Module 2 Technical Analysis

Chapter 7

Single Candlestick patterns (Part 3)

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M2-Ch7-title

7.1 – Paper Umbrella

The paper umbrella is a single candlestick pattern which helps traders in setting up directional trades. The interpretation of the paper umbrella changes based on where it appears on the chart.

M2-Ch7-D1a

A paper umbrella consists of two trend reversal patterns namely the hanging man and the hammer. The hanging man pattern is bearish and the hammer pattern is relatively bullish. A paper umbrella is characterized by a long lower shadow with a small upper body.

If the paper umbrella appears at the bottom end of a downward rally, it is called the ‘Hammer’.

If the paper umbrella appears at the top end of an uptrend rally, it is called the ‘Hanging man’.

To qualify a candle as a paper umbrella, the length of the lower shadow should be at least twice the length of the real body. This is called the ‘shadow to real body ratio’.

Let us look at this example: Open = 100, High = 103, Low = 94, Close = 102 (bullish candle).

Here, the length of the real body is Close – Open i.e 102-100 = 2 and the length of the lower shadow is Open – Low i.e 100 – 94 = 6. As the length of the lower shadow is more than twice of the length of the real body; hence we can conclude that a paper umbrella has formed.

7.2 – The Hammer formation

The bullish hammer is a significant candlestick pattern that occurs at the bottom of the trend. A hammer consists of a small real body at the upper end of the trading range with a long lower shadow. The longer the lower shadow the more bullish the pattern.

The chart below shows the presence of two hammers formed at the bottom of a down trend.

M2-Ch7-Chart1

Notice the blue hammer has a very tiny upper shadow, which is acceptable considering the “Be flexible – quantify and verify” rule.

A hammer can be of any color as it does not really matter as long as it qualifies ‘the shadow to real body’ ratio. However, it is slightly more comforting to see a blue colored real body.

The prior trend for the hammer should be a down trend. The prior trend is highlighted with the curved line. The thought process behind a hammer is as follows:

  1. The market is in a down trend, where the bears are in absolute control of the markets
  2. During a downtrend, every day the market would open lower compared to the previous day’s close and again closes lower to form a new low
  3. On the day the hammer pattern forms, the market as expected trades lower, and makes a new low
  4. However at the low point, there is some amount of buying interest that emerges, which pushes the prices higher to the extent that the stock closes near the high point of the day
  5. The price action on the hammer formation day indicates that the bulls attempted to break the prices from falling further, and were reasonably successful
  6. This action by the bulls has the potential to change the sentiment in the stock, hence one should look at buying opportunities

The trade setup for the hammer is as follows:

  1. A hammer formation suggests a long trade
  2. The trader’s entry time depends on the risk appetite of the trader. If the trader is a risk taker, he can buy the stock the same day. Remember, the color of the real body in hammer does not matter; hence there is no violation to the Rule 1. If the trader is risk averse, he can buy the stock the day after the pattern has formed only after ensuring that the day is a blue candle day
    1. Risk takers can qualify the day as a hammer by checking the following condition at 3:20PM on the hammer day..
      1. Open and close should be almost the same (within 1-2% range)
      2. Lower shadow length should be at least twice the length of real body
      3. If both these conditions are met, then the pattern is a hammer and the risk taker can go long
    2. The risk averse trader should evaluate the OHLC data on the 2nd If it’s a blue candle, the trade is valid and hence he can go long
  3. The low of the hammer acts as the stoploss for the trade

The chart below shows the formation of a hammer where both the risk taker and the risk averse would have set up a profitable trade. This is a 15 minutes intraday chart of Cipla Ltd.

M2-Ch7-Chart2

The trade set up would be as follows:

Buy Price for a risk taker – He takes the trade on the Hammer candle itself at – Rs.444/-

Buy price for a risk averse – He takes the trade on the next candle after evaluating that the candle is blue at – Rs. 445.4/-

Stoploss for both the traders is at Rs.441.5/-, which is the low of the hammer formation.

Do notice how the trade has evolved, yielding a desirable intraday profit.

Here is another chart where the risk averse trader would have benefited by virtue of the ‘Buy strength and Sell weakness’ rule.

M2-Ch7-Chart3

Here is another interesting chart with two hammer formation.

M2-Ch7-Chart4

Both the hammers qualified on the pre conditions of a hammer i.e :

  1. Prior trend to be a down trend
  2. Shadow to real body ratio

On the first hammer, the risk averse trader would have saved himself from a loss making trade, thanks to Rule 1 of candlesticks. However, the second hammer would have enticed both the risk averse and risk taker to enter a trade. After initiating the trade, the stock did not move up, it stayed nearly flat and cracked down eventually.

Please note once you initiate the trade you stay in it until either the stop loss or the target is reached. You should not tweak the trade until one of these events occurs. The loss in this particular trade (first hammer) is inevitable. But remember this is a calculated risk and not a mere speculative risk.

Here is another chart where a perfect hammer appears, however it does not satisfy the prior trend condition and hence it is not defined pattern.

M2-Ch7-Chart5

7.3 – The Hanging man

If a paper umbrella appears at the top end of a trend, it is called a Hanging man. The bearish hanging man is a single candlestick, and a top reversal pattern. A hanging man signals a market high. The hanging man is classified as a hanging man only if is preceded by an uptrend.   Since the hanging man is seen after a high, the bearish hanging man pattern signals selling pressure.

M2-Ch7-Chart6

A hanging man can be of any color and it does not really matter as long as it qualifies ‘the shadow to real body’ ratio. The prior trend for the hanging man should be an uptrend, as highlighted by the curved line in the chart above. The thought process behind a hanging man is as follows:

  1. The market is in an uptrend, hence the bulls are in absolute control
  2. The market is characterized by new highs and higher lows
  3. The day the hanging man pattern appears, the bears have managed to make an entry
  4. This is emphasized by a long lower shadow of the hanging man
  5. The entry of bears signifies that they are trying to break the strong hold of the bulls

Thus, the hanging man makes a case for shorting the stock. The trade set up would be as follows:

  1. For the risk taker, a short trade can be initiated the same day around the closing price
  2. For the risk averse, a short trade can be initiated at the close of the next day after ensuring that a red candle would appear
    1. The method to validate the candle for the risk averse, and risk taker is exactly the same as explained in the case of a hammer pattern

Once the short has been initiated, the high of the candle works as a stoploss for the trade.

M2-Ch7-Chart7

In the chart above, BPCL Limited has formed a hanging man at 593. The OHLC details are –

Open = 592, High = 593.75, Low = 587, Close = 593. Based on this, the trade set up would be as follows:

  • The risk taker, initiates the short trade on the day the pattern appears (at 593)
  • The risk averse, initiates the short trade on the next day at closing prices after ensuring it is a red candle day
  • Both the risk taker and the risk averse would have initiated their respective trades
  • The stoploss price for this trade would be the high price i.e above 593.75

The trade would have been profitable for both the risk types.

7.4 –My experience with a paper umbrella

While both the hammer and the hanging man are valid candlestick patterns, my dependence on a hammer is a little more as opposed to a hanging man. All else equal, if there were two trading opportunities in the market, one based on hammer and the other based on hanging man I would prefer to place my money on hammer. The reason to do so is simply based on my experience in trading with both the patterns.

My only concern with a hanging man is the fact that if the bears were indeed influential during the day, why did the price go up after making a low? This according to me re establishes the bull’s supremacy in the market.

I would encourage you to develop your own thesis based on observations that you make in the markets. This will not only help you calibrate your trade more accurately but also help you develop structured market thinking.

shooting-star7.5 – The shooting star

The shooting star is the last single candlestick pattern that we will learn about before we move to multiple candlestick patterns. The price action on the shooting star is quite powerful, thus making the shooting star a very popular candlestick pattern to trade.

The shooting star looks just like an inverted paper umbrella.

M2-Ch7-Chart8

Unlike a paper umbrella, the shooting star does not have a long lower shadow. Instead it has a long upper shadow where the length of the shadow is at least twice the length of the real body. The colour of the body does not matter, but the pattern is slightly more reliable if the real body is red. The longer the upper wick, the more bearish is the pattern. The small real body is a common feature between the shooting star and the paper umbrella. Going by the text book definition, the shooting star should not have a lower shadow, however a small lower shadow, as seen in the chart above is considered alright. The shooting star is a bearish pattern; hence the prior trend should be bullish.

The thought process behind the shooting star is as follows:

  • The stock is in an uptrend implying that the bulls are in absolute control. When bulls are in control, the stock or the market tends to make a new high and higher low
  • On the day the shooting star pattern forms, the market as expected trades higher, and in the process makes a new high
  • However at the high point of the day, there is a selling pressure to an extent where the stock price recedes to close near the low point of the day, thus forming a shooting star
  • The selling indicates that the bears have made an entry, and they were actually quite successful in pushing the prices down. This is evident by the long upper shadow
  • The expectation is that the bears will continue selling over the next few trading sessions, hence the traders should look for shorting opportunities

Take a look at this chart where a shooting star has been formed right at the top of an uptrend.

M2-Ch7-Chart9

The OHLC data on the shooting star is; open = 1426, high = 1453, low = 1410, close = 1417. The short trade set up on this would be:

  1. The risk taker will initiate the trade at 1417, basically on the same day the shooting star forms
    1. The risk taker initiates the trade the same day after ensuring that the day has formed a shooting star. To confirm this the trader has to validate:
      1. If the current market price is more or less equal to the low price
      2. The length of the upper shadow is at least twice the length of the real body
    2. The risk averse will initiate the trade on the next day, only after ensuring that the 2nd day a red candle has formed
  2. Once the trade has been initiated, the stoploss is to be placed at the high of the pattern. In the case the stop loss is at 1453

As we have discussed this before, once a trade has been set up, we should wait for either the stoploss or the target to be triggered. It is advisable not to do anything else, except for maybe trailing your stoploss. Of course, we still haven’t discussed about trailing stoploss yet. We will discuss it at later stage.

Here is a chart where both the risk taker and the risk averse would have made a remarkable profit on a trade based on shooting star.

M2-Ch7-Chart10

Here is an example, where both the risk averse and the risk taker would have initiated the trade based on a shooting star. However the stoploss has been breached. Do remember, when the stop loss triggers, the trader will have to exit the trade, as the trade no longer stands valid. More often than not exiting the trade is the best thing to do when the stoploss triggers.

M2-Ch7-Chart11


Key takeaways from this chapter

  1. A paper umbrella has a long lower shadow and a small real body. The lower shadow and the real body should maintain the ‘shadow to real body’ ratio. In case of the paper umbrella the lower shadow should be at least twice the length of the real body
  2. Since the open and close prices are close to each other, the color of the paper umbrella should not matter
  3. If a paper umbrella appears at the bottom of a down trend, it is called the ‘hammer’
  4. If the paper umbrella appears at the top end of an uptrend, it is called the hanging man
  5. The hammer is a bullish pattern and one should look at buying opportunities when it appears
    1. The low of the hammer acts as the stop loss price trade
  6. The hanging man is a bearish pattern which appears at the top end of the trend, one should look at selling opportunities when it appears
    1. The high of the hanging man acts as the stop loss price for the trade
  7. The shooting star is a bearish pattern which appears at the top end of the trend. One should look at shorting opportunities when a shooting star appears
    1. The high of the shooting star will be the stop loss price for the trade.

605 comments

  1. Charles says:

    In the shooting star lesson, consider the 3rd chart : an example with scrip price of 174…
    For the risk taker stoploss would be hit as the next candle’s high was above the high of shooting star high. Plz clarify if am wrong.
    Thanks…

  2. DECO says:

    Sir,
    Any study on relation between candle stick pattern in different time frames?

    • Karthik Rangappa says:

      Candlestick can be applied to any timeframe. However my experience says higher the timeframe, the better is the reliability of the signal.

  3. kashish shambhwani says:

    Let us look at this example: Open = 100, High = 100, Low = 94, Close = 102 (bullish candle).

    how can high be 100 if close is 102??

  4. kashish shambhwani says:

    don`t u think that the stop loss would have been hit as per SECOND LAST CHART?
    SL should be on closing basis or intra basis?

  5. Ramkrishna says:

    This is a Chart from 15minute time frame, the stock made an Intraday low and then it started moving up, however after 3 bars, it made a Paper umbrella, so should i look at this as a Hammer (bullish signal) or as a Hanging Man (bearish signal) and why?

    • Karthik Rangappa says:

      That would be a Hammer and not a hanging man. It is not a hanging man because a hanging man requires a well defined up trend which is missing in this case.

