Module 2 Technical Analysis

Chapter 14

Indicators (Part 1)

338

M2-Ch14-title

If you look at a stock chart displayed on a trader’s trading terminal, you are most likely to see lines running all over the chart. These lines are called the ‘Technical Indicators’. A technical indicator helps a trader analyze the price movement of a security.

Indicators are independent trading systems introduced to the world by successful traders. Indicators are built on preset logic using which traders can supplement their technical study (candlesticks, volumes, S&R) to arrive at a trading decision. Indicators help in buying, selling, confirming trends, and sometimes predicting trends.

Indicators are of two types namely leading and lagging.  A leading indicator leads the price, meaning it usually signals the occurrence of a reversal or a new trend in advance. While this sounds interesting, you should note, not all leading indicators are accurate. Leading indicators are notorious for giving false signals. Therefore, the trader should be highly alert while using leading indicators. In fact the efficiency of using leading indicators increases with trading experience.

A majority of leading indicators are called oscillators as they oscillate within a bounded range. Typically an oscillator oscillates between two extreme values – for example 0 to 100. Based on the oscillator’s reading (for example 55, 70 etc) the trading interpretation varies.

A lagging indicator on the other hand lags the price; meaning it usually signals the occurrence of a reversal or a new trend after it has occurred.  You may think, what would be the use of getting a signal after the event has occurred? Well, it is better late than never. One of the most popular lagging indicators is the moving averages.

You might be wondering if the moving average is an indicator in itself, why we discussed it even before we discussed the indicators formally. The reason is that moving averages is a core concept on its own. It finds its application within several indicators such as RSI, MACD, Stochastic etc. Hence, for this reason we discussed moving average as a standalone topic.

Before we proceed further into understanding individual indicators, I think it is a good idea to understand what momentum means. Momentum is the rate at which the price changes. For example if stock price is Rs.100 today and it moves to Rs.105 the next day, and Rs.115, the day after, we say the momentum is high as the stock price has changed by 15% in just 3 days. However if the same 15% change happened over let us say 3 months, we can conclude the momentum is low. So the more rapidly the price changes, the higher the momentum.

14.1 – Relative Strength Index

Relative strength Index or just RSI, is a very popular indicator developed by J.Welles Wilder. RSI is a leading momentum indicator which helps in identifying a trend reversal. RSI indicator oscillates between 0 and 100, and based on the latest indicator reading, the expectations on the markets are set.

The term “Relative Strength Index” can be a bit misleading as it does not compare the relative strength of two securities, but instead shows the internal strength of the security. RSI is the most popular leading indicator, which gives out strongest signals during the periods of sideways and non trending ranges.

The formula to calculate the RSI is as follows:

M2-Ch14-Chart1

Let us understand this indicator with the help of the following example:

Assume the stock is trading at 99 on day 0, with this in perspective; consider the following data points:

Sl No Closing Price Points Gain Points Lost
01 100 1 0
02 102 2 0
03 105 3 0
04 107 2 0
05 103 0 4
06 100 0 3
07 99 0 1
08 97 0 2
09 100 3 0
10 105 5 0
11 107 2 0
12 110 3 0
13 114 4 0
14 118 4 0
Total 29 10

In the above table, points gained/lost denote the number of points gained/lost with respect to the previous day close. For example if today’s close is 104 and yesterday’s close was 100, points gained would be 4 and points lost would be 0. Similarly, if today’s close was 104 and previous day’s close was 107, the points gained would be 0 and points lost would be 3. Please note that, the loses are computed as positive values.

We have used 14 data points for the calculation, which is the default period setting in the charting software. This is also called the ‘look-back period’. If you are analyzing hourly charts the default period is 14 hours, and if you are analyzing daily charts, the default period is 14 days.

The first step is to calculate ‘RS’ also called the RSI factor. RS as you can see in the formula, is the ratio of average points gained by the average points lost.

Average Points Gained = 29/14

= 2.07

Average Points Lost = 10/14

= 0.714

RS = 2.07/0.714

= 2.8991

Plugging in the value of RS in RSI formula,

= 100 – [100/ (1+2.8991)]

= 100 – [100/3.8991]

= 100 – 25.6469

RSI = 74.3531

As you can see RSI calculation is fairly simple. The objective of using RSI is to help the trader identify over sold and overbought price areas. Overbought implies that the positive momentum in the stock is so high that it may not be sustainable for long and hence there could be a correction. Likewise, an oversold position indicates that the negative momentum is high leading to a possible reversal.

Take a look at the chart of Cipla Ltd, you will find a lot of interesting developments:

M2-Ch14-Chart2

To begin with, the red line below the price chart indicates the 14 period RSI. If you notice the RSI’s scale you will realize its upper bound to 100, and lower bound to 0. However 100 and 0 are not visible in the chart.

When the RSI reading is between 30 and 0, the security is supposed to be oversold and ready for an upward correction. When the security reading is between 70 and 100, the security is supposed to be heavily bought and is ready for a downward correction.

The first vertical line marked from left shows a level where RSI is below 30, in fact RSI is 26.8. Hence RSI suggests that the stock is oversold. In this particular example, the RSI value of 26.8, also coincides with a bullish engulfing pattern. This gives the trader a double confirmation to go long! Needless to say, both volumes and S&R should also confirm to this.

The second vertical line, points to a level where the RSI turns 81, a value which is considered overbought. Hence, if not for looking at shorting opportunities, the trader should be careful in his decision to buy the stock. Again, if you notice the candles, they form a bearish engulfing pattern. So a bearish engulfing pattern, backed by an RSI of 81 is a sign to short the stock. What follows this is a quick and a short correction in the stock.

The example that I have shown here is quite nice, meaning both the candlestick pattern and RSI perfectly align to confirm the occurrence of the same event. This may not always be true. This leads us to another interesting way to interpret RSI. Imagine the following two scenarios:

Scenario 1) A stock which is in a continuous uptrend (remember the uptrend can last from few days to few years) the RSI will remain stuck in the overbought region for a long time, and this is because the RSI is upper bound to 100. It cannot go beyond 100. Invariably the trader would be looking at shorting opportunities but the stock on the other hand will be in a different orbit. Example – Eicher motors Limited, the stock has generate a return of close to 100% year on year.

Scenario 2) A stock which is in a continuous downtrend the RSI will be stuck in the oversold region since the RSI is lower bound to 0. It cannot go beyond 0. In this case as well the trader will be looking at buying opportunities but the stock will be going down lower. Example – Suzlon Energy, the stock has generated a return of negative 34% year on year.

This leads us to interpret RSI in many different ways besides the classical interpretation (which we discussed earlier)

  1. If the RSI is fixed in an overbought region for a prolonged period, look for buying opportunities instead of shorting. The RSI stays in the overbought region for a prolonged period because of an excess positive momentum
  2. If the RSI is fixed in an oversold region for a prolonged period, look for selling opportunities rather than buying. RSI stays in the oversold region for a prolonged period because of an excess negative momentum
  3. If the RSI value starts moving away from the oversold value after a prolonged period, look for buying opportunities. For example, the RSI moves above 30 after a long time may mean that the stock may have bottomed out, hence a case of going long.
  4. If the RSI value starts moving away from the overbought value after a prolonged period, look for selling opportunities. For example, RSI moving below 70 after a long time. This means the stock may have topped out, hence a case for shorting

14.2 – One last note

None of the parameters used while analyzing RSI should be treated with rigidity. For example, J.Welles Wilder opted to use a look back period of 14 days simply because that was the value which gave the best results considering the market conditions in 1978 (which is when RSI was introduced to the world). You may choose to use 5,10,20, or even 100 days look back period if you wish too. In fact this is how you develop your edge as a trader. You need to analyze what works for you and adopt the same. Please note, fewer the days you use to calculate the RSI, the more volatile the indicator would be.

