to identify better trades.
I have been learning from these chapters since July, all my 25 years I wanted to learn trading but it seems so tough to me that I have never tried, now I know so much.
Thank you, this has been an amazing educational experience.
Thanks for the kind words, and I’m glad you found the content useful. Happy learning 🙂
thank you sir.
Good luck.
Hi Sir,
Is there any software/ Web Application that is there online – where we can create all these checklist and the stock gets selected automatically everyday.
Also if possible with price, SL, Target price etc
Please suggest –
Regards
Deepak
I think you can do this on screener.in
Zerodha pi is not function now . so please make the changes in the study material sir.
Will do that sometime soon.
Excellent article! I am an option trader for 3 years now, I have developed a code using Zerodha API that places an order on Kite and also squares off basis on signal of buy/sell indicator on chart. I have few questions for starting scalping –
1. If I want to do scalping, how can I speed up the execution of order? My current code takes token for authentication for each order.
2. Do you suggest to use Pi to start with or should I look for 3rd party charting and data source as a beginner in scalping?
Paresh, I’m not really the best person to discuss API latency etc. But I do know our APIs are fairly fast. Please do check the Kite connect forum for better inputs on this topic. Pi is no longer supported.
sir, suppose I want to hedge my position by buying futures n selling OTM call to get a margin benefit, should I select any option in zerodha or it will automatically do it? please guide.
You will have to do it yourself 🙂
No sir, I meant suppose I have longed 1 lot of futures now if I want to get a margin benifit by hedging an OTM call, can I just sell a call or I have to select some option to avail that?Thats my query sir.
You can sell a call or buy a put to get margin benefit.
Sir, Why does every trading book or teacher say that finding a profitable trading system or strategy is easy than developing a proper trading psychology and risk management system ? Is finding or creating a profitable trading strategy that easy ?
Thats just to emphasise the importance of psychology and risk management 🙂
Karthik Sir, here is something interesting…
Here is the chart of BATAINDIA (NSE) date 31 August 2021
EOD chart: https://www.tradingview.com/x/5U0nVhWr
here very big lower wick of 9% low of 1592 is formed on this day. It formed Morning between 9.15am-9.20am. (withing 5 minutes)
1.Is this this freak trade?
2.How to avoid stoploss triggering due to this type of trades if was took swing trade?
and when i saw this same chart on Zerodha(tradingview) and Tradingview(official) in EOD chart both showing low=1592.
—But in 5 minutes chart,—
in Tradingview(official chart) its recorded and showing. low=1592
image: https://www.tradingview.com/x/M6J5cr65/
In Zerodha chart its not recorded and low is different. low=1744
image: https://www.tradingview.com/x/rAqP9fnG
why these two platforms charts are different sir?
which chart we want to follow?
1) Yes, this is a freak trade.
2) Cant avoid, but please do place a limit instead of a market order to ensure the impact of damage is lower
Trading platforms can show slightly different values, check this – https://tradingqna.com/t/why-does-two-charts-of-the-same-timeframe-look-different-on-the-same-platform/4715
Hi, How i could get Pi?
Zerodha has a proprietary trading terminal called ‘Pi’.
Pi is no longer offered and supported.
Hello Sir,
I am trying to use zerodha streak and creating a very fast intraday buy/sell order that roughly does atleast 40-60 trades a day.
However, Zerodha charging me Rs. 20 per order kills my actual income.
Is there a way Zerodha reduces the brokerage rates or something?
Nope, we have one rate for all. If you think about it, 20 is as low as it can get 🙂
excellent books. waiting for Elliott wave principles study
Dont think we will include Elliot waves anytime soon, Dipesh.
Hello Karthik sir,
Thank you very much for this wonderful resource on technical analysis,
I would like to ask if there are any news regarding the stock, where in quarterly profits slumps YOY basis, and then it forms a bullish pattern, is it safe to invest in such stock, if all other checklist points satisfy the trade.
Thank you once again!!
Yes, as long as you understand why it slumped and you are ok with that reason 🙂
I came across your Zerodha only a few days back and I found it very informative and useful. I am entering or should I say re-entering the stock market after a gap of more than ten years. Your site is helping me to refresh my memory and also teach many things I did not know. Thank you very much for that and that too with out any conditions and obligations. I shall be visiting your site regularly and frequently and perhaps correspond with you often. Thank you once again.
Welcome back to the markets, Raju! Happy learning and please do feel free to post your queries here, I’ll be happy to respond. Thanks.
Thanks for sharing the knowledge in a simple manner. gone though all topics in TA. Started checking the Candles for last 3 Days as per the Final checklist.. Do we need to identify the candle formed with previous trend ? or just identify the candle formed in last three days without trend.
Hi sir, though I am late entry, but I am glad that I went through all chapters of TA. Very beautifully explained, all concepts and charts. Thank you very much for this good work.
For short listing the stock, you have asked us to go through the charts of all the scrips under Nifty50 for e.g. how do I view charts of all scrips under nifty50 from Zerodha’s Kite? Only after adding the scrips to my watchlist, I am able to see charts. Should I be adding all the scrips? There should be some other way. Please request you to connect me to concerned dept who can assist me.
I am new to Zerodha. Thanks n regards
Glad you liked the content, Kalyani. Yes, you will have to add the scrips to watch list. I’d suggest you call the support desk and they will help you with this.
Sir
Sir in trending market like from previous 35 days till market is in downtrend so our candle rules and 6 steps are not not confirming any reversal. So where we take any trade sir. And in the trend when we take it it goes wrong because it is not reversal sir.
Vishal, make sure there is a recognisable candlestick pattern. You need to combine that along with the prior trend to initiate the trade.
sir thank you for such a simple and elaborate explanation. I have started to bring TA into practice and on 18 Nov I scanned entire NIFTY50 for a known candlestick pattern to buy stock but havent found any. Please suggest if there is any bullish pattern for buying stock on 18 Nov. I am keeping 1 day as trading period
Ashish, it is ok to not find a recognisable candlestick pattern. You need to scan on a daily basis though to identify opportunities.
Sir
Why you telling me e in scalping you you take your risk reward ratio is is 0.75% or 1%
Give the reason
Because its quick trade, you hold a scalp for few minutes only.
Sir
First sorry
I changed my topic, sir from last 5 years I doing share marketing trading field work but still I am not successful. Because one supreme reason is always my fund sa 5000 tu 10,000 this was the main reason.
So I want your help sir please please suggest me any job in trading field. I am best in itself sir. I trying too many fields I failed so please accept my request one time suggest me I want to increase my funding.
Vishal, why don’t you keep track of opportunities in the broking field. The sector is hot and many opportunities are opening up.
Sir
How sir is I became a broker.please give your valuable time explain briefly sir.I don’t understand what you telling me.
Vishal, can you please add some context? I’ll be able to help.
Sir
You give me the idea for job in broking field. Ok sir but I don’t no how sir. Which work and which place I work.
Thats something you need to explore, Vishal.
Sir
Tell me the grandchecklist for intraday trading.
Is it same but tell me the candle timeframe and risk reward ratio
Yes, the process remains the same.
Sir
I trade 18 trade only 2 is profitable and 16 are losses. I applied all the 6 grandchecklist that can be suggested by you.
One main thing I don’t see wave theory and sometimes it is in different Trend . And sometimes I don’t how volume see .
What I can do sir much losses
Vishal, I hope the 2 profitable ones resulted in enough profits to cover the losses. You need to spend some time to figure what you are doing wrong, do check again if you deviated from the checklist.
Sir
No sir I am very quickly out from profitable trade when my RRR completed.
Is I want to do anything else sir .
One question sir when trending market from previous day’s wave theory perspective suggested downward but candle is bullish engulfing so what I can do. Tell me for intraday trading.
I’d trust the candle more than wave theory 🙂
thankyou for the immense knowledge , can’t have a better teacher then you
Happy learning, Vividh!
Thankyou so much for the simple and effective content!
Glad to know you liked the content! Happy learning 🙂
Hello Karthik sir
If I wants to create a short checklist for Intraday. Which indicators I should use or which should be added as per your experience. I use 15 mins.
I’d suggest you look at basic indicators like the moving average or even the Bollinger bands.
Right now my checklist is
Candelsticks pattern
Volume sma of 125 candles in 15 mins
Standard pivot points
Vwap
RSI
MACD
That’s it, and I trade based on NSE 200s Top gainers and Top Loosers in live market using market pulse app. Find opportunities in market pulse and trade in zerodha’s kite.
But still I cannot have consistency in profits.
Sure, I think over time, you will figure the shortfalls and hopefully calibrate the system for better results 🙂
When are you going to teach us how to day trade.
All these patterns are possible to apply on day trade as well.
Sir, Material need updation as you have mentioned Zerodha -PI..which is currently not accessible from Zerodha platform now.Also you have mentioned not in detail regarding strategies/techniques for Intraday trading apart from Scalping.Also If you recommend any online realtime course.. How is the outcome of these interactions.Do Zerodha organize these??
Yeah, Pi is no longer available. I’d suggest you check the video series once Rajiv, we made that recently.
Sir,It looks PI is still present.>Can u guide how to access same..Also regarding Day and Option trading can u guide if not morning what should be idle time to entry..As I understand maximum price changes happens in First and half hour thereafter there is not much volatility..for Scalping/day trading its not much benefit one can take…Also generally shares in Nifty 50 moves by max 1 to 2% up and down in a day..So what should be ideal target like if u invest in Reliance (Trading at approx 2.5k) for new scalpers..suppose purchased 100 stocks to start with.
Rajiv, we have stopped supporting PI. Regarding intrday, you can use all the candlestick patterns that are discussed here for intrday as well. The trade setup remains the same. But TA may not really work for scalping, to scalp you just need to work along with the bid-ask pattern and place trades on the go. Or it could be just based on how you think the price will react over the next instance.
To
all the zerodha Team
please except my humble gratitude for doing this excellent work. it is helping me a lot and provided me organized information for which i was looking.
i have now a good clarity and good basic knowlede about what to do or not.
again thanking each and everyone.
may the team gets doing such great work and wish you all the very best.
thank you so much Kartik sir .
Dheeraj, thanks so much for the kind words. I’m glad you really liked the content. Happy reading!
