Indicadores comerciais zerodha

Indicadores (Parte 1)

Se você olhar para um gráfico de ações exibido no terminal de negociação de um comerciante, é mais provável que vejam linhas que executem todo o gráfico. Essas linhas são chamadas de "Indicadores Técnicos". Um indicador técnico ajuda um comerciante a analisar o movimento de preços de uma segurança.

Os indicadores são sistemas de negociação independentes introduzidos no mundo pelos comerciantes bem-sucedidos. Os indicadores são baseados na lógica predefinida, utilizando os operadores que podem complementar seu estudo técnico (candelabros, volumes, S & R) para chegar a uma decisão comercial. Os indicadores ajudam na compra, venda, confirmação de tendências e, às vezes, previsão de tendências.

Os indicadores são de dois tipos, a saber, liderar e atrasar. Um indicador líder leva o preço, o que significa que geralmente indica a ocorrência de uma reversão ou uma nova tendência antecipada. Embora isso pareça interessante, você deve notar, nem todos os indicadores principais são precisos. Os principais indicadores são notórios por dar sinais falsos. Portanto, o comerciante deve ser altamente alerta ao usar indicadores avançados. Na verdade, a eficiência do uso de indicadores avançados aumenta com a experiência comercial.

A maioria dos principais indicadores são chamados osciladores, pois eles oscilam dentro de um alcance limitado. Normalmente, um oscilador oscila entre dois valores extremos - por exemplo, 0 a 100. Com base na leitura do oscilador (por exemplo, 55, 70 etc), a interpretação comercial varia.

Um indicador de atraso, por outro lado, está atrasado; o que significa que geralmente indica a ocorrência de uma reversão ou uma nova tendência após a ocorrência. Você pode pensar, qual seria o uso de obter um sinal após o evento ter ocorrido? Bem, é melhor tarde do que nunca. Um dos indicadores de atraso mais populares é a média móvel.

Você pode estar pensando se a média móvel é um indicador em si, por que discutimos isso antes mesmo de discutir os indicadores formalmente. A razão é que as médias móveis são um conceito central por conta própria. Ele encontra sua aplicação dentro de vários indicadores, como RSI, MACD, Estocástico, etc. Por isso, discutimos a média móvel como um tópico autônomo.

Antes de prosseguirmos a compreensão de indicadores individuais, penso que é uma boa idéia entender o impulso que significa. Momentum é a taxa na qual o preço muda. Por exemplo, se o preço das ações é de Rs.100 hoje e ele se move para Rs.105 no dia seguinte e Rs.115, no dia seguinte, dizemos que o impulso é alto, já que o preço das ações mudou 15% em apenas 3 dias. No entanto, se a mesma mudança de 15% aconteceu, digamos 3 meses, podemos concluir que o momento é baixo. Assim, quanto mais rapidamente o preço muda, maior o impulso.

14.1 - Índice de Força Relativa.

Índice de força relativa ou apenas RSI, é um indicador muito popular desenvolvido por J. Welles Wilder. RSI é um indicador de impulso líder que ajuda na identificação de uma inversão de tendência. O indicador RSI oscila entre 0 e 100, e com base na última leitura do indicador, as expectativas nos mercados são definidas.

O termo "Índice de Força Relativa" pode ser um pouco enganador, pois não compara a força relativa de dois títulos, mas mostra a força interna da segurança. O RSI é o indicador líder mais popular, que produz sinais mais fortes durante os períodos de faixas laterais e não variáveis.

A fórmula para calcular o RSI é a seguinte:

Deixe-nos entender este indicador com a ajuda do seguinte exemplo:

Suponha que o estoque seja negociado em 99 no dia 0, com isso em perspectiva; considere os seguintes pontos de dados:

Na tabela acima, os pontos ganhos / perdas indicam o número de pontos ganhos / perdidos em relação ao fechamento do dia anterior. Por exemplo, se o fechamento de hoje for 104 e o fechamento de ontem foi de 100, os pontos ganhos seriam 4 e os pontos perdidos seriam 0. Similarmente, se o fechamento de hoje fosse 104 e o final do dia anterior fosse 107, os pontos ganhos seriam 0 e os pontos perdidos seriam 3. Observe que, as perdas são calculadas como valores positivos.

Utilizamos 14 pontos de dados para o cálculo, que é a configuração do período padrão no software de gráficos. Isso também é chamado de "período de look-back". Se você estiver analisando gráficos horários, o período padrão é de 14 horas, e se você estiver analisando gráficos diários, o período padrão é de 14 dias.

O primeiro passo é calcular o "RS" também chamado de fator RSI. RS como você pode ver na fórmula, é a proporção de pontos médios obtidos pela média de pontos perdidos.

Média de pontos obtidos = 29/14.

Pontos médios perdidos = 10/14.

Conectando o valor do RS na fórmula RSI,

Como você pode ver o cálculo RSI é bastante simples. O objetivo do uso do RSI é ajudar o comerciante a se identificar sobre as áreas de preços vendidos e sobre-comprados. O sobrecompra implica que o impulso positivo no estoque é tão alto que pode não ser sustentável por muito tempo e, portanto, pode haver uma correção. Da mesma forma, uma posição de sobrevenda indica que o momento negativo é alto, levando a uma possível reversão.

Dê uma olhada no gráfico da Cipla Ltd, você encontrará muitos desenvolvimentos interessantes:

Para começar, a linha vermelha abaixo do gráfico de preços indica o RSI de 14 períodos. Se você notar a escala do RSI, você perceberá seu limite superior para 100 e inferior para 0. Contudo, 100 e 0 não estão visíveis no gráfico.

Quando a leitura do RSI é entre 30 e 0, a segurança deve ser sobrevenda e pronta para uma correção para cima. Quando a leitura de segurança é entre 70 e 100, a segurança é supostamente comprada e está pronta para uma correção descendente.

A primeira linha vertical marcada a partir da esquerda mostra um nível em que RSI é inferior a 30, de fato RSI é 26,8. Daí o RSI sugere que o estoque está sobrevendido. Neste exemplo particular, o valor RSI de 26,8, também coincide com um padrão de engarrafamento de alta. Isso dá ao comerciante uma confirmação dupla para ir muito tempo! Escusado será dizer que ambos os volumes e S & amp; R também devem confirmar isso.

A segunda linha vertical, aponta para um nível onde o RSI transforma 81, um valor que é considerado sobrecompra. Por isso, se não for buscar oportunidades de curto prazo, o comerciante deve ter cuidado em sua decisão de comprar o estoque. Novamente, se você notar as velas, eles formam um padrão de engarrafamento. Então, um padrão de engarrafamento, apoiado por um RSI de 81, é um sinal para reduzir o estoque. O que se segue é uma rápida e uma curta correção no estoque.

O exemplo que mostrei aqui é bastante bom, o que significa que o padrão de candelabro e RSI se alinham perfeitamente para confirmar a ocorrência do mesmo evento. Isso nem sempre pode ser verdade. Isso nos leva a outra maneira interessante de interpretar RSI. Imagine os dois cenários seguintes:

Cenário 1) Um estoque que está em uma tendência de alta contínua (lembre-se que a tendência de alta pode durar de alguns dias a poucos anos) o RSI permanecerá preso na região de sobrecompra por um longo tempo, e isso é porque o RSI é superior a 100. Não pode ir além de 100. Invariavelmente, o comerciante estaria olhando para curto prazo, mas o estoque, por outro lado, estará em uma órbita diferente. Exemplo - Eicher Motors Limited, o estoque gera um retorno de cerca de 100% ano a ano.

Cenário 2) Um estoque que está em uma tendência descendente contínua, o RSI estará preso na região de sobrevenda, uma vez que o RSI é menor para 0. Ele não pode ir além de 0. Neste caso, o comerciante estará olhando para oportunidades de compra, mas o O estoque diminuirá. Exemplo - Suzlon Energy, o estoque gerou um retorno negativo de 34% ano a ano.