Also, J.Welles Wilder decided to use 0-30 level to indicate oversold regions and 70-100 level to indicate overbought region. Again this is not set in stone, you can arrive at you own combination.

I personally prefer to use 0-20 level and 80-100 level to identify oversold and overbought regions respectively. I use this along with the classical 14 day look back period.

Of course, I urge you to explore parameters that work for you. In fact this is how you would eventually develop as a successful trader.

Finally, do remember RSI is not used often as a standalone indicator by  traders, it is used along with other candlestick patterns and indicators to study the market.


Key takeaways from this chapter

  1. Indicators are independent trading systems developed, and introduced by successful traders
  2. Indicators are leading or lagging. Leading indicators signals the possible occurrence of an event. Lagging indicators on the other hand confirms an ongoing trend
  3. RSI is a momentum oscillator which oscillates between 0 and 100 level
  4. A value between 0 and 30 is considered oversold, hence the trader should look at buying opportunities
  5. A value between 70 and 100 is considered overbought, hence the trader should look at selling opportunities
  6. If the RSI value is fixed in a region for a prolonged period, it indicates excess momentum and hence instead of taking a reversed position, the trader can consider initiating a trade in the same direction.

338 comments

  1. Bimal says:

    Nitin, I was looking at Infy charts after Friday (7.11.14) closing. The stock hit 52 wk as well as all time high on 7th November. The last six candles on daily chart showed gap up opening and higher closing. Bollinger band suggests envelope expansion indicating trending stock. I think that they are indicators of strong bullishness in the stock. However, I also found that the RSI is near 76 and MACD is higher than signal. These indicate bearishness. I could not find any definite single or multiple candlestick pattern to trade. How should one interprete such chart for position trade?

  2. raman says:

    Sir,
    Please let me know good Technical analysis software in which i can draw all the things that u have mentioned in your Techinal Analysis module

    • jagadeesh says:

      Hi Raman,
      You can use amibroker which is a paid one. The price ranges between 18000 to 25000 depending on the edition you want.
      If you want to have a free software, you can use Fibotrader. Obviously the paid one is more user friendly than the free softwares. I don’t have any idea on our upcoming software ‘PI’. So even i request Karthik sir to comment on this. Hope it helps.. 🙂

      • Karthik Rangappa says:

        Here is a sneak peak into Pi. It is in beta stage, there are close to about 1000 people using it. Hopefully the finial release should be around the corner.

    • Karthik Rangappa says:

      The same is discussed here in this chapter Raman.

  3. Ashwin says:

    Hi Karthik,
    Can you please throw some more light on the look back period?

    • Karthik Rangappa says:

      Lookback period is simply the number of days data you wish to include in your calculation. For example a standard RSI indicator has a 14 day lookback period. You could change it to 21 if you wish.

      A 5 day SMA has a 5 day look back period…so on and so forth.

  4. Subhadeep Basu says:

    Lets go the materials in versity, only then I can comment.222

  5. Keerthan says:

    Hi Karthik,
    Could you have a look at the TVS Motors charts especially the last 5-6 trading sessions. The stock is trading near its all time high, which was 266.7 achieved a couple of trading sessions ago and so a sort of resistance exists around these levels, there is a dark cloud formation if we look at the last two trading sessions,looks like there is a double top pattern formation in place, the selling on Friday is not accompanied by increasing volumes(I believe it was profit booking before the weekend/expiry with doubts on NIfty’s movements) , indicators (RSI,MACD) doesn’t say much other than showing good strength. How do we approach this scenario, given that there is a possibility of making a new high accompanied with a breakout or a possible move towards the downside?

    • Karthik Rangappa says:

      Almost all the things you have mentioned is true –

      1) Double top formation
      2) Resistance
      3) Dark Cloud formation
      4) Low Volumes

      Except for the volumes part, the stock is suggesting a short trade (it click most of the checklist items). I would be happy to short and be quick to book profits as well. The only reason I’d be quick to book profits is the absence of impressive volumes.

      • Keerthan says:

        Thank you Karthik, for the validation. I have another question for you. Could you have a look into the charts of Small Cap’s like Aimco Pesticides, Waterbase, Freshtrop fruits etc. Here a peak was formed where volumes where high at those levels and over a period of time the volumes are decreasing and the chart shows a fall which is flat like a consolidation. Could you tell us what stage is the stock in (ie, accumulation, distribution or other)?

  6. Ankit Kukadia says:

    Hey,

    Material is quite lucid.. Thanks a lot for such an effort for Investor Education… I would like you to put up some explanation on Divergences in RSI and how to use them as trading opportunity… It will be really good and great opportunity one can get if we identify the divergence right… I am attaching one chart of current correction which if userd along with Trendline provided good shorting opportunity in Nifty.. See the impact of divergence…

  7. rajeshck32 says:

    I WANT TO KNOW ABOUT DIVERGENCE . CAN YOU PLS EXPLAIN THE CHART . THEORETICALLY PERFECT DIVERGENCE HAPPENED . AS I AM NOT ABEL TO UP LOAD THE CHART , PRESENT SITUATION IN NIFTY DAILY . WITH RSI INDICATOR .

  8. i want to know about fixing the for long or short , using resistance and support.

  9. Saurabh says:

    Hi Karthik,

    Where can we find the historical quarterly earnings of a company and can the stock price vs earnings be plotted on PI. Or is there any other place where I can find the same data?

    Generally speaking: Where can I find old data related to fundamentals?

    • Karthik Rangappa says:

      There are few sites that give out this information, try – Morningstar India, Moneycontrol, screener.in, economic times website etc. As far as I know you cannot plot the stockprice vs earnings on any software. However google finance has a nice feature which marks all the important dates (along with a quick 1 line explanation) on the the chart, suggest you give it a try.

  10. Prasanth Prakasan says:

    Dear sir,
    Can you please advice techniques which are useful for Indtraday.

    • Karthik Rangappa says:

      Please start by buying 1 or stocks and holding it till close…also to begin with don’t get into multiple buys and sells in the same day.

      • r.somasekharaiah says:

        In the evaluation process i read as— if s and r is more than 4 percent away from stop loss, stop evaluating in the chart. this i am unable to understand. kindly brief me.

        • Karthik Rangappa says:

          Meaning if the stock price is at 100 and the support for the stock is at 96 or more then it maybe touch to trade the stock as the placement of SL (based on support) will be quite far.

  11. Ganesh says:

    “If the RSI is fixed in an overbought region for a prolonged period, look for buying opportunities instead of shorting”
    How long exactly will be that prolonged period if I am using a 14 day RSI(like 4 days, 5 days or more than a week)?

    • Karthik Rangappa says:

      There are times when the RSI is stuck in a range for over 3-4 weeks. This according to me is a prolonged period.

  12. ashokle and i could trendlines says:

    i cannot expand indicators row.(RSI MACD ETC.). earlier it was possible so that i could draw trendlines. now it is a problem.please clarify

    • Karthik Rangappa says:

      Expand where? as in which software?

      • ashok says:

        earlier i was able to expand RSI, MACD rows in intraday chart available in nest chart. now i cannot do it.now it is too small row almost impossible to draw lines on them. i can draw lines on chart but not on rows as mentioned.