Hi Karthik,
First & foremost a big thankyou for encouraging newcomers like me to enter into something with the correct knowledge. However I require your help in trying to understand on how to get started(literally). Being a housewife I have time during the day, so should I check Nifty 50 companies chart everyday? or is there a better way?. Kindly guide.
Thank You
Bhavya, thanks for the kind words 🙂
Yes, please start with Nifty 50 companies and try and spot candlestick patterns and the trading opportunities they may present. I think it is a good way to get started.
Any other charting software other than Zerodha Pi.
Gokul, check out Kite, it has both ChartIQ and Tradingview.
Thanks a lot… You explained Technical Analysis in Comprehensive but Simple & Crystal Clear for beginners…
Glad you liked it, happy learning 🙂
Sir one small doubt, can we close NRML order on the day execution itself?
Yes, you can.
Hi Karthik, I think Zerodha Pi is discontinued. You have already mentioned 2 software names. Would you mind suggesting a good data feed vendor as well from your personal experience please?
Shahul, I don’t deal with any data vendor, so cant really suggest. But someone mentioned this company ‘true data’, is good. YOu can check them out once.
I tried to get pi software, but its unavailable now. how to get that, or is there any other good charting software available for free.
Please try the charting software available in Kite, there are two available – Tradingview and ChartIQ, both are really good.
Sir
How I can take 5 trade in a day.
With grandchecklist point of view.
For that reason how much stocks I put in my watchlist
You will have to trade based on the quality of signals you get. YOu can start with Nifty 50 in your watchlist.
Sir can we use the chart given already in the zerodha kite trading platform
Yes, we can!
Sir
As for RRR
HOW MUCH RISK TO REWARD WE KEPT IN INTRADAY TRADING .
AND ALSO HOW MUCH RISK TO REWARD IN SWING TRADING
PLEASE EXPLAIN ME WHY?
BECAUSE IN INTRADAY I PUT 1:2 RISK TO REWARD THAT CAN WE HITTING MUCH MORE TIMES
THANK YOU
Try increasing the risk-reward ratio, Vishal. That may help. Experiment with SLs and see what works for you.
Hey Karthik,
Kudos for creating such quality content on Zerodha Varsity, it’s very helpful for beginners like me to understand the basics of Stock market.
Request :
Brief example on Shortlisting and Evaluation of a NIFTY50 stock would have been really helpful.
I bought adani wilmar at 343 is it a good stock and how much it can go in the near future.
Sir, First of all i wann thank you for all your efforts to provide free education like this. I am reading varsity in 2022, does i need to look for more education outside varsity to get started with trading. is all the information available here is still applicable in Indian market. Hope to receive a response soon.
Thank you Karthik
Excellent content
Happy learning!
Is Pi Charting Software still available or it discontinued , any news it coming again in future.
No, its not available anymore.
Hi, when do you the evaluation process? EOD? Or in the morning when the market opens
Ekya, EOD is one of the most standard ways of evaluation and scanning for next opportunities.
It’s my general question not related to above.
I want to know that, trading at NSE and BSE is considered seperate . For example if I purchase 100 shares of Xltd. at NSE in order that price will rise but price fall , so can I do short sell the same share at BSE in order to recover the loss ?
Yes, but make sure you close the short position before the end of day.
It means I need to do short sell on the same day on the BSE if I had purchased shares on NSE and squaring of the position on the same day in order to recover the loss.
What if I did this on the next day ?
Yup, all within the day.
What if I did this on the next day ?
Hi Sir, First off I really appreciate your dedication and effort on this , all the topics were explained very well in simple Terms. Thank you for that.
I do have a question though, Since Zerodha stopped support for Pi now, do you think it is better to familiarize ourselves with Kite before upgrading to paid software like you suggested. It is quite some investment for a beginner after all.
Cheers 🙂
Absolutely. Kite is quite power-packed, so it makes sense to figure out what Kite has to offer before you try other things.
If S&R level is more than 4% away from the stoploss, you wouldn’t investigate the stock further. Like….for instance,
After an uptrend a bearish engulfing pattern appears. Here our stoploss would be :
Higher of ‘H’ price of any of the candles….since it is a short call, resistance level should be taken in account. If R level is more than 4 percent away from SL …(Higher H), one should discard the further research…..4 percent in what context….4 percent of share value?? What no of points?
YOu treat this in terms of percentage, it becomes easier that way. Number of points wont work across all stocks.
A couple of questions:-
1) Being a positional trader does trading in EQ be Beneficial for me as there I would not get the advantage of leverage.
2) If I trade in EQ by taking the stock in delivery for positional trading can I sell the stock immediately on intra-day basis?
3) Other than confirming the trade can we use indicators for setting our targets?
4) Despite of developing a proper view on the market can we say it is really a challenge as to when to square off our position, as chances are that we can get carry away with the trend.
Guide for the same.
Thanks in advance!!
1) Leverage is a double-edged sword. Btw, you can take a positional trade with FO also.
2) Yes, but its good to be clear about what you intend to do
3) Yes, you can. But backtest it once.
4) Yes, highly likely, hence a trading plan is really important.
5)As a positional trader If I wish to trade in EQ I can only go long as for shorting I cannot hold my position for multiple days in EQ,this leads to:-
a)As a swing trader If I wish to short I will have to take positions in F&O only.Right?
b)While trading in F&O ,which charts are suitable to analyse and take trading decision:-
1) Underlying assets in Spot
2) Underlying in futures
3) Individual strikes in option chains
Guide for the same.
Thanks in advance!
1) Yes, that’s right
2) Both underlying and futures. Take a look at both charts.
No point looking at charts of individual strikes.
Sir, first of all great thanx for such kind of highly organised content, you encourage me learn more. Sir I start trading from 30th may, trade with 1 share for experience gain. I sort the chart start & analyse as guide by you. I have few queries
1) Right time to enter intraday trade.
2) What should we do when neither Stop loss nor target hits in both Swing & Intraday trading.
3) To which extend Corporate news(Pulse Zerodha) is important for trading. I mean how much weightage we should give to them while doing TA.
1) Right time is when your strategy gives you the signal to initiate the trade 🙂
2) YOu just have to wait for one of the outcomes, unless you have time as a stop loss
3) It’s good to keep track and figure what’s happening. Gives you a perspective.
Can we use pivot points to define our support and resistance.
Guide for the same
Thanks in advance!!
Yes, you can Paras. Just make sure you understand the difference between traditional S&R and pivot points well.
What I believe is traditional S&R is used for positional/swing trading and Pivot Points are from Intraday perspective.Is it right?
Guide for the same
Thanks in advance!
Not really, both can be used for any type of trading.
Excellent masterskill . superb explanation, simplicity of the writeup & honesty in presentation etc. For all these, extending my appreciation. Thanks.
Thanks so much, means a lot 🙂
Excellent masterskill . Thank u sir.
Thanks .
sir metastock and ambibroker is charting software,,,, and what is trading view ? Is trading view.com is also charting software?
can is use metastock still? or what are other current charting software?
Yes, they are all charting software, but the underlying technology differs. The trading view is good, we have integrated that within Kite.
how to get metastock? and can i use tradingview.com instead of metastock or ambibroker?
charting software that only na where we can use TA in chart by patterns and putting tools as in trading view?
Not sure who is the reselller of Metastock, but I’d suggest you use TV that’s integrated on Kite.
ALso in shortlisting process==2 points are there-
While looking at the chart, my attention is only on the recent 3 or maximum of 4 candles
While looking at the recent 3 candles, I check if any recognisable candlestick pattern is developed.
The meaning of recent 3-4 candles is the current day 3-4 candles right?
example- if i open today’s chart then recent or today’s current 3-4 candles will be todays 3-4 candles is it right ?? not previous old candle right?
If I’m looking at day chart, recent 3-4 is recent 3-4 days. If its a 15 minute intrday chart, recent 3-4 are the recent few 15 minutes chart.
and what is pullback i have seen in above comments, and how can i use it in trading?
A price movement in the contra direction to the primary trend is called pullback.
Karthik Rangappa says:
November 21, 2014 at 9:42 am
While looking at intra day chart, it makes sense to look at continuous charts wherein you will view the last 3-5 days intra day charts. By doing so you will get a better perspective on the price action. If you are using pull back, then please ensure the pullback is in on low volumes. Also, unfortuantely there is no alternative to S&R levels, at least that I can think of 🙂
Reply
jagadeesh says:
November 21, 2014 at 12:18 pm
Yeah. That pullbacks on low volumes, even i observed in today’s market sir and from my observation today, i thought entry on a pullback with low volumes to 50 EMA or a trendline which coincides with a Fib ratio is good to trade. Please correct me if im wrong. As a newbie, i dont know much about this and im articulating everything from the articles here and my observations in the live market. 🙂
Reply
Karthik Rangappa says:
November 21, 2014 at 12:43 pm
Jagadeesh – yes trading on low volume pullbacks is indeed a good start. I would suggest you stick to 1 strategy master it and move to another.
My query is what is mean by trading on low volume pullback i didn’t understand by above comments., what is this strategy ,what is pullback, is it same as retracement? and why trade on low volume on this. please explain all about above comments sir.
Check this – https://twitter.com/karthikrangappa/status/1546795551059894273
thanks a lot got it….
Happy learning 🙂
Ok except trading view, is zerodha pi still available, can we use it, means i want another charting platform having tool for candlestick pattern recognization and that charting software should be free , in trading view there is subscription fees, and in free trial there are adds on it.
please suggest me charting software platform except trading , even i am using tradingview right now, and what about kite how can i use kite charting and from where?
Nope, its not available. Kite has both Trading view and ChartIQ, you can choose between the two.
Kashif says:
November 30, 2015 at 1:52 pm
I plan to start with 10 blue chip cos. & not put a stop loss in any. I will take delivery but will sell maybe intra-day if I’m making money. Is this a good idea ?