      • Ramkrishna says:

        Thanks a lot Sir for your timely help 🙂

      • Ronnie says:

        I didn’t understand this chart can you please explain this chart sir

        • Karthik Rangappa says:

          Ronnie – we are discussing about the 8th candle from the right. It has formed a bullish hammer which as per the pattern suggests the trader to go long on the stock. In fact the same chapter section 7.2 discusses this pattern in detail.

          • Gyan says:

            Karthik – what about 13th candle from right? That also seems to be a hammer followed by downtrend. But after that stock moved down?

          • Karthik Rangappa says:

            I’m not sure if we are looking at the same candle, are you referring to the one with a very small upper shadow? Anyway, candlestick patterns do not guarantee price movements, it only enhances the probability of the move to happen in the expected direction.

          • chirag says:

            hi ,if candlestick dont garante the price movement then who gurantee the price movement?

          • Karthik Rangappa says:

            No one guarantees anyone anything in the markets.

  6. DP1323 says:

    Dear sir what is the main difference between hanging man and shooting star.as they are bearish in uptrend.

    • Karthik Rangappa says:

      Both are bearish patters. The shooting star has a long upper shadow which emphasizes the bearishness a bit more than a hanging man.

  7. jagadeesh says:

    So that means, when a particular stock is range bound, we need to consider the trade only after the appearance of marubozu or a range breakout as this pattern doesn’t need any prior trend. Am i following you Karthik sir??

  8. Nitesh sharma says:

    Hi Karthik
    In Intraday which indicator is More Supreme candlesticks or Oscillators( RSI , Stochastic) from the time varsity was lanced i am following the charts can see that oscillators are very powerful and almost superseding any other indicators

  9. Nitesh sharma says:

    Hi Karthik
    Sorry to ask this silly doubt , i want to attach one chart from Google finance here but not able to do so can you please help me how to attach here

  10. Nitesh sharma says:

    HI Karthik Got IT how to upload image , now see today’s Chart Can u please help me with few candlestick Patters in intraday where i would have got benefited

  11. Gautham K S says:

    I was a staunch fundamental analyst , but reading your article made me want to learn about technicals also.
    Very informative and interestingly put modules from you. Great work and thanks.
    I would like to learn one thing at a time ,, so have started with candlesticks.
    Validating if I have learnt right
    1) that which occured today(21-11-2014-) on Kotak Mahindra Bank is a Shooting star Theoretically?
    Though there is a small lower shadow there i m ignoring it because of the size of the upper shadow
    2) that which occured today (21-11-2014) on Karnataka Bank qualifies to be called a Morning star ?
    If yes then even though DAY 3 was gap up opening but DAY 2 was not a gap down opening. Is day 2 being gap down an important criteria?
    REGARDS

    • Karthik Rangappa says:

      Thanks Guatam, I’m glad you are liking the modules.

      1) Yes, Kotak has formed a ‘sort’ of a shooting start but trading this is not easy as the stoploss is quite high.

      2) No because the morning star formation should have a prior downtrend which is missing in this case. Therefore it does not qualify as a morning start.

      • Gautham K S says:

        Thanks but funnily I traded in ktkbank today making a good profit only thinking that it was a morning star pattern (completely missed the downtrend part) ….. seeing Gap up opening , morning itself took a position………now feeling like laughing at myself … LOL
        Anyways thanks a lot.

        • Karthik Rangappa says:

          lol 🙂

          • Sameer says:

            Sir reading GAUTHAM K S comments.. by mistake he has taken a wrong call [morning call confusion] and still made a profit.. how come ?? so how reliable are these candlestick charts and patterns ?? Also I have been observing from last few days these candle stick pattern formations for intraday in live market.. on 5 min chart and a few times have seen that even after a pattern [satisfying the required conditions] is formed like bullish marubozu, hammer or shooting star the stock dosent moves in desired direction. for example.. after a perfect hammer I expect the price to move up for atleast next 2 candles on 5 min chart but the price moves down after hammer or even in some case after a bullish marubozu.. Sir please explain this… Regards

          • Karthik Rangappa says:

            Sameer – candlesticks or any technical factors only enhances your odds of making a profit but never guarantees a profit. If you have made money and still cant figure out why, then attribute it to luck. As far as patterns are concerned – the higher the time frame the higher is the reliability.

          • Sameer says:

            Sir thanks a lot for the prompt reply.. Regards..

          • Karthik Rangappa says:

            🙂

      • chirag says:

        if suppose same case occured in downtrend then is that called morning star

  12. Kishore says:

    Do we not have an analogous pair to shooting star at the bottom of a downtrend like Hammer @ bottom -> Hanging man @ Top. Or that candlestick does not have a practical significance?

  13. rajeshck32 says:

    sir in your chart in shooting star there are shooting star in between the trend how to identify the real shooting star to trade , as you have said ss will be formed at the top of an up trend , how could i know that is the top to trade in next candle , can any body predict the top and bottom in stock market , post mortem is okay when it is happening how to identify the real shooting star .

    • Karthik Rangappa says:

      You are absolutely right. Timing the market is a tough job. However, whenever a candlestick pattern (like shooting star) appears after a supporting prior trend, you just make an assumption that the trend’s top or bottom may have been formed…and go ahead and trade with conviction. If you do not make this assumption then you will be stuck in a dilemma not knowing what to do.

      • rajeshck32 says:

        sir you can avoid 50 % of your false shooting star by , taking the position above or below the ss candle on closing basis .

        • rajeshck32 says:

          sir you can avoid 50 % of your false shooting star by , taking the position above or below the ss candle on closing basis .

          • Karthik Rangappa says:

            Not sure about the 50% claim, but yes one should look at initiating actions on a closing basis. In fact that is the reason why through out the module I have specified the time of entry as around 3:20 PM…which is very close the the market close (3:30 PM).

  14. CHVSSR says:

    SHOOTING STARS RIGHT

  15. jagadeesh says:

    Hi CHVSSR,
    The second one is not a shooting star as it appears in a visible downtrend. Shooting star’s prior trend must be up. But, that can be considered as bullish engulfing pattern considered the first green candle after the inverted hammer.

  16. gurumoorthy says:

    could u please explain what is meant by long trade in “A hammer formation suggests a long trade”??

    • Karthik Rangappa says:

      A long trade is when you intend to buy a stock at a certain trade with an intention of selling it at a higher rate at a later point and thereby make a profit on the transaction. A hammer patter is used to identify such opportunities.

  17. Ankit Kukadia says:

    Hey,
    Please see the chart and let me know whether the encircled pattern can be considered as Hammer or not? And does next candle in making nullify bullish impact if at all previous one is hammer?

    • Ankit Kukadia says:

      My argument for considering it as hammer is there was substantial downside from top 8600 in nifty to 7900 and than we saw this candle on WEEKLY chart.. Being higher time frame chart, does it have more impact on overall trend of market?

      • Karthik Rangappa says:

        Considering you are looking at a weekly chart, yes you can consider this as a hammer. If this was on a EOD chart it would NOT be a hammer as the downtrend is not really satisfactory. I would like to see at least 5 – 8 downtrend session before a bullish patter emerges.

        • ARUN MENDIRATTA says:

          If we are looking at weekly chart, as in chart how come we can consider it as hammer as there should be a downtrend prior to it and i can see only two candles in downtrend prior to it?????

          • Karthik Rangappa says:

            Two candles of downtrend in a weekly chart are quite a bit – it represents 2 full trading weeks of data.

  18. Ankit Kukadia says:

    How trade set up be if we see shooting star on weekly chart.. Where should be stop loss and target??

  19. vishvendra89 says:

    More often than not *exciting* the trade is the best thing to do when the stoploss triggers – correction *exiting*, thanks

  20. vishvendra89 says:

    second last image in shooting stars was confusing but got clarified in comments, would be better if you replace it for future references, thanks

  21. Jay says:

    Hi, Thanks for providing great info on tech trading.. After reading the lesson, it feels like shooting star and hangman almost similar… Could you please advise me how to differentiate between a shooting star and a hangman in a chart. Thank you.

  22. Jay says:

    oh… just understood when I read it again… the long shadow on paper umbrella is on down, and in shooting star its on top… right?? thanks

  23. RAHUL says:

    Hi Karthik, this training is absolutely mind blowing effort of yours. I do have one request can you please explain about the philosophy of stoploss in a bit more detail and with some examples (graphic as well as written), as it sometimes becomes confusing when clarity on stoploss is not available. For me stoploss simply means that whenever i buy a stock i should put a stoploss at some % after which it will get sold automatically.

  24. kodaligopi547 says:

    Hi Karthik,

    Section 7.3 Hanging man. In the second chart (BPCL Limited), wouldn’t the risk taking trader who would have initiated trade on the same day when hanging man has formed book loses on the next day. High on day 1 is lesser than the high on the next day. Basically stop loss would have been hit on the next day for the risk taker. Can you please let me know if I’m missing something.

    • Karthik Rangappa says:

      Day 1 high is greater than day 2 high so SL would not have been triggered for the risk taker on day 2. However on day 3 the high was almost the same as day 1 high. But my guess is this would have just peaked and cooled off almost immediately. Also it really depends on how you manage SL. If you take SL on closing basis then I guess the SL would never have been breached. However if you are the kind of trader who tracks SL real time, then my guess is the trade would have been closed due to a SL breech.

      • ARUN MENDIRATTA says:

        How come day 1 high is greater than day 2 high ?? I t is visible to me that day 2(risk averse day) high is more than day 1 high or SL . As such SL will have breached

  25. Deepesh Yadav says:

    Hi Karthik,
    Can i consider this as Hammer ?
    Thank You,

  26. c_sidhu says:

    Hi Karthik,
    First I must congratulate you and your team for putting up a tremendous effort in building such a reference on Stock trading et al.
    Can you explain if we can use ATR(Ave. True Range) to get the Stop Loss as 1.5 times ATR. How far is it dependable as compared to Support /Resistance method?

    Thanks.

    • Karthik Rangappa says:

      Thanks for the kind words 🙂

      ATR is a good method to place a SL as it incorporates the recent volatility of the stock while placing a SL. I would tend to believe this is sort of more dependable than S&R. In fact in the ‘Options Theory’ module (which is work in progress) we will include a chapter on volatility and a method to place SL based on this. I suppose this will be a better technique to place SL.

  27. Purvesh says:

    This is reversal or not

  28. Mitrajit Bhattacharya says:

    Hi Karthik, What does a shoting star mean after a downtrend?

    • Karthik Rangappa says:

      I believe a shooting star in a downtrend further emphasizes the fact that the market is weak (bearish). Think about this – if the market is indeed trying to showcase strength then the long shadow of the shooting star would not have formed.

  29. M ANANTHA RAMAN says:

    Dear Mr.Kartik,
    Kindly see the chart ( Nifty daily chart of 6April, 15. There is a Hanging man in uptrend but there is strong support is there, also MACd has crossed and pointing UP.( below zero line.) In this case how do u interpret this for next day?

    • Karthik Rangappa says:

      Like I have mentioned in the chapter, my dependence on hanging man is low, in fact more often than not I would treat a hanging man in an uptrend as as indication of continuation of bullishness. Also considering the fact that it has broken above the support, my view is biased towards being bullish….or to put it another way, I may avoid initiating a short trade under such circumstances.

  30. M Anantha Raman says:

    Sorry Kartik pl see this chart instead

    • Karthik Rangappa says:

      Same answer as above.

      • ashi valla says:

        Why dint u mention about morning start in the chapter
        .. But many people have mentioned in their doubts and comments
        im sorry i coudnt find it in the chapter.. Went twice… ,
        2nd one is.. I need some free software’s to plot graphs..by which i mean candlestick patters… It should be colourful (my ease) 😉
        im interested in itraday trades… So i would like to plots 10mins graph fr whole day…say it can be 5min,10mins,15mins.. Any timescale to be precise… I would just like to input the last traded price every nw and then and the software should make a graph fr me.. R8 nw , say today… I made graphs (oscillator) for 1min graph fr 2hr time span. Just kept refreshing the last traded price every second.and plotted. .
        waiting for ur comments on this.. ..

  31. ashi valla says:

    Im actually 21.. Just studying the basics.. Im nt into investment..l prefer itraday trades… . Suppose i but some shares (selecting MIS) .is it mandatory that i should sell the same day..can i sell after a couple of days, weeks or even a month.. ?
    can i have an email id of urs so that i could ask doubts through..
    mine’s [email protected].

    • Karthik Rangappa says:

      MIS should be squared off the same day. Also, I would sincerely suggest you try out buy-hold strategy to begin with. Graduate to intraday once you are comfortable with it. Please ask all your queries here…I usually respond as quickly as possible.