        • Karthik Rangappa says:

          Ashok, this seems to be a software issue, can you please contact your broker regarding this? If you are with Zerodha then you can call +91 80 40402020 and get this sorted. Thanks.

  13. DJ9425 says:

    Dear Karthik,

    I am posting here a chart of nifty ,In that there are two lines in RSI indicator.
    Of which, one is RSI14 but other line I don’t understand. Please guide. & can we add it in
    chart on our Pi and how ?.

    Regards.
    Haridas.

  14. prasad sarwate says:

    dear kartik sir,
    u have mentioned about the rsi in 0-20 and 80-100 as oversold and overbought regions resp.but what abt the rsi that is in a prolonged period of say in the range of 40-60.how to read these stocks.

  15. Alok Nautiyal says:

    Sir,
    Could you pls let me know which indicator is better to look between RSI and stochastic

  16. Alok says:

    Sir,
    If we have two scenario, pls suggest which one should we prefer for buying the stock
    scenario 1- Stochastic/RSI both are around 25 and then one bullish candle like marbouzo/hammer/bullish engulfing
    scenario 2- Stochastic/RSI bot are about 50 but EMA crossover of 3 days is above 8 days and it is going upwards which suggests positive trend

  17. Alok says:

    Sir,
    Which indicator according to you is better between EMA crossover and Bollinger bands

    • Karthik Rangappa says:

      EMA is momentum and BB is volatility based, cant compare both.

      • Gaurav says:

        Dear Sir,
        What is the difference between volatility and momentum?

        • Karthik Rangappa says:

          Very loosely put, Volatility is the daily movement of the scrips. Momentum is the rate of change of stock’s return. If the stock is trending high meaning it makes higher high, then its said to have a positive momentum. If it makes lower low on a daily basis, then its said to have a -ve momentum.

  18. aehsan4004 says:

    which is the best indicator / combination of indicator
    1) for pure intraday trading ?
    2) for short term (1 or 2 week ) holding ?
    3) for medium term ( 1 month to 1 year ) holding ?
    4) for long-term more than 1 year ( fundamental will be best for this , i assume ) but any technical indicator to re-affirm our selection ?

    • Karthik Rangappa says:

      Clearly mapping indicator to a given time frame is quite a challenge. But if you insist – for intraday something like a stochastic/MACD should help. For longer periods I would suggest you use moving averages.

  19. aehsan4004 says:

    exchanges issue daily highest gainers & losers .
    can this data be used as an indicator of some sort ? if yes , how ?

    for example , is it good strategy to long on stocks that gained the most the previous ( expectation being being uptrend will continue ) & similar for the stocks that lost the most the previous day ?

    or should be do completed opposite expecting a retracement or a correction ?

    • Karthik Rangappa says:

      It would be difficult to judge the strategy without validating it. Hence the best way to validate this would be to backtest the thesis. Download the daily closing data and run a query to fish out highest gainers/losers and check how they performed the following day.

  20. G A says:

    there is any difference b/w out technical analysis and united states?

  21. G A says:

    what type of skills required to be a trader and how to know i become a good trader?

  22. RK kumar says:

    What is the relevance of vix,open interest in options and how can we understand the positions of fii’s in option whether they are long or short….generally we call them fii’s but how many institutions registered under fii’s tag do they take separate views and trade or any kind of understanding between them?
    Theoretically option price derived from equities but nowadays due to high volumes in Fno and huge time and monetary implications equities price is derived by the options price esp.shorting data,is it correct?

    • Karthik Rangappa says:

      Suggest you read through chapters 15 to 20 in options module, its completely dedicated to understanding Volatility. It is very difficult to estimate FIIs are long or short in the market as they usually do arbitrage trade (which requires them to be both long and short at the same time). There are many FIIs registered in India, I guess SEBI has the entire list put up on their website.

      Also remember, spot dictates the derivative market and not the other way round.

  23. swapnil says:

    Karthik my target is to earn 2-3% on weekly basis. Please suggest me a strategy.
    My TA always goes wrong. 🙁
    Thanks in advance. 🙂

  24. Hitesh says:

    What is logic behind interpretation of RSI?

  25. Anurag says:

    Sir can u please suggest some syrategy for intraday commodity.? Which indicator is best suited for this suggest with a lookback period ?? And how much time grame chart is most benefecial to make profit?? Pls guide as i m new in trading

    • Karthik Rangappa says:

      These are generic questions Anurag, difficult to give you an exact answer. Also, please note there is no 1 good answer for this…you will have to experiment and arrive at what really works for you.

  26. DJ9425 says:

    Hi Karthik,

    Here are two charts of nifty spot both are 30 min. But why there are difference in RSI value
    of both charts at SAME time. In GF charts it showing 91 and kite showing around 70.

  27. shash.dollars says:

    Hello Karthik sir,
    Am not able to see any charts/screenshots uploaded by the readers in comment section. I tried a couple of browsers but still the problem remains. Please suggest…

    • Karthik Rangappa says:

      I guess in one of the recent updates, the media images got a little mixed up. Let me see what best can be done. Thanks.

  28. John says:

    Hi, somewhere you mentioned the name of a particular book which can help us i forgot the name of the book and author.

  29. John says:

    Can you please tell me how to find an undervalued and overvalued companies stock.

    • Karthik Rangappa says:

      A simple 2 stage DCF will help you identify this from a fundamental perspective. You can also use indicators such as RSI and MACD to get a technical perspective (for short term trading).

  30. Mehamood says:

    Hello Karthik, I need some help with one of the indicators – Stochastic Momentum Index, listed in KITE. That indicator works for me very well. I want to use it for 4 Hr time frame to confirm the trend, unfortunately 4Hr timeframe is not there in the KITE. So, is it possible to let me know which parameters are to be used to model that formula in AMIBROKER, please? I would really appreciate and thank you

    • Karthik Rangappa says:

      I’ve not used Amibroker much, so cannot comment. But why don’t you try this in Pi?

      • Sebastine C Chittilappilly says:

        Hello Karthik: What is the formula used for calculating Stochastic Momentum Index in Pi? The one I tried in Excel does not match for simple average smoothing. Could you please guide?

  31. Ganesh Iyer says:

    Hi Karthik,

    If the RSI is fixed in an overbought/oversold region for a prolonged period, we need to look for Buying/Selling opportunities. However, can you suggest the definition of prolonged period? Example: The RSI for a stock is in the overbought region for the past 15 days. So can 15 days be considered as a Prolonged period? Bottom-line – How many number of days can be considered as Prolonged Period? If the definition is subjective, what factors of the stock should be considered for evaluating the period?

  32. Prasoon says:

    Karthik sir,
    Wanted to ask you regarding market indicators.
    Is price relative/relative strength tool which compares the underlying security against the merger market average available in most technical Softwares? And why do they range between negative and positive territory

    • Karthik Rangappa says:

      Sorry to disappoint but I’m Not sure about this ‘merger market average’, I myself have to dig deeper into this topic. If in case you have any material then please do share it with the community here. Thanks.

  33. Shubham says:

    Hello Karthik,
    As mentioned in the tutorial that if the RSI starts moving away from oversold/overbought value from prolonged period of time, look for buying/selling opportunities respectively.
    My doubt is what if it continues to stay between the value 30-70 over a prolonged period of time. in both cases, it satisfies the above condition.
    Thanks

  34. pravshbajaj007 says:

    hello karthik sir
    when module 9 and 10 available for us?

