Module 2 Technical Analysis

Chapter 20

Supplementary Notes 1

354

SN-Cartoon

Average Directional Index (ADX)

About:
The Average Directional Index (ADX), Minus Directional Indicator (-DI) and Plus Directional Indicator (+DI) represent a group of directional movement indicators that form a trading system developed by Welles Wilder. The Average Directional Index (ADX) measures trend strength without regard to trend direction. The other two indicators, Plus Directional Indicator (+DI) and Minus Directional Indicator (-DI), complement ADX by defining trend direction. Used together, chartists can determine both the direction and strength of the trend. Source: stockcharts.com

What should you know?

  1. ADX system has three components – ADX, +DI, and -DI
  2. ADX is used to measure the strength/weakness of the trend and not the actual direction
  3. ADX above 25 indicates that the present trend is strong, ADX below 20 suggest that the trend lacks strength. ADX between 20 and 25 is a grey area
  4. A buy signal is generated when ADX is 25 and the +DI crosses over –DI
  5. A sell signal is generated when ADX is 25 and the –DI crosses over +DI
  6. Once the buy or sell signal is generated, take the trade by defining the stop loss
  7. The stop loss is usually the low of the signal candle (for buy signals) and the high of the signal candles ( for short signals)
  8. The trade stays valid till the stoploss is breached (even if the +DI and –DI reverses the crossover)
  9. The default look back period for ADX is 14 days

On Kite:
Load the ADX indicator from studies. Kite gives you an option to change the look back period, by default the look back period is set

Image 1_ADX

You can customize the color of all the three components of the ADX system. Click on ‘create’ to load the indicator –

Image 2_ADX_loaded

By default the ADX indicator is loaded below the instrument. The black line represents ADX, ensure it is above 25 while looking for the crossovers.

Alligator Indicator

About:
An indicator designed to signal a trend absence, formation and direction. Bill Williams saw the alligator’s behavior as an allegory of the market’s one: the resting phase is turning into the price-hunting as the alligator awakes so that to come back to sleep after the feeding is over. The longer the alligator is sleeping the hungrier it gets and the stronger the market move will be. Source: infimarkets.com

What should you know?

  1. The Alligator indicator is overlaid on the price chart
  2. The indicator is made up of three simple moving averages – 13, 8, and 5 period averages are used
  3. The 13 period MA refers to the Alligator’s jaw, 8 period MA refers to the Alligator’s teeth, and the 5 period MA refers to the Alligator’s lips
  4. By default 13 MA is colored blue, 8 MA is colored red, and 5 MA is colored green
  5. A buy signal is generated when the following condition is satisfied –
    1. All three MA’s are separated
    2. The price is above the 5MA, 5MA is above 8MA, and 8MA is above 13 MA
    3. Once the above condition is satisfied, it means that the asset is trending up
    4. When the uptrend is established, it is upto the trader to identify a good entry point within this trend
  6. A sell signal is generated when the following condition is satisfied –
    1. All three MA’s are separated
    2. The price is below the 5MA, 5MA is below 8MA, and 8MA is below 13 MA
    3. Once the above condition is satisfied, it means that the asset is trending down
    4. When the downtrend is established, it is upto the trader to identify a good entry point within this trend
  7. Periods when the 13, 8, and 5 MA are intervened (or moving flat) is considered a ‘no trader’ zone and therefore the trader is advised to stay out of markets

On Kite:
Load the Alligator indicator from the studies. As you can see the default values of the moving averages are loaded i.e 13, 8, and 5.

Image 3_Aligator_load

As you can see, the indicator input also loads the ‘offset’ values for each MA. These offset values are also loaded by default values. Offsetting or displacing the moving average reduces the number of whipsaws in the average. Needless to say that you can change the default values for moving average and offset to any value that you deem appropriate. Further you can even customize the color of each indicator to your preference.

Here is the snapshot of how the indicator looks when the indicator is overlaid on the chart. Do notice there are 2 instances when the sell condition is satisfied (highlighted in red) and 1 instance when the buy condition is satisfied (highlighted in blue).

Image 4_aligator overlay

Aroon

About:
Developed by Tushar Chande in 1995, Aroon is an indicator system that determines whether a stock is trending or not and how strong the trend is. “Aroon” means “Dawn’s Early Light” in Sanskrit. Chande chose this name because the indicators are designed to reveal the beginning of a new trend. The Aroon indicators measure the number of periods since price recorded an x-day high or low. There are two separate indicators: Aroon-Up and Aroon-Down.

A 25-day Aroon-Up measures the number of days since a 25-day high. A 25-day Aroon-Down measures the number of days since a 25-day low. In this sense, the Aroon indicators are quite different from typical momentum oscillators, which focus on price relative to time. Aroon is unique because it focuses on time relative to price. Chartists can use the Aroon indicators to spot emerging trends, identify consolidations, define correction periods and anticipate reversals. Source: stockcharts.com

What should you know?

  1. The indicator measures the number of days since last high or low is made, hence the indicator is a measure of time relative to the price
  2. Aroon consists of two component – Aroon up and Aroon Down
  3. The default value for Aroon is 25 days. Aroon up measures the number of days since the last 25 day high occurred and Aroon down measures the number of days since the last 25 days low has occurred
  4. Both Aroon up and Aroon down are plotted side by side
  5. Aroon Up/Down is lower bound to zero and upper bound to 100
  6. A buy is generated when Aroon up is above 50 and Aroon low is below 30
  7. A sell is generated when Aroon down is above 50 and Aroon up is below 30

On Kite:
Here is the snapshot of the indicator when loaded from studies –

Image 5_aroon load

As you can see the default period is 14, feel free to change this to any number you wish. 14 here represent the ‘number of days’. Do remember if the period is 14, the Aroon measures the number of days since the stock made 14 days high/low.

Image 6_Aroon applied

As you can see both Aroon up and Aroon Down are plotted.

Aroon Oscillator

Aroon Oscillator is an extension of the Aroon indicator. The Aroon Oscillator measures the difference between the Aroon up and Aroon down and plots the difference in the form of an oscillator. The oscillator swings between -100 to +100, with the ‘0’ level as the center point.

The snapshot below shows the Aroon Oscillator loaded on to the chart –

Image 7_Aroon Osc

A reading above zero means that Aroon-Up is greater than Aroon-Down, which implies that prices are making new highs more recently than new lows. Conversely, readings below zero indicate that Aroon-Down is greater than Aroon-Up. This implies that prices are recording new lows more recently than new highs.

As you can see, the Aroon Oscillator is either going to be positive or negative the vast majority of the time. This makes interpretation straight-forward. Time and price favor an uptrend when the indicator is positive and a downtrend when the indicator is negative. A positive or negative threshold can be used to define the strength of the trend. For example, a surge above +50 would reflect a strong upside move, while a plunge below -50 would indicate a strong downside move. Source: stockcharts.com

Average True Range

About:
Developed by J. Welles Wilder, the Average True Range (ATR) is an indicator that measures volatility. As with most of his indicators, Wilder designed ATR with commodities and daily prices in mind. Commodities are frequently more volatile than stocks. They were are often subject to gaps and limit moves, which occur when a commodity opens up or down its maximum allowed move for the session. A volatility formula based only on the high-low range would fail to capture volatility from gap or limit moves. Wilder created Average True Range to capture this “missing” volatility. It is important to remember that ATR does not provide an indication of price direction, just volatility. Source: stockcharts.com

What should you know?

  1. Average True Range (ATR) is an extension of True Range concept
  2. ATR is not upper or lower bound, hence can take any value
  3. ATR is stock price specific, hence for Stock 1 ATR can be in the range of 1.2 and Stock 2 ATR could be in the range of 150
  4. ATR attempts to measure the volatility situation and not really the direction of the prices
  5. ATR is used to identify stop loss as well
  6. If the ATR of a stock is 48, then it means that on average the stock is likely to move 48 points either ways up or down. You can add this to the current day’s range to estimate the day’s range. For example the stock price is 1320, then the stock is likely to trade between 1320 – 48 = 1272 and 1320 + 48 = 1368
  7. If the ATR for the next day decreases to say 40, then it means that the volatility is decreasing, and so is the expected range for the day
  8. It is best to use ATR to identify the volatility based SL while trading. Assume you have initiated a long trade on the stock at 1325, then your SL should be at least 1272 or below since the ATR is 48
  9. Likewise if you have initiated a short at 1320, then your stoploss should be at least 1368 or above
  10. If these SL levels are outside your risk to reward appetite, the its best to avoid such trade.