Isso nos leva a interpretar RSI de muitas maneiras diferentes, além da interpretação clássica (que discutimos anteriormente)

Se o RSI for corrigido em uma região de sobrecompra por um período prolongado, procure oportunidades de compra em vez de curto-circuito. O RSI permanece na região de sobrecompra por um período prolongado por causa de um impulso positivo excessivo Se o RSI for corrigido em uma região de sobrevenda por um período prolongado, procure oportunidades de venda ao invés de comprar. O RSI permanece na região de sobrevenda por um período prolongado devido a um impulso negativo excessivo. Se o valor de RSI começa a se afastar do valor de sobrevenda após um período prolongado, procure oportunidades de compra. Por exemplo, o RSI move-se acima de 30 depois de um longo período de tempo pode significar que o estoque pode ter sentido de fundo, daí um caso longo. Se o valor de RSI começar a se afastar do valor de sobrecompra após um período prolongado, procure oportunidades de venda. Por exemplo, RSI movendo-se abaixo de 70 depois de um longo período de tempo. Isso significa que o estoque pode ter superado, daí um caso para curto-circuito.

14.2 & # 8211; Uma última nota.

Nenhum dos parâmetros utilizados ao analisar RSI deve ser tratado com rigidez. Por exemplo, J. Welles Wilder optou por usar um período de retrocesso de 14 dias, simplesmente porque esse foi o valor que deu os melhores resultados considerando as condições do mercado em 1978 (que é quando RSI foi introduzido no mundo). Você pode optar por usar 5,10,20, ou mesmo 100 dias, olhar para trás, se desejar também. Na verdade, é assim que você desenvolve sua vantagem como comerciante. Você precisa analisar o que funciona para você e adotar o mesmo. Por favor, note que, menos dias que você usa para calcular o RSI, mais volátil será o indicador.

Além disso, J. Welles Wilder decidiu usar o nível 0-30 para indicar regiões sobrevendidas e 70-100 para indicar região de sobrecompra. Novamente isso não está definido em pedra, você pode chegar a sua própria combinação.

Eu pessoalmente prefiro usar o nível 0-20 e o nível 80-100 para identificar regiões de sobre-venda e sobrecompra, respectivamente. Eu uso isso junto com o período clássico de 14 dias.

Claro, eu exorto você a explorar os parâmetros que funcionam para você. Na verdade, é assim que você acabaria se desenvolvendo como comerciante bem sucedido.

Finalmente, lembre-se de que o RSI não é usado frequentemente como um indicador autônomo pelos comerciantes, ele é usado juntamente com outros padrões de candelabro e indicadores para estudar o mercado.

Key takeaways deste capítulo.

Os indicadores são sistemas de negociação independentes desenvolvidos e introduzidos pelos comerciantes bem-sucedidos. Os indicadores estão liderando ou atrasados. Os principais indicadores sinalizam a possível ocorrência de um evento. Os indicadores de atraso, por outro lado, confirmam uma tendência contínua O RSI é um oscilador de momentum que oscila entre 0 e 100 níveis A O valor entre 0 e 30 é considerado sobrevendido, daí o comerciante deve olhar para oportunidades de compra Um valor entre 70 e 100 é considerado sobrecompra, daí o comerciante deve olhar para oportunidades de venda Se o valor RSI for corrigido em uma região por um período prolongado, isso indica um impulso excessivo e, portanto, em vez de assumir uma posição inversa, o comerciante pode considerar iniciar um comércio na mesma direção.

216 comentários.

Nitin, eu estava olhando as paradas da Infy depois do fechamento de sexta-feira (7.11.14). O estoque atingiu 52 semanas, bem como o máximo histórico em 7 de novembro. As últimas seis velas no gráfico diário mostraram abertura e abertura mais alta. A banda de Bollinger sugere expansão de envelope indicando estoque de tendência. Eu acho que eles são indicadores de forte alvoroço no estoque. No entanto, eu também descobri que o RSI é perto de 76 e MACD é maior do que o sinal. Estes indicam baixa. Não consegui encontrar nenhum padrão de castiçal único ou múltiplo definido para o comércio. Como se deve interpretar esse gráfico para o comércio de posições?

Regra geral e # 8211; Em caso de dúvida, evite 🙂

Além disso, eu esperaria que a Infosys voltasse um pouco sobretudo com baixos volumes para longar.

O que é com volumes? Bastante novo na negociação.

Você usa um termo & # 8220; retracement & # 8221; freqüentemente, como retracement de volume, retracement de preços. Não entendi, você poderia explicá-lo no contexto da negociação.

Se um estoque se mover de 75 para 100 & # 8211; então esta perna é chamada de upmove. Invariavelmente, os estoques aumentam fortemente, desista de pequenos ganhos e # 8211; talvez caia de 100 para 90 e depois suba de novo e diga 120. Essa queda de 100 para 90 é referida como retracement.

Qual é o período rsi para negociações intradiárias.

Você pode usar os parâmetros padrão (14 e 21) e verificar se eles combinam seu apetite de risco. Observe, quando você usa RSI em gráficos intradiários, os parâmetros padrão mudam para corresponder a freqüência intradía & # 8230 ;.imprimir 14 e # 038; 21 seriam 14 minutos e 21 minutos e # 8230 e não 14 e 21 dias.

Por favor, deixe-me saber um bom software de análise técnica no qual eu posso desenhar todas as coisas que você mencionou no seu módulo de Análise Techinal.

Você pode usar o Amibroker, que é pago. O preço varia entre 18000 a 25000, dependendo da edição desejada.

Se você quer ter um software livre, você pode usar o Fibotrader. Obviamente, o pago é mais amigável do que os softwares gratuitos. Não tenho idéia do nosso próximo software & # 8216; PI & # 8217 ;. Então, eu mesmo pedi a Karthik, senhor, que comente sobre isso. Espero que ajude ... 🙂

Aqui está um pico de fuga no Pi. Está em estágio beta, há aproximadamente cerca de 1000 pessoas usando isso. Espero que a liberação final esteja ao virar da esquina.

O mesmo é discutido aqui neste capítulo Raman.

Você pode lançar mais luz no período de retrocesso?

O período de busca é simplesmente o número de dias de dados que deseja incluir no seu cálculo. Por exemplo, um indicador RSI padrão tem um período de lookback de 14 dias. Você pode mudar para 21 se desejar.

Um SMA de 5 dias tem um período de espera de 5 dias e # 8230, assim por diante e assim por diante.

Vamos nos materiais na versidade, só então eu posso comentar.222.

Desculpe-me, dint bastante Subhadeep. Você pode elaborar gentilmente?

Você pode ver os gráficos da TVS Motors, especialmente as últimas 5-6 sessões de negociação. O estoque está sendo comercializado perto de seu máximo histórico, que foi 266,7 conseguiu um par de sessões de negociação e, portanto, existe uma espécie de resistência em relação a esses níveis, há uma formação de nuvens escuras, se olharmos para as duas últimas sessões de negociação, parece lá é uma formação de padrões de duplo topo, a venda na sexta-feira não é acompanhada por volumes crescentes (eu acredito que foi uma reserva de lucro antes do fim de semana / expiração com dúvidas sobre os movimentos da NIfty & # 8217;), indicadores (RSI, MACD) doesn & # Não digo muito além de mostrar boa força. Como abordamos esse cenário, dado que existe a possibilidade de fazer um novo alto acompanhado de uma ruptura ou de um possível movimento em direção à desvantagem?

Quase todas as coisas que você mencionou são verdadeiras & # 8211;

1) Formação de duplo topo.

3) Formação da nuvem escura.

Com exceção da parte dos volumes, o estoque está sugerindo um curto comércio (ele clica na maioria dos itens da lista de verificação). Eu ficaria feliz de ser curto e ser rápido para registrar lucros também. A única razão pela qual eu sou rápido para registrar lucros é a ausência de volumes impressionantes.