  35. pravshbajaj007 says:

    HELLO KARTHIK SIR,
    PLEASE SUGGEST ME FEW BOOKS FOR TECHNICAL ANALYSIS AND CAN I AM ABLE TO LEARN TRADING WITH TECHNICAL AT HOME
    OR I SHOULD JOIN ANY COURSE.. PLEASE GUIDE ME

  36. nishu patel says:

    sir what is the difference between RSI and SMOOTH RSI please provide one example please so i can understand easily thanking you

  37. Pravesh bajaj says:

    Sir how to use esi for intra day trading

  38. praveshbajaj says:

    which indicators is best for intra day and swing trading please guide me i am not able to decide?

  39. sammandar khan says:

    Thanks for kind details
    How will I know RSI value fixed for a prolonged period?
    Thanks

    • Karthik Rangappa says:

      You will have to look for the daily change in value. You will know when RSI is sticking around the same value over few days/weeks.

  40. sammandar khan says:

    Thanks
    Plz clear my next query on next chapter15th

  41. SHYAM says:

    Hi sir,

    Can we use rsi indicator in individual stocks??

  42. kabir chandra says:

    hi, I was looking for StochasticRsi oscillator in pi, where can i find it ?

  43. mukesh says:

    hi,

    Looking for an indicator to see the price difference ratio or say spread between two stocks with mean line in between along with 2 standard deviation lines

    what I looking for is basically – a price ratio (blue curve) that appears to oscillate around a mean (purple line). And then 1-, 2-, standard deviation lines just to get a feel for how far away from the mean the oscillations might go.

    can some one please please code this indicator, I am sure there might be so many other people who are doing pair trading and are trying to find the same kind of indicator but it is not there, so it will help thousands of other zerodha users also

    REFERENCES:
    http://luminouslogic.com/a-pairs-trading-example.htm
    https://www.equityfriend.com/traders-tool/pair-trade-opportunity-and-analysis.html

    Regards,
    Mukesh

  44. Deepala says:

    Hello sir, first a heartfelt thanks for all the hard work you people have put in, to educate us. I want to know from where can i learn about momentum trading in detail sir. Would be very grateful if you could give us a chapter on momentum trading. Thank you.

    • Karthik Rangappa says:

      Thanks for the kind words, Deepala.

      You can apply the same TA principles to trade momentum. In fact, all the patterns I’ve discussed help you identify momentum and you could use the same to set up trades.

  45. darshandd says:

    Due to varsity, i am able to know about TA in stock market….
    i have que.– what was your thought behind indicator? means, there are plenty but you choose some of here. so we believe these are the best !?

  46. Hemant says:

    If i am using ema of 25 and 50 lookback period then should the value of rsi lookback period be also between 25 &50 or is it independent of ema period?

  47. Ayush says:

    Sir, I have some doubts,
    1. RSI is just a approximation of future occurance(uptrend or downtrend) based on lookback period, am i right?
    2. What lookback period will intraday trader will use?
    3. Suppose, If a intraday trader uses lookback period of 14 hours as you have mentioned, will it be helpfull because there will be small changes in price??
    4. Do we have to use MA,RSI,MA of volumes and S&R together for best possible result, am i right?

    • Karthik Rangappa says:

      1) Entire TA is an approximation based on historical occurrences
      2) I’d look at last 3 days data but focus more on current day’s price action
      3) Yes, it should
      4) Keep it simple, use one indicator (one which you understand best) along with CS pattern and S&R.

      Good luck.

  48. Ayush says:

    Sir, why to use indicator if we can indentify trend through candelsticks, is indicators only for confirmation?

  49. Pushkar says:

    two questions :
    1.) can we take different level for different sahres, for eg for infy we can use range 0-30 and 70-100 whereas for cipla we can use 0-20 and 80-100.
    i ask this because if i apply 0-20 and 80-100 on infy then very hardly i can see the RSI getting less than 20 or greater than 80 historically, instead when i use 0-30 and 70-100 there are many instances where the RSI displays oversold by crossing 30 and overbought by crossing 70 historically.
    2.)what is the the RSI is continuously between 31-69 (for range 0-30 and 70-100)? does that mean the RSI is not useful then ?

    thanks in advance

  50. SOMNATH says:

    hello,
    I need to know about super trend indicator? and on what basis period and multiplier value has to be selected for intraday trading and for long term?

  51. ZQ0852 says:

    DEAR SIR,
    How one should look at movement of nifty index while evaluating a stock. Say, can we add trend of nifty index to the grand checklist??

    • ZQ0852 says:

      Especially during intraday trading??

    • Karthik Rangappa says:

      The over all direction of the market should ideally be in the same direction of the trade. This enhances the probability of success.

      • ZQ0852 says:

        Dear sir,
        say I have evaluated a stock and most of the points are tallying with checklist and it suggest to go short, but when the market opens next mornig the market trend is upward, then
        1. Should I continue with my evaluation , drop the call or change the direction i.e. long instead of short (especially when it is an intraday call), please suggest…..
        2. Sir, Can I mail you as I have some doubts( regarding trading only) which I do not want to publish in public, as it may disturb other participants,??
        Regards

  52. Sameer says:

    I want to use comparative Relative Strength Indicator in PI . It shows this but the definition of Comparative RSI is to compare one security with the other security or base security , which is not showing .

  53. Ganesh says:

    I get the following ticks from zerodha through kite connect:

    The columns are: Timestamp, LTP, volume

    But when I calculate the RSI using the standard formula, I see that the values differ from what shows up in the kite website -> studies ->RSI graph. Can someone please elaborate on how the RSI is calculated using the intraday ticks?