On Kite:
As you can see, the default value of ATR is 14, which means to say that the system calculates the ATR for the last 14 days. Of course you can change this to any value to wish. Here is the snapshot –

Image 8_ATR_load

Once you load the chart, ATR is plotted below the price chart as seen below –

Image 9_ATR_create

So the next time you place a stoploss make sure you check the ATR value to see if stoploss level is relevant. You may also want to read more about volatility and its application (including volatility based SL) – Click Here

Average True Range Band

The ATR bands are an extension of the ATR concept. The idea is to plot an envelope around the stock price to evaluate if the stock prices are behaving “normally” or trending in a particular direction. In order to do this, the ATR band calculates the upper and lower band.

What should you know?

  1. The ATR band calculates and plots the upper and lower envelope around the stock price
  2. To begin with a moving average of stock price is calculated
  3. The ATR value is added to the moving average value, and this forms the upper envelop
  4. The ATR value is subtracted to the moving average value, and this forms the lower envelop
  5. If the stock price penetrates either the upper or lower envelop, then the expectation is that the stock price will continue to move in the same direction. For example if the stock price has penetrated above the upper envelop, the expectation is that the stock will continue to move higher
  6. You can even use the ATR bands as an alternate to the Bollinger Band trading system. You can read more about the Bollinger Band (section 15.2)

On Kite:
When you load the ATR band from studies, you will be prompted for few inputs –

Image 10_ATRB_load

Period refers to the MA time frame; the default value is 5 days. You can change this to whichever time frame that you deem suitable. We would suggest you ignore ‘shift’ parameter. For the ‘field’ option select ‘close’, this means to say that you are plotting the MA values on the closing prices. The rest of the options are mainly aesthetic features, feel free to explore them. Once you click create, you will see the ATR bands plotted on the chart.

Image 11_ATRbands_created

Super trend

Before understanding the supertrend indicator, understanding the ATR is necessary as super trend employs ATR values to calculate the indicator values. The supertrend indicator is plotted over the price chart of the stock or the index. The indicator line changes its color between green and red based on the price moment in the underlying. Super trend does not predict the direction, rather once the direction is established it will guide you to initiate a position and suggests you to stay in the position till the trend sustains.

What should you know?

  1. When plotted, the supertrend indicator appears like a alternating green and red continuous line
  2. A buy signal is generated when the stock/index price turns greater than the indicator value. At this stage, the indicator color turn green and you can also see a crossover of the price versus the indicator (price greater than indicator value)
  3. Once the long position has been established, the trader is advised to hold the position till the price closes below the green line. So in a sense the green line helps as a trailing stoploss for the long position
  4. A sell signal is generated when the stock/index price turns lesser than the indicator value. At this stage, the indicator color turn red and you can also see a crossover of the price versus the indicator (price lesser than indicator value)
  5. The sell signal can be used to initiate a fresh short or exit long. Although waiting for the sell signal to exit the existing long position can sometime lead to taking a loss. So the trader should use his discretion here
  6. Once the short position has been established, the trader is advised to hold the position till the price closes below the green line. So in a sense the red line helps as a trailing stoploss for the short position
  7. Supertrend is basically used to identify a trend therefore it works best in a trending market
  8. The supertrend indicator when compared to a regular Moving Average trading system generates fewer false signals, for this reason the super trend indicator is preferred over a Moving Average trading system

On Kite:
When you select Supertrend indicator from the list of studies you will be prompted for two inputs – Period and Multiplier.

Image 12_supertrend load

Period refers to the ATR number of days. The default value on Kite is 7, which means to say that the system will calculate the ATR value for the last 7 days. You can input any value you deem suitable.

The multiplier refers to a value by which the ATR will get multiplied. The default value on Kite is 3, so whatever is the value of ATR, it will get multiplied by 3. Multiplier is a crucial input for Super trend. If the multiplier value is too high, then lesser number of signals are generated. Likewise if the multiplier value is too small, then the frequency of signals increase, hence chances of generating false trading signals are quite high. I would suggest you keep this value between 3 and 4.

Once the indicator is plotted, this is how it appears on the chart –

Image 13_supertrend_create

Notice how the indicator changes the color as the price moves. Also, whenever the buy/sell signal is generated green and red arrows are generated (respectively) prompting the trader to go long or short on the stock.

Volume weighted average price (VWAP)

VWAP is one of the one of the simplest indicators to use. It works on the principle of averaging the traded price in terms of volume traded. Let me give you an example of to help you understand this better.

Here is how Infy traded between 14:30 and 14:35 on 2nd Nov 2016 –

image-14_vwap

The data is quite simple to understand, for example, at 14:32, 2475 shares were traded, it made a high of 983.95, low of 983, and closed the minute at 983.1.

Now, we use this data and compute the VWAP price. In order to do this, we calculate the following –

  1. Typical price = which is the average price of High, Low, and close
  2. Volume Price (VP) = we get this by multiplying the typical price with its volume
  3. Total VP = This is a cumulative number, which is got by adding the current VP to the previous VP
  4. Total volume = This is again a cumulative number, which is got by adding the current volume to the previous volume
  5. VWAP = We get this VWAP number by dividing the Total VP by Total Volume. The resulting number indicates the average traded price, weighted by volume.

Let’s do the math on Infy data –

image-15_vwap

As you see, the VWAP is a dynamic number, changing based on how the trades flow in.

How to use the VWAP?

  1. VWAP is an intraday indicator, use it on minute charts. Often when you plot this, you will notice a jump at 9:15 AM, when compared to previous day’s data. Ignore this jump as it means nothing
  2. VWAP is an average and like any indicators employing averages, this too lags the current market price
  3. VWAP is used for 2 main reasons – to get a sense of intraday direction and to get a sense of the efficiency of order execution
  4. If the current price is below VWAP, then the general opinion is that the intraday trend is down
  5. If the current price is above VWAP, then the general opinion is that the stock is trending higher
  6. If the VWAP lies in between the high and low, then the expectation is that the stock will remain volatile
  7. If you intend to short a stock, then it is considered an efficient fill if you short the stock at a price higher than VWAP
  8. Likewise, if you intend to go long on a stock, then it is considered an efficient fill if you go long at a price lower than VWAP

On Kite:

Open the chart of your preference and select VWAP from the studies drop down –

image-16_vwap

Note, VWAP can be applied only on intraday time frame and cannot be applied on EOD data.

Once you select the time frame (1 min, 5 mins, 10 mins etc), the engine calculates the VWAP and plots it on the chart as an overlay.

image-17_vwap

You can now visualize the VWAP and the current market price and plan your trades accordingly.

 

354 comments

  1. Adam says:

    In the supertrend example, if we would have waited for crossovers to exit, we would have suffered losses(or at least would have lost most of our profits) so is there a better exiting strategy?

  2. Vipul Karde says:

    I think Super Trend is the best indicator or what I would say as super Profit machine. We should see first identify the 30 min Super Trend Signal – whether buy or sell and then see 5 min Super Trend signal line to enter the trade as per the 30 min Signal. Eg. if 30 min signal is in sell mode (red line above), then in 5 min mode take every sell signal that comes with stoploss of 5 min signal line. I have minted tons with this strategy hence sharing. Karthik Sir can elaborate further if there are any chinks in this strategy. Alternatively you may combine any longer term time frame to judge primary trend and take decision as per shorter time frame supertrend eg. 1 hr – 10 mins 🙂 Thank you

    • Khyati Verdhan says:

      Hi vipul
      Your strategy is good and works well in trending and low volatile market but in range bound market with high volatility it sometime fails. So I feel if we combine it with some other indicators like donchain channel, SMI, the result would be far more better.

    • Karthik Rangappa says:

      Vipul, if the strategy is working fine with you, then best not to tamper with it 🙂

    • ShreyaDR says:

      Vipul, do you mean keep on averaging >>if 30 min signal is in sell mode (red line above), then in 5 min mode take every sell signal that comes with stoploss of 5 min signal line>>

      • Vipul Karde says:

        First of all thanks to Karthik sir for his guidance & khyatiji for appraisal. What i meant by this strategy was take every long term signal i.e buy or sell signal on 30 min chart. In case of 5 min duration enter and exit as per 5 min chart signal. Please dont average especially in case of options it may not work due to decay in premiums. I normally believe in booking timely profits hence not encouraging average stuff.. all the best. 🙂

        • Karthik Rangappa says:

          Just to add – averaging on your losing trade is not advisable at all. On the other hand, one should look at averaging on winners.

        • Dileep says:

          What happens when Sell signal appears in 5 mins chart after you have entered into trade looking at buy signal in both 30 mins and then 5 mins. Are you going to square off buy trade or keep it open until new signal appears in 30 mins chart?