Obrigado Karthik, pela validação. Eu tenho outra pergunta para você. Você poderia dar uma olhada nas tabelas de Small Cap & # 8217; s como Aimco Pesticides, Waterbase, Freshtrop frutas, etc. Aqui foi formado um pico onde volumes onde altos nesses níveis e ao longo de um período de tempo os volumes estão diminuindo e o gráfico mostra uma queda que é plana como uma consolidação. Você poderia nos dizer em que fase é o estoque (ou seja, acumulação, distribuição ou outro)?

O material é bastante lúcido .. Muito obrigado por esse esforço para Investir Educação e # 8230; Gostaria que você apresentasse alguma explicação sobre Divergências no RSI e como usá-las como oportunidade comercial e # 8230; Será realmente bom e uma ótima oportunidade que se pode obter se identificarmos a divergência direita & # 8230; Eu estou anexando um gráfico de correção atual, que se userd junto com a Trendline forneceu uma boa oportunidade de shorting em Nifty .. Veja o impacto da divergência e # 8230;

Obrigado. Eu entendo muitas pessoas como usar técnicas de divergência. Provavelmente incluirá isso nas seções subseqüentes.

Você pode adicionar diversão no tópico atual ou RSI.

Obrigado pela sugestão de Pavaneet, examinarei isso.

+1 para Cobertura na Divergência.

Eu sinto que o indicador + padrão de estoque juntos mostrará direção futura melhor.

Sim, é por isso que também tenho indicadores na lista de verificação 🙂

QUERO SABER SOBRE DIVERGÊNCIA. PODE PLS EXPLICAR A QUADRO. A DIVERGÊNCIA TEÓRTICAMENTE PERFEITA SUCEDEU. COMO EU NÃO ESTOU ABEL PARA CARREIR A CARTA, SITUAÇÃO ACTUAL EM NIFTY DIÁRIO. COM INDICADOR RSI.

Claro, vou escrever sobre divergências em breve. Obrigado.

Eu quero saber sobre como consertar o longo ou o curto, usando resistência e suporte.

Onde podemos encontrar os ganhos trimestrais históricos de uma empresa e o preço das ações versus ganhos pode ser plotado no PI. Ou existe algum outro lugar onde eu possa encontrar os mesmos dados?

Em termos gerais: Onde posso encontrar dados antigos relacionados aos fundamentos?

Existem poucos sites que dão essa informação, tente # 8211; Morningstar Índia, Moneycontrol, screener. in, site de tempos econômicos, etc. Tanto quanto eu sei, você não pode traçar o estoque vs ganhos em qualquer software. No entanto, o google finance possui um bom recurso que marca todas as datas importantes (juntamente com uma rápida 1 explicação de linha) no gráfico, sugerem que você tente.

Você pode sugerir técnicas de consultoria que são úteis para a Indtraday.

Comece por comprar 1 ou estoque e segurando até o fechamento & # 8230; também para começar com não entrar em várias compras e vender no mesmo dia.

No processo de avaliação eu li como & # 8212; Se s e r estiverem a mais de 4 por cento de distância da perda de stop, pare de avaliar no gráfico. isso eu não consigo entender. gentilmente me informe.

Significado se o preço das ações é de 100 e o suporte para o estoque é de 96 ou mais, talvez ele toque para trocar o estoque, pois a colocação do SL (com base no suporte) estará bastante longe.

Qual porcentagem é boa para suporte & amp; Perda de parada baseada em resistência?

Desde já, obrigado.

Não há% como tal, o próprio suporte atua como um SL.

& # 8220; Se o RSI for corrigido em uma região de sobrecompra por um período prolongado, procure oportunidades de compra em vez de curto / # 8221;

Quanto tempo será exatamente esse período prolongado se eu estiver usando um RSI de 14 dias (como 4 dias, 5 dias ou mais de uma semana)?

Há momentos em que o RSI está preso em uma faixa de mais de 3-4 semanas. Isso de acordo comigo é um período prolongado.

Eu não posso expandir a linha de indicadores. (RSI MACD ETC.). anteriormente era possível para que eu pudesse desenhar linhas de tendência. agora é um problema. Por favor, esclareça.

Expandir onde? como em que software?

Mais cedo eu consegui expandir as linhas RSI, MACD no gráfico intradía disponível na tabela de ninhos. agora eu não posso fazê-lo. Agora é uma linha muito pequena quase impossível desenhar linhas neles. eu posso desenhar linhas no gráfico, mas não em linhas como mencionado.

Ashok, isso parece ser uma questão de software, você pode entrar em contato com seu corretor em relação a isso? Se você estiver com Zerodha, então você pode ligar para +91 80 40402020 e obter isso ordenado. Obrigado.

Estou postando aqui um gráfico de nifty, na medida em que há duas linhas no indicador RSI.

Do qual, um é RSI14, mas outra linha que não entendi. Por favor, guie. & amp; podemos adicioná-lo.

traçar o nosso Pi e como?

RSI (C, 14, S, 9) indica um RSI plotado nos preços de fechamento de 14 dias (C). S, 9 indica que uma média móvel de 9 dias está sendo planejada no RSI de 14 dias. Para consultas relacionadas a Pi, sugiro que você entre em contato com Srini & # 8211; [& # 160; protegido].

Tenha um bom dia!

querido kartik senhor

Você mencionou sobre o rsi em 0-20 e 80-100 como regiões de sobre-venda e sobrecompra, mas o que é o rsi que está em um período prolongado de dizer na faixa de 40-60. Como ler esses estoques.

De acordo com o RSI, tais estoques realmente não se dirigem a nenhum lado. Então é melhor procurar padrões de castiçal.

Você poderia me informar qual indicador é melhor olhar entre RSI e estocástico.

Ambos são usados ​​em diferentes circunstâncias ... então não posso realmente comparar.

Se tivermos dois cenários, sugere o que preferimos para comprar o estoque.

cenário 1- Stochastic / RSI ambos são cerca de 25 e, em seguida, uma vela bullish como marbouzo / martelo / engarrafamento de alta.

cenário 2 - Stochastic / RSI bot são cerca de 50, mas EMA crossover de 3 dias é superior a 8 dias e está indo para cima, o que sugere tendência positiva.

O cenário 1 parece ser uma configuração melhor.

O indicador de acordo com você é melhor entre o cruzamento EMA e as bandas de Bollinger.

A EMA é momento e o BB é baseado em volatilidade, não pode comparar ambos.

qual é o melhor indicador / combinação de indicador.

1) para negociação intradiária pura?

2) para espera de curto prazo (1 ou 2 semanas)?

3) a médio prazo (1 mês a 1 ano)?

4) para longo prazo mais de 1 ano (fundamental será melhor para isso, eu suponho), mas qualquer indicador técnico para reafirmar nossa seleção?

Claramente, o indicador de mapeamento para um determinado período de tempo é um desafio. Mas se você insistir & # 8211; Para o intradigo, algo como um estocástico / MACD deve ajudar. Por períodos mais longos, sugiro que você use médias móveis.

Os intercâmbios emitem maiores ganhadores e ampères diariamente perdedores.

esses dados podem ser usados ​​como um indicador de algum tipo? se sim, como?

por exemplo, é uma boa estratégia para prolongar os estoques que ganharam mais o anterior (a expectativa de ser uma tendência de alta continuará) e amp; semelhante aos estoques que perderam o máximo do dia anterior?

ou deve ser completado o oposto esperando um retracement ou uma correção?

Seria difícil julgar a estratégia sem validá-la. Daí a melhor maneira de validar isso seria fazer uma prova posterior. Faça o download dos dados de encerramento diários e execute uma consulta para pescar ganhadores / perdedores mais altos e verifique como eles realizaram no dia seguinte.

há alguma diferença entre análise técnica e estados unidos?

qual o tipo de habilidades necessárias para ser um comerciante e como saber que me tornarei um bom comerciante?

Paciência, atenção aos detalhes, disciplina e uma constante busca para aprender e improvisar.