    2017-07-28 09:20:14.366 194.9 1030000
    2017-07-28 09:20:17.297 194.85 1040000
    2017-07-28 09:20:19.607 194.85 1040000
    2017-07-28 09:20:20.183 194.85 1040000
    2017-07-28 09:20:24.372 195 1055000
    2017-07-28 09:20:25.540 195 1055000
    2017-07-28 09:20:26.190 195 1070000
    2017-07-28 09:20:28.626 195 1085000
    2017-07-28 09:20:31.159 195.05 1135000
    2017-07-28 09:20:34.225 195.05 1135000
    2017-07-28 09:20:36.436 195.05 1135000
    2017-07-28 09:20:37.434 195.15 1140000
    2017-07-28 09:20:39.281 195.15 1140000
    2017-07-28 09:20:40.264 195.15 1140000
    2017-07-28 09:20:43.119 195.15 1155000
    2017-07-28 09:20:46.216 195.15 1155000
    2017-07-28 09:20:49.240 195.15 1160000
    2017-07-28 09:20:52.452 195.15 1160000
    2017-07-28 09:20:56.403 195.15 1160000
    2017-07-28 09:20:58.356 195.2 1180000
    2017-07-28 09:21:01.405 195.2 1190000
    2017-07-28 09:21:04.158 195.2 1190000
    2017-07-28 09:21:07.375 195.15 1205000
    2017-07-28 09:21:09.500 195.05 1215000
    2017-07-28 09:21:10.403 195.15 1220000
    2017-07-28 09:21:12.522 195.2 1225000
    2017-07-28 09:21:13.192 195.15 1230000
    2017-07-28 09:21:16.239 195.15 1250000
    2017-07-28 09:21:19.284 195.1 1255000
    2017-07-28 09:21:22.347 195.1 1260000
    2017-07-28 09:21:25.195 195.15 1270000
    2017-07-28 09:21:27.121 195.15 1270000
    2017-07-28 09:21:28.602 195.15 1270000
    2017-07-28 09:21:30.266 195 1300000
    2017-07-28 09:21:31.440 195 1300000
    2017-07-28 09:21:34.287 195.15 1305000
    2017-07-28 09:21:37.250 195.2 1310000
    2017-07-28 09:21:40.241 195.2 1310000
    2017-07-28 09:21:45.603 195.25 1325000
    2017-07-28 09:21:50.173 195.3 1330000
    2017-07-28 09:21:51.308 195.3 1330000
    2017-07-28 09:21:52.452 195.45 1355000
    2017-07-28 09:21:54.210 195.45 1355000
    2017-07-28 09:21:55.283 195.45 1355000
    2017-07-28 09:21:59.306 195.45 1355000
    2017-07-28 09:22:00.196 195.45 1355000
    2017-07-28 09:22:02.377 195.45 1355000
    2017-07-28 09:22:04.493 195.45 1355000
    2017-07-28 09:22:05.399 195.55 1375000
    2017-07-28 09:22:07.519 195.55 1380000
    2017-07-28 09:22:09.213 195.65 1390000
    2017-07-28 09:22:10.286 195.65 1390000
    2017-07-28 09:22:14.129 195.7 1400000
    2017-07-28 09:22:15.205 195.7 1400000
    2017-07-28 09:22:17.257 195.7 1400000
    2017-07-28 09:22:19.168 195.85 1410000
    2017-07-28 09:22:23.382 195.3 1515000
    2017-07-28 09:22:25.163 195.3 1515000
    2017-07-28 09:22:28.631 195.3 1515000
    2017-07-28 09:22:32.256 195.3 1515000
    2017-07-28 09:22:35.312 195.05 1525000
    2017-07-28 09:22:36.793 195.05 1525000
    2017-07-28 09:22:38.631 195.05 1525000
    2017-07-28 09:22:41.276 195.45 1600000
    2017-07-28 09:22:42.333 195.45 1600000
    2017-07-28 09:22:43.152 195.45 1600000
    2017-07-28 09:22:44.393 195.45 1600000
    2017-07-28 09:22:45.434 195.4 1605000
    2017-07-28 09:22:50.243 195.4 1605000
    2017-07-28 09:22:52.176 195.4 1605000
    2017-07-28 09:22:55.442 195.55 1610000
    2017-07-28 09:23:02.249 195.55 1610000
    2017-07-28 09:23:04.297 195.55 1610000
    2017-07-28 09:23:05.243 195.55 1620000
    2017-07-28 09:23:06.397 195.55 1620000
    2017-07-28 09:23:07.273 195.55 1620000
    2017-07-28 09:23:09.349 195.6 1625000
    2017-07-28 09:23:13.179 195.55 1650000
    2017-07-28 09:23:14.411 195.55 1650000
    2017-07-28 09:23:26.231 195.65 1680000
    2017-07-28 09:23:31.406 195.7 1690000
    2017-07-28 09:23:32.523 195.7 1690000
    2017-07-28 09:23:35.256 195.7 1690000
    2017-07-28 09:23:38.878 195.7 1690000

  54. Ganesh says:

    To be more precise:
    These are the closing prices for DLF August Future starting from 09:19:00 AM to 09:34 AM.
    Since RSi is based on closing price of the period, For the 14 period (1 min chart) RSI should be 82.98

    09:19:00 194.8
    195.2
    195.45
    195.55
    195.75
    195.5
    195.5
    195.35
    195.4
    195.5
    195.65
    195.7
    196.1
    196.3
    09:34:00 196.35

    But on the 1 min chart it shows the RSI as 58.69

    • Karthik Rangappa says:

      Like I suggested, first check if the formula works on EOD data. Also, when you are dealing with the minute chart, you are dealing with a lot of noise.

      • Ganesh says:

        Hi Karthik,

        The formula works well on EOD data. I am writing some code which depends on intraday RSI on a 1 min period.
        If you can elaborate on how the value is in coming out to be around 58 @09:34-:09:35 AM for DLFAUG17FUT it will be very helpful. The closing price for every minute is as mentioned by me.
        What formula is kite app using? why is it not using the formula mentioned above?

  55. Shubhendu says:

    Dear sir. Can you clarify my whether RSI value can become exactly 100 if there is any point of loss with in the 14 days.
    I think as per the formula RSI could never become exactly 100 unless RS value become infinite and RS value will become infinite only if the average loss is zero and it is possible only when there is no point of loss in look back period ie.14 days. It may be 99.9999 but it could not become 100. Please clarify whether I’m right or not.
    Thanks for your valuable time spending on my comment.

  56. Umer Azam says:

    “fewer the days you use to calculate the RSI, the more volatile the indicator would be”.
    What does this mean sir?
    Also, since nowadays nifty is pretty rangebound would you suggest using RSI indicator on it? Would 14 days be apt or should I increase the time?
    Looking forward for your valuable inputs. ☺️

    • Karthik Rangappa says:

      Whenever you reduce the time frame in technical analysis, the noise component increases, and hence more volatile.

      I find simple moving averages more effective in present day circumstance.

      • Umer Azam says:

        Sir, market is not trending nowadays so how can you justify using SMA? You said it works best when market is trending

        • Karthik Rangappa says:

          No, what I ment was that a simple SMA should help in identifying a trending situation. For sideways markets, I also like Bollinger Bands.

  57. Udit Aggarwal says:

    Hi. It’s been a year at Zerodha for me and in my humble opinion, it’s all one can ask for in a trading platform and so much more. I recently started experimenting with intraday trading and got mixed results. I have a couple questions regarding the same.

    1. In your opinion, what are the best technical indicators for intraday trading?
    2. What time frame (i’ve been working with 5/10 min charts) is the most suitable for such trades?

    Thanks!

  58. harshit kumar says:

    Sir , I have confusion that the events of overbuying and overselling had occurred in past hours or periods .How can we take desicion based on event occurred some days ago.as technical analysis shows the past trend.

    • Karthik Rangappa says:

      TA is best when you take action based on what has transpired in the market on an immediate basis barring some theories of Dow and Support/Resistance.

  59. venu says:

    I have set 20/80 indicator , what does it mean if it between 40 to 60

    60 to 80 what does this indicatate???

  60. kunal says:

    karthik ji can u plz answer to my questions
    i have read it somewhere in newspaper that
    1. priceband=685 to 700 per equity share of face value of rs. 10 each
    if price is 685 to 700 then what is face value? whats the difference?
    and what does these means:–
    2. discount to eligible employees : rs 68 per equity share on offer price
    3. floor price is 68 times the face value and the cap price is 70 times the
    face value
    4. bids can be made for a minimum of 21 equity share and in multiples
    of 21 equity share thereafter.

    • Karthik Rangappa says:

      1) Face value is the notional value of the share, whereas the share price is the actual value on a per share basis as assigned by the market
      2) Yes, this is the discount for employees
      3) Assuming FV as 10, floor is 680 and upper band is 700
      4) You have to apply for 21 shares or in mutiples – not numbers like 22, 25, 15 etc..

  61. kunal says:

    kk but what does floor price and face value mean and can u plz elaborate no. 4

  62. Princia says:

    Sir, Where will i get information about VAH,VAL,POC,IB,WAP ? Is there available in zerodha varsity??

  63. Princia says:

    Sir ,

    Is there notes on VAH ,VAL,POC etc??