          • Karthik Rangappa says:

            You should go with the primary time frame – if the decision was based on 30 mins, then its best to stick to the 30 mins time frame.

          • Dileep says:

            I have tried it but failed badly. lost 27490 in a single trade. It does not give signal in correct direction. nothing is guaranteed.

          • Karthik Rangappa says:

            Absolutely, nothing is a guarantee. The only thing that comes close is constant learning and improvisation.

          • Vipul Karde says:

            Felt sorry for the losses that you incurred. See basically my ideology is take all the primary time frame & trend signal & in case you have missed it then switch to lower timeframe and take the signals equivalent to primary time frame. Hope not confusing ! Also you should have defined risk taking & risk management discipline planned in advance only before trade entry.
            As Karthik Sir mentioned that in the market you might be equipped by numerous tools, but dont take anything for granted & guaranteed. Proper Trade Discipline & Stoploss would always save the skin. Nevertheless you can always cover up your losses. Don’t be disheartened. 🙂

          • Dileep says:

            What I have observed over a period of time, what signal Supertrend gives after 10-15 minutes, the same signal appears in Parabolic SAR 10-15 minutes before. SO you will certainly get much better price than Supertrend. So far, PSAR has been the best indicator ever I have come across.

          • Dileep says:

            As far as accuracy is concerned, Both Supertrend and PSAR will give same accuracy. But you can catch more points in PSAR.

        • ShreyaDR says:

          Vipul, when you say “timely profit” and since you trade intraday, can you pls. explain your strategy, with the help of charts ( flashback feature from Q)? how & when you book ur profit or how & when you book ur losses?

    • Gaurav says:

      Try to use Heikin Ashi chart and then use your strategy. Test this on some previous data, and tell if it gives better signals.

    • Sutharsan Shanmugasundaram says:

      Vipul – while using 5 mins time frame, do you close out each day before 3:30 PM ? Because I think overnight position could be very dangerous for short time frames.

    • chandramouli says:

      Mr. Vipul, could you please elaborate the logic of identifying the signal on 30 min time frame and then placing a stop loss on the 5 min candle

  3. Lijoo says:

    Sir, What is SMI & Donchain Channel ?. Is it available in pi an in kite ?. Can you elaborate both ?.

    DL 0071

  4. Khyati Verdhan says:

    Hi kartik
    Thanks for this supplement notes on indicators. It is very useful and knowledge gaining too. Will you give such description on other indicators and chart pattern on kite, it would be very helpful. Also. Kite app can also contain all features of web based platform??

  5. ShreyaDR says:

    gr8 article. Can you please explain types of charts & its utilization too? i.e. heiken Ashi, point & figure, range bars, Renko etc.

  6. Khyati Verdhan says:

    Hi kartik,
    I am little confused. Please clear my doubt.
    In kite, if I place a buy order with no trigger price then it buys at market price but if we give trigger price then buy when price reaches that price. Also if I want to buy at higher price than CMP but only when CMP reaches that price what should I do???
    Is This concept applicable in case of placing stop loss. Can I need to place separate order for stoploss

  7. Sainudheen says:

    Sir, Which is the best period and Multiplier number for Checking Current Super trend for intraday trading, and for positional trading which is the best period and Multiplier number.
    Thank you

  8. Sainudheen says:

    Thanks sir

  9. Khyati Verdhan says:

    When kite app would launch???

  10. Khyati Verdhan says:

    Hi kartik
    What will be expire date of these contract. Is its trading same as nifty

  11. Suresh kumar says:

    Hello.. Is the supertend indicator enabled in the pi software.. How to enable the same..

  12. aehsan4004 says:

    i need some indicator to use for making short-term equity CNC trades ( i will hold at the max 10 days only , not more ) ….. which one is best ?

  13. Khyati Verdhan says:

    Hi kartik
    I very much like kite beta. Its very better than previous mobile app

  14. Sainudheen says:

    Sir, which is the most reliable and accurate indicater according to you, Thanks

    • Karthik Rangappa says:

      Each one is different and varies across time frame. However I do have a greater conviction in simple moving averages.

  15. Sainudheen says:

    Sir , Simple Moving Average can i take time frame of 5 days and 35 days crossover for intraday trading , or something better than this according to you for intraday trade sir . Thanks

  16. Sainudheen says:

    Sir, Supertrent indicater gives late buy and sell signal , as compare to MACD and ADX , do we need to change the Period or multiplier or Can we use defalut (7,3) combinations.
    Thanks sir

    • Karthik Rangappa says:

      Works extremely well when the markets are trending. If the markets are flat, irrespective of which momentum indicator you use, you will get wrong signals.

  17. Sainudheen says:

    Sir, Which is the best candle to refer Heikin-Ashi or Normal Candlesticks patterns.
    Thanks

  18. Dileep says:

    are you aware of problem with KITE? We can not modify the order. Not quanity. Not type. So I just cancel the order and place new one. But this is definitely a bug.

    • Karthik Rangappa says:

      Kite works like a charm, you can easily place and modify orders. Please have a word with our support team to figure out how.

  19. atul.bhagat says:

    Dear Karthik Sir
    When a buy signal is generated by a supertrend indicator should we immediately go long at the market price or should we wait for the close of the candle (eg in a 5 min intraday chart) .Also how to determine the stoploss for a buy/sell signal generated by supertrend indicator.

    • Karthik Rangappa says:

      I’d personally prefer to wait for the close of the candle. As far as SL is concerned, I’d suggest you trail it as you would be locking in profits as and when the stock/index moves in your favor.

  20. K R ANAND says:

    Dear Kartik, thanks a lot for your precious efforts. I would just want to know which other indicators should I add with Supertrend so as to escape false signals (or at least minimize it) generated in the flat market.

    • Karthik Rangappa says:

      I find two indicators useful to identify trends – simple moving averages and ADX. Also, you can use support and resistance to know if the markets are flat or trending. For example the markets between 3rd to 17th March was kind of sideways b/w 7400 to 7550…and you can identify this with simple S&R on daily charts.

  21. K R ANAND says:

    Thanks Kartik

  22. Alok says:

    Sir,
    Is Pivots points mentioned in kite are same support and resistance.
    According to you which pivot is better standard or fibonoci
    Thanks
    Alok

    • Karthik Rangappa says:

      Pivot method is a way of identifying S&R, its not the same as like plotting it on graph. Both are good, really depends on the market situation.

  23. Alok says:

    Sir,
    According to your vast experience how many minutes candle one should look for intraday trading(Both for price action candlesticks and 9 by 21 SMA)
    Thanks
    Alok

  24. Alok says:

    Sir,
    I have read so many books of famous writers on Stock market, but the way you had explained is marvelous. Thanks for sharing your knowledge. Could you pl. explain the breakout strategy and how to calculate entry and exit levels(targets) .
    Thanks
    Alok

  25. Sainudheen says:

    Sir,
    I have a doubt on Stop loss, Sir how to set a stop loss on particular stock while day trading ,
    Can you please explain with an examples,
    Sir which indicater can provide SL , Can i take pivot point support as SL .
    Thanks

  26. R Raman says:

    Great explanations.. Looking forward to the day when other indicators will be added – especially MACD and MACD Histo – and how that can be used with MA crossovers for a simple strategy….
    Thanks!

  27. Dileep says:

    i have a doubt over timeframe of 30 minutes chart. You are closing 9:15am tick at 9:30 not 9:45. but when i refer to same chart later, it shows 9:15, 9:45 correctly which is wrong. 9:15 tick must close on 9:45 not 9:30 otherwise whole chart goes wrong. You can nifty chart for example tomorrow to verify my point.

    • Karthik Rangappa says:

      Where are you seeing this Dileep? If you are with Zerodha then both Kite and Pi will reflect closing at 9:45 AM for the the 30 mins chart.

  28. Dileep says:

    please do not disclose personal details and trade details to 3rd party in any situation.
    is it possible to add sl and target 1 2 3 on supertrend chart when it generate new signal. that will help a lot.

    • Karthik Rangappa says:

      Not sure, as these indicators come as a standard package.

      • Dileep says:

        I have also mentioned about personal details and trade details since it was compromised recently. Someone from Hyderabad “Sri Mahalakshmi Enterprises” and R.SATHYANARAYANA AND B.RAMANI IYER – these people have obtained my address and trade details from your call center or some sources. They have even mentioned I have traded in forex. How come these confidential gone out? You need to enhance IT security and compliances. Those are fraudsters and I am one of the victim. I recommend Zerodha should send a circular to all customers so that nobody else become victim. They are working for some broker in chennai. They will try to harm other brokers and businesses.

        • Karthik Rangappa says:

          Dileep, we are curious to know more about this, can you please mail me your phone number? my email id is karthik.r at zerodha dot com. Thanks.