Reply
Karthik Rangappa says:
January 23, 2016 at 2:27 am
Nope, you need to be clear on what you intend to do – intraday or delivery. Tough to do a combo!
by above kashif comments and your comments, i want to say if i will take a swing trade for few weeks , also swing is considered to be delivery, and i did not put stop loss and if my target doesnot hit in few weeks and i hold for more days in making a mindset that some day it will move up so i will hold further without stoploss, as same as kashif did., then how it will be tough just asking because if anytime i will see that price move up then i will exit otherwise hold when prices will be down, even it will take more time and if i see profit in same day then i will exit same day as intraday as i thinkk i have both option by this swing delivery trade either i will exit same day or else any time when i see price up movement,,,, but you said this will be tough , i want to ask how this will be going means what is tough here in this… little confused,
i have bought a share just for practice in small qty without SL ,which i bought before reading your TA module that is my mistake as i have bought without deep TA and i did not put SL, and i was in loss of 3K but after reading charts and trends of that stock, i hold it more than i am in profit of 2.5k now, but it takes me 2 month because i have not taken the trade for particular time period just taken for delivery.
so please explain me all after reading my comment that what is the lack here i mean i have share my views here and want some correction here….
The issue is with the clarity of thought and trade thesis. Most successful traders have a clear thesis on what they plan to do and why they plan to do whatever they do. Without which, you will get your ideas mixed and that usually results in a loss-making trade.
sory still not getting sir by your above comments, please could you elaborate some more and easy way. what i want to ask is in my last comment.
Can you let me know what exactly you are unable to understand? Maybe ask your query from fresh?
i mean what is tough here?
Kashif says:
November 30, 2015 at 1:52 pm
I plan to start with 10 blue chip cos. & not put a stop loss in any. I will take delivery but will sell maybe intra-day if I’m making money. Is this a good idea ?
i means one of above comment is here- can you please put some light on this comment, is it not the right way to do, if i buy a stock but my time is not fix and didnot put a stoploss, and making mentality that any time whether intraday or in fews weeks and days or months whenever i see some gain then i will exit,
i want to know what is wrong in this idea, is it not well manner or not well found strategy.please explain
Neeraj, buying for intrday with no SL or target implies that you are just speculating, right? I can’t comment on that except to advise not to speculate. I’ve discussed the difference between speculating and trading here – https://www.youtube.com/watch?v=t-Fwh57MWDY&list=PLX2SHiKfualFGenPFh2onjzsh8TeprEmU&index=2
if we are in profit in that trade and know that it will give some return in few days or months, but the only thing is that our trade style is not fix in above statement i think like as professional traders because there is no fix duration of trade , not fixed target and SL too…. but afterall we are in profit ,so please enlighten above statements to me.
Its not good enough to be profitable just like that; whatever you do, you should be in a position to repeat and scale.
one more query is –
if there is resistance breakout i take a buy,then what would be my target , means if i have R1, R2…. so on, then how to deteremine my targets and also can i take dual our triple target means if R1 breakout then my target lets say on R2 ,so can i increase my target to R3 and more,,, how to analyze it,
can you give simple theory of target, if i want simple and handsome target then what is the call behind it, not want risky and greedy target just a worthy target if want.
There are three options –
1) Keep the immediate next resistance as the target
2) Keep a fixed percentage as a target i.e. for example, 5%
3) Trail your SL. As the stock moves in your direction, move the SL higher or lower if you ar short.
thanx a lot sir,,
Happy learning!
Trade setups given below.
a. Bullish Marubuzo formed on 11-Mar-19.
BUY Tatachem 1 lot @592.15 on 12-03-2019. SL: 580. Target: 650+.
Hit SL on 13th Mar but subsequently it has come up and future trading at 594 now 🙁 – should I have not sold the contract?
it is commented above-
As your reply was “)I’d not trade on extremely large candlestick patterns as the SL gets too deep”
my query is-1- i checked bullish marubozu in tatachem stock on 11-mar-2019 having O=248.60, H=252.85, L=248.60, C=252.25 (+1.84%up)
then how it is extremely large cs pattern as you said, i think it is not so large, can you please check,
2- Also please tell me the calculation and defination of how much large candlestick of marubozu should we avoid ,due to deep stoploss, and is the way is diffrence of open and close percentage is the size of CS .please explain sir.
1) You need to measure the range Neeraj. Usually, anything in the range of 8-10% is high
2) Take the difference between open and close and divide over open or close to get a sense of range.
yeah understood but in above last query range is upto 1.84% which is low, as you said 8-10% is higher range, then why you said above candle is extremely large ,it is only 1.84 %
Sorry, can you share the context in which I mentioned this. Thanks.
Hi, I wanted to share an image of the NIfty bank chart needed help with it. can you help?
You can upload on Gdrive and share the link here.
If the S&R level is more than 4% away from the stoploss sir can you please elaborate this in simple way i did not understood this .
So let’s assume you want to go long on a stock whose candle stick forms a bullish engulfing. The SL for this trade is at the low of the candle. But as per S&R, it will also be nice if the SL co-incides with the support region. But the support here is 4% away, which means the SL can be deep. Something that you as a trader will have to think through before initiating the trade.
Hi Karthik,
This is a great learning platform and thanks for sharing useful insights and best practices being followed by you. Just a question on the point # 2 of Part-1: Shortlisting process under “The Scout” section. When you say that “attention is only on the recent 3 or maximum of 4 candles”, does that mean you see the first 3 or 4 candles being formed at the beginning of the day? If yes, what is the time interval you consider for these candles? Thank you.
Yes, we do need to consider those candles as well, but mainly to observe the trend (prior trend). The interval is the same, does not change for the initial few candles.
Hi Karthik,
After going through the text I was about to installed Zerodha Pi however just noticed that support for Pi is no more available with at the Helpdesk. Rather they recommended to use Kite. If that’s the case, shouldn’t we update the educational text to use Kite in place of Pi? Just a thought. Thanks
Kamal, you are right. In fact, over the next few months, we are taking up the project of updating the content on Varsity.
Hi, Please suggest which trading terminal ( free one) to use as Pi is no longer supported by Zerodha?
Please use kite.zerodha.com
One point of the grand checklist was that the support and resistance should be around stoploss for that stock.How to find the same for the stock that is trading at its all time high?
There won’t be any S&R for stocks that is around all-time high and low. You can use trendlines though.
Hi Karthik Sir,
wanted to know if its a good idea to trade in Futures with an intension of scalping. I have gone through the entire module on futures and find it very interesting and honestly relatively less riskier than options. When a future does reflect the same as volitality of a stock, why not trade on this instrument rather than the stock ? Would love to know your thoughts.
Yes, you can scalp with futures, there is no issue with that.
https://www.tradingview.com/x/ivvDGwJH
please can you check above screenshot, i want to ask is this candle which is last dated on 10/11/2022 is nullish marubozu or not, i am seeing that last candle has not upper wick but smaller lower wick of 2 points ,will it be acceptable to be flexible rule no 2
Yup, this can be accepted.
Also same hdfc chart in trading view has different candle having upper wick but in zerodha there has no upper wick so why this difference and what to consider?
Check this Neeraj – https://support.zerodha.com/category/trading-and-markets/kite-web-and-mobile/charts/articles/why-does-two-charts-of-the-same-timeframe-look-different-on-kite-or-pi
Trade type – Positional trades with an option to square off intraday, provided the target hits the same day.
How to setup this in zerodha kit can you please explain.
These are intraday trades, Manish. So you initiate the trade during the say and square off just before the market closes.
Sir I am in dilemma.. I was looking at the chart of stocks of NIFTY 50 most of the stock are just moving up or down by plus minus 5
or even less. I don’t find it worth to do intraday in that unless I have some huge capital. For the beginner like me after learning all your TA module, how should I proceed in the market especially in intraday.
And is it necessary to have prior experience in equity intraday before trading in option. (Needless to say I will learn the upcoming F&O module)
Saurabh, most people trade intraday for smaller gains, it is very hard to capture big moves in intraday. So please do rethink your market expectations. That said, you can try swing trading as well, where you can hold positions for few days. In swing trading you can aim to capture larger moves.
Got your point sir.
I guess you missed to answer my 2nd ques which was it is necessary to have prior experience in equity intraday before trading in option? Obviously I will learn your upcoming F&O module..
Not really. You can gain experience by trading in small quantities and learning on the go.
Thanks very much for the time you are giving to us. I feel like someone professional is there to guide me
I was watching some of your video on youtube and you said that every individual should have their own trading strategy
and that’s why I am building strong foundation from Varsity
HATS OFF to you sir…
Happy learning, Saurabh. I hope you liked the videos 🙂
Hi Karthik,
I really liked the way you have explained all the concepts. Great job!
I am a beginner and trying to figure out if I want to take up trading as full time profession or not.
I started trading about 4 months back using the swing trading strategy and the checklist that you have mentioned in this module. My win/loss ratio has been less than 50% ; however I have made a small profit as well.I understand that the strategy is useful for sideways market.
I want to explore day trading and different strategies to find out what works for me. Where do I find strategies for different market conditions for day trading as well as swing trading?
Dhaval, trading is best kept as a secondary source of income and not a mainstream activity unless you are managing super large sums of money or have your own large corpus to manage. As far as the strategies are concerned, you will find them in the later modules of Varsity.
Thanks for your prompt reply..
Happy learning, Dhaval 🙂
Charting software is must and should for full time trader
Yes sir.
Where I found best chart software to buy?
Is zerodha kite chart software is not enough for full-time trading?
Tell me how to use chart software with Kite zerodha?
Kite offers both Tradingview and ChartIQ, I think its more than enough for professional trading.
Thankyou for all the useful information. I have a question. You advised beginners to take up swing trading first. But can we short sell stocks in swing trading? Is that possible?
Not in EQ market, you can in the futures market.
Noted. Thankyou!
Hi Karthik
If I am viewing the chart on ChartIQ 7 for 15 minutes interval and applied the moving averages (exponential) for 9 days and 21 days to see the crossover, will that be fine? And same for volume chart, 10 days moving average of volume on 15 minutes volume chart?
Yeah, it should not be a problem.
Thank you.
Welcome!
Happy new year sir😊😊!!!
I’m a CA Final and CFA L3 student.Very soon my articleship will get over and I will drop CA after that and continue with CFA.My CFA L3 exam is due in Aug 2023.
I have decided to go for a job of research analyst after clearing L3 in august 2023.
How much salary package can I expect as research analyst assuming I have reasonable, if not good, writing and financial modelling skills?
Happy new year to you as well, Abhishek. I’m not sure about the salary package, but my guess is around 50K a month? Please di check with your peers for a better understanding.
Module on building trading strategies and scripting, please come up with that as soon as possible. Thank you.
Noted, Sir.