  64. Archit Bagla says:

    Hi sir
    When you say the word “Trend” , be it upward or downward , does its definition changes on the type of trading.
    Like If I am a day trader then “trend ” can be defines by a lookback period of 7-10 days and for the short term trader it my be several weeks or months for the same stock.
    Please tell me if I am getting it right

    • Karthik Rangappa says:

      The trend just refers to the direction in which the stock is gaining momentum, based on which you can set up your trades. YOu are right on the look-back period – trend refers to the look back period you are taking into consideration.

  65. Santosh Panda says:

    Hi Sir,
    I am looking for StochasticRsi Oscillator and Vortex Indicator in pi, where can i find it ?

    Regards
    Santosh Panda

  66. Ritu Aggarwal says:

    Hi Karthik,

    I recently joined Zerodha and its the least when i say that you are doing outstanding work with it. Keep up the great work.
    I have one question. Which indicators when combined work best for intraday trading? I really find stochastics fast % line very useful in predicting. However, what will your suggestion be?

    Thanks.

    • Karthik Rangappa says:

      Ritu – Welcome to the Zerodha Family 🙂

      One shoe does not fit all.

      No candlestick pattern or indicator works on the same 2 stocks. For example, bullish engulfing along with RSI may work on SBI but may not on HDFC. The trick is to backtest and be aware of which pattern/indicator (has a better probability) works on which stock.

  67. Esan says:

    karthik your view about advantages and disadvantages of ichimoku indicator whether it is a reliable indicator

  68. Kartik Raghuram says:

    Hello Mr. Karthik 🙂 Sir can you please tell me which technical indicators/strategy is good to use for intraday trading according to you? and the parameter settings for them according to you.. Also for intraday trades especially, is Profit:StopLoss ratio of 2:1, 3:1 good one?
    Awaiting your kind reply! Thanks.

    • Karthik Rangappa says:

      That would be really tough to answer because no two indicators work alike and no indicator works the same way on two stocks. You will have to backtest each indicator on different stocks and figure out which one works on what.

      • Kartik Raghuram says:

        Thanks Mr. Karthik. I have done a certification course in which i learnt about Technical Analysis, Indicators like MA, MACD, RSI, Bollinger Bands & Dow Theory. Candlestick chart patterns: Bullish/Bearish Engulfing, Piercing/DarkCloud, Bullish/Bearish Harami, Morning/Evening Star.. According to you, is there anything else which i should learn about/add to my list of indicators and chart patterns which is definitely worth it.. Thanks and regards.

        • Karthik Rangappa says:

          If you are comfortable with these patterns, then I’d suggest you practice these in real markets. Once you get confident, try other patterns. Perhaps, you can backtest them to get greater insights. Thanks.

          • Kartik Raghuram says:

            Okay sure thanks 🙂 I have been suggested to use SMA(80), MACD(12,26,9) RSI(14) with oversold level 30 and overbought level 70 and BB(20,2) for the daily chart trades.. Is this fine ?

          • Karthik Rangappa says:

            Its fine, as long as you backtest it 🙂

  69. Arijit says:

    I am new in stock trading. I am interest in short term trading one to two week.
    My question is what kind of technical indicator I need to set.
    1. 5 20 sma crossover
    2. RSI (14) above 80

    your views pls.

    • Karthik Rangappa says:

      Yes, you can use any of these indicators. However, I find candlestick charts a bit more powerful in terms of its predictive power.

  70. senthil says:

    Hi Karthik, Excellent materials on technicals! I have a querry 1. Should RSI value analysis fixed(20-30 for buy & 80-100 for sell) for all stocks. Or can we choose different RSI for different stocks?

    • Karthik Rangappa says:

      Not really, you can choose to customize your RSI levels.

      • Ritobroto Seth says:

        I am trying to calculate the RSI of Suzlon for an interval of 14 days. These are the date and close e prices –
        Thu Nov 02 09:15:00 IST 2017 — 16.4
        Fri Nov 03 09:15:00 IST 2017 — 16.5
        Mon Nov 06 09:15:00 IST 2017 — 16.1
        Tue Nov 07 09:15:00 IST 2017 — 15.55
        Wed Nov 08 09:15:00 IST 2017 — 15.5
        Thu Nov 09 09:15:00 IST 2017 — 15.5
        Fri Nov 10 09:15:00 IST 2017 — 15.55
        Mon Nov 13 09:15:00 IST 2017 — 14.65
        Tue Nov 14 09:15:00 IST 2017 — 14.5
        Wed Nov 15 09:15:00 IST 2017 — 13.65
        Thu Nov 16 09:15:00 IST 2017 — 13.45
        Fri Nov 17 09:15:00 IST 2017 — 13.7
        Mon Nov 20 09:15:00 IST 2017 — 13.6
        Tue Nov 21 09:15:00 IST 2017 — 13.85
        Wed Nov 22 09:40:34 IST 2017 — 13.75

        My RS is coming out to be 0.197 and RSI is 16.45
        But in Kite the value is showing something around 31.6?? Can you please explain how come you are getting that value?

        • Karthik Rangappa says:

          Are you applying this to closing value?

          • Ritobroto Seth says:

            Yes these are the closing values. You can cross check one or two dates if you want. Also, please let me know what is the answer that you are getting.

          • Karthik Rangappa says:

            Sure. Will let you know if I do this.

          • Ritobroto Seth says:

            I got it know. Although in the article you have mentioned to divide the (total_profit/14) and divide the (total_loss/14) to find the average loss and gain, but what you actually doing is dividing the (total_profit/no_of_positive_days) for finding the average gain and dividing the (total_loss/no_of_negative_days) for finding the average loss. I was doing the prior one once so their was a mismatch of the RSI value, from your value. Please confirm.

          • Karthik Rangappa says:

            I guess you found your answer 🙂

  71. chidambaram says:

    Hi Sir,
    If the RSI is in a overbought or oversold region for a prolonged period (say more than 20 days) and so if we are entering the trade ( long/short) respectively and once we have entered ,if the momentum losses and RSI and price are moving in opposite direction, what to be done? How to identify these scenarios and get rid of it?

    • Karthik Rangappa says:

      YOu cannot get rid of it, you can trade along with it 🙂

      Its best if you use it as a contrarian indicator when the RSI values are stuck in the overbought/sold value for a prolonged period of time.

      • chidambaram says:

        Hi Sir,
        What if we have entered the trade based on RSI touching overbought or oversold, in a hope that it would retrace back ,but if the trend prolong to continue in the same direction??In this case what could be the SL?

  72. Ali says:

    Hello Karthik,

    Does the Zerodha trading platform has a feature wherein I can continuously get the values of the EMA’s that are plotted on my graph ?. For example as the graph builds along during a trading session and the EMA’s get plotted for a particular scrip/stock/security, there should be an API that I can use to extract the EMA values for this particular scrip/stock/security. I can then use these values within a customised program to arrive at the decisions I need to make an entry or exit.

    Please advice.

    Regards,
    Ali.

    • Karthik Rangappa says:

      No, we don’t have this feature. However, if you are familiar with coding, then maybe you should check out the Kite Connect APIs – https://kite.trade/docs/connect/v1/. I’m sure you can build this quite easily.

      • Ali says:

        Hello Karthik,
        Thank you for the prompt response. I have one more query on the Stock Futures (Derivatives) market. Do you know why after market hours are not allowed for the derivatives (Stock Futures) segment ?. What is the logic behind restricting this when one can place a after market hours order on the equity segment ?.

        Regards,
        Ali Asghar.