  29. Alok says:

    Sir,
    Could you pls explain how to pre determine whether it is continuation pattern or reversal pattern, as sometimes its just small pullback.

    Thanks
    Alok

    • Karthik Rangappa says:

      It would be hard to do this, the only way to figure this out is by experience. However, sometimes volumes give some information…for example a pullback if associated with low volumes can indicate a possible reversal.

  30. Alok says:

    Sir,
    This has been found that in some cases after candlestick hike for any stock followed by hammer , reversal starts, is this related with volume because as per price action inverted hammer should follow uptrend for reversal and vice versa

    Thanks
    Alok

  31. civils.aditya says:

    Hello Karthik,

    Last year, I started new after reading Varsity and earned few bucks. I traded NIFTY NFO Intraday. Similar to some other stories, I lost much more than I earned. Mostly because:
    1) I wasn’t able to make a clear analysis of market
    2) Didn’t have any strategy (like hedging)
    3) Lack of clarity and a desire to earn led me to getting emotional with market
    4) Emotions took a hold and I lost huge sums
    And finally had to give up.

    I’m in software industry right now with 8.5 years of experience but really want to get into trading, now sensibly and slowly.

    Could you please guide me how can I approach towards analysing the market.
    I’m starting the Varsity again but that’s just technical analysis, I also want to learn analysing the market based on the news we get from the markets. How can I do that.
    Also, with your experience, do you have any honest suggestion for me?
    I want to honestly start again. Looking forward for your reply.
    Thank you.

    -Aditya

    • Karthik Rangappa says:

      Please take my advice – concentrate on your software profession as you have valuable experience of nearly 9 years. Dont get into active trading. Start investing small amounts for long term duration, once you are comfortable with this move towards making overnight short term bets. My guess is it will take you few years to get to this stage.

      • civils.aditya says:

        Thank you Karthik…
        Regarding Investing, what do you suggest should be my starting point.

        • Karthik Rangappa says:

          Analyse the business, analyse the financial statements, develop an investment conviction …and the finally go ahead and invest. Invest with a long term perspective and nothing short term.

  32. tanmoy says:

    Hi Karthik, I don’t see chapter 19 (Final checklist)

  33. Sainudheen says:

    Sir,
    Candlestick pattern do we need to check 1 day candle or can we check 5 minutes candle and take a decision on that, for intraday trading.
    which is the best time frame candle for doing intraday trading.
    Thanks

    • Karthik Rangappa says:

      If you are trading intraday then I’d suggest you use 5 or 10 mins candle. However I do know intraday traders who trade based on EOD candle. I guess this depends on your trading style.

  34. ganesh jagdale says:

    when will your module no 10 (strategies) release
    waiting for so long

    • Karthik Rangappa says:

      Thanks for your patience Ganesh. We are working on Module 8 now, we are working in the same sequence. So I guess you need to wait a little longer 🙂

  35. alok says:

    dear sir,
    I am following the supertrend of your kite for buy and sell stock , kindly suggest me which indicator would you suggest in tranding market

  36. JAGADEESH212 says:

    Super trend working cool!!

  37. JAGADEESH212 says:

    karthik wen can we expect module 8 ,9 &10 completely??? eagerly waiting for it!!

  38. BHUPESH UPADHYAY says:

    Nice and very informative module on technical analysis done with all chapters in 2 days weekend leave. 🙂
    one question that OI analysis and PCR for nifty not come under technical analysis?

  39. Ahmed a memon says:

    Sir I m little familiar to the stock market…but new to the technical analysis..I m really happy and surprised that I m understanding this tough subject very easily…I like to play only option trading…can you explain which candlestick or other analysis pattern is suitable for me?

  40. ASHOK KUMAR jANARDHAN says:

    Can we add an indicator on another indicator e.g. a Moving Average on RSI?

  41. Alok says:

    Hello Sir
    How do you rate big brokerage houses giving call on different stock each and every day. Do their call overrule/impacts technical analysis
    Thanks
    Alok

  42. Alok says:

    Sir,
    Future and options both are derivative so i guess spot price derives them, but between future and option who quickly changes followed by other

    Thanks
    Alok

  43. SaikiranGarapati says:

    Can i Buy shares in NSE and same can be sell in BSE in Intraday? I called you are call center executive,he told me we can do it for intraday. When i inquire out side,my friends are saying it is not possible..

    Please let me know which one is correct.If it can be done, How? You are executive advised me to add the same script in Market watch for both stock exchanges NSE and BSE..While buying, Buy it from NSE and While selling select it from BSE and sell the same quantity…and the price difference is our profit…Is that true?

    Please let me know…

  44. Alok says:

    Hello
    I have one confusion that how volume is calculated, is it same as number of quantity because for example 1 qty of eicher motor is more than 200 qty of ashok leyland, money infused in market is more in eicher but qty is showing more for ashok, so how this volume is calculated.

    Thanks
    Alok

    • Karthik Rangappa says:

      I buy 100 share of a company and someone sells those 100 share to me, then volume is 100.

      • Alok says:

        Hi,
        I’m aware of 100 qty buy and sell makes 100 vol. But my question is in comparison of 2 stocks, one which is having low price like ashokley but high qty , while another is having high price like eicher motor but low qty. So while calculating pre market volume what needs to be considered , which is having higher volume.

        • Karthik Rangappa says:

          You could convert both to Rupee value (value traded) to assess which is attracting more money. Value traded = Volume * price.

  45. papinder says:

    Hi, Karthik sir,

    First of all thank you , for your great insight and inputs.

    i wanted to test SUPERTREND indicator with 5 and 21 days moving average crossover any leads how to go ahead with it.

    thankyou in advance

  46. papinder says:

    Can i get the AFL code for SUPERTREND so that i can test it myself. regards

  47. saurabh says:

    sir what is your view on elliott wave does it help or it is confusing

  48. Sainudheen says:

    Dear Sir,
    I would like to know that ADX based trading what would be the SL can i give , Both buy & Sell ?

    • Karthik Rangappa says:

      ADX indicates the strength of a trend, not a great tool to identify points to place your stops!

      • Mrs. Shetty says:

        Can every chart that we open give the ticking time of the market on top.
        selection of the scrip of 2nd/3rd list does open in case we want to view chart of other scrip for quick view in popped out charts, we have to go to original charts .
        can you incorporate these suggestions.
        thanks

        • Karthik Rangappa says:

          Are you are talking about the charts in Kite?

          • Mrs. Shetty says:

            yes.
            The timing of net and that of mkt is different by 1.5 to minutes. so every chart should idealy having timing in hr,min,sec.
            as rgdsd my first point .. v see many charts and with many time frames and this is possible in kites due to popping out features. But on these charts is there:
            1) any key to open market depth.
            2) any function keys to place orders or buy or sell.
            3) any function keys or shortcut key to view our mtm or position.
            4) while changing the scrip name in d dropbox that appears, only the list no. 1 appears, and if v mention the scrip from list no. 2 or 3, it is not accepting or does not show in the dropdown window. It should ideally show if i hv the scrip in my match list from 1 to 5 anywhere.
            I hope you will into these points.
            thanks for responding immdly.

          • Karthik Rangappa says:

            Will pass the message to the developer team. Meanwhile, please do have a loo at this – lots of shortcut keys and more here – https://kite.trade/docs/kite/

  49. Abhilash says:

    Hi karthik. Please I have a requirement on Pivot points from your technical team. I want to refer the values of 3 days pivot points with a time frame of 1 Hour. But if I take 1 hour time frame on Kite I can see a unique pivot values for the past 4 days. Till 15 Min chart we can see the different values but not 30 minutes and 1 Hour. Please inform this to your technical team.

  50. rockstar says:

    i read about adx ,but i dont find it pi..is it not there in pi???when can we expect it if it is not there?

  51. Uday thaker says:

    Karthik sir, thanks for your valuable advice on our various queries. Sir, though I will be the new to chart based investments.Sir, can I follow supertrend indicators for medium to long term investments in large as well as mid cap shares?

  52. CHAITANYA KALE says:

    Market Guru,
    My request is teach us ICHIMOKU indicator on varsity

  53. Sainudheen says:

    Sir,
    ATR is useful for choosing correct Stop loss and understanding the Volatility , How can i take correct SL by using ATR , Can you explain and give one example , Thanks

  54. Vidhyapathy says:

    Hi Team,

    Kindly let me know how add new study in zerodha

    Thanks,
    VP

  55. Tejvir Singh says:

    Sir,
    Your work is so great as you / zerodha team also cannot think what a best work you have done by providing good knowledge in simple way on technical analysis. It is very difficult to say greatness of your work in few words. It is useful for enlighten thousands who was in dark. भद्र पुरुष ही महान कार्य करते हैं । Thanks a lot.
    Sorry for taking your valuable time to ask – one should take average of 10 days volume for a share from BSE and NSE both or from a single exchange is sufficient.