Qual é a relevância do vix, o interesse aberto nas opções e como podemos entender as posições das opções na opção se são longas ou curtas? #. Sob a etiqueta do fabricante, eles tomam pontos de vista e comércio separados ou qualquer tipo de entendimento entre eles?

Teoricamente, o preço das opções é derivado de ações, mas hoje em dia devido a altos volumes em Fno e ao tempo enorme e as implicações monetárias, o preço das ações é derivado pelo preço das opções, espurando dados, está correto?

Sugiro que leia os capítulos 15 a 20 no módulo de opções, é completamente dedicado a entender a Volatilidade. É muito difícil estimar que os FIIs são longos ou curtos no mercado, pois geralmente fazem comércio de arbitragem (o que exige que eles sejam longos e curtos ao mesmo tempo). Existem muitas FII registradas na Índia, acho que a SEBI tem toda a lista colocada em seu site.

Lembre-se também, o local determina o mercado de derivativos e não o contrário.

Karthik meu alvo é ganhar 2-3% em base semanal. Sugira-me uma estratégia.

O meu TA sempre dá errado. 🙁

Desde já, obrigado. 🙂

2-3% por semana é de cerca de 10% ao mês ou 120% ao ano !! Não é possível meu amigo. Leia a seção 1.3 aqui & # 8211; zerodha / varsity / chapter / background /

O que é lógica por trás da interpretação do RSI?

Expliquei isso no capítulo Hitesh.

Senhor, por favor, sugira alguma estratégia para a mercadoria intradiária. Qual indicador é mais adequado para isso sugerir com um período de lookback ?? E quanto tempo grame gráfico é mais benéfico para ganhar lucro? Pls guia como eu sou novo na negociação.

Estas são perguntas genéricas, Anurag, difícil de lhe dar uma resposta exata. Além disso, note que não há uma boa resposta para este & # 8230; você terá que experimentar e chegar ao que realmente funciona para você.

Aqui estão dois gráficos do ponto nítido ambos são 30 min. Mas por que há diferença no valor RSI.

dos dois gráficos ao mesmo tempo. Nos gráficos GF, mostrava 91 e pipa mostrando cerca de 70.

Desculpe Karthik não é capaz de anexar o arquivo do gráfico, isto é em 27/06/2016, hora 1 pm.

Isso é por causa dos carrapatos & # 8211; nem todos são capturados ao mesmo tempo. Há uma explicação detalhada sobre isso na negociação, tentando descobrir isso para você. Voltarei o link em breve.

Olá Karthik senhor,

Não consigo ver nenhum mapa / captura de tela carregado pelos leitores na seção de comentários. Eu tentei alguns navegadores, mas ainda o problema permanece. Por favor, sugira # 8230;

Eu acho que em uma das atualizações recentes, as imagens de mídia ficaram um pouco confusas. Deixe-me ver o que melhor pode ser feito. Obrigado.

Oi, em algum lugar você mencionou o nome de um livro específico que pode nos ajudar, esqueci o nome do livro e do autor.

Não tem certeza de qual livro você está se referindo 🙂

Karthik, o livro que você escreveu, é investidor inteligente ou investidor final e, por favor, me ajude também com o nome do autor.

Poderia ser Investidor Inteligente, não leu o Ultimate Investor 🙂

Você pode me dizer como encontrar um estoque de empresas subavaliadas e sobrevalorizadas.

Um DCF de 2 etapas simples irá ajudá-lo a identificar isso de uma perspectiva fundamental. Você também pode usar indicadores como RSI e MACD para obter uma perspectiva técnica (para negociação de curto prazo).

Olá Karthik, preciso de ajuda com um dos indicadores & # 8211; Índice de Momento do Estocástico, listado no KITE. Esse indicador funciona muito bem para mim. Eu quero usá-lo por um período de tempo de 4 horas para confirmar a tendência, infelizmente o período de 4Hr não existe no KITE. Então, é possível me informar quais os parâmetros a serem usados ​​para modelar essa fórmula em AMIBROKER, por favor? Gostaria muito de agradecer e agradecer.

Eu não usei muito o Amibroker, então não consigo comentar. Mas por que você não tenta isso em Pi?

Olá Karthik: qual é a fórmula utilizada para calcular o índice de Momento de Estocástico em Pi? O que eu tentei no Excel não corresponde ao alisamento médio simples. Você poderia guiar?

Não tenho certeza, Sebastine. É um motor de gráficos de terceiros e as fórmulas são codificadas.

Se o RSI for corrigido em uma região de sobrecompra / sobrevenda por um período prolongado, precisamos procurar oportunidades de compra / venda. No entanto, você pode sugerir a definição de período prolongado? Exemplo: O RSI para um estoque está na região de sobrecompra nos últimos 15 dias. Então, 15 dias podem ser considerados como um período prolongado? Bottom-line & # 8211; Quantos números de dias podem ser considerados como Período Prolongado? Se a definição é subjetiva, quais fatores do estoque devem ser considerados para avaliar o período?

Certamente é subjetivo, daí eu só posso falar por mim mesmo. Considero 15-25 dias como período prolongado.

Queria lhe perguntar sobre indicadores de mercado.

É a ferramenta relativa ao preço relativo / força relativa que compara a garantia subjacente à média do mercado de fusão disponível na maioria dos softwares técnicos? E por que eles variam entre território negativo e positivo.

Desculpe desapontar, mas eu não tenho certeza sobre esta média do mercado de fusões & # 8217 ;, eu mesmo tenho que aprofundar esse tópico. Se no caso de ter algum material, por favor compartilhe com a comunidade aqui. Obrigado.

Conforme mencionado no tutorial, se o RSI começa a se afastar do valor de sobrevenda / sobrecompra de um período de tempo prolongado, procure oportunidades de compra / venda, respectivamente.

Minha dúvida é o que se ele continua a permanecer entre o valor 30-70 durante um longo período de tempo. em ambos os casos, satisfaz a condição acima.

No RSI, procuramos valores abaixo de 30 ou acima de 70. Durante o período, ignoramos.

oi karthik senhor.

quando o módulo 9 e 10 estão disponíveis para nós?

Em breve, espero. Fiquei apanhado em algumas outras coisas e tirando algum tempo e foco. Vai voltar à trilha muito cedo e completar esses módulos.

HELLO KARTHIK SIR,

POR FAVOR, SUGrande-me alguns livros para análises técnicas e posso aprender a trabalhar com técnicos em casa.

OU DEVO PARTICIPAR DE QUALQUER CURSO ... POR FAVOR GUIA-ME.

Eu sugiro que você leia o conteúdo no Varsity. É um bom material que temos aqui e deve ser mais que suficiente para você começar.

senhor, qual a diferença entre RSI e SMOOTH RSI, forneça um exemplo, por favor, para que eu possa entender facilmente agradecendo você.

RSI liso é algo que eu não ouvi falar. Vou tentar pesquisar e colocar minhas notas de aprendizado em breve.

Senhor, como usar o esi para negociação intra-dia.

ESI? Não tenho certeza, Pravesh.

quais indicadores são melhores para comércio intra e swing, por favor me guie, eu não sou capaz de decidir?

As médias simples simples ajudam. De uma chance.

Obrigado por detalhes gentis.

Como vou saber o valor RSI fixado por um período prolongado?

Você terá que procurar a mudança diária de valor. Você saberá quando RSI está ficando em torno do mesmo valor durante alguns dias / semanas.

Plz limpe minha próxima consulta no próximo capítulo 15.

Podemos usar o indicador rsi em ações individuais?

Oi, eu estava procurando o oscilador StochasticRsi em pi, onde posso encontrá-lo?

Está disponível, escreva para [& # 160; protected] para consultas relacionadas a Pi.

Procurando um indicador para ver a diferença de preço ou dizer espalhar entre dois estoques com linha média entre junto com 2 linhas de desvio padrão.