  32. ashi valla says:

    Im actually 21.. Just studying the basics.. {in the previous comment its ‘morning star’ nt ‘morning start’ . Im nt into infesting fr long time..l prefer intraday trades… . Suppose i but some shares (selecting MIS) .is it mandatory that i should sell the same day..can i sell after a couple of days, weeks or even a month.. ?
    can i have an email id of urs so that i could ask doubts through..
    mine’s [email protected].

  33. vasanth says:

    Can i consider the highlighted candle as Harami & can go for long, eventhough the prior is the small uptrend?

  34. vasanth says:

    Image for the above comment..

    • Karthik Rangappa says:

      No, an uptrend should have at least 5-6 upward trending days…likewise the downtrend should have 5-6 downward trending days …before you can classify them as an uptrend or downtrend.

  35. vasanth says:

    Regret for the wrong query.. As highlighted initially there is a formation of Bullish harami with sufficient volume & can look for buying opportunity & immediately there is a hammer formation… But the prior was not the downtrend, there is a small uptrend.. whether can i again consider this as also the buying opportunity?

    • Karthik Rangappa says:

      There is nothing like a wrong query, we are all learning and evolving 🙂

      So, the same thing holds true here – cant be considered as a trend because we need at least 5-6 candles prior to the pattern.

  36. vasanth says:

    In the above chart can i consider the highlighted candle as Bullish harami?
    After confirming the candle as bullish harami with sufficient volume, i took position on that point but ended up in loss.. Any specific reason behind that?

    • Karthik Rangappa says:

      Well, remember by employing TA techniques you are enhancing the probability of success, while success itself is not guarantee. So yes, trades can result in a loss even if factor involved in making a trade decision is perfect.

  37. Muthu Kishor Ganesan says:

    Hi Karthik. Keep going with this nice work. Pl clarify my doubt given below.
    Why should I keep lower of the pattern candle as a stop loss. Whynot mid value between low & close ( incase of red candle ) or open(incase of blue candle)?
    by this way i could save some more money incase pattern fails na?
    Or is there any science beyond this?
    – Kgm Kishor

  38. Robin says:

    Hi Karthik,
    Is SHOOTING STAR and INVERTED HAMMER the same?….If not, what is the difference?
    Thanks 4 ur time.
    ROBIN

    • Karthik Rangappa says:

      Yes they are the same, an inverted hammer formed at the top end of the rally is called a shooting star. However an inverted hammer formed at the bottom end of the rally is not called a shooting star.

  39. Ganesh says:

    A Question
    Shouldn’t the closing price for the day and the opening price for the next day be the same? I saw a few graphs here which are not following this.
    Take the last graph of morning star for example, the open of the candle succeeding the morning star is way above the closing price!! Why does this happen?

    • Karthik Rangappa says:

      It closing and opening price need not be the same. They would vary due to various overnight demand supply situation.

  40. mateena says:

    Sir if there is red hammer at the bottom of a downtred what does it signifies?

    • Karthik Rangappa says:

      The colour of the Hammer does not signify anything. Just treat it as a regular hammer at downtrend (bullish).

  41. Raghavendra says:

    Hi Karthik,
    Is there any specific reason why Inverted Hammer pattern is not discussed. Is it not so important?..

    • Karthik Rangappa says:

      Inverted hammer found at the top end of the rally is called the ‘Shooting Star’. We have discussed the same. Inverted hammer found at the bottom end of the rally is not really of any great significance, hence we have skipped it.

  42. madhu nair says:

    Hi Karthik, after a sustained up move a shooting star was formed yesterday. The volumes were strong too. today, though it was a black candle day the volumes were poor. my question is, could this be a re tracement after a strong upsurge, which would mean the bullish trend would continue or can we conclude the bearish trend has set in. how would you play this trade?

    • Karthik Rangappa says:

      From a 1 – 2 day perspective I would look at setting up a super quick short trade on Futures…but would be quick to book profits and get out. If the stock declines on low volumes, I would be happy to initiate a long.

      • madhu nair says:

        appreciate your views Karthik. my follow on question is , when an identifiable candle stick pattern is formed on either a new high or a low , is it to be treated differently as opposed to the same being formed at a major resistance or support level? The dilemma is to know weather the reversal , either bearish or bullish is a minor retracement or a genuine one. please comment.

        • madhu nair says:

          Karthik, would like to read your comments on the above.

          • Karthik Rangappa says:

            Madhu – If the formation is at a recent new high/low then do watch out for previous S&R levels for cues. Else if it is a ‘All time’ new high/low then look for super short trades (maybe frequent but make sure you book profits). The reason I say this is when a new high/low is formed the sentiment in that direction is strong and the secondary reaction to this market sentiment may not last long…in fact the trend can reverse back to primary with a sharp reversal. Hence one needs to be diligent while trading all time high/low.

  43. Afshin says:

    Hi Karthik,

    Stop losses which you suggest, are they based on closing basis or just trading basis…

    Regards,

    Afshin

  44. madhu nair says:

    Karthik, Cipla as can be seen is trading in a channel. as indicated by the red arrow a shooting star was formed and the stock did correct the following day albeit, with lesser volumes. in such cases do you go short with the lower trend line as the target? or should we also worry about the trend continuing and treat the correction as a retracement? what are your views?

  45. RU0271 says:

    No pattern is a sure shot pattern to win.

  46. pavan says:

    Pls. refer to section 7.3 – “The hanging man is classified as a hanging man only after it precedes an uptrend”.
    Shouldn’t it read as “The hanging man is classified as a hanging man only if it is preceded by an uptrend”.
    Or maybe “The hanging man is classified as a hanging man only if the prior trend is an uptrend.”

  47. Prashu says:

    Excellent explanation of candles -to see the candles as INDIVIDUAL. Thought process behind candles is thought provoking.
    Thank you karthik

  48. Rajat says:

    Thank you for creating this wonderful tutorial. I have one query though. In the given daily chart of PIIND,

    i) There is a clear downtrend before P1 and P2.
    ii) Volumes of P1 is above 10 day’s SMA and P2 is around 10 day SMA.

    Which pattern is more prominent here? Should we consider P1 as hammer (body:tail = 15:25)or P2 as bullish engulfing (though opening of P2 is not below P1-close)?

    • Karthik Rangappa says:

      Rajat – the chart looks good, I suppose its take from Kite 🙂

      For all practical purpose, I would have initiated a long trade based on the hammer (on P1) but upon seeing the Bullish engulfing on P2, I would be encouraged to hold the long position. I would take the lower point between the two i.e P1’s low as the SL for this trade.

  49. Rajeev says:

    Sir
    Great going.I want to do swing trading.wat time frame is perfect for that?is look back period of 6months OK?

  50. SaikiranGarapati says:

    Can i consider attached TCS Screen shot as formed a Hammer? and Please let m eknow target and stoploss,Support and Resistsnace

  51. SaikiranGarapati says:

    Sorry i forgot to attach a Screen shot?

  52. dian says:

    Hi Karthik,

    For intrday trading, what time frame should i select for candlesticks?

    Regards,
    Dian

  53. dian says:

    also, if i am only doing intrday-trading, is knowledge of single candlesticks enough?

    Regards,
    dian

    • Karthik Rangappa says:

      No, you will need to develop an overall understanding. Suggest you learn both single and multiple candlestick patterns.

  54. varun bhargava says:

    Apart of single and multiple candlestick patterns
    Please throw some light on heiken ashi pattern, I have observed they are more reliable and strong as compared to standard single and multiple candlestick pattern for long or short term as trend is more clear there.

  55. nik_kib says:

    Hi,

    I believe that short selling is only possible for a one day trade. i.e buy in the morning and square off before 3.15 then how come in the Hanging man section the author has mentions to short at the close of the next day.

    “For the risk averse, a short trade can be initiated at the close of the next day after ensuring that a red candle would appear ”

    How can we short at the close of day ?? am I missing something ??? Please reply

    • Karthik Rangappa says:

      If you short in cash segment, then you will have to buy back by 3:15. However of you short in derivatives (futures segment) then you can carry forward the position.

  56. Shyam says:

    Hello,
    In order to confirm that a prior trend is DOWNWARD(or UPWARD), for how many trading sessions does the stock need to trade BEARISH(or BULLISH)

    • Karthik Rangappa says:

      Check for at least the last 5-7 trading sessions.

      • RajiSuresh says:

        Dear Karthik,
        1).You had earlier advised me, as a newbie, I should first try my hand at Swing Trading before going for Intraday If it takes 5-7 trading sessions to confirm a trend, does this mean for swing trading I have to wait 5-7 Days to initiate a trade? Does this mean a max of only 4 trades in a month? (I am planning to do this full time – after I fully understand everything of course)
        2) As a newbie, instead of starting of with Swing Trading can I start with Options? Or would you still recommend I begin with Swing Trading before Options? If yes, could you tell me why?

        • Karthik Rangappa says:

          Options is a tricky subject, there are many factors at play. I’d suggest you get familiar with it before attempting options. Yes Swing trading requires patience both in terms of trade identification and trade evolution, but its this patience that will teach you greater things about market. Good luck.

          • RajiSuresh says:

            Dear Karthik,
            OK sir, So I should start out with Swing trading. Pls give me some more clarity on points below: (sorry if they sound too silly)
            1. If it takes 5-7 trading sessions to confirm a trend, does this mean for swing trading I have to wait 5-7 Days to initiate a trade? Does this mean a max of only 4 trades in a month?
            2. You have said in your lessons that the lookback period for swing trading should be 6months to 1 yr+. If I’m looking at say 6months, is it monthly candles(6 nos) or EOD (120+ candles)?
            3. And what we are looking for in the Look back period is for similar patterns /candle formations . Am I correct?
            4. How many such identical occurrences should be present in the Look back period for us to initiate the trade?

          • Karthik Rangappa says:

            1) If you have a basked of 50 stocks in your watch list, then I’m certain on average you can find at least 1 opportunity per day
            2) EOD Candles for at least 6 months
            3) Yes patterns, support, resistance, and other technical cues
            4) Depends upon the pattern

  57. Ashish says:

    Hi karthik, how will you interpret this chat

  58. Tanmoy says:

    Hi Karthik, I can see a hammer formation in TCS chart with prior down trend but not sure about the support level. Volumes and RSI looks good to me. Am I correct?

  59. SaikiranGarapati says:

    Hi Karthik,

    Can i consider last candle as a Hammer?

    Regards,
    SaikiranGarapati.

  60. rohan says:

    length of body= 10
    high-low-= 55
    body % = 10/55 *100= 18%
    so will this candle qualify for hammer?

  61. SARAVANA PERUMAL D says:

    Hi Karthik,

    1. If i doing nifty option intra-day trading. where i can apply the 5min or 15min time frame. I mean Underlying (Nifty) or contract price chart (Nifty JAN 7400PE) and which one is most reliable?

    2. Which combination of indicators and overlay most suitable for intra-day and Moving Average Combinations.

    • Karthik Rangappa says:

      1) Always the underlying

      2) I personally like the 9 x 21 minute EMA crossover.

      • ZQ0852 says:

        Sir, you said 9*21 minute EMA crossover, my doubt is if I am looking on 10 min chart , then how can I draw 9minute*21minute crossover??

        • Karthik Rangappa says:

          After the first nine 10 mins candle, you can develop a 9 EMA of a 10 mins candle. Similarly, after twenty one 10 mins candle, you can develop a 21 EMA of a 10 mins candle.

          • Vishal says:

            21 ten mins candle means 210 minutes or 3+ hours. That means to form a 9*21 minute candle, I will have to wait upto 12.30 in the noon?

          • Karthik Rangappa says:

            Not really, Vishal. This is where the continuous charts help. You can always plot these EMAs on continuous intraday charts.

  62. rohan says:

    in the checklist its mentioned that with candlestick pattern formation see also for high volume.
    so this rule will be applicable for hammer formation also or not as hammer has small body and long shadow( so that means low volume) ?

  63. Avinash Punjabi says:

    Dear Karthik,
    One question on shooting star.
    As you mentioned the stock/index has to be in a prior uptrend/bullish trend for the validation of a shooting star when it is formed.
    Now consider this continuous downtrend in JAN 2016, after such a long downtrend there would be 4-5 days of upside/up candles ie an uptrend in a downtrend, if the shooting star is formed after this 4-5 days uptrend will it hold good as a reversal pattern and if yes how strong would it be. Can we trade that with confidence.Thanks

    • Karthik Rangappa says:

      It does, but typically I see this as a low volume retarcement and I expect the prior trend to continue. More details on this in the Volumes chapter.