  56. susmitha says:

    dear sir,in kite ,in the list of charts,ther is one by name VOLUME CANDLE.can you please explain how its different from regular candles.how can we use them for trading decisions..thank you

    • Karthik Rangappa says:

      Volume candle combines the volume + price action in a single candle. Fatter the candle, the higher the volume for the day and vice versa.

  57. sainudheen says:

    Sir,
    What is Volume Weighted Average Price , and what is the use of it ,Kinldy explain Sir ?

  58. RITUKANT MAURYA says:

    Thanks for adding VWAP in the chart. Its such a powerful indicator for intraday trader. it is my humble request to please add preset order in kite in which script is pre selected including order type, Stoploss etc and only one click order get places.

  59. Venkat Reddy says:

    I am a existing client of zerodha and my request is teach us ICHIMOKU indicator.
    Please send reply to my mail also.

  60. muniraj says:

    HI IN KITE HOW TO ORDER PADDING ORDER AND STOP LOSS ORDER IN KITE CHART

  61. abhishek kumar sah says:

    what is the significance of time frame in the renko chart, lets say i plot a 5 point brick, for every 5 point movement it will form a brick irrespective of the time frame, so where’s the catch?

  62. abhishek kumar sah says:

    how good is renko chart with the combination of super trend indicator for trading?

  63. Varun says:

    It would be great if standard deviations bands could be added to the VWAP.

  64. avinash says:

    sir how can i get supertrend alert in kite

  65. tarun says:

    karthik sir, is it better to perform technical analysis on the candlestick chart of index or the futures candlestick chart of index. like banknifty index chart or 29dec2016 BANKNIFTY FUTURES CHART

  66. raoge says:

    Dear karthik,
    Thanks for detailed explanation of the super trend and other indicators. I am new to Zerodha as opened account recently.
    Today I noticed that Supertrend chart is showing different in Kite & Pi application.
    For example Nse equity stock- Auropharma the Supertrend Sell (Red) occurred at 11:45 hrs in Pi where as it is showing at 14:30 in Kite.
    While the settings for both are same at 14-3. Why kite is not showing same as Pi? This has misguided me as I am using Kite very easily compared to Pi which takes lot of time for refreshing. Please is it possible to make the settings in both application same or the user should have option to use whichever he likes. I would have uploaded the screen shot but I donot know how to do it here.
    Thanks.

  67. aehsan4004 says:

    which indicator should be used with STOCHASTIC OSCILLATOR to eliminate whipsaws ?

  68. tarun says:

    karthik sir, i want to ask that according to you the combination of a lagging and leading indicator such as MACD and stochastic will help in taking decision or not? because i read in an article that it is very accurate in trending markets.

    • Karthik Rangappa says:

      Nothing is accurate Tarun. These tools are there just to help you support your decisions making process, over dependence on these can actually get counter productive.

  69. raoge says:

    Dear Karthik, I am awaiting for ur reply on Supertrend indicator query which I posted on 10 jan 2017.

  70. Sampath says:

    Thanks Karthik for valuable Info… i am a user of PI, and am trying to write a script across MACD,ADX and SUPERTrend indicators but am not able to find ‘keyword code’ for SuperTrend Indicator ( checked even in Tradescript manual).. Pls help

  71. Rao says:

    Dear karthik,
    I am reposting my query as u missed it.
    Thanks for detailed explanation of the super trend and other indicators. I am new to Zerodha as opened account recently.
    Today on 09-01-2017 I noticed that Supertrend chart is showing different in Kite & Pi application.
    For example Nse equity stock- Auropharma the Supertrend Sell (Red) occurred at 11:45 hrs in Pi where as it is showing at 14:30 in Kite.
    While the settings for both are same at 14-3. Why kite is not showing same as Pi? This has misguided me as I am using Kite very easily compared to Pi which takes lot of time for refreshing. Please is it possible to make the settings in both application same or the user should have option to use whichever he likes.
    Thanks.

  72. RITA KODAPE says:

    When adding ON BALANCE VOLUME indicator on KITE ,It is not showing values of OBV indicator.

  73. G V S Reddy says:

    Hi friends. What level to cross in ADX to consider trending market and level to drop below to find non trending market? Because different people will tell different levels like 22, 25, 30, 40. Getting confused. Thanks.

    • Karthik Rangappa says:

      Just an opinion – each person has his or her own preference, its best you set up trades and optimize them to what suits you.

  74. Ruchit says:

    Yeah so first of all,let me tell ya that this whole thing you guys created is totally most admirable.I’m sure this step of yours will help people losing their most of money! Now-I do have a question to ask you out,
    You see there are two major or main stock exchanges in INDIA as BSE & NSE,and the whole wonderful world trades in that.Means-people from different places and with different point of views does exchange their money and therefore the price gets updated every second,then how come NSE & BSE gives same outcome of price of every single stock everyday?!

  75. Pratish says:

    Karthik Sir, awesome work on all these modules. I am a new user of Pi and have 2 basic questions.
    1) can we import the scrips added in marketwatch from kite to pi?
    2) is there a way to apply the study done on one scrip to all my scrips in marketwatch.
    Many thanks in advance.

    • Karthik Rangappa says:

      1) No, they both are two different eco systems.

      2) Save as template should work. although I need to double confirm this. Meanwhile, please feel free to touch base with our support to clarify this.

  76. fazlur rehman says:

    sir, in Pi platform, price does not change in order window according to the market price as in kite. pls rectify it .

  77. Shrikant Sharma says:

    As I see, the Pitchfork tool is not available on Pi . Any plans to introduce it it ? Also, can I draw pitchforks on different time frame charts of say, 50 scrips and SAVE all of them in Kite ?Will they load the same when I re-login ? Thanks..

  78. James says:

    Respected Sir,

    A person X is full time scalp trader.

    Situation 1 –

    A person X bets its 20,000 on, say, JSWSTEEL at 10:10AM @185.50. At 10:25AM, X books profit @186.10, making about 62/- (~0.3%). Similarly, it trades again to make profit of, say, 70/- (~0.3%) at 10:50AM-11:05AM. Trading 3-6 times a day, X makes about 1% return.

    At the end of the month, X makes about 10-12% returns with scalping as X trades only 12-15 days a month.

    Situation 2 –

    A person X utilizes margins given by brokers for intraday trades up to 10 times. In this way, X is able to make about 10% returns a day (not 1%) as its 20,000/- can now buy stocks worth 2,00,000/-. At the end of the month, X is able to make about 90-100% returns (as compared to its 20,000/- amount) as X trades only 10-12 days a month with more care.

    Question 1 – Are above situations possible in real world? Please elaborate why, why not, which situation, to how much level & so on? (As per me, these situations must be common)

    Question 2 – If yes, what person X need to do to be such a successful trader as it is in above situations? Or, is it too difficult for a full time trader to be like X.

    Question 3 – How above situation/s, or person X, can be modified/improved to make it a common practice?

    Question 3 – What is your advice to me if I really aspire to be like person X?

    (I have started intraday trading 2 years back & have nice experience of being severely lashed down. I terminated my trading a/c. Later I learned how to really trade in market & its relevant basics. I have been following markets for about 1.5 years. I found Zerodha Varsity 6 months ago. It took me last 3 months to go through Module 1 & 2 thoroughly along with its relevant application & practice in real world. I am about to move on to module 3 & think to go through all module in same way before I can confidently start full time scalp trading like X.)

    Question 5 – After how many modules, can I be perfectly ready for real world scalp trading with real money & should have full confidence of being equipped with almost all required knowledge for scalping? (I think after half of module 4. Obviously, I will keep on finishing the rest side by side.)

    I want to start with 1 trade a day that too by considering it like a swing way.

    Lots of thanks in advance!!

    • Karthik Rangappa says:

      James, both the situations are possible…but let me tell you it’s not easy, especially situation 2!

      The trick is to achieve consistency in your trades. Even the top hedge funds in the world fail to achieve this consistency. They say in trading, 20% is strategy and 80% is risk management. So there is lot more going on than just margins and strategy. Keep at it and I hope you find success. God luck.

  79. James says:

    Respected Sir,
    Thanks for your kind attention !!!
    _
    My presumption was same. I’ll wait for the risk management module of varsity & will practice on that to perfect myself.
    _
    I would be glad to know the answer to question 5 as well. Also, Is Varsity content (along with practice) enough to achieve that consistency?
    _
    Thanxxx again !!!