Greetings Karthik Sir,
I have been asking multiple doubts since the day I am learning from Varsity, some of them were quite silly as well but thank you very much sir for answering all my doubts promptly.
In this chart of Britannia, can we consider it a Bullish engulfing pattern as it has a long upper shadow,
https://drive.google.com/file/d/1fOEJZumrGALQgBqtVV43eBNa0hb-ixqY/view?usp=sharing
Also, in this chart of ITC, can p2 be considered a doji as its body length is less than 0.3% and the marubozu has all shadow lengths less than 0.3%
https://drive.google.com/file/d/1NBaN7bJhistKhUVUECZXqPNRJ45U8kHG/view?usp=sharing
Thanks !!
Britania – yeah, sort of.
ITC – yes 🙂
Also, I’d suggest you watch this video, where I’ve discussed how to use candlestick pattern – https://www.youtube.com/watch?v=z0Rwoz6PduM&list=PLX2SHiKfualEyD05J9JsklEq1JFGbG6qJ&index=3
Thank you very much Karthik sir!!!
Happy learning 🙂
Hello Sir.
I Just attended a free webinar on Trading in stock markets,As the lecture was quite interesting and mainly focused on options trading the speaker was a quite pessimistic on the traditional patterns which we have discussed here as in his opinion these are old age concepts and we need to evolve as per time.Instead he focused on the OI+Volumes and Option chain analysis part as we are trading in options.(TA+Data Analysis)
Just wanted your opinion on the same as patterns+volumes and S&R are the main components on which we set up the trade.Are these concepts old now or this happens to be true while trading in options or it was just a marketing move from his side to enroll for the paid program or is it about Spot vs Derivatives.
Do share your thoughts on the same.
Thanks In Advance.
Thats ironic, calling these patterns old age and implying OI+volume as new age. All these techniques (patterns, OI, Volume, etc) have been around for a while. The governing formula for options – the B&S option pricing formula has its origins in 60s. Does that mean its irrelevant? In fundamental analysis, the concept of DCF has been around for 30-40 decades or more, and still being used.
So please question these people whom you listen to and try to understand their ration, ask them to justify whatever they are saying.
Their logic was to take up their paid course as they believe nothing is free and free content doesn’t tell you anything.Seems like they don’t know about Varsity.However, thank you for sharing your thoughts as it is clear that when we will trade in options we will tend to look at option chain data but before that we need to look at spot levels as well to get an overall direction of the stock.What I believe is that we discussed the concepts of volume+price+OI in options as well just that it was their marketing strategy to sell their online course by making people believe nothing is free.This helps to build trust on Varsity even more and on Kartik Sir you as well.
Thank You.
Happy learning, Paras and good luck to you 🙂
Hello Karthik
Thanks for all the knowledge and info you are providing to all of us budding traders through your content.
Can you suggest which alerting mechanism one should use for getting info about stocks? is there any free software available for the same? Like somebody told me about upstox dartstock, but its not available now with upstox. Even zerodha pi is not available. So how to get data about stocks going up or down, hitting all time high or low for intraday purpose! Actually as a new learner on the block, I would like to try my hand to something that’s available as of now for free for practice. But if you advice that its better to buy one(pl suggest one) then definitely I will.
Hridik, Kite has everything. Is there anything particular you are looking for?
Thanks for the prompt response Karthik. I mean automatic alerts wherein you will get all details on your screen about the market at one go ie about stocks, all sectors of nifty etc on that particular day– Like which stock is making a new high or low, or which sector is going up or down. It will help to take any decision while taking a trade. On moneycontrol and other sites you need to click on various tabs to see separate details and it will consume time. Can it be possible through some software wherein necessary/important details are available on one screen while trading.
Ah, if a stock has an even like corporate action etc, it gets highlighted on Kite. Also check Streak’s market summary page for this.
what does it mean by “EQ Segment”
EQ Segment is basically where stocks are traded. Also called cash segment.
I completed Technical Analysis Module. Can I start trading, or should I complete Fundamental analysis as well?
You can start slowly and see how it goes. When you start trading, you will realize where the gaps are, and you can fill that by learning more along the way.
sir,
what if we are able to see Dow pattern and most checklist items ticked but no candle stick pattern ?
then should we go for trade or not?
Thats ok, you can still go ahead as long as your conviction is high on the trade 🙂
Do we still have PI linked with Zerodha?
Nope, we discontinued.
Good morning sir!!!
If I have chosen daily timeframe for swing trading and I want the determine the short term trend or I want to determine the S&R then is it necessary to use daily EMA or we can use weekly EMA? How does the choice between the two change our analysis?
I’d suggest daily time frame itself, Abhiskek. You can look at weekly as a secondary check, but don’t depend on just weekly.
Sir does macroeconomic variables like inflation,growth rate, etc play equally important role in intraday trading as they do in swing trading?
Not much, unless there is some macro announcement for the given day.
Sir like currently globally the sentiment among investors is negative due to US Fed persisting to higher interest rates for long time and chances of recession etc.Markets are continuosly falling right now as well.
Should I consider these current developing macro scenarios before entering into any intraday buy trades(other than the macro announcement for the given day)?
Hey Abhishek, yes, it makes sense to keep an eye on all the factors at play, just so that you know what the market sentiment is when you start to trade. I’d also suggest you check this two-part video series on how to analyse the market – https://www.youtube.com/watch?v=dMjce5P4j-Y
Swing trading is when we do the transactions with a timeframe of few days to weeks. That would mean that we have to actually take the delivery of shares in case of ‘long’ and should have shares in case want to sell (‘short’).
And if we have sell, that means ultimately we have to buy initially.
So, can we really do a ‘short’ transaction in Swing Trading?
Yes, you can using futures & options for shorting.
Hello
Request you to review the snapshot below and help with your inputs:
https://1drv.ms/u/s!AmFuhfJtZ3c452aVa-JySnfvBjrC?e=ao2cA6
Thanks.
Yeah, I’d set up a long trade on this.
Can you suggest some books to learn further on technical analysis?
Or is it sufficient what you have taught in this module?
This is good enough to get started, Advait.
Request your feedback on the identified trade:
https://1drv.ms/u/s!AmFuhfJtZ3c452ddp6a46inPNv91?e=Pdapto
Many Thanks.
By far the best learning material on TA available (that too for free :O). After many many confusing videos and blog(which dont justify the logic and confuse you more), I found varsity and I just dont want to stop. For a novice like me, it perfect, curated in a language so so simple to grasp, with tons of examples and the best part is to help you develop the intuition specially for candlestick patterns is exquisite. As mentioned by someone earlier in the comments, just one word – EXCELLENT.
Thanks for the kind words, Robin. Glad you liked the content 🙂
Sir
All the time people say market changes and your method not best all the time. So you want to change it.
But my question is in Gct Trade means you gives us grand checklist trade for trading.
Therefore it also want to change after some time, please solve my query
Vishal, you can have a checklist which is general but please tweek it based on market circumstances. For example, if your check list says that you should buy a stock only at the support price, then its ok to buy at point slightly higher to support if you feel that the momentum is picking up.
Sir
Means only do flexibility in trading nothing else
Yeah, you need to be flexible.
Sir,
If I follow candlesticks, volume,S&R,dow theory, fibonacci, MACD,RSI……will it be enough to set up trade or Do i have to also follow the other indicators (chapters which you briefed in the last three chapters)?
Please suggest from your own experience.
It will be a good starting point for sure, you can build from here.
Sir,
At times I am finding that candlestick, volume and S&R is confirming to trade. All settings for these three parameters are given for timeframe settings of-1D.
However, RSI/MACD is not giving much convincing signalling with timeframe settings with 1D. However, when I come down to time settings with 4H/1H, then MACD/RSI is giving convincing results.
In this scenario, can I consider these indicators with 1H/4H with other major parameters (candlestick/S&R/voulme) with 1D time settings to confirm a trade?
Looking for your response please.
Of course, you can Anirban. Feel free to tweek the parameters to figure what works for you. Generally speaking, longer time frame is better in terms of signal quality.
Sir,
We learnt that volume should be ideally atleast average on the day of candlestick pattern that indicates for the trade set up. However, the Dow Theory says that when a trend is just reversing then volume decrease. In that sense, sometimes I come across situations where the volume significantly increases over trend build up period. However, on the day of candlestick formation (just during reversing) which signifies to go for a trade, the volume sometimes suddenly comes below average.
I like to know, that whether should we consider this below average volume to be normal or should be show apathy to take trade if volume is even below average on the day of candlestick pattern.
Pls suggest.
Unfortunately, there is no straightforward answer to this. Yes, sometimes the volumes do drastically reduce on the pattern day. In such instances, I’d prefer to initiate the trade on a case-by-case basis only.
What is the lookback period when looking at a prior trend? For swing trading, if it is 6 months to 1 year, how do I actually identify prior trend? There would be a lot of ups and downs, the trend would change corresponding to the period taken even inside the 6 months. Could you please clarify
Sir,
In the “volatility” section in “Options”, you have advised to calculate for “volatility based stop loss” and set the same. I am a totally novice trader who is trying to concentrate swing under Nifty 50. I would like to understand if I would require to calculate the “volatility based stop loss” for plain swing trading or could only consider the lowest low. Please advise.
Its good to know the volatility-based approach for SL placement for swing trading. I’d suggest you spend sometime to figure this 🙂
Zerodha has stop providing Pi software for free?
Yes, Pi is discontinued.
Sir,
Suppose I bought a share in CNC today (T) for simple swing trade. Now, with respect to this, I would like to know the below:
(i) Can I sell the share tomorrow (T+1) as delivery happens on T+2?
(ii) If I put a stoploss on tomorrow (T+1) and in case if the stoploss hits on tomorrow (T+1), is there any consequences?
1) Yes – Check this – https://support.zerodha.com/category/trading-and-markets/corporate-actions/general/articles/change-in-btst-trade-settlement
2) No
Sir,
In one of your comment you told that if all points of checklist satisfying Except for volume then you can take trade,
But
Yesterday I encountered one case where all points of checklist were satisfying Except for volume less than moving average,still reversal didn’t happened why?