        • Karthik Rangappa says:

          I’ll get back to you with an answer for this, Ali. Thanks.

          • Ali says:

            Hey Karthik,

            Did you get a chance to think over the query of Derivatives not being allowed for pre and post market hour orders ?

            Regards,
            Ali Asghar.

          • Karthik Rangappa says:

            Hey, sorry I guess I missed your query earlier – anyway, even in after market hours trading price discovery won’t happen for eq, one has to trade only market orders at closing prices of 3.30.

      • Ali says:

        Hello Karthik,

        Going back to the query I posted on 7th december and you responded with the possibility of using Kite connect API’s. I really want to give this a try. Would you be able to provide technical assistance in case I hit some roadblocks during the development ?.

        Regards,
        Ali Asghar.

  73. Vishal says:

    Hi Karthik,

    As a beginner I loved articles here on Varsity, Thanks for sharing your knowledge with such great examples.

    What I am failing to understand is how these indicators can help in long term investments, I understand FA is good for long term but how do we chose an entry point where prices are low which in turn helps in more profit. If we make an entry at uptrend market and eventually lose money due to down trend.

    Could you please help with some pointers which can help in understanding entry point and exit point.

    Thanks.

    • Karthik Rangappa says:

      Vishal, TA and FA are two different schools of thoughts. You use TA for short-term trades and FA for long-term investments. Mixing the two can be a little tricky. I’d suggest you dont do this, at least when you are starting off. Long-term investment should be made based on fundamental factors.

      • Vishal says:

        Thanks for the reply.

        So does it mean just look at the fundamentals of the company and if they are good buy the stocks whatever the market price and let fundamentals handle it on the long run?

        Thanks.

  74. mukkurathor says:

    Hi sir…when we say “prolonged period” what range we ahould consider …is it for 1 month or more?

    • Karthik Rangappa says:

      It really depends, if you are looking at a 6-month-old chart, something like 1-2 months can be considered prolonged.

      • mukkurathor says:

        Thank u sir….just for confirma. tion…if i look at adani power chart (6 month)….the RSI has crossed 85….and in the past it has shown down trend when RSI crosses above 80( see 2 yr chart) ….should i wait for other indicator( like candle pattern ) , to initiate the short position in this scrip.

        • Karthik Rangappa says:

          Like I’ve mentioned earlier, the decision to buy or sell has to come from Candlestick, indicators only act as a secondary confirmation to the trade.

      • mukkurathor says:

        Thank u sir….just for confirmation…if i look at adani power chart (6 month)….the RSI has crossed 85….and in the past it has shown down trend when RSI crosses above 80( see 2 yr chart) ….should i wait for other indicator( like candle pattern ) , to initiate the short position in this scrip.

  75. Anish Srivastava says:

    Where I can find relative strength comparative tool on pi or Kite?

  76. rajesh says:

    My doubt not related to this topic, although please answer
    Suppose i initiated a trade kept stoploss and take profit … Will trade get executed even if i am not in online due to powerloss, internet problem etc.. (as these are most common )? i am hearing a lot of negative about zerodha in this case..
    kindly reply me

  77. Ram Niwas says:

    Firstly happy republic day to all
    Karthik sir I m new in your trading platform. I m reading your articles and they are fruitful for me as beginner.
    I would like to know which strategy is best for option trading as I have lost so much money in option.
    Thnx

  78. Prateek kumar jaiswal says:

    Hi Karthik,
    What I understand if RSI stuck in overbought region for prolonged period and if I am believing to go long from here so it would be easy for me if I received any supporting signal to go long at this juncture. Having said this what all parameters one can look for to support this overbought region and hence go long? Few things I can consider if supports are being respected, Avg volume is justifiable and getting strong candlesticks patterns with S&R and volume.
    Kindly throw your opinion here.

  79. Bhavesh pokar says:

    Sir in rsi indicator, which time frame is best?
    Chart candle time 5 min, 10min,or 15min which is accurate for intraday?

  80. Murali Navada says:

    Just awsome Article Nithin Sir, Nimage koti Namana 🙂

  81. Varun Joshi says:

    Hi! Sir, Can we have Chande Vidya Indicator in Zerodha Charts?

  82. Varun Joshi says:

    Also if we can have 75 min charts on our charting software…

  83. ALI ASGHAR says:

    Hello Karthik,

    I am trying to use the programmable alerts on the PI trading platform using TradeScript language. One basic question that arises when I go through the TradeScript manual is , for every function that TradeScript provides ,f or example
    LAST – which fetches the LAST TRADED price
    OPEN – which fetches the OPEN price of a scrip.
    the manual says it will be the OPEN price of the the current CANDLE , LAST PRICE will be the most recent price of the current CANDLE, but it does not say whether these are DAILY CANDLES, HOURLY CANDLES or MINUTE CANDLES.
    If I would want to compare the Closing price of the previous day to the OPEN price of the current day as soon as the market opens , how would I do that ?
    Are all these functions based on the CHART that one is using ?

  84. Krishnakant says:

    What values are considered for RSI ? is it closing price, average price ? Since the values are not matching between kite software and manual calculation. Also there is difference with other software like screener pro

    • Karthik Rangappa says:

      Closing prices as default, but you can give it any input – Open, high, low, or avg prices. You just need to ensure that the input is same across all software, as long as that is in place, the RSI values will match.

      • Krishnakant says:

        It’s not matching with my manual calculation considering closing price and also with screener pro. Could you please share me the formula you use for RSI

        • Karthik Rangappa says:

          The formula is explained in the chapter itself.

          • Krishnakant says:

            Consider RSI of Jubilant Foodworks for latest 14 days which comes to 77.6 as per the formula, whereas it’s showing 68.03 in kite now. You can cross check

          • Karthik Rangappa says:

            Will do. Btw, you are calculating this on which average – simple avg, exponential avg, weight avg?

  85. Krishnakant says:

    Calculating based on simple average.

  86. Tarun Arora says:

    Is there any way to plot first 15 min high-low point automatically with horizontal lines for current and past dates in the Kite ?

  87. mani says:

    Nithin,
    is there any plan in near future to add “squeeze momentum indicator” as its now only available with trading view but one of the best indicator so for.
    Kindly update.

    • Karthik Rangappa says:

      We will check this and let you know Mani.

      • YOGESH KULKARNI says:

        Hi Karthik,
        I m using Kite since last 1 year, i do activly trading in FnO. To get an early entry/exits signal , i required Average RSI indicator. How can I add it in kite?

        • Karthik Rangappa says:

          RSI is available but I don’t think Avg RSI is not available. Maybe you can add the moving average over RSI.

  88. kishore says:

    Sir

    kindly tell me how i can add ztrend indicator to my chart.

    • Karthik Rangappa says:

      Open the chart and select the indicator you need under “studies”. This will plot the indicator on the price chart.

  89. Anagha says:

    What is standard indicators for RSI Chart?

  90. Anagha says:

    What is standard values to be put for RSI Chart?

  91. Binesh says:

    Sir, Any good books you think would be a good read on different technical indicators?

    • Karthik Rangappa says:

      I cant think of a book which is dedicated only to indicators. You may want to check Steve Nison’s book on Candlestick Patterns. The 2nd half of the book discusses few indicators.

  92. Shyam says:

    Hi,

    I am attaching image of banknifty as on 25th jun. Is that a bearish divergence?