    • Karthik Rangappa says:

      Sure James.

      As far I know, the contents here should give you a good start…but please do read up and start exploring newer dimensions of trading and investing.

  80. James says:

    One more thing …
    _
    In addition to question 5, please tell, as per your experience, how much return is possible (common in real world) in Situation 2?
    _
    Right now, I am preparing myself to achieve 40-50% returns every month in Situation 2. Is it ok? Isn’t my expectation more unreal (I guess not, your experience/advice =?)?
    _
    Thanxx for all 3 answers in advance !!!

    • Karthik Rangappa says:

      Q5 – Module on TA and Futures should be good for scalping.

      Cannot comment on returns, James. But sorry to sound discouraging, please do not be under the illusion that you will be able to generate a return like 50% every month…and please do not quite your job to do this full time. I myself don’t know anyone who is able to smash such numbers month after month.

      Good luck.

  81. James says:

    Respected Sir,
    .
    Thanks for honest answers of my queries !!
    Not quitting job so soon (obviously) not at least until I start achieving consistent desired returns.
    .
    Varsity content is really very helpful & elaborate. This is something that is not available easily at one place. Sometimes, I can’t believe varsity is offering it for free 🙂
    .
    Thanks a lot for such a good quality educational content !!!

  82. trader2017 says:

    How should i combine different indicators with candlesticks and chart patterns? is there is particular thing that needs to be kept in mind before combining indicators/candles/chart patters in order to optimize the desired outcome?

    • Karthik Rangappa says:

      Give chart patterns higher priority, the trade idea should originate from candlestick patterns. Look at indicators just as a reconfirmation to the trade setup. I personally do not prefer relying too much on indicators.

  83. Rachit Jain says:

    Sir, can I create a custom indicator in kite, Like I have to create a indicator which shows the value of (Total Buy Qty/Total Sell Qty) cumulatively, like we have ATR, VWAP etc.,
    Please Guide
    thanx

  84. archanam says:

    Hello Sir,

    I am checking pi software but I see chart and Chart tool option in menu is disabled for me.

    How to enable that ?

    Please help. Thanks

  85. Vasanth says:

    For smaller/intraday trend identification, ADX is working fine in 5 & 15 mins timeframe.But Adx is not working/not increasing in higher time frames like 30mins, 1 hour and 1 day. Pls suggest ur view. I used to follow only SMA 21x50x100x200 for trend identification and it’s working fine in higher time frames.in addition to this kindly suggest for better evaluation.

    • Karthik Rangappa says:

      As long as it works, it works 🙂

      Remember, a certain indicator with a certain parameter may work for a certain stock. The same may not apply for another stock. The trick is to calibrate and fine tune (to figure out what works and what does not work) it across your watch list.

  86. vinay504 says:

    First of all, I would like to say I learned a lot with your blogs. thanks for sharing valuable information. my question is that Which one is you would suggest using as I am new to this cover order or bracket order? I am starting with an initial capital of 5K rupees. and also can we modify stop loss on both?

    • Karthik Rangappa says:

      If you are starting with 5K, I’d suggest you execute few simple EQ trades before getting into BO and CO.

      • Koushik ghosh says:

        What do you mean by EQ trades?Actually am also planning to start with 5k

        • Karthik Rangappa says:

          Remember, there is is the EQ segment and the derivative segment. Any trade in the spot market or equity market is referred to as EQ trade. When you trade in EQ you can either do an intraday trade or you can take delivery of the stock and hold it overnight.

  87. ALOO says:

    Hello, if I enter a trade as per Supertrend buy/sell call its almost sure that if I wait till the line colour to change it’ll lead to a loss or no profit. So, how am I supposed to set a decent target once trade is initiated?

    Also, what could be taken as a better stoploss instead of supertrend line? Because if a closer target is set then the supertrend line stoploss wud b pretty far making RRR bad..

    • Karthik Rangappa says:

      You need to start calibrating your trades to identify which parameters suits which stock. It is hard to use the same set of parameters across all the stocks. So start tweaking the numbers and see which supertrend parameter works for which stock.

      • ALOO says:

        Ty fr the info, I checked several 5min intraday charts and EOD charts and found that long call from supertrend indicator are almost giving 80-90% or even more correct signals and hence giving a profit. So, is it worth trading as per the indicator only?

        • Karthik Rangappa says:

          No indicator alone cannot lead you to take a trading decision.

          • ALOO says:

            I know we cannot trade solely based on an indicator but what could be the reason of high profit chance if someone would’ve went according to Supertrend calls?

            Also, is 3 as multiplier fine for intraday 5min? Or it should be below or aboce that

          • Karthik Rangappa says:

            You have to calibrate these variables for each stock Aloo.

  88. Shrikant Sharma says:

    Dear Karthik,
    1.) Which Indicator in your opinion is the best Momentum indicator on a 5 min chart for day trading which I can confirm on a 15 min time frame also ?Kindly also mention any tweaked parameters if they work better than default values on 5 min chart.
    2) The technical analysis is based on a premise that a human being with his knowledge, emotions,fear and greed will repeat the actions which his predecessors have been doing in the past and it reflects in the Chart patterns and various Technial analyses that have been employed in the market. Now with more and more Computers and Robots taking upon the trading each day, the human element will be eliminated.Does that mean that the analyses and trading methodologies which are being employed today will become redundant /obsolete in the near future ? If so , how can a mortal human being who doesn’t have access to Trading Robots/ Algorithms keep abreast with them ?
    Thanks.

    • Karthik Rangappa says:

      1) I like it simple, so I’d always prefer moving averages. Try the 21×9 mins tweak on 5 mins chart
      2) I’d agree. Eventually we all have to find our edge and stick to it. However, the silver-lining is that most of the good algos operate in the micro-milli time frame. So in a sense larger time frame trader without the knowledge of coding still have some space to breath.

  89. Shrikant Sharma says:

    Dear Karthik,
    Just two more things I forgot to ask was that (1) On the stochastic indicator on Kite, only the time period can be changed , colours of fast and slow can be changed and overbought + oversold values along with colours can be changed.I wanted to ask that what are the default settings of %K and %D on this indicator? Also, what is the default smoothing value?
    (2) Correct me on this one :-
    a) RSI(14) = RSI of 14 days on a daily chart = RSI of the last 14 Hourly candles on a hourly chart = RSI of the last 14 Five-minute-bars on a 5 minute chart and like wise….

  90. Ayush says:

    Sir,
    How can we choose best indicator for us?
    Why so many indicators? Can’t we rely on 2 or 3 indicators?
    It is confusing too

    • Ayush says:

      How one can can use more than 2/3 indicators at a time, wouldn’t it be difficult and confusing

    • Karthik Rangappa says:

      It really depends on your trading temperament. I like to keep my charts clutter free…this helps me focus on price action as opposed to what indicators are suggesting. I just overlay moving averages (1 or 2) on the charts.

  91. Manish Agarwal says:

    VWAP: In the section – How to use the VWAP?

    Point# 5 says IF CMP > than VWAP then the trend is on the positive side/higher. Contrary to this point# 8 suggests going long if the CMP VWAP.

    • Manish Agarwal says:

      RE-TYPING as my message got truncated: ON VWAP:
      VWAP: In the section – How to use the VWAP?
      Point# 5 says IF CMP > than VWAP then the trend is on the positive side/higher. Contrary to this point# 8 suggests going long if the CMP VWAP.

      • Manish Agarwal says:

        RE-TYPING #2 as my message got truncated: ON VWAP:
        VWAP: In the section – How to use the VWAP?
        Point# 5 says IF CMP is higher than VWAP then the trend is on the positive side/higher. Contrary to this point# 8 suggests going long if the CMP less than VWAP.
        As per my understanding, one should go long when CMP higher than VWAP.

    • Karthik Rangappa says:

      Not sure if point 8 is suggesting that.

  92. rajesh.katariya89 says:

    how to do BTST/STBT, i m a beginner. please suggest the time frame of trading as i had already learned that intraday is surely not the thing to do right now.

    • Karthik Rangappa says:

      If you are stating now, I’d suggest you look at doing equity investing – i.e holding positions overnight. Once you are comfortable doing this, then maybe you can try short term swing trading before BTST trades.

  93. KP SRIKANTH says:

    how to use pivot points indicator in zerodha kite

  94. srikanth kp says:

    Do we have any co relation tools between sectors or stocks??
    any sites for nse and bse

  95. Ajay says:

    Hi Sir,
    Default supertrend parameters is Period;7,Multiplier:3 .will it work for all time frames(1day,1month and 1 week)?
    For intraday 5 mins ,10mins and 15 mins chart ,if we want to use super trend what are the preferable parameters ?