O que eu procuro é basicamente & # 8211; uma relação de preço (curva azul) que parece oscilar em torno de uma média (linha roxa). E, em seguida, 1-, 2-, linhas de desvio padrão apenas para ter uma idéia de quão longe da média as oscilações podem ir.

pode alguém por favor codifique este indicador, tenho certeza que pode haver tantas outras pessoas que estão fazendo negociações par e estão tentando encontrar o mesmo tipo de indicador, mas não está lá, então ajudará milhares de outros usuários da Zerodha também .

Olá, primeiro, um sincero agradecimento por todo o trabalho que você colocou, para educar-nos. Quero saber de onde posso aprender sobre a negociação momentânea em detalhe, senhor. Seria muito grato se você pudesse nos dar um capítulo sobre negociação de impulso. Obrigado.

Obrigado pelas amáveis ​​palavras, Deepala.

Você pode aplicar os mesmos princípios de TA para o impulso comercial. Na verdade, todos os padrões que eu discuti ajudaram a identificar o ímpeto e você poderia usar o mesmo para configurar negócios.

Devido ao time universitário, sou capaz de conhecer a TA no mercado de ações e # 8230 ;.

eu tenho que. & # 8211; Qual foi o seu pensamento atrás do indicador? significa que há muito, mas você escolhe alguns dos aqui. então acreditamos que estes são os melhores!

Fique atento ao básico. Pessoalmente, não gosto de depender muito dos indicadores.

Se eu estiver usando ema de 25 e 50 período de lookback, então, o valor do período de retorno de rsi também deve estar entre 25 e 50 ou é independente do período de ema?

Não, ambos são bem mutuamente exclusivos.

Senhor, tenho dúvidas,

1. RSI é apenas uma aproximação de ocorrência futura (tendência de alta ou tendência de baixa) com base no período de lookback, estou certo?

2. O período de lookback que o comerciante intradiário usará?

3. Suponha que, se um comerciante intradía usar um período de lookback de 14 horas como você mencionou, será útil porque haverá pequenas mudanças no preço? 🙂

4. Precisamos usar MA, RSI, MA de volumes e S & amp; R juntos para obter o melhor resultado possível, estou certo?

1) A TA completa é uma aproximação baseada em ocorrências históricas.

2) Tenho que olhar nos últimos 3 dias de dados, mas concentrar-me mais na ação de preços do dia atual.

3) Sim, deveria.

4) Mantenha-o simples, use um indicador (um que você entenda melhor) juntamente com o padrão CS e S & # 038; R.

Senhor, por que usar o indicador se podemos identificar a tendência através dos candelsticks, os indicadores são apenas para confirmação?

Sim, é assim que eu vejo isso, Ayush. Uso indicadores como confirmação lateral.

1.) podemos tomar um nível diferente para sahres diferentes, por exemplo, para infy, podemos usar o intervalo de 0-30 e 70-100, enquanto que para cipla podemos usar 0-20 e 80-100.

Eu pergunto isso porque se eu aplicar 0-20 e 80-100 no infy, então, dificilmente posso ver o RSI obtendo menos de 20 ou mais de 80 historicamente, em vez disso quando eu uso 0-30 e 70-100 há muitos casos em que o RSI exibe oversold atravessando 30 e overbought atravessando 70 historicamente.

2.) O que é o RSI é continuamente entre 31-69 (para o intervalo de 0-30 e 70-100)? does that mean the RSI is not useful then ?

desde já, obrigado.

1) Yes, of course. In fact, its best when done this way.

2) Its usually considered the ‘no action’ zona.

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

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

Especially during intraday trading??

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

say I have evaluated a stock and most of the points are tallying with checklist and it suggest to go short, but when the market opens next mornig the market trend is upward, then.

1. Should I continue with my evaluation , drop the call or change the direction i. e. long instead of short (especially when it is an intraday call), please suggest…..

2. Sir, Can I mail you as I have some doubts( regarding trading only) which I do not want to publish in public, as it may disturb other participants.

1) As long as the SL has not breached you execute the trade.

2) Request you to post it here only.

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

Let me check this Sameer.

I get the following ticks from zerodha through kite connect:

The columns are: Timestamp, LTP, volume.

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

2017-07-28 09:20:14.366 194.9 1030000.

2017-07-28 09:20:17.297 194.85 1040000.

2017-07-28 09:20:19.607 194.85 1040000.

2017-07-28 09:20:20.183 194.85 1040000.

2017-07-28 09:20:24.372 195 1055000.

2017-07-28 09:20:25.540 195 1055000.

2017-07-28 09:20:26.190 195 1070000.

2017-07-28 09:20:28.626 195 1085000.

2017-07-28 09:20:31.159 195.05 1135000.

2017-07-28 09:20:34.225 195.05 1135000.

2017-07-28 09:20:36.436 195.05 1135000.

2017-07-28 09:20:37.434 195.15 1140000.

2017-07-28 09:20:39.281 195.15 1140000.

2017-07-28 09:20:40.264 195.15 1140000.

2017-07-28 09:20:43.119 195.15 1155000.

2017-07-28 09:20:46.216 195.15 1155000.

2017-07-28 09:20:49.240 195.15 1160000.

2017-07-28 09:20:52.452 195.15 1160000.

2017-07-28 09:20:56.403 195.15 1160000.

2017-07-28 09:20:58.356 195.2 1180000.

2017-07-28 09:21:01.405 195.2 1190000.

2017-07-28 09:21:04.158 195.2 1190000.

2017-07-28 09:21:07.375 195.15 1205000.

2017-07-28 09:21:09.500 195.05 1215000.

2017-07-28 09:21:10.403 195.15 1220000.

2017-07-28 09:21:12.522 195.2 1225000.

2017-07-28 09:21:13.192 195.15 1230000.

2017-07-28 09:21:16.239 195.15 1250000.

2017-07-28 09:21:19.284 195.1 1255000.

2017-07-28 09:21:22.347 195.1 1260000.

2017-07-28 09:21:25.195 195.15 1270000.

2017-07-28 09:21:27.121 195.15 1270000.

2017-07-28 09:21:28.602 195.15 1270000.

2017-07-28 09:21:30.266 195 1300000.

2017-07-28 09:21:31.440 195 1300000.

2017-07-28 09:21:34.287 195.15 1305000.

2017-07-28 09:21:37.250 195.2 1310000.

2017-07-28 09:21:40.241 195.2 1310000.

2017-07-28 09:21:45.603 195.25 1325000.

2017-07-28 09:21:50.173 195.3 1330000.

2017-07-28 09:21:51.308 195.3 1330000.

2017-07-28 09:21:52.452 195.45 1355000.

2017-07-28 09:21:54.210 195.45 1355000.

2017-07-28 09:21:55.283 195.45 1355000.

2017-07-28 09:21:59.306 195.45 1355000.

2017-07-28 09:22:00.196 195.45 1355000.

2017-07-28 09:22:02.377 195.45 1355000.

2017-07-28 09:22:04.493 195.45 1355000.

2017-07-28 09:22:05.399 195.55 1375000.

2017-07-28 09:22:07.519 195.55 1380000.

2017-07-28 09:22:09.213 195.65 1390000.

2017-07-28 09:22:10.286 195.65 1390000.

2017-07-28 09:22:14.129 195.7 1400000.

2017-07-28 09:22:15.205 195.7 1400000.

2017-07-28 09:22:17.257 195.7 1400000.

2017-07-28 09:22:19.168 195.85 1410000.

2017-07-28 09:22:23.382 195.3 1515000.

2017-07-28 09:22:25.163 195.3 1515000.

2017-07-28 09:22:28.631 195.3 1515000.

2017-07-28 09:22:32.256 195.3 1515000.

2017-07-28 09:22:35.312 195.05 1525000.

2017-07-28 09:22:36.793 195.05 1525000.

2017-07-28 09:22:38.631 195.05 1525000.

2017-07-28 09:22:41.276 195.45 1600000.

2017-07-28 09:22:42.333 195.45 1600000.

2017-07-28 09:22:43.152 195.45 1600000.

2017-07-28 09:22:44.393 195.45 1600000.