  64. Sahil Kwatra says:

    Hi….I know we can sell shares even when we do not hold them but we need to buy back on the same day. Now imagine a stock which is following a bullish trend and I happen to spot something that tells me that the stock would go down in the next few days (but I do not know exactly when). Now is there a way I can sell this stock and then wait for some days to buy it back?? (I mean a case where I do not have to buy in on the same day)
    Thank you!

  65. SaikiranGarapati says:

    Hi Karthik Sir,
    Can i consider Yesterday HDFC BANK formed a Hanging man? Small tail is there in uppers side of the candle. Can i flexible about that tail?
    Regards,
    SaikiranGarapati

  66. SaikiranGarapati says:

    Hi Karthik Sir,

    Can i consider Day candle of Indusind bank is Doji or Hanging man?

    Regards,
    SaikiranGarapati.

  67. Koushik says:

    If I am not mistaking, then the blue color hammer indicates a buy call and the red color hammer indicates a short call. Am I right?

    • Karthik Rangappa says:

      Blue indicates bullishness and red indicates bearishness. On a standalone basis, they do not really give out a buy/sell signal.

  68. Puneet says:

    Hi Karthik,

    The material out here is just outstanding and written in such easy to understand lucid language, congrats to you and your team for putting these up together.
    I have a question here though, I am talking about Nifty50 candlestick pattern for yesterday i.e. 5th July 2016.
    Market is on a downtrend and at 2:15PM what we see, is it a shooting star and does that mean the market can do down further from here?

    • Karthik Rangappa says:

      Thanks Puneet!

      The pattern on 4th is more like a shooting star/grave stone doji, which suggests that the market is likely to go down.

  69. NIKHIL KINAGI says:

    For 7.5 – The shooting star under the example of OHLC share, why is the Stop Loss set at high 1453? I mean, the actual purpose of Stop Loss is to prevent a major loss, right? So, shouldn’t it be set for a value 1410?

    • Karthik Rangappa says:

      The beauty of candlestick pattern is that each pattern suggest a stoploss that would suite the pattern. So as per the shooting star, the SL is best when placed at the high of the pattern, hence 1453.

      The job of a SL is to prevent losses, and it has to be placed where it is deemed relevant, and you take such trades only if the reward also seems good enough.

  70. VINOD says:

    i find u have mentioned the hanging man reverses the uptrend and hammer reverses downtrend. however does the shooting star validate the end of only an uptrend??? what if a shooting star is formed in a downtrend?? kindly explain kartik

    • Karthik Rangappa says:

      There is no shooting start at the end of a downtrend. However, if you do find a shooting star in a downtrend, it just indicates that the downtrend is likely to continue. This is because the shooting star is characterized by large upper shadow and the closing is near the low point of the day.

  71. vinod says:

    thanks kartik

  72. Madhuri says:

    Does the shadow signify real trade taking place.
    Is the length of real body a representation of the volume of trade.
    Can the umbrella, shooting star patterns be applied to intraday trades.

    • Karthik Rangappa says:

      The shadows indicates trades – in fact it is a part of the price action. Yes, you can use these patterns to execute intraday trades.

  73. madhuri says:

    thanks kartik for your response but you did not answer
    Is the length of real body a representation of the volume of trade.
    Is the real body a net result of buying and selling.I find the real body color fluctuating between red and blue and then ending with a red or blue..
    On checking i find many candles with long real body show less volume than candles with small real bodies.
    also noticed that some shadows or patterns like Doji show high volumes.You said these shadows are part of price action then why there is no real body.
    Am i un derstanding it clearly? Pls clarify.Thanks

    • Karthik Rangappa says:

      Sorry, I missed that. Length does not necessarily translate to volumes. The candle evolves during the day (note its a function of the price action)….so the color gets decided only after the closing prices are fixed.

      Dojis are formed when the opening and closing prices are one and the same. I’d recommend you read the chapter on doji’s to understand them better, along with all the different variations of Dojis.

  74. madhuri says:

    is there a chart which gives values of support and resistance for a particular stock

  75. sudheer says:

    Hi Karthik,
    In all your examples you have quoted that “The risk taker initiates the trade the same day after ensuring that the day has formed a shooting star” with respect to all candle sticks. I am little confused here. What benefit does he get if he initiates trade after pattern is formed on the day.On a bearish day or the candle forming which indicates bearishness how does the sell high buy low work if we were to trade at the end of the day.Sorry if this sounds silly or dumb 🙂

  76. Raj says:

    Hi karthik ,
    In the above chapter you explained about the shooting star appearing in an up trend (then there is a possibility of the stock to become bearish).
    now my question is, if the same pattern(shooting star) appers in a down trend then what we have to expect out of the stock (POSSIBILITY IS BULLISH OR BEARISH)????? please give me some clarity on this sir.
    Thanks&Regards

  77. sammandar khan says:

    In the shooting star second chart what should be the target price if there is stop loss 1453 & buying price 1417?
    In the last chart of the shooting star why is it going on in up trend after shooting star because the shooting star is a bearish signal?

    Thanks

  78. RD2640 says:

    Dear Sir

    https://kite.zerodha.com/share/T7HNPNBLD1.png

    is it making a hanging man correctly at around 2:30 PM and is it right to check the intraday movements with 15 min chart??

  79. Kavitha says:

    Hi Karthik,
    Why should there be a “stoploss” set (hanging man pattern/shooting star) when the trader is initiating short trade.

  80. Hemath says:

    Could any one please explain how short trade will work out in the bearish pattern if we buy the stock on closing price of p1 day.if i’m not wrong in short trade we will sell first and then buy but these two actions to be completed on the same day otherwise it would results in short delivery

    • Karthik Rangappa says:

      Hemanth – yes, if you are shorting the spot, then it results in short delivery. However, you can short the futures and continue to hold it overnight.

  81. Vijay says:

    Sir which strategy will work best for mcx crude oil? Can I trade only using single patterns specially rectangular one(marubozu)…. Can I use only marabou for crude oil mcx with support and resistance ????

  82. Vijay says:

    Does fundamental analysis required in commodity trading? I mean should I go for learning fundamental analysis for intraday trading in crude oil (15 min chart)? Please give me full advice as there is inventory? But what about balance sheet as I am not trading in equity.. Please clarify me… Thanks in advance..

    • Karthik Rangappa says:

      If you are trading intraday or even for few trading sessions, then TA will help.

      • vj says:

        hii i found a pattern with following detail

        O: 3,636.00 H: 3,638.00 V: 1.60k C: 3,632.00 L: 3,632.00 D: 24/01 13:45
        CRUDEOILM17FEBFUTVOLUME
        volume is below 10 period average ( moving average)
        it is a red candle marubozu pattern??
        can i enter the trade for sell @3632 with sl 3638and tgt 3623 ????
        well thanks today also made profit of 11 point

  83. PA says:

    Hi Karthik,

    Is their a facility available with Zerodha wherein I can automate trades based on TA. to give a perspective if Zerodha has a facility wherein if Marubozu is formed in NIFTY option the trade is automatically initiated with target and SL?

  84. Arpit says:

    sir,
    you are saying to go for short around 3.20pm if hanging man appears. but the shorting is only for intraday. does that mean that the trade is only for appx 10 mins?

    • Karthik Rangappa says:

      Yes, shorting in spot is only on an intraday basis. However, you can short the futures anytime and carry forward the positions overnight.

  85. AMIT KUMAR PANDEY says:

    kartik sir please suggest some indicators that works comparatively well in intraday chart and their parameters based on 5 min and 15 chart?

  86. AMIT KUMAR PANDEY says:

    tried a little bit sir. i works well on trending market.
    any others indicator sir with its paramaters ?

  87. Aloo says:

    Hello, if a red hammer forms that means its gonna b bullish. So to compliment it shouldn’t be the volume be below average? Because below average volume for red hammer will mean weak hands selling which will compliment bullish hammer instead of above average volume for red hammer. Same thing for shooting star and hanging man?

    • Karthik Rangappa says:

      No, both are kind of mutually exclusive. One should not associate a pattern with ‘likely’ volume. Analyse it as it happens. Any pattern with low volume indicates less conviction in the pattern (price action).

  88. ALOO says:

    I want to ask them all at Zerodha Varsity comment section but from almost a month the comment section is not working. Tried asking for support from Zerodha support but nothing has really solved it.. So, please I’ll be highly obliged if you can answer my queries here.

    1) In the chart below of BPCL
    Link – https://drive.google.com/file/d/0B0bePrdjZCDoLVpqSjYzam81SEc5Z0FCNEFYN19Iamx0dFJz/view?usp=sharing
    a) The downtrend I’ve marked is correct ?

    b) Is the arrow I’m pointing to is a red hammer ?

    c) The arrow towards volume signifies that the bulls got the price from deep low back to form a doji ? So it’s bullish and complimenting the red hammer ?

    d) By the downtrend, hammer, close to support, fine volume and RSI showing near over sold, I thought it was increase. It increased today so was I logically right ?

    e) Stop loss for BPCL was 10-15 points lower. So was it fine to trade ?

    2) In the chart below of Cairn
    Link – https://drive.google.com/file/d/0B0bePrdjZCDoZ05UUldldWNvQ251aC1nRmM1QW8tTmUtQ3JV/view?usp=sharing
    a) Is the uptrend I’ve shown, is it valid/correct ?

    b) The arrow pointing to the candlesticks form a shooting star and a hanging man together ?

    c) By the uptrend, shooting star, hanging man, fine volume, close to resistance and touching top bollinger band. I thought it would decrease today. It did decrease till -3 then increased EOD. So was I logically right ?

    3) In the char below of Zee
    Link – https://drive.google.com/file/d/0B0bePrdjZCDoMGFUWHpDM09pVkNLTlJCUHhQUWM5cVl1bzhr/view?usp=sharing
    a) Is the downtrend correct ?

    b) Is the 2nd last candlestick forming a green hammer ?

    c) So, by looking at the downtrend, a hammer, maybe a dow flag patten, pretty close to resistance and a fine volume I thought it would be a bullish day(that is today). So, was I correct logically ?

    4) In the chart below of TataPower
    Link – https://drive.google.com/file/d/0B0bePrdjZCDoZWFCWGVVYXFKR04tXzR0OUZZeTY0SGRNMEpR/view?usp=sharing
    a) I saw all the checklist ans aspects totally agreeing that it will increase. Which are… Piercing pattern, volume above avg, near support, dow flag patter and even the fibonacci retracement was showing it exactly at 38.2%
    So, am I logically right that it’ll keep increasing as it did today ?

    General questions related to charts.

    1) If a red hammer pattern forms after a downtrend, it means further the trend is bullish. What I’m getting confused at is that the volume to be complementing the red hammer should be below the average volume. Because, as it was a red hammer the volume being lower than average would mean that selling is getting weak so therefore it would compliment the red hammer bullishness.

    Whereas, if the hammer was green, the volume being greater than the average volume will compliment it as green candle with high volume means bullish.

    Am I correct ? Is this same for shooting star and hanging man too ?

    • Karthik Rangappa says:

      BPCL

      1) Yes
      2) No, it is a long legged doji
      3) Yes, but doji;s signify indecision
      4) Yes, as long as other trade conditions are satisfied

      CAIRN

      1) Yes
      2) Yes, both the patterns are present
      3) Yes, it did seem like a good trade (assuming other checkpoints were valid)

      Zee

      1) Yes
      2) Yes
      3) Yes

      Tatamotors

      If everything aspect of trade is aligned, then it should be good for a trade as the conviction is on the higher side.

      Good luck.

  89. Anil Sardiwal says:

    Shooting star example, Are we selling when the shooting star is formed? If yes, then why do we have stoploss to the HIGH when even higher value would give more profit?

  90. Ayush says:

    Does different time frame have different closing price?
    Is it like 15 min time frame have the close price of previous 15 min time frame?

    • Karthik Rangappa says:

      Yes, each time frame will have a different close. This is a continuous process, the closing of one time frame is not related to another.

  91. Ayush says:

    Does lower shadow mean, the lowest price at which bears try to buy or sell share.

  92. Aditya says:

    Buy Price for a risk taker – He takes the trade on the Hammer candle itself at – Rs.444/-

    Buy price for a risk averse – He takes the trade on the next candle after evaluating that the candle is blue at – Rs. 445.4/-

    Stoploss for both the traders is at Rs.441.5/-, which is the low of the hammer formation.

    Do notice how the trade has evolved, yielding a desirable intraday profit.

    How is this a profit ?

    • Karthik Rangappa says:

      It also depends on the profit target for each trader. Also, candle formation is just one variable that you need to check, you still have the checklist which contains all the other variables which has to fall in place for the trade to qualify.

  93. Ananth says:

    Hello Karthik,
    Could you please explain what is
    1. Higher Lows and Lower Highs
    2. Higher Highs and Lower Lows
    With example please?