    • Karthik Rangappa says:

      You need to back test this on stocks. It may work for stock 1 but may not work on stock 2. There is no ‘one shoe fits all’ kind of thing in markets.

  96. Shyam says:

    Hi Kartik,

    After going through TA module,I have started tracking mini crude oil may futures chart since last week. I see that sell signal is visible in 5 min chart while this is not visible in 15 min chart. Why so? Though both the charts are showing that the trend is on lowerside. Indeed oil prices have been pounded badly since last week.
    2. What time frame chart is suitable for trading in crude futures?

    Regards,
    Shyam

    • Karthik Rangappa says:

      This is because you are looking at two different timeframes. I;d be comfortable looking at 10mins chart or any timeframe higher than that.

      • Shyam says:

        Hi Kartik,

        What shd one do if there is a buy signal in 5 min chart and sell signal in 30 min chart ?

        • Karthik Rangappa says:

          You need to stick to a time frame and take action according to that time frame. Do not cross reference the buy/sell signals across time frames.

  97. Shyam says:

    Hi Kartik,

    Just wanted your help as I didnt know who to approach . I use metastock s/w for analysing the charts. I want to know how to use scanners…I mean suppose if 50 MA cossed 200 MA in any stocks or if the prices are above 50 day MA and 200 MA it gets highlighted easily . I tried asking the vendor but I am afraid it has not helped. Also tried googling . Would appreciate if you could point at the right direction.

    2. Also do you have any screening system in kite?

    Regards,
    Shyam

    • Karthik Rangappa says:

      1) I used to use Metastock around 8 years ago, and I seem to have forgotten the layout and technicalities. So I’m afraid, I wont be of much help here.
      2) No.

  98. krajasha says:

    i joined in zerodha on sep 2016. As of now I am doing only on equity cash segment and also i got winners certificate too in 60 days challenge. Can i get fundamental and technical analysis training to improve my trading and investing skills.

  99. Vinod Kedare says:

    Hi Karthik,
    First of all thanks for uploading all the trading research material in such a simplified manner, its good to re-learn again,
    However my question is totally different (rather a suggestion)
    1. I have 10-15 friends who are interested to trade in the stock markets but they can’t do so because of their working hours,
    2. Is it possible, in Zerodha firm, that I log-in from a single “sub-broker” id and trade for them-on their behalf?
    3. Logging-in from each individual id is quite time consuming and by the time I will do it the ground situations changes a lot.
    4. I had also spoken to one of your representatives regarding this, but they said its not available.
    5. Can this be made possible?
    6. Asking you because found your brokerage rates, support to be the best (even helping in taxation arena)
    7. Am sure, if you get a solution to this, lot of people who cannot trade would able to do so.

    Sorry for the lengthy span of the question, but I guess it would be mutually beneficial

    Thanks
    Vinod Kedare

    • Karthik Rangappa says:

      Thanks for the kind words Vinod. I understand your concern, but our risk managment policies will not permit what you are asking for. Besides, this is also not permitted by SEBI.

      • Vinod Kedare says:

        Thanks for your reply buddy, if it ain’t legally permitted then no use,
        However I will open an account with Zerodha and will get all my 10-15 friends registered with you at the earliest.
        But there is something like Auto-Trader (Proportionate Trading) provided by foreign brokerages in Forex trading – something similiar to your Open Trade
        I guess if that comes under permissible rules, it can be extended in your brokerage aswell, and my problem would be solved partially.
        Thanks anyways
        Looking forwarding for good trading experience through your brokerage ( Last month I got 10% returns)
        Thank You

  100. Kushan Joshi says:

    Hello Karthik,
    I have a query regarding a trading strategy that I use for day trading.
    What I do is, use the VWAP indicator on 5 minute charts. Then I wait for the stocks’ price to fall to the lowest that it has been in the last two days, or allow it to rise to the highest that it has been in the last two days. I then take a long or a short position accordingly. I have been using this method for a few days now and have booked considerable profits except for when the price begins to consolidate.
    I wanted to know if you see any drawbacks in this strategy.

    Also, I should say what an awesome job you have been doing with these modules. It has helped me a lot.

    Thank You

    • Karthik Rangappa says:

      Sure. It sounds good here, but frankly you will have to backtest your strategy to make sure its working under all possible use cases.

  101. sainudheen says:

    Sir,
    Head and shoulder pattern and double bottom , here we tend to make mistake like in head and shoulder tend to take a position in Support level (double bottom) but as per head and shoulder it will break and go down further…
    But in double bottom it is an opportunity to buy ….
    i just want to know like how to avoid that mistake and what is the difference between those two. …
    Kindly explain…
    Thanks

    • Karthik Rangappa says:

      I guess the only ways to learn how to avoid is to learn by trading. Eventually, experience will teach you which pattern to trade and which ones to avoid.

  102. hesham says:

    is there any institutions are availabe to study regarding the technical annalysis for shorterm courses

  103. sunil devre says:

    Is there any way to find morning star candle stick pattern from numbers of stocks rather then checking chart of all the stocks.

  104. Ram says:

    Can we do codify in the Kite tool to detect the patterns in the chart?

  105. NAS says:

    As per your experience, Which chart patterns are more reliable to enter a trade?

    • Karthik Rangappa says:

      Its hard to circle in on patterns…you just have to go with the flow. However, I do have a soft corner for doji/spinning top based chart patterns 🙂

  106. Nas says:

    Thank you Karthikji….

  107. shabaz says:

    sir,
    is there any way to find resistance levels at all time highs?
    as it is not possible to predict resistance levels than how can the analysts find resistance levels in all time highs.

  108. KUMAR MAYANK says:

    Hello Karthik sir

    I am talking about day trading in nifty futures only.
    Well we learnt a lot in this module. Now it is easy to analyse the pattern, trends etc in middle of the chart but its very difficult to take a stand near right edge of the chart where future is uncertain. As far as candle stick pattern and volume are concerned they are reliable but indicators are not so much useful. By the time they show a reversal or a new trend a large chunk of points has already gone.
    I hope you got my point. Please advise me how to use these indicators or to do day trading for that matter.

    Thanks

    • Karthik Rangappa says:

      Weel, this is in fact the whole point of TA. You need to get to a position where you will be able to take a position looking at the right side of the chart. This takes time and patience and will have happen over many trading hours and studying charts. Good luck.

  109. somnath says:

    Period refers to the ATR number of days. The default value on Kite is 7, which means to say that the system will calculate the ATR value for the last 7 days. You can input any value you deem suitable.

    The multiplier refers to a value by which the ATR will get multiplied. The default value on Kite is 3, so whatever is the value of ATR, it will get multiplied by 3. Multiplier is a crucial input for Super trend. If the multiplier value is too high, then lesser number of signals are generated. Likewise if the multiplier value is too small, then the frequency of signals increase, hence chances of generating false trading signals are quite high. I would suggest you keep this value between 3 and 4.

    Suppose ATR for X stock is 40 and multiplier is 3.Then 40 X 3 =120 what does this value indicate(ATR x MULTIPLIER).I STILL DONT UNDERSTAND WHAT VALUES TO BE PUT ON FOR PERIOD AND MULTIPLIER FOR INTRADAY TRADING AND FOR LONG TERM TRADING? WILL BE GRATEFUL TO U IF U PROVIDE MORE FOCUSS AND GUIDANCE ON IT?

    • Karthik Rangappa says:

      Hi Som, I’d suggest you stick to default values to begin with till you get comfortable with the indicator.

  110. somnath says:

    if ATR get multiplied by multiplier then how can it help me to either sell or buy the stock.

  111. somnath says:

    thank u karthik for reply.

    Just to clarify more for intraday and longterm which of these following indiacators work well –
    Period Multiplier
    1) 7 3 long term or intraday
    2) 7 4 long term or intraday
    3) 10 3 long term or intraday
    4) 10 4 long term or intraday
    Can u please suggest as per ur preference 1 to 4
    If there are other values to suggest please suggest as per ur experience with supertrend indiactor?

  112. Jay says:

    ATR that we get from Kite is different than that of Pi. I downloaded OHLC data from Pi and used it to calculate ATR for different periods of my choice. The ATRs were calculated using the simple average of the true ranges of previous periods, which was matching with data from Pi, but not with Kite.
    Can someone please clarify how ATR is calculated on Kite? Mainly, what are the weights assigned to true range from previous periods?

    Thank you,
    Jay

    • Karthik Rangappa says:

      Hmm, possible due to two different charting libraries and two different (not drastically though) formulas used.

  113. amit chawla says:

    How can we apply ichimoku charts on Pi?