1)13% uptrend in 5days
2)dark cloud cover pattern on 4 % long green candle
3) volume 14% less than moving average
4)high of pattern formed near resistance
5)RRR 1.3
Advait, all these checklist items only enhance your probability of success. There are no guarantee in the market 🙂
Sir,
Suppose I want to execute an intraday trade for the below price movement:
Entry: 10, stoploss:7, target: 16
Now, since we don’t have provision of BO now, can we set the trade like below:
1. First Put a CO for entry: 10, stoploss:7
2. If trade execute at 10, then we have to separately place a sell off order at target: 16
Now if this entry happens at 10, entire trade is set for stoploss:7, target: 16. Being a two tier approach, please confirm if this is correctly done.
Else, could you kindly confirm if there is any 1 tier provision like the one for BO?
There is no BO/CO now, Aniban. I’d suggest you stick to option 2.
Sir,
Pardon me, but could you kindly re-check if we can still place CO in intraday/MIS under NSE?
Sir,
Am I missing somewhere with the CO? Is there still any provision under NSE? Kindly guide.
EQ CO is still available.
sir,
what if the percentage up move/down move is around 5-8% or more but the number of days is less around 3-4
so can I say that classify it as trend
Ideally, I’d like it if the number of days is slightly longer to establish that the sentiment has sustained through a few days and not just a short-term affair.
sir,
I have encountered one type of case many times in which every point of the checklist satisfies (in the case of swing trading) ,
but ,(for example in case of downtrend)
the pattern itself has its low at support and closing value at the target,
so my question is that in such case when the pattern itself achieves target should we take the trade or take trade keeping the target as next resistance(as in my example)?
No point taking such trdes then, scope for further movement kind is lesser 🙂
sir, then what should be appropriate % move and in how many days
At least about 10-15% across 7-8 days will be nice 🙂
sir, is this the condition for uptrend/downtrend
“At least about 10-15% across 7-8 days ”
cause I think 8-10% should be enough as I encountered it in most of the charts
Yeah, start with this and see how it goes 🙂
Sir,
What will be our action when a scrip surpasses the all time high? Should we long at that time or wait to take action? If we should wait, then at what point can we take action?
Its an uncharted territory, the best thing to do is to hold the position (if you already have an exposure) and trail the stop loss.
Thank you for great knowledge.. your doing great work
But i have 1 question.. as you said varsity including a module.. i am searching for the module for building trading strategies and scripting.
You can find strategies here – https://zerodha.com/varsity/module/trading-systems/, unfortunately, don’t have much wrt scripting.
thank you for the selfless efforts by you sir
Happy learning, Vaishnav!
Very clear with excellent example charts…
Happy learning!
Sir,
Please help me with the below regarding normal swing:
Suppose there is a down trend which is following since past few days and then at one day we come across a candlestick pattern showing signs of a trend reversal accompanying all other parameters like support, vol and RRR.
(i) Kindly let know what should be the minimum number of days for the downtrend that should be there to justify for the situation and to take a trade.
(ii) Often there are situations when there is an uptrend (Not necessarily a break out) and then suddenly it gives few downtrends (3-4) accompanying all the the parameters like support, vol and RRR. Should this type of cases can even be considered?
1) I’d suggest at least 8 to 10 trading sessions with 10-12% decline
2) Yeah, sometimes you do get quick trade opportunities here 🙂
Sir,
In cases of double/triple tops/downs, we learnt that a minimum fortnight time should be there for consideration of this situation. Is there also a maximum time limit above which this top/down formation don’t really mean?
Nope, no such thing 🙂
Sir,
As a retail investor, I have identified 3 stocks for longterm investment on retirement planning. Now, what should be the strategy for making positions on the stocks….Like these stocks are now going 20-40 percentage low from the highest all time peak. Should I keep making positions on them through small small portions like SIP keeping more buying when price low and less buying when price high. Please guide.
Explained the hole stock market and related in simple language. Thanks a lot.
I just like to know that how I can go to Zerodha’s Pi, the charting software.
Thanks Kishore. We no longer support Pi. You can use Kite instead, its far more powerful.
Is there a Module explaining the functions of Kite ?
Most of the functionalities are supported here – https://support.zerodha.com/
sir
one time again i start trading ,but sir for sitting in market b/w 9 to 3 pm and only see graphs. It is very boring task , sir what i can do at that time without disturbing my mind in hyperfocus state at traing
I dont know what to say 🙂
Maybe you should try investing and focus on other areas of work.
I wanted to thank you for Varsity,it has helped me a lot to cultivate my interest in markets ,I especially appreciate the way you explain complex concepts in a clear and concise way. can I really do an internship with you , I don’t want any stipend / Certificates rather I am willing to pay for your mentorship , I am 20 years old and currently studying at NMIMS , Sir please be my mentor!.
Hey Anwit, thanks for the kind message. Unfortunately, we don’t have a mentorship program, but if at we do come up with something, then we will let you know. Do keep track of our social media handles for announcements.
In the current scenario, most of the stocks are in uptrend and its becoming difficult for the conditions in the checklist to be satisfied. I am specifically looking for Bullish candlestick patterns but unfortunately in most of the stocks, prior trend is not downtrend.
Even, as part S&R identification, Support is hardly coinciding with the stoploss of the trade.
What should be the general approach whenever we see such rising trends.
There will be pockets of opportunities that will show up, although fewer. You need to watch the markets closely and identify this when it comes your way.
This question is reg. Trading the range breakout vis-à-vis the checklist item of confirmation via S&R:
Consider the following two statements (w.r.t going long in range breakout):
1. S&R should confirm to the trade. The stoploss price should be around S&R.
For a long trade, the low of the pattern should be around the support.
2. For trading on range breakout – A trader will take a long position when the stock price breaks the resistance levels (and will go short after the support level breaks)
Ques:
From the 1st point, ideally we should look for an opportunity wherein any of the bullish candlestick pattern is created near the support levels
While from the 2nd point, we have to keep an eye for the bullish candlestick pattern near the top level of a range i.e. resistance. In which case it goes the 1st point.
Is that right? What am I missing in my understanding?
1) Yes, thats right. Entry points near S&R give a slightly higher conviction on trade.
2) At the top of the rally, you look for shorting opportunities. Remember, the prior trend is important for trade. So if you are looking at bullish pattern, prior trend should be bearish.
Thanks.
I missed to mention that since I am new, I am sticking to Swing Trading which constraints me to assess only ‘Long’ opportunities.
Follow up question:
For Trading on range breakout, do we look for any candlestick patterns (on either of the levels) as a matter of building conviction on the trade?
Yes, you can and good luck in the markets 🙂
Hi sir, I’m a student right now. Considering my time constraints, please suggest me a proper timeframe!
I’d suggest end of day 🙂
Have you removed the chapter index that used to be appear on the left hand side within the chapters?
Note: That used to help to keep checking the topic/chapter names that had helped recollecting plus it was in the orde of your checklist.
May I please suggest to have it restored.
Thanks.
Zerodha’s Pi is already closed. Kindly update it in the module.
We will, Prashant.
sir
I do intrady trading. In which i put risk to reward 1:2 . Is it good in intrady ya something like in intardy it is too much far in a day. at last my query is how much risk to reward put in intrady is good for health
My personal preference is to hold trades at least for a few days 🙂 but yes, RRR of 1:2 is decent.
Hi karthik sir,
I have some queries on scalping trading,
Today , I taken a small scalping trade for practice in Bandhan bank with 100 shares (I am attaching the photo below) entry price 221.10 , target 222 and stop loss 220.60. the RR WAS 1:8 in that trade. Exited within 30 mins.
https://drive.google.com/file/d/1rirZmIqI6X3QISalGJIUgwQSX5_qTMHp/view?usp=sharing.
I added all the text in the image itself. 🙂 I want to know from your experience that whether it was a right or a wrong decision while making this type of trades.
As learned in varsity, if the trend is down and there is a spinning top that means it could be a sign of reversal or continuation in the support (demand area) . In this chart , the candle broken the high of 4 previous candles , so I thought it can be a small reversal as the candle’s size was not so big .
So with scalping, you do so many trades that identifying each decision in isolation gets very tough. You need to look at it from a portfolio perspective. But this one looks alright 🙂
Thank you :)🙂 I am doing positional trades and practicing futures and options with sensibull’s virtual trading and currently reading the advanced module of options theory. But sir, the movement in the virtual trade is rapidly fast, it changes second by second. I am not able to convince myself to put my real money into F/O trading. How can I get rid of this fear ? 🙂 because the returns that I expect from positional trading , that coming in options with few minutes, but it’s very volatile, the stoploss in option trading can get hit within minutes.
One of the easiest ways to do this is by looking at currency futures. The volatility is lesser, margins are lesser, and the experience is real.
Thanks :))>> for that I will study the module of currency and govt securities then dig deep into currency derivatives. I seen the margin is below 2000 rs. and the option premium ranges between 300-700rs. If possible do upload a video on currency derivatives on varsity youtube channel. “How to begin your journey with futures and options trading”.🙂
Done, noted 🙂
Request you to review the following trade:
https://1drv.ms/i/s!AmFuhfJtZ3c46FWkRk3bB69EcWL1?e=eQQCsE
Q1. Any mistakes in any of the steps?
Q2. Is it worth going for trade?
I wont be able to comment on individual trades, but one thing – if you are not confident about a trade, then reduce the quantity and take the trade. But treat this as a learning opportunity and disregard the P&L.
Got it. Thanks a lot.
Sir,
What are trend lines (in your style of explanation)? Although Trends are covered as part Dow Theory and mentioned in your checklist, it appears that you didn’t focus much.
So, it will help, if you can elaborate bit more on how do you fit in the trend lines within the analysis and also how do they differ from Support & Resistance lines.
Thanks.
Do check this series – https://www.youtube.com/watch?v=yzRP-mA2eiE&list=PLX2SHiKfualH_xMbGM-3zWC47s9gUjGR_
Sir
Intraday ke liye kya time frame hona hai 5 min ya 15 minutes
Sir
Intraday mein ye grand chechklist se trade lena asan nhi hai koi aur stratgey ya ye sahi hai . Sir thoda explain jarur karein
Sir
Maximum activity in market b/w 9.15 am to 11am then 1.30 to 3.00.
So take an example,in morning open market in 15 candle I wait for pass 3-4 candle of 15 minutes then I go to see market. In which maximum momentum ends.
Sir my question to go from one stratgey to other is very difficult.someone tell something I compare with your stratgey . I learn everything from you . When I making too much losse in market, I listening to you. Then I go one step ahead,this time my losses are very less. but I have hunger for something best and work in all market.