    Regards and thanks in advance

    • Karthik Rangappa says:

      Higher lows / Higher Highs = means stock is trending up
      Lower highs / Lower Lows = means stock is trending low

      Look at any trending stock and you should be able to observe this.

  94. Ananth says:

    Thank you Karthik, please correct me if I am wrong.
    Higher high means, on any time frame if there is an uptrend and present candle which closes above the average number of N number of days and the high of the same candle.
    However I am confused in identifying or understanding higher lows.
    Please help. Thank you

    • Karthik Rangappa says:

      Higher highs simply means today’s high point of the day is higher than y’day high point of the day….and the high for tomorrow is also higher than today’s high – excuse my sense of past and present sense here – but you get the picture right? This happens when the stock is trending upwards.

      Likewise for higher lows.

  95. Rajiv says:

    hi Sir, let us assume the daily candle forms a shooting star pattern but on the same day has hit 52-week high and then formed a shooting star pattern. can we still go and short it? or should we just ignore the trade since it has hit 52-week high. Please share your thoughts. Thanks.

    • Karthik Rangappa says:

      Frankly, ATH is a bullish sign. If I were to short this, then it would be because I;d expect a quick reversal – I’d watchout and be quick to take profits (if any) off the table.

  96. ALOO says:

    Hello:o)
    So here I started a trade in LIC at the marked candle with its info visible. Here, it was a perfect prior uptrend, perfect shooting star pattern, perfect above average volume, RSI indicator was even above over bought.

    So, after all the ‘Yes’ signals from every technical perspective it was a pretty good trade. But as you can see in the chart it didn’t go as per the indication. Why so ? It was a pretty perfectly formed trade, agreeing on 5 out of 6 checklist points.

    Link
    https://drive.google.com/open?id=0B0bePrdjZCDoZWZ0Qy1QRC1MMnc

    • Karthik Rangappa says:

      Well, TA only enhances the probability of a trade, no guarantees in the market 🙂

      • ALOO says:

        Oh 😐 as the checklist was agreeing highly my expectation was pretty high 😮

        Also, here in this chart. I see a decent prior uptrend, above avg volume, overbought and dark cloud cover but the only problem I see is that the red candle is not covering exactly 50% or above of the previous green candle, it’s like 1 point higher than the half of previous green candle. So can this be a valid trade as other aspects are pretty good ?

        Or as the pattern isn’t 100% right so it isn’t a valid trade ?

        Link – https://drive.google.com/open?id=0B0bePrdjZCDoYXNOSFBpQjhJNkU

        • Karthik Rangappa says:

          I’d at the most take an intraday trade hoping for a quick reversal. Trend continuation in charts like this can be sharp – you cannot really time it.

          • ALOO says:

            So what you mean to say is that you would go long on this as intraday ?

            Also, it formed a doji yesterday with below average volume, so does it catalyze the pattern now ? What should be the perspective now ?

          • Karthik Rangappa says:

            Intraday because the reversals could be quick and therefore I do not want to carry the risk of overnight positions.

          • ALOO says:

            But is the intraday even valid ? because the pattern as I mentioned is not covering 50% of the previous green candle.

          • Karthik Rangappa says:

            No, its not. This is only if you were forced” to take a position.

      • chirag says:

        well i think it can be sayas sa shooting star because the percentge of real body is less than 1%,
        m i right?sir.

      • chirag says:

        well i think in LIC stock thats not a shooting star because the percentage of real body is not more than 1%,maybe we call it spinning top
        m i right sir?

  97. Chandrashekhar says:

    Hi sir,

    Incase of hammer and shooting star having very thin vapour upper body (I mean open=close approx)
    apart from this all trading setup is same as you explained above for the hammer and shooting star.
    my doubt is whether this very thin vapour upper body works fine or makes any differance comparing to small upper body.

  98. Waqaar says:

    Hello Sir,

    Should we use normal Candlestick or Heiken Ashi Candlestick ?

    Thanks

    • Karthik Rangappa says:

      You need to read this entire TA module to understand that 🙂

      • Waqaar says:

        I have read it, you never mentioned heikan candlestick, so we should use normal candlestick but i read it on internet that heikan is better therefore I asked.
        Thanks

  99. Rajan Balana says:

    I have doubt. In the last chart of this article, the shooting star is highlighted in the circle.

    Let’s assume, If a trader enters the trade by shorting the stock on the next day, he would have entered the market at the opening price of the stock for the day and set his stop loss as the high of the shooting star. Right?

    If I observe the candlestick at the end of the day, the stock price has surged. However, it has not breached the stop-loss price (if I understand that correctly). How would the stop-loss get triggered in this case?

    If I have misunderstood the chart, Please correct me.

    Thank you
    Rajan Balana

    • Karthik Rangappa says:

      Quite simple – once you initiate the position, you hold on to it till your target is hit or SL is breached.

      • Rajan Balana says:

        Alright. So you mean that we are not doing intraday trade in the above example, right? Because intraday position gets automatically squared off at the end of the day.

  100. Senthamizhselvan says:

    For harami formation one of the condition is that the

    Open and close should be almost the same (within 1-2% range)

    How to calculate the range in terms of percentage?
    Is it (Open-Close)/Close?

    • Karthik Rangappa says:

      Yup, you can use the difference between the open and close and divide it over close.

      • Ajay Kumar bhagat says:

        Dear Sir
        Has eicher motor formed a bearish harami chart today? As in one year daily chat the harami pattern is followed by a doji formed at the uptrend. should it be read as bearish market to folow in eicher motor.

  101. Ajay Kumar bhagat says:

    sorry for the mistake ….it is doji in the uptrend followd by Harami Pattern

  102. Rajiv says:

    Hi Sir, On June 9th has Ultratech cement formed a bullish hammer pattern (on daily chart). Please share your opinion. Thank you.

  103. Mehul Kansagra says:

    I would like say thanks for sharing this deep chart informating and replys.
    If Prior tread is bullish and shotting star pattern made on chart so meaning is bearish will come.
    But my question is when prior tread was bearish and shooting star made on chart so what is the meaning?

    Regards,
    Mehul Kansagra

    • Karthik Rangappa says:

      When prior trend is bearish and a shooting star forms, then it indicates a continuation of bearishness.

  104. Birendra Sah says:

    In section 7.3(2ND GRAPH), for BPCL Limited which has formed a hanging man at 593 you have mentioned that both risk taker and risk averse investor will book profit. But I see for the risk taker stoploss would be hit as the next candle’s(3rd candle in the circle) high was above the high of candle of trading day i.e Stop Loss. Please clarify if I’m wrong. And secondly, how long data consideration you take while determining whether the previous trend is bullish or bearish?

    • Karthik Rangappa says:

      If the SL has been hit, there isn’t much one can do. You will have to respect the SL level and get out of the trade.

      If you are doing a short term trade, then at least 5 – 8 trading session should be considered.

  105. mahek says:

    i have a confusion in rule #1 buy strength and sell weak..this mean buy when the there is bullish trend and sell when it is bearish trend? in this case why i will book loss ? or this means i will profit bcz my selling price will be anyways greater than the price at which bought my shares.

  106. sansriti says:

    Hi Karthik
    When you talk about the position of a risk averse trader, for example in case of a shooting star, the risk averse trader will initiate a trade on the second day after ensuring a red candlestick has formed. So on the second day, we need to see in the start itself if the market is going down, or are we to wait the whole of second day to determine that a red candlestick has formed? And then place an order at the end of the day or third day beginning?
    Also, thank you so much with coming up with such an initiative to educate us. Really appreciate it a lot.

    • Karthik Rangappa says:

      If you are risk averse, it is always a great idea to wait for the confirmation. Afterall, you are trying to play super safe here 🙂

      • sansriti says:

        Thanks Karthik for the advice. But I always start thinking that if we are waiting for so long, would it get too late to enter the market? For example, Infosys, it has formed a bearish marubozu on Friday, now I am not able to understand what would be the good time to enter. I want to short it, but, I am not sure if it will still fall more down, considering it has already touched a 3 year low. Any advice on this?

  107. Ankit says:

    As we learnt in earlier chapters open value of a particular share should be same as close value on last day, but I have seen in practical difference between open value and close value of last day of an particular share. Please explain what I am missing ?

  108. Ash says:

    Hi Karthik,

    Stop loss seems too close in this pattern. What happens if there’s a gap down opening?

    Thanks,
    Ash

    • Karthik Rangappa says:

      The stoploss would trigger 🙂

      • Ash says:

        Say the stock closed at 100 and opens next day at 104 and my stop loss is 102, are you saying the stop loss will still trigger? How would that happen/work, since the market didn’t give even give the stock a chance to trade at 102 in the first place right? Is that how it works?

  109. siddharth anvekar says:

    Hi Karthik!
    Under chapter 7.2(hammer),
    Risk takers can qualify the day as a hammer by checking the following condition at 3:20PM on the hammer day..

    1)Open and close should be almost the same (within 1-2% range)
    2)Lower shadow length should be at least twice the length of real body
    3)If both these conditions are met, then the pattern is a hammer and the risk taker can go long.
    Now as on 15th september 2017 powergrid EOD chart, O=212.70,C=212.50,H=213.45,L=208.10.

    This satisfies rule (2) but what about (1) because I really did not understand that “(within 1-2% range)” and also how much of an upper tail flexibility is fine?
    Thanks Sir.

  110. Deepak dev says:

    “Open and close should be almost the same (within 1-2% range)”
    what if the difference is less than 1%?
    Also is there any way I can take out the OHLC data of my watch list/workspace for last 3 days to excel from Pi?
    I have tried the Link to excel from workspace, but it is coming as N.A in all cells.

    • Deepak dev says:

      Sorry the first question was answered above.

      Second question was about getting OHLC data to excel,
      I have tried google finance web query.
      Works fine except the closing prize.
      The closing prize showing in PI is somehow different than the one getting from google finance.
      But If I see the last trade prize in Pi it matches with google data. Why this difference?

      Does the exchanges calculate the closing prize with some other parameters rather than last traded prize?

    • Karthik Rangappa says:

      Less than 1% is not really a problem. It should work on Pi. I’d suggest you speak to [email protected].

  111. Chintan Kapadia says:

    PVR – 25th September 2017
    Is it hammer ?
    Still didn’t work and breached SL.
    Am I right ?
    And other info for this.

  112. V Vivek says:

    Hi Kartik,

    I really benefitted from your lecture today. Sun TV had formed a hammer yesterday and today it was an opportunity to buy. I just tried with one stock and it worked. My question is , Sun TV was mentioned in Economic Times today that it had formed a hammer and it was the time to buy. But in normal course, in so many stocks, how do I shortlist such stocks as that of Sun TV?

  113. Mukesh says:

    Hi,

    Thanks for this valuable and easy to learn chapters.

    i would like to know what time frame we should look at while analyzing the single stick patterns OR What is the general time frame we should look at while doing technical analysis

  114. Varun Joshi says:

    If the stock is in downtrend and the shooting star pattern emerge than what does it mean?

    If you take chart of Lupin – 29/10/2017
    Open – 1002
    High – 1021.45
    Close – 1001.1
    Low – 999

    Its previous day close was – 993 … the stock did open gape up and the gape sustained during the day.

  115. Prakhar says:

    Should we consider companies profile also for short term or intraday trades or just identifying opportunities through charts is sufficient.

  116. manjul says:

    Hi Karthik,
    What do you mean by “If the current market price is more or less equal to the low price” in case of shooting star?

  117. V Vivek says:

    What is expected when the the shape is exactly reverse of hammer? It has long upper body and then square shaped normal body? The trend is downward in the past two trading session

  118. Avinash says:

    Sir can i start trading with this amount of knowledge(up to single-candlestick-patterns-part-3 ) or do i need to finish every chapters in varsity.?

  119. Sarthak Laddha says:

    Icici bank forming perfect hanging man pattern on 1day candlestick…. Will it go down monday?

    • Sarthak Laddha says:

      Even all the stocks in the bank nifty forms the same pattern and even bank nifty also..

    • Karthik Rangappa says:

      Your guess is as good as mine!

      • Sarthak Laddha says:

        Shooting star*
        However i am worried about the moody rating and paytm team up with icici for providing providing short term credit facilities?

        • Karthik Rangappa says:

          Sarthak, you will have to look at things in a holistic way. On any given day, there are several factors that influence the market. You should be in a position to look at these and decide which has a higher impact than others. In this case, Moody’s rating upgrade has a higher influence on markets than the shooting star, or so I think.

  120. chidambaram says:

    Hi Sir,
    What is the meaning of a shooting star in a downtrend ? Is it similar to a hanging man in the uptrend?? Mean the bull have emerged and tried to push the price up, but failed to make a higher close ,but they we successful in not allowing the price to drop further?