  114. Soujanya B M says:

    1. Please update with using Heikin Ashi charts
    2. I am not able to find EMA, kindly let me know how to add to chart
    3. Whether weighted close is same as Weighted Average Price?

    Regards,
    Soujanya

  115. T A RAMA KRISHNA REDDY says:

    Hi karthik sir,is it possible to earn RS 1000 per day from stock market consistently with a capital of RS 50000 by selecting a good trade a day?just one trade a day and no over trading. Is it easy and possible please suggest me?

    • Karthik Rangappa says:

      We are talking about 2% daily return or about 504% return for a year. A very very very tough task if you were to ask me.

  116. Jugal B says:

    Sir, do you think stochastic is a good tool to practice charting? If yes could you please explain it along with the other indicators?

    • Karthik Rangappa says:

      I tend to depend more on candlestick patterns rather than indicators…so generally speaking, I look at very few indicators. Most of the times, I restrict to just the moving averages.

  117. selva says:

    hi sir,
    every educational tool provided here is awesome, and i’m looking for contents about zigzag. can’t find it. is it available?

    • Karthik Rangappa says:

      Thanks for the kind words Selva. Yes, the ZZ is not available. Maybe I will add it one of these days.

  118. ZQ0852 says:

    Dear sir,
    I did not get the point no.8 in ADX:
    “The trade stays valid till the stoploss is breached (even if the +DI and –DI reverses the crossover)”

    Say I go long when the +DI crosses the -DI, after few candles the -DI crosses over the +DI then as per rule the sell signal is generated then How can the the first trade (based on the buy signal) be valid ?

    Regards

    • Karthik Rangappa says:

      ADX just confirms the trend, it’s best used in conjunction with a trading system where the signal to buy and sell originates. Depending purely on ADX is not a great idea.

  119. ZQ0852 says:

    Dear sir,
    thanks for becoming our guide in the jungle of stock market, I have few doubts :-
    1.) Say, I have identified a stock and S&R levels and other related research, finally I am bullish on the same, and as per our general convention the first resistance point should be our target, now, what I want to know is that Is there any way to determine or predict the period it will take to hit the target??
    (Source of doubt: Generally we hear from analyst and experts that ये 4 से 5 महीने का टाइम फ्रेम ह, इसका 6 महीने का होल्डिंग पीरियड ह etc etc.)

    2.) The market depth generally shows top 5 ask and bid price, if the total number of qty for sell is say 3000(top five), now if I place a market order for 5000 share to buy then the remaining 2000 shares will be fullfilled from upper side or lower side .
    How the large qty market orders affect the price?
    Secondly, which one we should prefer market order or limit order?

    3.)I am little bit confused about pre and post market orders , the kheechdi that cooks up during 9 to 9:15 , and , moreover who can and should place pre and post market orders and their merits and demerits.

    Regards

  120. ZQ0852 says:

    Dear sir,
    I did not get the VWAP, I have point wise doubts:-
    1.-Is not the points 4 ,8 and 5,7 are contradictory to each other.
    I mean in point 4 you say the if the price is below vwap then the stock is in downtrend , but in point 8 you say if you want to go long the stock it is efficient to long at a price lower than vwap, मतलब कोई स्टॉक downtrend में हैं तो भला उसको buy क्यों करेंगा ??

    SAME DOUBTS FOR OTHER TWO POINTS, IT WILL HELPFUL IF YOU COULD ELABORATE EACH POINT WITH THE HELP OF CHARTS.

    REGARDS

    • Karthik Rangappa says:

      The assumption is that you are trading based on another system and you are looking at VWAP only for the sake of efficiency of the fill.

  121. Dr. Abhijeet Kumar says:

    Sir, I am an orthopaedic surgeon with keen interest in stocks..

    Q no. 1:- Please guide me how to follow the trend using ADX indicator, Should I keep the trade on till the ADX is rising and exit as soon as it reverses?

    Q no 2 :- If the candlestick has already crossed the SMA but still my supertrend is in sell region, should I initiate a long position of should wait till supertrend indicator says buy?

    Q no. 3 :- May also use the slope of supertrend itself to follow the trend, as I have seen that steeper the slope better moving is the trend, and whenever it goes flat, a moment of indecisiveness comes in; should I stick with this methodology or please give your kind suggestions..

    • Karthik Rangappa says:

      Doc,

      1) ADX is best used to gauge the strength of the momentum. The decision to buy or sell has to originate from somewhere else…ADX is only complementary to that system
      2) I’d rely more on candlesticks
      3) Slope again points to the momentum. You may as well look at MAs.

      • Dr. Abhijeet Kumar says:

        Its like if I start trade by using MACD and supertrend, and then remain in trade using ADX? as it keeps on growing I shall keep my long/short positions intact and whnever it goes down I will quit as it will show the losing trend? isnt it ?

  122. Arun mendiratta says:

    karthik,
    I can see there is some technical error in dis module as the comments page is same irrespective of different chapters i.e support & resistance chapter, volume chapter comments page are all same…..
    plz resolve dis issue soon

  123. Sourav Sen says:

    Sir What intraday chart time frame do you mostly prefer for mcx nickel copper etc.etc.and today I saw alligator is it good can trade to depend on it..

  124. Sourav Sen says:

    And today I saw doji appear in uptrend but still market is moving high why? actually what doji does and how can I predict what next candlestick should be bullish or bearish..

    • Karthik Rangappa says:

      Well, patterns are only predictive in nature, they do not guarantee movement in any particular direction.

  125. Sourav Sen says:

    And what is the indicators to see volume in chart

  126. Sibhi says:

    Karthik, may I know the conditions for abnormal candle

  127. Sourav Sen says:

    Sir please tell me some about your trading strategies, time frame, indicators and entry and exit, risk to reward ratio.. Please sir.

  128. Sourav Sen says:

    Ok Sir thank you.😃 but sir my last question is what moving average setting do you mostly prefer in 15 minutes chart.. Exponential, double exponential or triple exponential.. What is the most accurate one..

  129. Abhijeet Kumar says:

    Hello Sir,
    First of all, Thanks a lot for all your efforts you have put in for Varsity. This is very helpful.
    I am not able to clearly decide on Support and Resistance level, Can you let me know any more parameters which I consider to get more affirmation on S/R levels.

    Thanks once again for all the efforts.

  130. ZB4376 says:

    Yesterday’s AMBUJACEM chart showed a bullish engulfing pattern. I entered CNC trade at 266.5 with a stop loss of 258 as suggested by ‘the lower of the two rule’. Today the stock closed at 272.10 and I am planning for a BTST trade.
    My SL-M order cancelled automatically at 4pm by Kite. So probably I will need to place a new AMO SL-M for tomorrow . My question is that for the new SL-M order should I stay with the 266.5 suggested by earlier rule or should I increase it to the low of today’s green candle (264)?

    • Karthik Rangappa says:

      You can certainly alter the SL to suit your convenience. But do make sure there is a logic behind what you do.

  131. Sanjay says:

    It is very difficult to differentiate between paper umbrella and spinning top.

    Can you please help me to find out the best way to differentiate between both ?

    • Karthik Rangappa says:

      Spinning top has a wafer thin body and short shadows, paper umbrella, on the other hand, has a small body, short upper shadow, and a long lower shadow.

  132. RAJESH.R says:

    Lot of things to study, it is very useful to beginners like me, Today i learn lot of thinks, thanks Zerodha team to develop such a study material.

  133. Arun Lal Mendiratta says:

    Karthik, just a QN pop up in my mind…..can I buy shares in delivery (CNC) by not entering the quantity of shares I want to buy but the amount of money I want to invest in a company???
    For ex rs 25k at cmp in a company instead of the QN of shares …

  134. Roshan says:

    Hi Karthik,

    ADX indicator is missing in PI in the study option. Could you please check and confirm.
    I am using latest version v1.0.0.6 update on 7/17/2017

  135. Roshan says:

    Also, any plan to include Relative strength Comparison(RSC) indicator. I think it is available only in Metastock.

  136. boopathi says:

    hi,

    is ADX indicator available in pi?

  137. keerthan kumar says:

    Hi, Karthik!
    Thanks for the wonderful material!
    Is candlestick pattern analysis is good for someone looking to hold the position for 1month to 3 months?
    which is an ideal time frame to be selected? If not which technique to be used for analysis.

    Please reply

    Regards
    keerthan

    • Karthik Rangappa says:

      I’d suggest it’s best suited for trades under 4-6 weeks. Although, I’ve noticed the beginning of a long and sustained momentum runs based single candlesticks patterns.

  138. Saurabh Rehan says:

    Sorry investing.com

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