Keep at it, Vishal. Its ok to make small mistakes, the learning outcome from these mistakes will help you grow.
Sir
I understand you give us an example of swing trading and scalping. But intraday is forgotten.Is scalping and intraday same in 15 minutes. So how much criteria we evalute. Is not same please provide us full information on intraday.
Intraday can be very risky, especially for a beginner, Vishal. I’d advice you to stay away from it.
sir
I am not beginner, i am still from last three years. In many ways i connect to the market from last 6 years. But today I still in market without profit.
listen
i do money mangement of my 40000 rupees. In one time i onle trade with 2000 rupees. and my daily commitment of only doing 2 trade. No matter it is profitable or loss. then i do only cover order in which fix stoploss no trailing. RRR is 1:1 after i trail to 1:2. i continue to go learn psychology with market wizard i read full 603 chapters in which i make notes. read books trading to win , trading in the zone, the disciplined trader.And many more …
these things i am telling only for i am not beginner. please provide me graet solutin for intraday. with fully video or write it. with candle to criterias to follow
from today
i do
candle 5 min
s&r verifed
volume should be satisafied
indicator using vwap
for wave i use william allegator of 30 min to know primary trend or secondary tarde.
rrr 1:1 then trail to 1:2
please explain
somone telling me breakout trades in early morning are very goodso i confuse too much
my only problem is stratgey and discilpine
please solve my query
Please make one change and see – stop intraday trading, do swing trades. Dont look at 5mins, instead look at EOD charts. Let me know if this makes any difference.
Sir
Mujhe intraday seekhna hai sir please. I do both I have capital of 50000 more I add it. 😭😭 Please sir bas intraday ke liye stratgey or rules bta do
Sir
You are great man,when last time you tell me to shift from intarady to positional. I am too much thinking. I don’t make money in positional. But from last three days in positional I make money 65 rupees but it is looking good in percentage term with too much relaxation.
Hope it gets better, Vishal. Good luck.
Hi,
Thank you for this module. This module discusses a lot of reversal patterns. Can you please suggest a book or any other reference where we can get more insights on continuation patterns?
You can check the Japanese Candlestick pattern book by Steve Nison.
Dear Sir, As you taught for newbie, my strategy consists of:
1. Candlestick
2. Volume
3. S&R
4. RSI
5. Crossover
6. MACD
7. Bollinger Band
For the above, I need to create my own scanner with queries in streak/Ticker Tape. However, since I am new to scanner, I am unable to write queries. Kindly guide me how I can become familiar with writing queries through either streak/Ticker Tape. This is getting very difficult for me. Request your kind support & guidance on this please.
Anirban, I’d suggest you touch base with Streak, they will give you a better idea about this than me.
Sir,
You have mentioned in the article that S&R to be there within 4% tolerance from stoploss. In this perspective, suppose there is a stoploss read of 100. Now, if I want to long on the candle, can 96 & 104 equally qualify for a support for a swing trade?
Yup, that is the idea. But should it be 4% or 8%, really depends on your risk appetite. You can develop these things as you evaluate and understand the markets better.
Sir,
I am using the 50 & 100 MA crossover over 1D chart.
Now, if I want to change to 15 mins * 30 mins crossover, then will the below settings hold good?
(i) Change the chart from 1D to 1 min
(ii) Keep the same settings for crossover to 15 and 30 min period.
Sir,
If I keep the chart to 30 mins and keep the 15 and 30 period crossover, then does that imply a lookback period average of 15*30 mins and 30*30 mins respectively? Please help to understand.
Sir,
Suppose I am trying to use 15 mins * 30 mins crossover. Will both the below hold equally good for indication?
(i) Change chart to 1 min. Keep the settings for crossover to 15 and 30 min period.
(ii) Change chart to 3 min. Keep the settings for crossover to 5 and 10 min period.
Please help if I am missing somewhere.
Sir,
Is there any way to simultaneously observe the 1H chart with 15 mins*30 mins crossover?
Ah, that can be tricky. When you load 1H chart, all your averages will be based on that 1H chart. You can observe two charts simultaneously – 1H and 15 mins.
Sir,
Unlike below the stoploss, if there is a price action zone above 4% of stoploss read, can we still consider it to be support or better to recognize this as resistance? Please advise.
Sure, you can on a case to case basis.
Sir,
Suppose I am trying to use 15 mins * 30 mins crossover. Will both the below hold equally good for indication?
(i) Set chart to 1 min. Keep the settings for crossover to 15 and 30 min period.
(ii) Change chart to 3 min. Keep the settings for crossover to 5 and 10 min period.
Please help if I am missing somewhere.
The thing is the crossover adopts to the chart frequency. So if I have 15mins chart and overlay it with a 30 period MA, it will be 30 periods of 15mins, replace 15mins with EOD, then it will be 30 day.
Great content. One, suggestion, please update information with time, this will help new/old readers updated. e.g. tool etc.
Sure, we do try and and update information that is relevant conceptually, but transactional numbers like lets say the latest RBI monetary numbers etc, we tend not to update.
Great job not just with the content, but also replying to your audience’s comments for almost 9 years now, Karthik! Its wonderful how even in 2023, your content is still very relevant! Besides the appreciation, I did have a few queries as someone new to the world of trading-
1. Would the cash stock market be the best place to start trading? Compared to lets say futures, options and forex?
2. When would you say a trader should consider himself experienced enough to venture into the more risky worlds of leveraged trading?
3. Do you think trading can be a consistent source of supplemental income? What would you say can be a reasonable expectation of monthly earnings for a decently experienced swing trader in terms of % of principal?
4. How does the current macro economic enviorment fare for a trader in your opinion? Both global and Indian?
Looking forward to hearing back from you, and thank you again Karthik!
Thanks, Sparsh.
1) Yes, fewer nuances in cash market, so I’d suggest you start here and learn.
2) Maybe at least a year after trading cash market? But I know most people wont have the patience for this 🙂
3) Nope, dont even think on these lines 🙂
4) Generally speaking, the number of news items, higher is the volatility in the market. Also, since you are trading, you can switch sides (long and short), fairly easily, so go with the flow.
Good luck!
Nothing can justify the selfless act done by team zerodha… nobody would teach all these details for free. Thanks Zerodha and team
Thanks for the kind words, and Happy learning, Srinivas 🙂
Thanks for your response Karthik! If you don’t mind, I’d like to further understand your comment on point #3-
1. Is your comment specifically for swing trading or trading in general?
2. Don’t most people trade to make money and generate additional income? Or do you see wealth growth and income generation as 2 different goals?
3. Are the returns for a good trader consistent enough to grow wealth but hardly consistent enough to be counted as a regular income?
Personally this is my goal of even getting started on trading, hence curious to hear more from you on this. Would be also great if you could share any relatable nuggets of wisdom from your own experience. Thanks again!
1) You can extend this to trading in general 🙂
2) Yes they do, but my experience tells me that that trading is not a sustainable way of generating an income. You can invest in funds and generate wealth though.
3) Very inconsistent. Think about it, how can it ever be consistent given that there is so much volatility in the market?
The reason to trade is to generally be glued in on whats happening in the market and every now and then, market gives you that one or two opportunities where everything is aligned for you, that is the time for you to push the peddle and take big trades. These opportunities don’t come easily though.
I see, thanks for your inputs Karthik 🙂
Sure, do let me know if there is any other query 🙂
1. Sir, percentage wise, could you tell me how much importance do you give for technical analysis for analysing a particular trade. Is it 100% or like 70% TA and 30% in others like FII Data. If you could give a brief split, it would be helpful?
2. Apart from important event dates like Fed event, do you also take macroeconomic situations into considerations for trades (like war leading to crude oil price movement) or give more importance to TA instead?
3. When is the right time to take delta neutral strategies like Iron Condor? Most of the time I see the upper range is breached in the last few months due to high volatility even after considering SD.
4. Since there is a change in volatility in the last few months, can we consider 6 month historical data for SD calculation?
5. In spread strategies, is it worth to keep breakeven point like 200 points deep from the spot? (Eg- if one is bullish and spot is 19000, can a spread with 18650 PE Buy + 18850 PE Sell be fine) In case if you feel the RR is not worth it, what would be a reasonable breakeven point deep from the spot?
(I feel I might be over analyzing and I have taken very less trades this entire year. I see most of the time Macros aren’t respected as we expect the market to in shorter time frame. Maybe your answers might help.)
Thank You.
1) I dont really like to give that split as it is completely case to case dependent. But if I’m evaluating a stock based on FA, then 80% will be FA, 20% probably is TA to figure if some amount of timing is possible in buying and selling securities.
2) Yes, one has to consider this
3) Depends on market situation, hard to generalize it otherwise.
4) Yes, you can, especially when you have short term trading in perspective.
5) Yes and no, it depends on the time period under consideration. Small spreads are ok, if you intend to hold position for a short term.
Do pay attention to macros 🙂
Thanks sir. The question I asked in relation to giving importance to TA was only in relation to NIFTY analysis for option trading. For eg, last trade analysis showed a bullish chart in TA and tha OI data was also buildup accordingly. But FII data showed largely bearish. I really dont know how to interpret this. Hence I asked that question.
Got it. I had actually made a two part video on how to analyze the market on your own. Here is the link, hopefully you should get some answers – https://www.youtube.com/watch?v=dMjce5P4j-Y&list=PLX2SHiKfualE4o4joBMXM_YHGBKnZSQbs
(continuation from my previous question)
Other data I could understand was that on one side, crude oil increase as a result of geopolitical tension might lead to inflation fear anytime. On the other hand, ultra low Vix of below 11 consistently says that the market is having lesser fear. I also assume that the recent 2 day rally might be due to fed’s decision as to not hike the rate and chances are that this rally might be sold at nearby higher levels if fear continues.
So with so many mixed data in different directions, its very confusing to interpret. Is there a way to look into this and do you think delta neutral strategies like iron Condor might be considered if one sees different mixed signals like this?
Yes, it does. Even simple short/long straddles and strangle may help.
After going through the chapters, I am at loss of words, I am greatly thankful for your effort, the way you explained with examples and language used. Zerodha university is holy grail of information for any one who wants to learn stock markets.
hats off to your narration skill and dedication.