2017-07-28 09:22:45.434 195.4 1605000.

2017-07-28 09:22:50.243 195.4 1605000.

2017-07-28 09:22:52.176 195.4 1605000.

2017-07-28 09:22:55.442 195.55 1610000.

2017-07-28 09:23:02.249 195.55 1610000.

2017-07-28 09:23:04.297 195.55 1610000.

2017-07-28 09:23:05.243 195.55 1620000.

2017-07-28 09:23:06.397 195.55 1620000.

2017-07-28 09:23:07.273 195.55 1620000.

2017-07-28 09:23:09.349 195.6 1625000.

2017-07-28 09:23:13.179 195.55 1650000.

2017-07-28 09:23:14.411 195.55 1650000.

2017-07-28 09:23:26.231 195.65 1680000.

2017-07-28 09:23:31.406 195.7 1690000.

2017-07-28 09:23:32.523 195.7 1690000.

2017-07-28 09:23:35.256 195.7 1690000.

2017-07-28 09:23:38.878 195.7 1690000.

I’d suggest you validate the formula over EOD data before venturing into intraday.

To be more precise:

These are the closing prices for DLF August Future starting from 09:19:00 AM to 09:34 AM.

Since RSi is based on closing price of the period, For the 14 period (1 min chart) RSI should be 82.98.

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

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

The formula works well on EOD data. I am writing some code which depends on intraday RSI on a 1 min period.

If you can elaborate on how the value is in coming out to be around 58 09:34-:09:35 AM for DLFAUG17FUT it will be very helpful. The closing price for every minute is as mentioned by me.

What formula is kite app using? why is it not using the formula mentioned above?

Fotgot to mention the date. it is 28th July morning.

Cool, posted a reply to your earlier query.

Kite uses Chartiq as the underlying charting engine. I’m really not sure about the formula they use. Can you did into Chartiq support doc and look for this, please? Obrigado.

Prezado Senhor. Can you clarify my whether RSI value can become exactly 100 if there is any point of loss with in the 14 days.

I think as per the formula RSI could never become exactly 100 unless RS value become infinite and RS value will become infinite only if the average loss is zero and it is possible only when there is no point of loss in look back period ie.14 days. It may be 99.9999 but it could not become 100. Please clarify whether I’m right or not.

Thanks for your valuable time spending on my comment.

I don’t remember seeing it at 100 either 🙂

“fewer the days you use to calculate the RSI, the more volatile the indicator would be”.

What does this mean sir?

Also, since nowadays nifty is pretty rangebound would you suggest using RSI indicator on it? Would 14 days be apt or should I increase the time?

Looking forward for your valuable inputs. ☺️.

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

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

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

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

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

1. In your opinion, what are the best technical indicators for intraday trading?

2. What time frame (i’ve been working with 5/10 min charts) is the most suitable for such trades?

Glad to hear that, Udit!

1) Bollinger Bands and EMA, are some of my favorites.

2) I’d prefer 9 x 21.

How do we use EMA, do you have an article on that yet?

Yup, check the chapter on moving average.

Obrigado pela resposta rápida. I can’t seem to find EMA indicator in Kite. Is it present there by some other name?

You will find that under studies.

Udit – You can’t find it because it is not named EMA. The name in kite under Studies is “Moving Average”, once you select that, you can choose the Option as “Exponential”, then it becomes EMA! 🙂

The kite platform have only 1,3,5,10,15 minute options. Kindly explain what you mean by “I’d prefer 9 x 21”

If you are looking at minute charts then it means – 9 minute versus 21. If its EOD charts, then its 9 days versus 21 days.

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

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

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

60 to 80 what does this indicatate.

Inching towards the overbought territory.

karthik ji can u plz answer to my questions.

i have read it somewhere in newspaper that.

1. priceband=685 to 700 per equity share of face value of rs. 10 cada.

if price is 685 to 700 then what is face value? whats the difference?

and what does these means:–

2. discount to eligible employees : rs 68 per equity share on offer price.

3. floor price is 68 times the face value and the cap price is 70 times the.

4. bids can be made for a minimum of 21 equity share and in multiples.

of 21 equity share thereafter.

1) Face value is the notional value of the share, whereas the share price is the actual value on a per share basis as assigned by the market.

2) Yes, this is the discount for employees.

3) Assuming FV as 10, floor is 680 and upper band is 700.

4) You have to apply for 21 shares or in mutiples – not numbers like 22, 25, 15 etc..

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

The floor price is the lowest value of the share price, bidders cannot bid lower than that. Face value is just the notional value.

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

Can you please expand these abbreviations for me, please? Thanks 🙂

Point of Control , Value of area , value of high , value of low.

Initial Balance , Weighted Average Percentage.

OHLC data is available which is basically the value of high, low etc. Volume is also available. But not the IB.

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

Not on Varsity. Will try and cover this sometime soon.

When you say the word “Trend” , be it upward or downward , does its definition changes on the type of trading.

Like If I am a day trader then “trend ” can be defines by a lookback period of 7-10 days and for the short term trader it my be several weeks or months for the same stock.

Please tell me if I am getting it right.

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

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

Guess both are not available Santosh. Let me check with the team to see if we can do something about it.

Please let me know when these two indicators will be available in Zerodha Pi.

I recently joined Zerodha and its the least when i say that you are doing outstanding work with it. Continue com o ótimo trabalho.

Eu tenho uma pergunta. Which indicators when combined work best for intraday trading? I really find stochastics fast % line very useful in predicting. However, what will your suggestion be?

Ritu – Welcome to the Zerodha Family 🙂

One shoe does not fit all.

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

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

I’ve not traded enough using Ichimoku, Esan. So I guess, I can’t really comment on it.

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

Awaiting your kind reply! Obrigado.

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

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

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

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

Its fine, as long as you backtest it 🙂

I am new in stock trading. I am interest in short term trading one to two week.

My question is what kind of technical indicator I need to set.

1. 5 20 sma crossover.

2. RSI (14) above 80.

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

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

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

I am trying to calculate the RSI of Suzlon for an interval of 14 days. These are the date and close e prices –

Thu Nov 02 09:15:00 IST 2017 — 16.4.

Fri Nov 03 09:15:00 IST 2017 — 16.5.

Mon Nov 06 09:15:00 IST 2017 — 16.1.

Tue Nov 07 09:15:00 IST 2017 — 15.55.

Wed Nov 08 09:15:00 IST 2017 — 15.5.

Thu Nov 09 09:15:00 IST 2017 — 15.5.

Fri Nov 10 09:15:00 IST 2017 — 15.55.

Mon Nov 13 09:15:00 IST 2017 — 14.65.

Tue Nov 14 09:15:00 IST 2017 — 14.5.

Wed Nov 15 09:15:00 IST 2017 — 13.65.

Thu Nov 16 09:15:00 IST 2017 — 13.45.

Fri Nov 17 09:15:00 IST 2017 — 13.7.

Mon Nov 20 09:15:00 IST 2017 — 13.6.

Tue Nov 21 09:15:00 IST 2017 — 13.85.

Wed Nov 22 09:40:34 IST 2017 — 13.75.

My RS is coming out to be 0.197 and RSI is 16.45.

But in Kite the value is showing something around 31.6?? Can you please explain how come you are getting that value?

Are you applying this to closing value?

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

Certo. Will let you know if I do this.

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

I guess you found your answer 🙂

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

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

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

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

You will have to cut the position.

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

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

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

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

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

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

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

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

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

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

Obrigado pela resposta.

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

Absolutely, that is how I invest for the long term and it has worked for me over these years.

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Indicators (Part 2)

15.1 Moving Average Convergence and Divergence (MACD)

The Moving Average Convergence and Divergence (MACD) indicator was developed by Gerald Appel in the late seventies. Traders consider MACD as the grand old daddy of indicators. Though invented in the seventies, MACD is still considered as one of the most reliable indicators by momentum traders.

As the name suggests, MACD is all about the convergence and divergence of the two moving averages. Convergence occurs when the two moving averages move towards each other, and a divergence occurs when the moving averages move away from each other.