  121. gaurav sawant says:

    how to find hammer/paper umbrela/Hanging Man ,shooting star/inverted hammer,spinnig top/star Doji in candle stick chart.all are always same,kindly help

  122. Mayank Agarwal says:

    Hi Karthik, If you look at the chart (5 minute interval) of Bharti Airtel on 8th December, a shooting star was formed at 3.20 PM, and as per the above observations, is this a shorting opportunity?
    Also, could you please suggest what time interval for the charts is suitable for intraday trading and which candlestick patterns should I watch out for to trade during the day.
    Thank You.

    • Karthik Rangappa says:

      Yes, shooting star indicates more bearishness, although I prefer to see that on a EOD basis. For intraday, I prefer 10 or 15 mins chart.

      • Mayank Agarwal says:

        Thank You! And for intraday trades, which candlestick patterns are more beneficial? Single or Multiple? And like mentioned in the chapters, do we have to make observations for two days (at 3.20 pm the first day and the opening observations on the second day) and then continue with the trade on the third day? Or, we could perform intraday trades by observing continuous intervals of the same day?

  123. Aakash says:

    Is there any specific reason that you have not discussed bearish alternative of shooting star?

    • Karthik Rangappa says:

      The shooting star is a bearish pattern. I guess you are talking about the bullish alternative. You can consider the hammer as the bullish alternative.

      • Aakash says:

        suppose i saw shooting star like candle after bearish pattern.obviously it will not be hammer(it has long tail but shooting star like structure has long head). So what can i infer from that?

  124. chidambaram says:

    Hi sir,
    1) If the shoting star is a blue colour or hammer is a red coloured one then selling and buying respectively on those days, doesn’t conflict with the rule buy strong and sell weak?
    2) If we are a risk averse trader and say a shooting start is formed with blue colored candle and followed by that on P2 day (on which we are suppose to enter the trade)also a blue candle is formed ,without touching the high of the shooting star(where our SL should be placed) ,then can we go on a short trade or should we avoid it?

    • Karthik Rangappa says:

      1) The color of the candle does not really matter in a paper umbrella since the real body is expected to be very small.
      2) The day you take the trade (P2), it should form a red candle. Assuming it does, then you can short the stock provided it has not crossed the high of the previous day.

  125. chidambaram says:

    Hi SIr,
    If the hammer/ hanging man is formed(due to huge market volatility) in most of the stock tday, due to gujarat election result anticipation ,then can we consider that and enter a trade or should we avoid it?

    • Karthik Rangappa says:

      You can since you should try and avoid being subjective about these patterns. Having said this, I’d suggest you avoid taking trades when you have corporate actions.

  126. Amit P says:

    Hello,

    I could not understand ‘prior trend’. What does this term imply? U have repeatedly mentioned it in most of the charts illustrated above by a black curve with candles at both the ends. Since both the candles show different patterns why is it considered a ‘prior trend’? Please explain.

    • Karthik Rangappa says:

      The black curve does not point to the two candles, rather the entire set of candles within the curve. If you notice, the candles within the curve have either moved up or moved down, indicating that the prior trend is either up or down.

  127. Vamshi says:

    Hi Karthik,

    What would it signify if we have reverse paper umbrella (longer upper shadow & smaller body in the lower bottom) ?

  128. invest_novice says:

    “Remember, the color of the real body in hammer does not matter; hence there is no violation to the Rule 1.”
    Actually this should be considered as an exception to rule no 1 for the risk taker.
    Rule 1 says that buy if it is a blue day. A red hammer is a violation only right?

    • Karthik Rangappa says:

      What about the flexibility rule 😉

      • invest_novice says:

        I agree with the flexibility. What I meant was that instead of writing it as “there is no violation to the Rule 1” it is better to say we are relaxing rule 1 like you mentioned for Marubozu(rule 3 violation. But we add this as exception to rule 3).

  129. invest_novice says:

    The hanging man(preceded by uptrend) is not a very strong pattern right? It says bears tried to make an entry but were unsuccessful since the close price is still close to high.
    For the same reason I feel you didn’t include a pattern(preceded by downtrend) that is opposite to that of hanging man.
    The hammer(preceded by downtrend), I feel is a stronger pattern and it has an opposite shooting start pattern(preceded by uptrend).

  130. Gyan says:

    Karthik – I am not able to attach chart screenshot as there is no icon to attach file. i just see – Name,Mail and text box of Comment where I am writing. Could you please see nifty weekly chart? the last candlestick(7th Jan – 12th Jan 2018) is a bullish maruboju?

  131. Prateek kumar jaiswal says:

    Hi Karthik,
    Despite of price rejection at lower level still we term it as bearish(Hanging man) reversal pattern why it is so, though you have mentioned above that hanging man pattern is not reliable enough but is there anything that makes hanging man candle more reliable if we look at previous candle together with hanging man.

    • Karthik Rangappa says:

      I can share a personal view here – I’m not a big fan of hanging man, for the exact reasons you’ve stated. However, a hanging man followed by a Doji makes it a tad bit interesting for a short trade.

      • Prateek kumar jaiswal says:

        Thanks Karthik.
        One thing is sure how easy these pattern look on paper it gets damm challenging during 9:15-15:30 while accomplishing. However, Varsity is creating a huge huge difference completely in understanding basics. Hats off for this.
        Can u also pls tell how to learn price action trading? I mean any useful resources, books to refer etc. One thing I have understood that only practice can make more confident and better here but if can get some head start in the right direction that would be quite satisfying rather than walking blind folded.

        • Karthik Rangappa says:

          Prateek, really happy to note that Varsity is making a difference in your trading 🙂

          Candlestick patterns are in fact, a manifestation of price action. I personally feel, this itself is a great way to start learning price action.

  132. Apurva A Kunkulol says:

    The real body of a candlestick(Hammer/Hanging man and a shooting star) is located differently, so what does that mean?
    Why are those respective bodies formed in the locations that they are(upper or lower end) and not anywhere else on the trading range?

  133. Arun says:

    Hi Karthik,

    You may have already answered this question, sorry if I missed.

    1. Do you have video classes of these tutorials ?
    2. Do you do any interactive online sessions on these tutorials ?

    Also it would have been better if an email triggered to the comment owner when you respond to a comment 🙂
    Arun
    Arun

  134. Sourabh says:

    In the last shooting star, could you please explain how the SL has been breached for risk taker and risk averse trader?

  135. Apurva A Kunkulol says:

    What is the acceptable length of a wick in single candlestick patterns?

  136. Apurva A Kunkulol says:

    What is the acceptable length of a wick(the opposite side of the shadow – just to be clear enough) in single candlestick patterns?

  137. Saket says:

    Hi,

    I’m sorry if this has been asked earlier, but I have a few concerns with the definition of Risk Takers and Risk Averse.
    As you have mentioned in previous chapters as well, Risk taker would initiate the trade at Close of same day while Risk averse would initiate the trade at Close of next day. However, I am not able to understand as to how could someone trade at Close? To elaborate my query further, if I am choosing MIS or CO option to trade, I am supposed to square-off my positions on the same trading day, right? So, suppose I am able to identify a Hammer pattern at 3:20 pm when shall I initiate the trade? with what option (MIS/ CO/ NRML)? By when do I have to square of my positions?
    I am a beginner so sorry if this question is trivial, I’d really appreciate if you could clear my doubts though.

    Cheers!

    • Karthik Rangappa says:

      Saket, since you are required to carry forward the position overnight, you will have to initiate the trade with NRML as product type.

      • Saket says:

        So if I want to trade intraday, can I initiate the trade whenever I identify a pattern (say hammer) or is its importance reduced if I use 15 min candles instead of 1-day candles? What timeframe makes the most sense for these patterns?

  138. Vidur Saini says:

    Hey Karthik,
    I was wondering if the shooting star or the inverted hammer (somewhere in the comments you said there is no inverted hammer) is formed at the bottom of a downtrend, will it lead to a reversal. Is an inverted shooting star a real technical indicator?
    P.S – You’re a great teacher. Congratulations on that. So many of us have so much to learn from you!

    • Vidur Saini says:

      In addition to the last comment, if you could please check HINDUNILVR’s today’s candlestick (7th March 2018), it has an inverted hammer at the bottom of a downtrend, is forming on the support levels, and Bollinger bands confirm.
      Volume, MACD and RSI and not so well.
      Do you think the inverted hammer is valid in this case as you said in one other comment (yes, I read all the comments) that inverted hammers are not of great significance?
      You’re the best!

      • Karthik Rangappa says:

        Thanks for the kind words 🙂

        Yes, that certainly is an inverted hammer. In this case, I’d give more importance to the support level, especially since its a phycological figure of 1300.

    • Karthik Rangappa says:

      End of the day, all candlestick patterns are just a manifestation of the price action. Given this, you can find your own pattern. If I spot a shooting star at the end of the downtrend, I’d be tempted to think there is more downside to come.

  139. Mahesh says:

    “The risk averse, initiates the short trade on the next day at closing prices after ensuring it is a red candle day”
    question is upto what time red candle day can be ensured
    i.e if next day on 10:00 am it is showing as red candle so should i take a trade at that time?

    • Karthik Rangappa says:

      Yes, this is a hammer, although not very convincing as the lower shadow is uncomfortably long. Both 1st and 2nd trend plays an important part here.

      • chirag says:

        sir if u see link again there is also second question about engulfing pattern,whts your view on that
        and yeah u also said that prior trend shouldconfirm having last 5-6 trading days or ther is 4%difference
        so how we calculate these difference from lower shadow to lower shadow
        or from close to close.
        thanks

        • Karthik Rangappa says:

          I’d prefer to look at close to close. Remember, the closing price is a more logical one (which is the weighted average of last 30 mins), the low could just be a swing during the day. For this reason, looking at close makes more sense.

  140. J says:

    Hi,

    Can you provide the numbers for Cipla in the example above? the OHLC of the candlestick?

    • Karthik Rangappa says:

      Ah, cant really figure the OHLC here, the y-axis is chopped off 🙂
      However, from the text that follows the chart, I can see the stock was around 440.

  141. Vaibhav says:

    Hi Karthik,

    As I setup trades for few trading sessions and using 1 Day charts to identify patterns. So How should we manage stop loss for few days session. For E.g. Hammer pattern formed and according to pattern stop loss setup. Now trade is move on my direction and did no reach to stop loss and target also not reached then in that case I thought to wait for few session so in that case how stop loss should be managed?

    Thanks in advance.

  142. RG says:

    Hi Karthik,
    Thanks a lot for these tutorials. They are of immense help. I really appreciate your efforts to share knowledge in the most simple ad lucid way possible 🙂

    My question is: What is the time frame for Technical analysis predictions. Can I use TA for long term investment horizons (say I hold on to my investment for 2 years). I assume that TA is useful only for shot term investment horizon (like intra day to few weeks).
    If I have a long term investment horizon, should I use Fundamental Analysis only or can I use a mix of TA & FA. If yes, how can I make use of TA for long term investment horizon.

    • Karthik Rangappa says:

      I’d suggest you use TA only for short-term trading. For long-term, you need to look at the companies fundamentals. A mix of TA and FA always help, but don’t rely solely on TA for long term.

  143. About gadhvi says:

    Hi karthik,
    Thanks for posting these wonderful concept in such simple manner. I have one doubt regarding to a statement mentioned.
    (When bulls are in control, the stock or the market tends to make a new high and higher low)
    I understand that new highs will be formed because the bulls are in control and the are buying all the time so prices will go up and hence new highs will be formed. However I don’t understand how can new lows be formed IF the bulls are in control.

    • RG says:

      I suppose higher low means if the low price yesterday was 100 then today it will be 110. So a high low is formed which means bulls have taken the control and even the low price for today is higher than yesterday.

    • Karthik Rangappa says:

      That may not be possible. Where did you read that?

  144. About gadhvi says:

    Hi karthik, sorry for asking a second question,
    Here it is. My question is wouldn’t a shooting star be formed and relevant in a bearish downtrend. Wouldn’t it mean that the bulls are trying to make an entry and we should go long from here.
    Let me know your thoughts about it.
    Thanks

  145. Shikha says:

    Hi,
    Just went through your modules for single candlestick patterns. My questions is-

    Is it necessary that we trade while the market is closing? (as you have mentioned most of the times to buy the stock at 3:30 pm based on patterns its following). If we put a 15 min chart, it might as well show the similar patterns during the day. So what is the ideal thing to do?
    Are all the charts that you show in your examples 15 min? or 1 day charts?