Thanks for the kind words, happy learning Shanmugam 🙂
If one stock have range breakout, do we need to check the support and resistance level also?
Yes, always a good idea to do that.
Hello sir,
I always visit varsity often even after years, From the beginning till now I have a doubt,why your are not explaining the concept of trendlines.
Moving averages are essentially a trendline, Vishak. Is there anything in particular you are looking for?
Hi Karthik,
Query on check list :
In case of a very bullish market, such as 2023, S&R range may not be near the stop loss or target range.
I read from the other comments that in case of all time highs there is no resistance range to consider as target. Got that.
Now , let’s say i want to go long on a blue chip stock & a key check point is stop loss around the support range. But the stock has rallied for the better part of the year, still volumes are flowing in – indicating smart money & clear candle stick pattern ( no compromise). But the support is nowhere close to stop loss. Considering the situation , can i ignore S&R point on checklist?
Conversely, would the apply in case of a steep but valid correction, where the stop loss is nowhere close to R1?
What you can do in such a case is to set up a trailing SL. Move the SL along with the price increase so that you keep locking in the profits.
Thank you, Karthik!!
Happy learning 🙂
When we are using 1D chart and their is aa shorting opportunity occurs so how we can short a stock in a cash market as we are newbie so we don’t take so much risk to go for a futures or options and intraday as well. So what to do for a short swing trades.
There are no alternatives at this point Rajesh. You have to short via futures or options if you want to swing trade your short position.
Sir I have 2 questions.
1. How to find the change of general market trends? For eg, there was a fall due to disappointed HDFC bank results recently. How to see these kind of trend changes? Is it with something like a 200 day moving average or something else? How can one know that a trend has reversed or is continuing?
2. How do you see whether the whole stock market is overvalued? Is it something like a buffett’s indicator(Marketcap/GDP) or NIFTY PE or something else?
Thanks.
1) Yes, trend changes are usually captured in a simple moving average. You can use short term MA or long term MA for the kind of trading you’d do.
2) Nifty PE is one indicator, but usually markets do get overheated in bull markets.
When to do shortlisting and evaluation process! Before market open?
Yes, or after the market closes.
Thanks whole team zerodha for this wonderful efforts. Especially Nitin Kamath and Nikhil Kamath initiating this drastic change in this industry of educating everyone about the stock markets. Thanks a lot for it. Even after this great gift of VARSITY. These guys are not stopping they are also providing great things on youtube too. THANKS A LOT TO TEAM ZERODHA. THANKS A LOT TO THE PEOPLE WHO ARE GIVING MOST OF THIER EFFORTS in making these great content.
Thanks so much for the kind words, Harsh. Happy to note you liked the content 🙂
Sir,
(i) You have written in one area to ignore candles those are less than 1% or above 10%. In this area, I would like to know the below:
(A) Are you talking for the figure about percentage in terms of (close-open)for that particular day? If yes, should we consider the wick also for the calculation or only the body?
(B) Or Are you talking about the percentage change of today’s close price with respect to close price of yesterday?
(ii) In one area, you have written that you put trade wherein the target is atleast suggesting for a 10% profit. In this perspective, I would like to know about your way to search for such trades meaning, whether you look to see for the weekly charts/daily charts when you scout. As for daily charts targets are less frequent to earn 10% profit than weekly charts. I don’t know whether I could brief you, but require your suggestion whether I should look for daily/weekly chart to give less trades and earn decent profits like the one you mentioned (>=10%).
N.B: I could wait 2-6 months.
1) I’m talking about % range for the entire day.
2) More about the day’s range that close compared to previous day.
For scouting you need to look at EoD charts, at least that’s what I prefer. I stick to EoD charts for most cases.
Thank you karthik for amazing content on Technical Analysis. You made all the concepts easy to understand and also explore the linkages between them. When I was at the beginning of this chapter, I thought of asking you question on the selection of Stock list. Surprisingly found it at the end. That shows the kind of thought process you have put in designing the content. Thanks a lot.
Thanks for the kind words, Pavan. I’m glad you liked the content on Varsity 🙂
This information after 10 years is still extremely relevant and the way you have explained each lesson is commendable.
Moreover this information is available free of cost and better and more curated than the gyan given by the Youtube gurus who are charging for lessons and portraying them as seasonal traders.
I often felt that charts are intimidating and it’s difficult to learn technical analysis but the way you have explained it so simply made learning easier.
Thank you so much Karthik Sir.
Thanks Aditya for the kind words. This is encouraging and motivates us to do better 🙂
Hello sir,
I am viewing Nifty 50 in a 5-day time frame. If we look at the downfall on March 13 technically to identify the fall signal, can I say that the ending of March 12 with a doji candle and the starting of March 13 with almost a marubozu candle and around 09:40–09:45 a bullish engulfing can be the signal? Also, if a candle is a long candle with visible wicks, can I say it is a marubozu?
Thank you so much for sharing your knowledge, and I have a request: can we also have a certified test for other modules? Getting certified in those will add to the skills we learn and make us feel confident.
Thank you.
About the wicks, please do check the size of the wicks with respect to the real body. About the certification, we will have it over time. Thanks.
Sir,
If I buy some share today in delivery and sell them tomorrow (without actually receiving the shares tomorrow), will there be any impact?
Nope. But you should be aware of the risks involved – https://support.zerodha.com/category/trading-and-markets/corporate-actions/general/articles/btst-risk
Sir,
Can you please share the link from where I could find option chains of all indices and companies?
Please do check Sensibull, they should provide the option chain.
Is Zerodha Pi still available?
Nope, its not.
Thank you Karthik sir for this excellent write up
Happy learning, Dheeraj!
Hi Karthik,
I have been following Nifty and Bank Nifty since a very long time and noticed that, the traditional candle stick patterns are not working over there. Especially when trading options. Many and many frequent fake breakouts can be seen in the major indices (Nifty, Bank Nifty and Fin Nifty). To be an option buyer in these indices is getting very difficult day by day. I never tried my hands on options selling though, but yeah, options buying has become very difficult (that’s what I have observed – appreciate your thoughts here).
Can you please help us understand how we can trade in these 3 major indices. For both Options and Futures. (The problem with futures is that there is no margin available unlike stocks 🙁
I honestly appreciate your inputs on how one has to approach trading the three major indices and any other specific knowledge one has to learn to be successful in trading the 3 major indices.
Thank you 🙂
I get your point, Sai. It is a fair assumption to make that things will get tighter going forward as alogo become more sofhosticated. Given this, I can think of two ways in which you can maintain an edge –
1) Stop looking at intrday day charts, especially option charts.
2) Expand your holding period from intraday to positional.
Hopefully with these two points, you should be able to make an improvement in your trading. Let me know. Good luck.
Sir,
I am using Zerodha ChartIQ since the beginning. Now, in there, there are some defined chart frames (1 min to 1 Month). Now, is there any way/platform known to you where I can customize the time frame and see charts for analysis?
Yes, you can customize it to your selected time frame right? Like 5mins, 10mins, 1 day, 1 week etc. Is that what you are refering to?
Sir,
The customization only allows for upto 300 mins which is 5 hours. I would more specifically require for say 3 days and 2 weeks. Is there any possible way out? This is not allowed in Zerodha ChartIQ.
Ah not sure, but I dont think its possible. But out of curiosity, why would you want that 🙂
Sir,
This is helping me to identify trends tremendously analysing through multiple time frames and working too fine for me. For now, I have been trying to figure out for 3 days and 15 days looking through 1D candles only.
However, I would request if you come across for any provision to look through 3 days & 2 weeks timeframe, kindly keep me posted (if possible)
Sure, I will. Meanwhile, do check once with the support team, just in case its already there 🙂
One of the simplest way of understanding module, i am feeling regret for getting all these knowledge very lately ,but realyy thankful sir.Thank u sir
Happy learning, Chiku 🙂
Dear Sir,
(i) For placing a buy GTT trigger, is it always necessary that Trigger price=Buy price?
Yeah, you can read more about it here – https://support.zerodha.com/category/trading-and-markets/kite-features/gtt/articles/how-can-i-use-the-gtt-feature
Sir,
Just asking for your thought/suggestion:
Like you taught volatility (s.d) helps us understand the max/min range of price during an upcoming particular period. Could one apply this strategy for intraday too, including some other parameters?
Yes, you could use the daily volatility number directly for intrday range.
Hi Karthik,
I am planning to start swing trading but only on Indices(through ETFs).
Will all the above literature apply on these too?
Also, does ETFs trading have any disadvantages over stock trading?
Sure, you could give it a shot, and yes, you can apply these on ETFs as well, and there are no disadvantages as such.
Hiii sir,
“Alternatively, you can have ‘minimum volume criteria’. For example, you can consider only those stocks where the volume per day is at least 500000”
How can we ensure the volume per day is above 500000, what minimum time period should we look at, eg: for the last 3 years, volume per day should be more than 500000, or 2 years, or 1 year, etc
I am a bit confused over it, cause there are certain stocks in NIFTY 50 as well that has very less volumes per day and low liquidity.
Alternatively, any quantifiable percentage difference in BID ASK SPREAD, to term the STOCK not liquid. Cause I have observed illiquid stocks are very volatile and move randomly triggering the STOPLOSS.
Thank you.
You need to check for daily volume to get a sense of how much is being traded. So if a stock has less volume, you can avoid it. Also, if your trading volume is not much, then you can ignore this as well. All depends on how much you want to trade 🙂
I consider my opportunity universe to be NIFTY 500.
I have created a positional trading screener which returns around 20-25 stocks each day. However, I believe that trading with 20-25 stocks daily for positional trading is unreasonable.
So, how would you recommend me to filter out the stocks to 1-2 stocks so that things become more reasonable?
Apply further screening criteria. If your system is giving you 20-25 stocks daily, that means you have fewer criteria for screening. The more tighter your screening is, the fewer your stocks.
Thank you sir for your reply. I will try to improve my system to get better stocks
Sure, wishing you the best 🙂
Since Zerodha’s Pi is no longer available. Which is the best trading software tool available ?
Kite 🙂
Hello Karthik Sir,
This is the link to the scanner that I have created:
https://streak.tech/strategy/ema-09
In case you have any suggestions for improvement, I’d love to implement the same.
Thanks 🙂
Thanks, Souvik. I’ll try and check this when possible.