A standard MACD is calculated using a 12 day EMA and a 26 day EMA. Please note, both the EMA’s are based on the closing prices. We subtract the 26 EMA from the 12 day EMA, to estimate the convergence and divergence (CD) value. A simple line graph of this is often referred to as the ‘MACD Line’. Let us go through the math first and then figure out the applications of MACD.

Let us go through the table starting from left:

We have the dates, starting from 1 st Jan 2014 Next to the dates we have the closing price of Nifty We leave the first 12 data points (closing price of Nifty) to calculate the 12 day EMA We then leave the first 26 data points to calculate the 26 day EMA Once we have both 12 and 26 day EMA running parallel to each other (6 th Feb 2014) we calculate the MACD value MACD value = [12 day EMA – 26 day EMA]. For example on 6 th Feb 2014, 12 day EMA was 6153, and 26 day EMA was 6198, hence the MACD would be 6153-6198 = – 45.

When we calculate the MACD value over a series of 12 and 26 day EMAs and plot it as a line graph, we get the MACD line, which oscillates above and below the central line.

Given the MACD value, lets try and find the answer for few obvious questions:

What does a negative MACD value indicate? What does a positive MACD value indicate? What does the magnitude of the MACD value actually mean? As in, what information does a -90 MACD convey versus a – 30 MACD ?

The sign associated with the MACD just indicates the direction of the stock’s move. For example if the 12 Day EMA is 6380, and 26 Day EMA is 6220 then the MACD value is +160. Now, under what circumstance do you think the 12 day EMA will be greater than the 26 day EMA? Well, we had looked into this in the moving average chapter. The shorter term average will generally be higher than the longer term only when the stock price is trending upwards. Also, do remember, the shorter term average will always be more reactive to the current market price than the longer term average. Hence a positive sign tells us that there is positive momentum in the stock, and the stock is drifting upwards. The higher the momentum, the higher is the magnitude. For example, +160 indicate a positive trend which is stronger than +120.

However, while dealing with the magnitude, always remember the price of the stock influences the magnitude. For example, higher the underlying price such as Bank Nifty, naturally, the higher will be the magnitude of the MACD.

When the MACD is negative, it means the 12 day EMA is lower than the 26 day EMA. Therefore the momentum is negative. Higher the magnitude of the MACD, the more strength in the downward trend.

The difference between the two moving averages is called the MACD spread. The spread decreases when the momentum mellows down and increases when the momentum increases. To visualize convergence and the divergence traders usually plot the chart of the MACD value, often referred to as the MACD line.

The following is the MACD line chart of Nifty for data points starting from 1 st Jan 2014 to 18 th Aug 2014.

As you can see the MACD line oscillates over a central zero line. This is also called the ‘Center line’. The basic interpretation of the MACD indicator is that:

When the MACD Line crosses the center line from the negative territory to positive territory, it means there is divergence between the two averages. This is a sign of increasing bullish momentum; therefore one should look at buying opportunities. From the chart above, we can see this panning out around 27 th Feb When the MACD line crosses the center line from positive territory to the negative territory it means there is convergence between the two averages. This is a sign of increasing bearish momentum; therefore one should look at selling opportunities. As you can see, there were two instance during which the MACD almost turned negative (8 th May, and 24 th July) but the MACD just stopped at the zero line and reversed directions.

Traders generally argue that while waiting for the MACD line to crossover the center line a bulk of the move would already be done and perhaps it would be late to enter a trade. To overcome this, there is an improvisation over this basic MACD line. The improvisation comes in the form of an additional MACD component which is the 9 day signal line. A 9 day signal line is a exponential moving average (EMA) of the MACD line. If you think about this, we now have two lines:

A MACD line A 9 day EMA of the MACD line, also called the signal line.

With these two lines, a trader can follow a simple 2 line crossover strategy as discussed in the moving averages chapter, and no longer wait for the center line cross over.

The sentiment is bullish when the MACD line crosses the 9 day EMA wherein MACD line is greater than the 9 day EMA. When this happens, the trader should look at buying opportunities The sentiment is bearish when the MACD line crosses below the 9 day EMA wherein the MACD line is lesser than the 9 day EMA. When this happens, the trader should look at selling opportunities.

The chart below plots the MACD indicator on Asian Paints Limited. You can see the MACD indicator below the price chart.

The indicator uses standard parameters of MACD:

12 day EMA of closing prices 26 day EMA of closing prices MACD line (12D EMA – 26D EMA) represented by the black line 9 day EMA of the MACD line represented by the red line.

The vertical lines on the chart highlight the crossover points on the chart where a signal to either buy or sell has originated.

For example, the first vertical line starting from left points to a crossover where the MACD line lies below the signal line (9 day EMA) lies and suggests a short trade.

The 2 nd vertical line from left, points to a crossover where the MACD line lies above the signal line, hence one should look at buying opportunity. So on and so forth.

Please note, at the core of the MACD system, are moving averages. Hence the MACD indicator has similar properties like that of a moving average system. They work quite well when there is a strong trend and are not too useful when the markets are moving sideways. You can notice this between the 1st two line starting from left.

Needless to say, the MACD parameters are not set in stone. One is free to change the 12 day, and 26 day EMA to whatever time frame one prefers. I personally like to use the MACD in its original form, as introduced by Gerald Appel.

15.2 – The Bollinger Bands.

Introduced by John Bollinger in the 1980s, Bollinger bands (BB) is perhaps one of the most useful indicators used in technical analysis. BB are used to determine overbought and oversold levels, where a trader will try to sell when the price reaches the top of the band and will execute a buy when the price reaches the bottom of the band.

The BB has 3 components:

Middle line which is The 20 day simple moving average of the closing prices An upper band – this is the +2 standard deviation of the middle line A lower band – this is the -2 standard deviation of the middle line.

The standard deviation (SD) is a statistical concept; which measures the variance of a particular variable from its average. In finance, the standard deviation of the stock price represents the volatility of a stock. For example, if the standard deviation of a stock is 12%, it is as good as saying that the volatility of the stock is 12%.

In BB, the standard deviation is applied on the 20 day SMA. The upper band indicates the +2 SD. By using a +2 SD, we simply multiply the SD by 2, and add it to the average.

For example if the 20 day SMA is 7800, and the SD is 75 (or 0.96%), then the +2 SD would be 7800 + (75*2) = 7950. Likewise, a -2 SD indicates we multiply the SD by 2, and subtract it from the average. 7800 – (2*75) = 7650.

We now have the components of the BB:

Statistically speaking, the current market price should hover around the average price of 7800. However, if the current market price is around 7950, then it is considered expensive with respect to the average, hence one should look at shorting opportunities with an expectation that the price will scale back to its average price.

Therefore the trade would be to sell at 7950, with a target of 7800.

Likewise if the current market price is around 7650, it is considered cheap with respect to the average prices, and hence one should look at buying opportunities with and expectation that the prices will scale back to its average price.

Therefore the trade would be to buy at 7650, with a target of 7800.

The upper and lower bands act as a trigger to initiate a trade.

The following is the chart of BPCL Limited,

The central black line is the 20 day SMA. The two red lines placed above and below the black like are the +2 SD, and -2SD. The idea is to short the stock when the price touches the upper band with an expectation that it will revert to average. Likewise one can go long when the price touches the lower band with an expectation it will revert to the average.

I have highlighted using a down arrow all the sell signals BB generated, while most of the signals worked quite well, there was a phase when the price stuck to the upper band. In fact the price continued to drift higher, and therefore even the upper band expanded. This is called an envelope expansion.

The BB’s upper and lower band together forms an envelope. The envelope expands, whenever the price drifts in a particular direction indicating a strong momentum. The BB signal fails when there is an envelope expansion. This leads us to an important conclusion; BB works well in sideways markets, and fails in a trending market.

Personally whenever, I use BB I expect the trade to start working in my favor almost immediately. If it does not, I start validating the possibility of an envelope expansion.