    • Shikha says:

      *3:20 pm

    • Karthik Rangappa says:

      Most of the candles are EOD charts, but you can use it across any time frame. It is not necessary to take the position at EOD, but if you need confirmation of the trend, then maybe it does makes sense.

  146. Abhi21 says:

    Why Stoploss is placed at High when Shooting star is formed (Refer to figure 2 of technical analysis part 1 shooting star?
    I have already gone through Zerodha varsity module but couldn’t get it! Can someone explain?

    • Karthik Rangappa says:

      SL for long trades is always at patter lows and SL for short trade is at pattern highs. Hence shooting star has SL at the high of the pattern.

  147. Venkata says:

    Hi, Karthik. What is the best intraday timeframe for BN. 5,15 or 30 min?

    Thanks,
    Venkata

  148. Syed says:

    Hello Kartik,

    I am sorry if this has already been asked but couldnt go through all the comments.
    In the last example, how could SL be triggered the next day or the following few sessions?.
    The shooting star’s (days high) is higher than subsequent trading sessions. wouldnt the trader book a smaller profit in the next few trading sessions and not going long?

    Regards,
    Syed

  149. Bhaskar says:

    Hi,
    What if the proper hammer candle seen on top or slightly lower than top of chart? Should I consider it bullish ? Or it has to be on downtrend only?

  150. Bhaskar says:

    Hi,
    If you see the cipla chart from April to May in 1 day candle, it has created multiple shooting stars still Price gone up need to understand this..

  151. Lakshay says:

    Great initiative by zerodha.
    I have a doubt that how the stoploss for a bearish candle is the high ?

    • Karthik Rangappa says:

      For all bearish candlestick patterns, the high of the candle acts as the stop loss. Likewise, for all bullish candlestick patterns, the low of the candle acts as the stop loss.

  152. Aravinth Kalaiselvan says:

    That shooting star OHLC data example you gave us is a bit confusing. We know that the bear is going to take control, then why would I stoploss at the high of the shooting star day?

  153. Apurva Anil Kunkulol says:

    I am unable to post the link to the screen shot, still I’ll give you the day and date of the candle:
    https://drive.google.com/file/d/1CHI5fTy8JtzvYigIc8ARD6kUn7VRRz-M/view?usp=sharing

    O: 0.00 H: 0.00 L: 0.00 C:84.85 V: 100 D: 05/17/1999
    Scrip: TataPower

  154. Rohith says:

    Why doesn’t the shooting star has two forms like Paper Umbrella. Doesn’t the shooting star at the bottom of a downtrend is not an indication that trend is going to reverse?

    • Karthik Rangappa says:

      A shooting star at the bottom of a trend indicates more bearishness.

      • Kiran Raj says:

        Hi Karthik Sir,

        This is just out of curiosity that I’m writing. I believe its better to analyze the candles with an approach of buyer/seller perspective, rather than just memorizing the pattern shapes and trying to hunt for them, which might actually miss the crux of charting analysis. I believe just memorizing that formation of hammer after a particular trend reverses the earlier trend might not be apt. Looking further, shooting star at the bottom of the trend only means that bears are in complete control until the day before inverted hammer is formed, and on the day of inverted hammer, the buyers have tried to bring the price up (Indication of long upper wick), but the sellers are so strong in dumping the shares that the candle closed near its Low for the day indicating more bearishness (Even though the prior trend is downward and an inverted hammer is formed after the trend, trend won’t reverse). On contrary, A hammer formed after uptrend is not necessarily saying that trend will reverse (Even though the vanilla charts are saying so). The reason behind this is, until the day the hammer was formed, buyers were in complete control. On the day of hammer formation, Sellers have desperately tried to bring it down (Indication of long lower wick), but the buyers were strong enough to help the scrip close near its day’s High. I would believe that buyers are still in driving seat despite the formation of a hammer after uptrend. I believe this approach would help minimize wrong interpretation. Of course, there are only 2 possibilities after a trade has been initiated. It either works our way or not. If it works our way when a trade is placed only by memorizing patterns and not understanding buyer/seller perspective, it only increases the danger of placing more wrong trades as we start believing more on structure of charts rather than understanding what they are trying to tell us. Hope I have understood your work (varsity) in the way it was intended to be.

        Thanks

        • Karthik Rangappa says:

          Absolutely, Kiran! In fact, I have been trying to convey the exact same point in multiple ways 🙂

          CS patterns manifest out of the price action, so once the price action is understood, the pattern does not really matter.

  155. Narasanna says:

    Dear sir,
    I feel hanging man and shooting star is same. am I correct ?

  156. Narasanna says:

    Dear sir,

    what are the ” open, close, high and low” prices ?
    these are specific to the candles range or day range ?

    could you please explain bit these prices ?

    Thanks
    NH

    • Karthik Rangappa says:

      These are different price points of the day, I’d suggest you start from here – https://zerodha.com/varsity/chapter/chart-types/

      • Narasanna says:

        Dear Sir,

        I have studied from beginning.

        My question in detail is as follows.

        At 9:30 market will open, the open market price is X and market is bullish hence price @ 1:30PM is X+2 and hammer will form here. here open price is X and hammer formed @ X+2, still we have 2 hour to close the day and if it closes for the price X+3.
        here open price was X and close price is X+3.

        1) is it good to buy the stock @1:30 or 3:20 ?
        2) next day open should be equal to close price (X+3), If next day open price is X+3, is it good to buy here ?

        Thanks
        NH

        Is my understanding is correct ??

  157. Srikrishna Rowthu says:

    Hi,

    I have been trading in equities from some time. As per I know, we can short shares using MIS option(intraday). But, in many of the lessons here, you told to short at end of the day, so that we can buy back after few days(which is not possible in CNC), when the market starts bullish again. Can you please help me here?

    Thanks
    Srikrishna

  158. Harshajeet Patil says:

    Hello Sir,

    In above provided details for ‘Shadow to real body ratio’ the calculation is provided for Bullish candle (Hammer pattern) as below: –
    Open = 100, High = 103, Low = 94, Close = 102 (bullish candle).
    Close – Open i.e 102-100 = 2 and the length of the lower shadow is Open – Low i.e 100 – 94 = 6

    So how to we calculate for Bearish candle (Hanging man or Shooting Star pattern). Will the calculation be like below:-
    O – 134.20, C – 133.95, L – 133.60, H – 137.10
    open – close (134.20 – 133.95 = 0.25) and high – close (137.10 – 133.95 = 3.15).

    Please let me know if my understanding and calculations are correct.

    Thank you.

    Regards,
    Harshajeet

  159. Chirag I Sharma says:

    1. Does the shooting star compulsorily have to be in a downtrend? Because today at around 3.15PM, the 15minute chart of Bank Nifty formed a near perfect shooting star but on a downward trend and immediately the next 15 minute was a big drop and a bearish marubozu was formed.

    2. How long does the effect on a CS pattern stay on a 15minute/30minute/1 day chart? For instance, above the shooting star was formed at 3:15 then the price dropped but do I expect it to drop even tomorrow or in a few trading sessions of 15 mins if it wasn’t EOD

    • Karthik Rangappa says:

      1) A shooting start at the end of a downtrend hints at a bigger fall. However, this is not a recognized pattern. A shooting start at the top of an uptrend indicates a reversal.
      2) It is best if you consider the pattern just for the day and not carry it forward to the next day.

  160. Prabhu says:

    Hi sir,

    Looking at the EOD Charts of Nifty 50, chart suggests that a Red candle (on 13th July) is formed after an inverted hammer (on 12th July). I believe it is a Shooting star followed by a red candle. When Pivot points are plotted on the chart, on both the days, it just managed to touch 11062 (resistance 2 as per charting software) after which it started moving down. Possibly it is a resistance. This suggests me that One has to turn bearish for the index. Working out the PCR ratio, it comes out to be 1.584. But, I have read that PCR is generally a contrarian approach. So, as per PCR, one should be bullish on the Index. Secondly, Index has been in a good rally for the last few sessions, Looking at the index composition, hardly 20 listed stocks have shown any signs of recovery from the correction, while other 30 have only moved marginally. Chats suggest me a downtrend, PCR suggests me Uptrend. Calculating the Max pain as per OI, I have arrived at 10800. What kind of stance is to be taken as of now ? Could it be bullish? Or bearish?

    Disclaimer : I haven’t taken any real positions. I’m just trying to relate all the concepts that I have learnt on Varsity and few online Webinars. I wanted to know if I’m analyzing stuff in the right approach. I personally believe it should be bearish from now on. for few days (atleast a week). Kindly correct me if I’m wrong. Thank you

    • Karthik Rangappa says:

      Prabhu, I like the fact that you are training your mind to arrive at a set up by considering different approaches and not just plain vanilla charts. However, in this particular case, I’d not pay much attention to Max Pain and change in OI. For all you know we would have a small pullback backed by low volumes before the index takes off again.

  161. Mohit Kumar says:

    Sir. i have not understood this point clearly
    ” More often than not exiting the trade is the best thing to do when the stoploss triggers.”
    Why we should not exit the trade when stoploss triggers.

    • Karthik Rangappa says:

      You need to exit the trade when SL triggers, Mohit. Afterall, that is the purpose of the stop-loss 🙂

    • Prabhu says:

      He meant, ” More often than not, exiting the trade is the best thing to do when the stoploss triggers.”
      It was not “More often than not exiting the trade is the best thing to do when the stoploss triggers.”
      Comma was missed, it is making room for the confusion. He was asking to exit the trade when stoploss gets triggered.

  162. Prakash says:

    Karthik – can you please explain the significance of Stop loss? In case of bearish, article suggests us to make the high value as Stop loss. Why do we need to make the high as SL?

  163. Mangesh Baxi says:

    How do you set a target for hammer?

    • Karthik Rangappa says:

      None of the candlestick patterns gives you a target, you will have to identify one yourself by looking at other things like the support or resistance level.

  164. cv says:

    can you please explain about reverse hammer pattern

  165. Siddharth says:

    Hey, If there is a downtrend or a uptrend in a stock price and paper pattern forms after 3 to 4 days of sideways movement of stock price.(the closing price did not move as it did during the trend) Do we consider this a buy or sell signal? Or should I see, whether the body or the shadow should be above the rest of the days to consider it a signal?

    Will this be applicable to all the patterns?

    Cheers.

  166. Dhaval patil says:

    Sir,How to set stop-loss in hanging man pattern.Because the prices consolidates n if we take high of hanging man it gets hit n then prices starts to fall down.
    I made mistake today in M&M .

  167. Rahul says:

    Dear Karthik,
    In the whole “Checklist” at the end, Is there any other method or Indicator that replace the Support and Resistance Part to confirm the trade and identify the target?
    I’m having a really hard time with Support and Resistance. I’m getting a grasp on the candlesticks and that it’s not just about the patterns you described, it’s about the way the market thinks that’s reflected in each candle.

    • Karthik Rangappa says:

      Rahul, I would not suggest that. The S&R is a critical technical trading element, you have to ensure you get comfortable with it. I understand it takes time, but do pursue and get through with it, trust me, you’d be glad you did 🙂

  168. Sapan Agarwal says:

    Hammer formation on Apollo Tyres on 12 of Sept 2018 is perfect example of above theory.
    Shared moved 10 Rupees on 14th of Sept 2018.

  169. doubtful says:

    if you apply the thought process used for paper umbrella to shooting star, how is it bearish always ?

    • Karthik Rangappa says:

      In a shooting star, the high point of the day was not sustained plus the stock closes near the low of the day. Both these points lead one to believe that the stock could retrace.

      • doubtful says:

        thanks for making time to respond.

        I read some more, i was referring to the inverted hammer pattern(shooting star in a downward trend), isn’t that bullish?
        inverted hammer not included as it is not a frequent pattern, is it ?

        • Karthik Rangappa says:

          A shooting star at the end of a downtrend is not really a valid pattern, but if you were to think about it, I’d still be bearish for the exact same reasons quoted earlier.

  170. Deepak says:

    I am not able to see few charts, I see names instead. M2-Ch7-Chart3, M2-Ch7-Chart5, M2-Ch7-Chart8.
    What could be the problem?

  171. Ankit says:

    Hi Karthik sir,

    I just tried to summarise the stop loss we can set as per the pattern and I have the below queries after it:

    Hammer: stop loss is the lowest of the day – I understand this as, whenever the stock reaches that lowest point again the trader should buy it so that when the stock goes up again, he can have the maximum profit.

    Hanging man : stop loss is the highest of the hanging man day. Here, if I set the stop loss as the highest point of the previous day, will the stock not be sold the very next day when the market opens at a price better than previous day close but lower than previous day high? Does it not have a chance to still go up? Should we not call that previous day high price a ‘Target’ instead of stop loss?