Sir good afternoon. sir I have been read technical analysis and future module 5 times,now I want to study chart so that what I read in theory can be applied in practical.currently since 3-4 days I am studying chart from trading view app but it is very boring and difficult.Please guide me how and where I can study and analysis chart efficiently and in proper way . After studying chart I am planning opening Dmat account for future trading. I am newbie so please sir tell me what should I do after reading technical and future modules.🙏🙏🙏
You can use Kite – it has two chart engines plugged in (Tradingview and ChartIQ), so you can choose whichever one you are comfortable using. Besides, you can also place trades on the same platform.
Hi Brother
I have Two Questions
1. What are the Operator driven stocks.
2. I think Zerodha Pi is not available now.
What are your suggestion for good charting software for free.
1) Basically stocks which can be pumped and dumped easily.
2) Thats right.
You can use Kite.
Hello Brother
1) https://drive.google.com/file/d/1fUchCt7G5O0C7-8B3FAJxgpiwltYGL-U/view?usp=drive_link
2) https://drive.google.com/file/d/1vMXbOUob27Y6ITGfHWseuY8uJ3ADKmcE/view?usp=drive_link
Am I doing it (T.A.) right way?
Also, I have a doubt that in previous chapters when we were discussing the morning star, we talked about that this pattern also looks like bullish Engulfing if we hide Doji from it. But think of a situation where in this chart after the latest doji there forms a small green candle and if we hide doji from between it looks like Bullish Harami Pattern instead of long green candle (Bullish Engulfing). Will it be valid? Can I take Trade there also?
Yes, you can consider that as a bullish harmi. Check this – https://www.youtube.com/watch?v=1kQjXFL4Mfc
https://drive.google.com/file/d/1fUchCt7G5O0C7-8B3FAJxgpiwltYGL-U/view?usp=drive_link, https://drive.google.com/file/d/1vMXbOUob27Y6ITGfHWseuY8uJ3ADKmcE/view?usp=drive_link
Am I Doing T.A. right way?
I am unable to Comment with Google Drive Links.
Yes, comments with links will not be published immediately.
In module 1 the chapter clearance and settlement it is said that you should not sell the stock on the T+1 day as it is risky as it is still not in our DEMAT account, so as a beginner you suggested to avoid day trading and Start with trades to hold the trade for a few days which is ‘Positional Trading’ or ‘Swing Trading’. My question is that if i identify a trading opportunity that satisfies my checklist and i took a non intraday order. If the next day itself i reached my target price can i sell it this day or T+1 day itself, is there any complications regarding doing so. Please excuse if i am wrong as i am just a beginner.
Joel, technically you can sell, there is no issue as such. Its just that there is a small risk of non delivery. You can check this – https://support.zerodha.com/category/trading-and-markets/corporate-actions/general/articles/btst-meaning
Karthik, you have adviced Trading in the Zone book…There is a book called The best looser wins which stresses upon adding to the winners philosophy…What are your views on adding to winners philosophy..
Booking profit regularly as advised in trading in the zone OR let profits with trailing Stop loss as in The best looser wins..what would you advice Sir out of two..
I am confused Karthik
Adding to the winners is always a great strategy, I’d suggest you consider it with a trailing stoploss 🙂
Thank you Karthik
Happy learning 🙂
Hello sir….I would like to thanks Zerodha and the team for this excellent read…sir my question is since pi is no more exixting and trading view v2.0 beta software has got all the indicators which you have mentioned, is there still a requirement for buying some other charting software like metastock and amibroker as you mentioned.
Not really, Kite has everything and more that you’d need in terms of charting.
Thank you sir for the invaluable information. Just wanted to know, a newbie trader should focus on swing trading first and then dive into option trading, right? Also, what can be the inflection point for this conversion? If you can share some insight on this, I would be really grateful.
I’d suggest focus on investment, then maybe positional swing trades 🙂
Hi Karthik…when I am adding to the winners in a particular stock..do I need to make sure that in that particular stock,my risk always remains 2% of capital deployed…or it can increase as per the number of entries I make in one particular stock.
It could be any % that you think suits your risk appetite. The idea is to ensure your risk is contained and not overexposed to anyone particular trade 🙂
Please recommend the book for technical analysis..
Study material on Zerodha varsity is comprehensive and good but still if somebody has time to read books on technical analysis which books would you recommend…like there are many Technical analysis of Financial markets John Murphy, Technical analysis of stock trends by John Magee, encyclopaedia of charts…etc…which one would you recommend…I have already studied Japanese candlesticks Steve Nison, and Trading in the Zone …I want to make myself good technical analyst for swing trades, I am already well versed with Mental Analysis…
Sunil, I’d suggest you check out the CMT website and the books that they have suggested there.
Karthik, they have not suggested books..They have suggested level 1 study material which costs around Rs 18,000 … I don’t want to spend that much…Can you check and suggest the book..pls
Ah ok. I thought they have a bunch of books that are suggested. Most of the fundamental books, I have already mentioned. Let me check if there are any other good books out there worth reccomending.
So what book would you recommend Karthik
For TA? I’d suggested a few books in the module itself.
I Aashay 20 yrs old, have completed reading the modules and watching the videos, but as it is this Varsity series is way older though it provides pretty accurate and mindful insights for a complete beginner trying to enter the Markets at an early age, I would be absolutely honoured if I get a reference to any newer Series or Notes which I can refer as of today to get up-to-date information about the Zerodha platform usage and any new aspects which are to be considered in todays new times.
Aashay, do check the channel here – https://www.youtube.com/@varsitybyzerodha, all videos are new 🙂
Hi Karthick,
I want to extend my heartfelt thanks to you for your selfless effort in writing the Zerodha Varsity. Your work, from basics to advanced topics, has been invaluable. By educating us on responsible trading, preserving capital, and generating wealth, you inspire us to grow personally and contribute to our nation’s growth. It has inspired many, including myself, to become financially responsible. Thank you for inspiring and educating us.
Thanks for the kind words, Emmanuel. I’m glad you liked the content and found it useful. Happy learning 🙂
Where is zerodha pi application available?!
Its no longer available.
What is “50 chart” in segment 19.5 part 1?
I could not find part 1 in 19.5, what are you looking at?
How to find targets in intraday, I use 15 min chart.
You can use support and resistance for this, Rajesh.
As I use 15 min chart so which timeframe i should use for S&R 1D, 1hr or 15 mins.
YOu can continue to use the 15 mins time frame only.
Hi Karthik,
Firstly, I want to express my gratitude for the beautifully crafted chapters on technical analysis. They have been incredibly insightful, and I thoroughly enjoyed going through them.
I have a question regarding return expectations in swing trading. I understand that it’s a game of passion and commitment for the long haul, but I’m curious about the average annual returns one can expect as a swing trader. Specifically, what is a reasonable benchmark for an average swing trader’s yearly earnings? Is it in the range of 30-40%, or is there a different standard?
Additionally, based on your experience and observations within your circle, how much do average and good swing traders typically earn annually? This information would help me gauge my performance and set realistic expectations
Thanks Umesh. Swing trading is not really long haul, and its very hard to put an indicative return to this. But if I’m doing swing trading for a living, then I’d expect at least 15% or more, else the efforts are not worth it.
Hi Karthik,
I have one more suggestion comment sorting order should be latest to oldest and it will be nice if there is some upvote or something , so sorting can be done on this basis , so most doubted question will already be answered most of the time , thank again for the content itself
I agree Umesh. Let me take this up again.
I have a question on the stock selection process.
By the time we understand the candlestick pattern along with volume and S&R at EOD my timing to place the buy order is already gone right because we are checking EOD then how do you put the buy order?
If we place the AMO order and if market opens gap up, then the order might not get executed, then how do you place the order?
The opportunity still exists right? By the end of the day, you do get a confirmation of the pattern, and you place the trade the next day morning.
The article is great. No doubt. There are multiple trading platforms that provide easy-to-use scalper mode options on the web. However Zerodha only provides traditional GUI dialogue box which appears when buying and selling. The “Quick mode” is not very helpful. Please look at other platforms and provide us a web interface that enables quick scalping
How do you select stocks for intraday?
YOu can stick to Nifty 50 stocks if you are starting out newly.
“The bulk of the work in scalping requires you to study of the order book and see how the liquidity changes. TA has very little application here, or so I think ” in one of the comments you had commented about this.
Could you dedicate a chapter within technical analysis and explain how to scalp on above principles? scalping has been becoming a mainstream activity in the market but a lot of misinformation exist in the market about this style of trading. guidance from experts like you would be very useful.
Also elaborate on how to plot s&r for scalping. After reading comments i figured from your answers that, 5 day data points for lookback on 5-10 min chart time frame is useful to find temporary support resistance levels, please confirm this or correct it.
thank you.
There are only two ways to do this Gautam –
1) Develop a system, set rules, and execute. The rules could be based on simple TA technique (Buy when X MA crosses over Y MA, buy when RSI is at xx) or simple quant based rules (buy when the stock price SD hits -1.2 etc).
2) Do it based on gut feel 🙂
If I were to scalp, I’d take the first approach. But I think the costs will be too prohibitive (taxes, brokerage) to chase scalping full time.
thank you for your reply sir. But as i said, it would be of a great help if you discuss scalping in detail. Kindly dedicate a chapter, or neverthless, a blog on z connect on how to scalp properly and be profitable. As i mentioned, there is a lot of misinformation online about scalping and even on varsity its only covered in brief. Hence its a sincere request from my side as well as on behalf of other fellow traders, that kindly cover this topic.
I look forward for your reply sir.
Thank You
Yours Sincerely,
Gautam Pinjani
Thanks Gautam. I’ll try and do this sometime. Do keep a tab on our Varsity’s social media channels, whenever its ready, we will put it out there.
If I trade in intra day and I want to scan all Nse 200 stocks to catch some momentum what should i do i should go with 1D chart or 15 Min chart for scanning. After Market hours. I use 15 mins chart for trading.
I’d suggest you use 1 day chart and see how it goes. If its working in your favor, then try small time frames. But I think 1 day should be good enough.
Hi, is Zerodha’s Pi now discontinued?
Yes, it is.
Hi Karthik, please make a seperate module on ‘Quantitative Analysis.
We have a module on trading systems, please check that. It is quantitative only 🙂