  93. Arvind Modi says:

    Sir,I am impressed in going through your TA analysis in depth. But unfortunately, even after repeated study of your write ups,I failed to decide following.please help.

    please refer the following stocks on BSE , waterbase, fresh fruits,and aimco pesticide .And please tell me as to whether these stocks are in accumulation phase or distribution phase..or it falls in different category otherwise,Please explain whatever is your logic.
    Thanks
    regards
    Arvind Modi

    • Karthik Rangappa says:

      Arvind, I can do that…but I’d like to understand what exactly is the problem you face. Maybe I can help you with this

      • Arvind Modi says:

        Sir,my confusion ,rather ,not able to understand the chart ‘s characteristic..As per your ,accumulation n distribution attributes,after rise with high volumes till it peak,I take this as mark up 1 phase.ok.Subsequently,stock started falling with reduction in volume unabatedly till almost higher low status at swing bottom.The volume is not enough to buy even with bullish candle pattern developes.My question is this formation does not specify any where in your brillint full article.So is this accumulation again? as distribution phase is almost over awaiting suitable candle pattern with volume ,Time n price consolidation .?what should be traders approach in such scenario????

        • Karthik Rangappa says:

          Arvind, volumes should confirm your action. In case the volumes don’t support, then usually there is scope for a contrarian view. I would suggest you look at this from this perspective.

          • Arvind Modi says:

            sir,With all respect, you have yet not specified as to whether these scrips are in which phase?accumulation or distribution end? Nothingvsaid so far in your article regarding contrarian approach.Please highlight on this.Are you in favour of contrarion approach?In case If I donot want to be contrarian,when can I take position in such type of stocks?
            Overall,I am very happy with your article.and helped me a lot to clarify my wrong concepts so far.I heartily thank you very much for that.

          • Karthik Rangappa says:

            Arvind, I’ve clearly explained here that identifying accumulation and distribution is a bit tricky. Check this article – https://zerodha.com/varsity/chapter/dow-theory-part-1/, section 17.2.

            Of course, contrarian approach is great, but for this, you need to have a great amount of conviction. You will develop this with experience.

          • Arvind Modi says:

            sir,With all respect, you have yet not specified as to whether these scrips are in which phase?accumulation or distribution end? Nothingvsaid so far in your article regarding contrarian approach.Please highlight on this.Are you in favour of contrarion approach?In case If I donot want to be contrarian,when can I take position in such type of stocks?
            Overall,I am very happy with your article.and helped me a lot to clarify my wrong concepts so far.I heartily thank you very much for that.
            p.s.in case if I go as contrarion ,what factors apart from volumes,I should look in to for a justified selection of the stocks

          • Karthik Rangappa says:

            Volumes matter, apart from that identifying accumulation and distribution trends matter, which like I explained can be developed over experience.

  94. Arvind Modi says:

    Karthik sir,I am waiting for your invaluable reply agaist my above post regarding confusion in deciding the faith of scrips waterbase,Fresh fruits n Aimco pastycides.Hope your write up helps in deciding this confusion
    Thanks
    Arvind

  95. shalender says:

    sir rsi is not same which i calculated in excel sheet of any company compare to your rsi.

  96. Onkar says:

    Sir In kite could you add swing indicator which shows HH,LL,HL,LH. on charts.

  97. Devesh says:

    If I have set the period for my chart as 1 minute then does the period in the studies like moving average mean 1 minute or would it be 1 day?

  98. Sarthak Laddha says:

    How to perform “Relative Strength Analysis” with some benchmark like nifty 50 on kite?

    • Karthik Rangappa says:

      The relative strength of momentum? If yes, you can simply look at the indicators for this.

      • Sarthak Laddha says:

        No, Relative strength analysis. Ratio of a stock 1 and benchmark (like nifty) [stock1/nifty] , and comparing it with the ratio of stock 2 and benchmark. [stock2/nifty] and Identifying the outperformance/underperformace with benchmark.

  99. Ajinkya Sawrikar says:

    Hey Karthik ! Could you please take a look at this chart and tell me what all it checks ? (According to the checklist until now)
    https://drive.google.com/open?id=1Oe9xlW1uP5LE_WDwnbvgzmeDnvavusCn

    • Karthik Rangappa says:

      I’d be hesitant to trade this stock with so many gaps and circuits. Technical Analysis is of very little help here 🙂

  100. Ajinkya Sawrikar says:

    What if the RSI moves in the range of 20 and 80 ? lets say 55 ? What does it indicate ?

  101. Ajinkya Sawrikar says:

    Hey Karthik ! Is RSI of any use if it is between 20 and 80 ? What does this range tell ?

  102. Dr R.Ronraj says:

    Mr Karthik R
    I very much like your postings
    let you be the torch bearer to may people like us
    Dr.R.Ponraj (M.Tech. NIT surathkal, Ph.D. IIT Madras)
    Coimbatore 13.10.18

  103. Jason says:

    Can you please help in ” How to check the values of the indicators placed on a chart at a particular pointer” in Kite
    ???

  104. gaurav says:

    Dear Karthik Sir,
    If a dumb newbie has started understanding all the TA contents nicely then how much time and money will it take to make 2k frequently usually on daily basis??

    Thank you.

  105. Srinathjayanna says:

    I’m a beginner and trade only in cash market still not started with f&o and I trade only nifty 50 selected stocks and some next 50 and midcap stocks I basically prefer swing trades and rsi I buy when rsi enters 30levels and even if it falls then also I buy and keep on averaging and I hold the positions for multiple days and when I enter into profit zones I book my profits this strategy has given me some good profits and has a good accuracy upto 80% wat do u say about this strategy is it good to average a lossing trade as in some TV channels they say don’t average Ur losing trades waiting for Ur precious opinion on this.

  106. Nove Vargs says:

    I have my own stock screen in Google sheets, I wish to add RSI also in a colum. Do you have a code for Google sheets which pull out RSI values of a script. Thanks in advance.

  107. Abhishek Kuckreja says:

    Hi,
    Can you tell me what is the difference between RSI and stochastic? Which one is better applicable for swing trading?

    • Karthik Rangappa says:

      Have explained the difference in the chapter. I’d suggest RSI. Stochastic does not work well for swing positions.

  108. bk sharma says:

    Can you suggest best trading software in the market which auto signals buy/sell intraday/Swing/Positional and user friendly.

  109. Padma says:

    Sir, to practice scalping on an intraday basis which indicators/combination of indicators are best to use? I am using 15 minutes and 5 minutes candles. Please provide some insight. I am entirely new to this but scalping on intraday is most interesting for me. I know scalping needs quick action that i can take care, planning to write code for executing the order.

    • Karthik Rangappa says:

      Padma, if you are keen on scalping, then I’d suggest you look at order flow data along with price volume breakouts. However, since you are new and you are interested in this, I’d suggest you start with 1-2 trade setups for the day using 10/15 mins candle. Once you get used to this, maybe you can think of scalping.

      Good luck!

      • Padma says:

        Thank you Karthik, i heard of price volume break outs but never heard a term order flow data . Please elaborate. Also pls share any reference material that can be of help for the best indicator selection for scalping on indian share market. Yes i also planned to try daily 1 to 2 indicators or combinations of indicators in my program..thank you…

        • Karthik Rangappa says:

          Order flow data is nothing but the way the people buy and sell, which reflects in the market depth (top 5 bids and asks). The higher the flow, the higher the liquidity of the stock, hence easier it to buy and sell larger quantities. I’m saying larger quantities because scalpers transact large quantities for a relatively smaller movement in the stock.

  110. Pavan Kumar says:

    When should RSI and MACD used,
    Range bound or trending?

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