    Shooting star: Same query as I have for Hanging man.

    Please guide me in this regard.

    Regards
    Ankit

    • Karthik Rangappa says:

      Not really Ankit, as you would short based on a hanging man, which means the SL has to be a price higher than the entry price. In the case of candlestick patterns, the high of the pattern marks as the SL for short trades and the low of the pattern marks as the SL for long trades. Given this, the high is an SL level for hanging man, and not really the target.

      Good luck.

      • Ankit says:

        Thanks for the answer, sir.
        I believe I haven’t understood the meaning of stop loss. Please let me know what needs to be changed in my understanding here – stop loss is the lowest price at which you would want to sell your shares automatically so that you do not bear a greater loss.
        Going by this, when I set the highest of the hangingman as the stop loss, should the shares not be sold the moment they go below that mark?
        That’s why I doubted that if the shares open at a price lower than the highest they will be sold right away the very next day.
        Please let me know if ‘stop loss’ works any other way.

        • Karthik Rangappa says:

          Ankit, I get a feeling that you are not familiar with the concept of shorting. In all the bearish patterns, the idea is to short the stock and buy it back later. I’d suggest you read this chapter in which a ‘short position’ is explained – https://zerodha.com/varsity/chapter/commonly-used-jargons/

          • Ankit says:

            I read about short trade sir. I believe that when we say we set the high of hanging man as the stop loss we mean ‘stop loss market’ with setting the trigger price and the stop loss both equal to the high of hanging man because we cannot set a stop loss greater than the latest price of the stock if we choose just the ‘stop loss’ option. Please let me know if anything is missing in this understanding.

  172. manish says:

    Hi Karthik,

    Can you tell me what do you mean by directional trade?

    Thanks,
    Manish

  173. Ankit says:

    Sorry for the confusion between SL and SL-M sir. It’ll be really helpful if you could give an example in which the next day (next to hanging man formation) pssibilities is mentioned.

    • Karthik Rangappa says:

      Ankit, I’m bit confused, can you please elaborate? Thanks.

      • Ankit says:

        Sir, Just to avoid any more confusion, I am jumping straight on to my question: what’s bothering me is to understand how shorting will help me when a hanging man is formed. I want to understand this with an example. I know we have examples like that of BPCL given by you above but they don’t tell what happens the next day of the Hanging man depending on the stop loss set by me. If feasible for you can you give a few examples of the possible scenarios the next day where I have set the highest of the previous day(hanging man formation day) as my stop loss (as suggested in the paras above).

        • Karthik Rangappa says:

          Ankit, the idea is to short the day or the day after the hanging man is formed. The expectation here is that the stock price will go down further and you can buy it back at a lower price and therefore profit from it. Please remember, hanging man increases the probability of the stock price going down the next day, there is no guarantee as such. I hope this helps.

  174. Srinathjayanna says:

    In some uptrend or downtrend there will be no confirmation of patterns like hangingman,hammer or shooting star but the indicators will be in overbought or oversold and rallies will be started on downside or upside is it because only on the indication of indicators in overbought and oversold region and can we go short or long only because of indicators.

    • Karthik Rangappa says:

      Not true, you can spot candlestick patterns within trends as well. In fact, CS patterns help one decide ideal entry and exit opportunities in the secondary trend.

  175. Sarvesh says:

    Hi Karthik,

    I am not able to recognize whether the pattern formed on TATA ELXSI on 7-12-2018 is Hammer or Hanging Man.
    Op: 1014 Hi: 1020 Lw: 995 Cl:1008
    prior trend being an uptrend but on 6-12-2018 stock correct.
    Thanks.

  176. amey says:

    Hi Karthik!

    I wanted to know if there are any prior probabilities regarding these candlestick patterns? Like if the hanging man is a bearish signal so it will be successful 70% of the time and 30% of the time it’ll fail or such, given there are large number of trials?

    Thanks.

    • Karthik Rangappa says:

      In fact, you will have to work towards this, Amey 🙂

      You will have to backtest each pattern across stocks and come up with a repository of which patterns works on which stocks. For example, the hammer may work very well on SBIN, but may not on HDFC Bank.

      • Amey says:

        Thanks Karthik!

        I will work towards it. Actually prior to posting that query, I was trying it out on excel but it got too complicated after a while.

        Any guidance on how can I go about it? Can TradeScript help here? How would you do it?

        • Karthik Rangappa says:

          Trade script probably can, I’ve never used it so cannot comment on it.

          I used to run this on excel, agree its a pain but with my limited skills, this was the only option for me 🙂

  177. Kartik says:

    Can you guide about Time period (15 minutes,30 minutes, etc ) candlestick pattern for intraday ,delivery

  178. apaar says:

    hi sir,
    i’ve a issue that in the 4th chart of the shooting star, there is a bullish shooting star candlestick and sir,you said to in this chapter that when the shooting star appears the trend will go down but in that case (4th chat) the trend go up and also prior tend is bullish.
    can you sir explained me i,m confused.

  179. Gaurav says:

    I am starting to learn Intra-day and trade only one or two trades a day when I can find some big movement in Nifty & bank Nifty. But I am not able to find the correct entry or exit timings. I am confused with the different time frames such as higher time frame and lower entry time frame. Can you suggest What should be the correct time frames so that I can analyse the proper candlesticks and enter/exit at correct time before the momentum starts in nifty & bank nifty

  180. Mani says:

    how to mathematically define a hammer sir, so that I can backtest using my kite api subscription. My understanding is that considering the body the lower shadow should be at least twice but how to quantify upper shadow sir?

  181. Ajeet says:

    Hi Kartik Sir ,

    Sorry didn’t get time to read above questions and comments and i am not sure if anyone had asked already the below question :-

    What does “Shooting star” mean in a downtrend . I am observing candles , can see Shooting star formation in lots of downtrend as well .

    • Karthik Rangappa says:

      Shooting star in a downtrend does not really mean anything, Ajeet. However, you can assume that the downtrend is probably intact.

  182. Siddharth Joshi says:

    Please check if JSW steel’s chart was a shooting star on 25th Feb 2018.

  183. judhistir parida says:

    In the hanging man example chart no-7 where BPCL stock Open = 592, High = 593.75, Low = 587, Close = 593 then how it became a red candle?

  184. madhu pappu says:

    hi Karthik,

    i just started going through the this material (very new to stocks), which i have got to know from my colleague. became a fan of your writing.
    I have a question.
    there are two candle sticks for
    1) paper umbrella – Hanging man (which is a bearish candle seen after bullish trend) and Hammer (a bullish candle seen after a bearish trend).
    2) doesn’t shooting star has also two scenarios. How to infer if i see this candle (blue) after a bearish trend. does it have different term?

    i am sorry, if my question doesn’t make sense.

    • Karthik Rangappa says:

      Glad you liked the content, Madhu 🙂
      1) Yes, that’s right
      2) The shooting star at the top end of the rally indicates bearishness. The same at the bottom end of the rally, according to me indicates more bearishness.

  185. vinay vardhani says:

    is there any need to confirm the volume?

  186. Bineeth Mistry says:

    Hi,
    I refer to the example taken in this module:
    In the chart above, BPCL Limited has formed a hanging man at 593. The OHLC details are –
    Open = 592, High = 593.75, Low = 587, Close = 593. Based on this, the trade set up would be as follows:

    The risk taker, initiates the short trade on the day the pattern appears (at 593)
    The risk averse, initiates the short trade on the next day at closing prices after ensuring it is a red candle day.

    My query is , what is meant by “short trade”? MIS under Equity segment?
    Is it Short sell?

  187. Roshan says:

    Did heromotors formed hammer on 26.4.19.
    (Volume was above avg)

  188. Harry says:

    Buy price for a risk-averse – He takes the trade on the next candle “after evaluating that the candle is blue” at – Rs. 445.4/-

    How can the risk trader evaluate that candle is blue before the end of the day?

    • Karthik Rangappa says:

      These are all EOD trades, Harry. However, the risk-averse trader may find himself in a tricky spot if the price has moved up quite a bit the next day.

  189. Harry says:

    “On the first hammer, the risk averse trader would have saved himself from a loss making trade, thanks to Rule 1 of candlesticks.”

    How does the risk-averse trader evaluate the next candle before the actual candle formation in the above case?

  190. RituRaj says:

    Hi, I am bit confused after reading all the single candle charts. Can u help me pattern/candle stick which is visible by you. I am attaching today’s BNF chart with 5 mins.
    Thanks

  191. PANKAJ says:

    What do you mean shooting star is inverted hanging man but I looks both same because in both upper shadow is 2 times the real body

    • Karthik Rangappa says:

      I can see an inverted hammer (2nd from last), although it does not get qualified as it does not have a prior trend. I can also see a bearish Marubuzo (9th candle from last), which seems to have worked.

  192. Satish says:

    Sir bad candle has formed at top resistance even though market didnt fall…ots bn current chart..
    https://drive.google.com/file/d/1k7NKIjlayRG570TFYtjSJH1Murzfa-0p/view?usp=drivesdk
    So sir i want to ask do they sometimes doesnt work???….abd how to get from this false breakput….plz suggest and correct sir🙏

  193. Vrushabh says:

    Sir, how can we plot the candlestick pattern for intraday, as we know the high, low and close price at the end of the day

  194. Omkar says:

    Hi,
    What if shooting start appears in a downtrend , just like a hammer ?

  195. hitaksha says:

    Open = 592, High = 593.75, Low = 587, Close = 593. Based on this, the trade set up would be as follows:

    the paper umbrella should be in blue colour but in graph it is showing red color.

    • Karthik Rangappa says:

      Let me check, but the color of the candle does not really matter when you are looking at a paper umbrella.

  196. Nishit Patira says:

    Small typo in the section on Paper Umbrella – Hammer Formation
    “The risk averse trader should evaluate the OHLC data on the 2nd If it’s a blue candle, the trade is valid and hence he can go long” is what was given in the section. I think, you meant to say “OHLC data on the 2nd day”.

  197. Ram says:

    Hey Karthik,
    Can the Supertrend Indicator be used as a fundamental in Fundamental Analysis?

  198. Ram says:

    But Karthik, when I was going through a number of company’s 5-10 year old charts I saw that the supertrend indicator gave right signals and the stock rose quite generously. Like when the supertrend indicator gave a positive signal to INFY in 2018 and the stock rose from 460 to 600 in the span of a year

    • Karthik Rangappa says:

      Hmm, maybe. For instance, I love the moving average cross over system for exactly this reason. Maybe ST works on similar lines, its just that I’ve not figured this out yet 🙂

  199. Ram says:

    And Karthik by the way I was going through a article about the supertrend indicator and the article stated that the indicator is better used off with Heikin-Ashi candles (Yeah I read it _Heineken Ashi_) 🙂 . I couldn’t quite understand the Heikin-Ashi candles, So could you please give some insights on the Heineken Ashi Candles (pun intended) 🙂

    • Karthik Rangappa says:

      I’m yet to figure out Heikin – Ashi, I’ve just been soon used to the candlesticks. But I can guide you through Heineken – Ashai 🙂

  200. Bismoy says:

    We known more often than not shooting star is bearish reversal pattern and hammer is bullish reversal and we also know the probability of price reversing after these patterns are encountered is high.However there are cases where these patterns do not suffice the reversals and stoplosses are hit.How do we limit such damage and find a fine line or balance to negate the false trades.

    • Karthik Rangappa says:

      This is exactly why you need to look at the checklist, Bismoy. The checklist ensures you are looking at the right set of parameters before initiating the trade.

  201. Natasha Tauro says:

    How many hours candlestick pattern would this work most accurately on? (I have peronally been using 1hr, is that accurate enough)

  202. Nikhil Khetan says:

    Hi Karthik,

    Do, the candlestick patterns have to be at the very end of the trend or can I be flexible for a few more candlesticks?

    If a stock is in an uptrend, then trends sideways for a few days and finally a candlestick pattern is formed at the end of it, can it be considered as a genuine pattern or should I ignore it?

    I am talking specifically about the end of the day chart of AdaniPorts for today. Can it be considered as a Dark Cloud cover?

    Thanks,
    Nikhil

    • Karthik Rangappa says:

      You will have to take the call as is because it is quite a challenge to call the top and bottom of a trend.

  203. Rahul Mishra says:

    Dear Sir,

    I am quite new to this subject. I don’t have any trading experience. I just want to know how a short trade is initiated at around 3:20 PM as we have to square off the position by the end of the day? Will it be done in the derivatives market?

    Regards,
    Rahul Mishra

  204. Jitu says:

    Sir
    You told about entry and exit but how do we know about target price?

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