15.3 – Other Indicators.

There are numerous other technical indicators, and the list is endless. The question is, should you know all these indicators to be a successful trader? The answer is a simple no. Technical indicators are good to know, but they by no means should be your main tool of analysis.

I have personally met many aspiring traders who spend a lot of time, and energy learning different indicators, but this in the long run is futile. The working knowledge of few basic indicators, such as the ones discussed in this module are sufficient.

15.4 – The Checklist.

In the previous chapters, we started building a checklist that acts as a guiding force behind the trader’s decision to buy or sell. It is time to revisit that checklist.

The indicators act as tool which the traders can use to confirm their trading decisions, it is worthwhile to check what the indicators are conveying before placing a buy or a sell order. While the dependence on indicators is not as much S&R, volumes or candlestick patterns, it is always good to know what the basic indicators are suggesting. For this reason, I would recommend adding indicators in the checklist, but with a twist to it. I will explain the twist in a bit, but before that let us reproduce the updated checklist.

The stock should form a recognizable candlestick pattern S&R should confirm to the trade. The stoploss price should be around S&R For a long trade, the low of the pattern should be around the support For a short trade, the high of the pattern should be around the resistance Volumes should confirm Ensure above average volumes on both buy and sell day Low volumes are not encouraging, hence do feel free to hesitate while taking trade where the volumes are low Indicators should confirm Scale the size higher if the confirm If they don’t confirm, go ahead with the original plan.

The sub bullet points under indicators are where the twist lies.

Now, hypothetically imagine a situation where you are looking at opportunity to buy shares of Karnataka Bank Limited. On a particular day, Karnataka Bank has formed a bullish hammer, assume everything ticks on the checklist:

Bullish hammer is a recognizable candlestick pattern The low of the bullish hammer also coincides with the support The volumes are above average There is also an MACD crossover (signal line turns greater than the MACD line)

With all four checklist points being ticked off I would be very glad to buy Karnataka Bank. Hence I place an order to buy, let us say for 500 shares.

However, imagine a situation where the first 3 checklist conditions are met but the 4 th condition (indicators should confirm) is not satisfied. What do you think I should do?

I would still go ahead and buy, but instead of 500 shares, I’d probably buy 300 shares.

This should hopefully convey to you how I tend to (and advocate) the use of indicators.

When Indicators confirm, I increase my bet size, but when Indicators don’t confirm I still go ahead with my decision to buy, but I scale down my bet size.

However I would not do this with the first three checklist points. For example, if the low of the bullish hammer does not coincide in and around the support, then I’ll really reconsider my plan to buy the stock; in fact I may skip the opportunity, and look for another opportunity.

But I do not treat the indicators with the same conviction. It is always good to know what indicators convey, but I don’t base my decisions on that. If the indicators confirm, I increase the bet size, if they don’t, I still go ahead with my original game plan.

Key takeaways deste capítulo.

A MACD is a trend following system MACD consists of a 12 Day, 26 day EMA MACD line is 12d EMA – 26d EMA Signal line is the 9 day SMA of the MACD line A crossover strategy can be applied between MACD Line, and the signal line The Bollinger band captures the volatility. It has a 20 day average, a +2 SD, and a -2 SD One can short when the current price is at +2SD with an expectation that the price reverts to the average One can go long when the current price is at -2SD with an expectation that the price reverts to the average BB works well in a sideways market. In a trending market the BB’s envelope expands, and generates many false signals Indicators are good to know, but it should not be treated as the single source for decision making.

249 comments.

Wanted to understand fast and slow stochastic and where they are used.

The indicator is best used while trading intra day. I will probably include a write on this sometime soon.

Thanks will be waiting for the same but its working awesomly well for intraday for few points profit in options but i really fail to understand why this news channels and advisory keep fooling people and when the best way to learn TA is keep it simple Thanks for all your efforts.

You said it, the best way to learn TA is by keeping it really simple and not complicating it with many lines and indicators.

We have tried to do the same in Varsity 🙂

Mind if I ask how are you using stochastics on options? For example what is the candle duration you are using and the details of the stochastic parameters?

MACD with 9 day SMA crossover/ MACD SIGNAL example for Asian paints seems wrong.

The red line might be for MACD line and black for MACD SIGNAL.

please look into this.

Thanks, I’m aware of this. Its just that I’ve not been able to rectify it yet. Will do shortly.

I think the MACD/signal line confusion still remains (30/09/2016). “The sentiment is bullish when the 9 day SMA crosses over the MACD Line wherein the 9 day SMA is greater than the MACD line. When this happens, the trader should look at buying opportunities” . This is in fact a bearish sentiment. Por favor, esclareça.

While changing the above, could you avoid using crosses over in both bullish and bearish scenarios? It creates confusion in newbies like me. Crosses over can be used in bullish sentiment whereas crosses under can be used in bearish sentiment. Or simply could you say that ” When the MACD line (generally black) goes above the signal line, then it indicates a bullish sentiment” or something like that. Obrigado.

I understand there is a confusion here, will fix it as soon as possible.

I wanted to work on overbought-oversold indicators. Now rsi and cci have been here for too long….How do I get better confirmations and reversals? I am sure we need to keep up with latest indicators….as these have been here for ages. Is there anything new I can work on?

Well, I agree it has been around for a while. But disqualifying it based on time factor may not be a great idea. Having said that, I have not come across anything new that looks promising 🙂

Hi Ashutosh all this indicators are there from along time and promise all this will be there till eternity and the ones mentioned in varsity are the chosen best ones with a great record and tested, don’t look for new ones practice more with old ones and promise you will never know you will become a master trader.

In the intraday chart, RSI is never touching the oversold region. Can i add a SMA and check the crossover for bullish and bearish confirmation??

Thanks in advance.. 🙂

No in fact what you can do is estimate the level upto which the RSI increases (on intra day basis) and based on this you can re calibrate the oversold and overbought levels.

Thank you so much for your reply. 🙂

Do you mean that i need to change the oversold and overbought regions regularly on intraday basis?? I read somewhere that the rsi oscillates between 45 and 100 in uptrend and between 65 and 0 in downtrend. How far it is true? Hope im not bugging you with my doubts. 😀

Desde já, obrigado.

Not regularly, but you need to understand what levels work for which stock. For example a level of 40 and 60 may work extremely well for Infy while at the same time 30 and 70 may work for TCS. So the point is to identify this metrics.

Btw, you are not bugging me, you are just contributing significantly towards making the community more vibrant. Please keep the comments queries coming 🙂

Thanks alot sir.. 🙂

Considering all the effort you put here to explain this stuff, I think I owe you.. 😀

You owe me nothing Jagadeesh 🙂

Is there any calculated formula where we can predict the proper closing. If yes, how to calculate?. If no, then how do some people predict in crowd index?

Excellent to say the least…

Really now understand the application of BBs.

One request .. Would you please include in your tutorial Stochastics & their applications soon?

Thanks, I’m glad you found this useful 🙂

Will include a chapter on Stochastics sometime soon.

Adani Ent. seems to be trading sideways for considerable time. I found the formation on chart perfectly suited for application of BBs.

Você concorda? Hope i am not embarrassing you by asking this.

Lol, why would you embarrass me :). This platform is meant to ask question and learn from one another.

Btw, you are perfectly right with Adani Ent. It is at the lower SD..which advocates a long position. But do make sure other things on the checklist confirm. Boa sorte.

karthik ji, kindly discuss elaborately on ADX in Varsity, thank you.

Will do that sometime soon. Obrigado.

i am in confusion regarding one of the examples mentioned in the above chapter. its this paragraph to be precise.

“For example, the first vertical line starting from left points to a crossover where the MACD signal (9 day SMA) lies below the MACD line and hence one should look for a selling opportunity. The 2nd vertical line from left, points to a crossover where the MACD signal line lies above the MACD line, hence one should look at buying opportunity.”

this is a paragraph explaining the improvised MACD with the example of asian paints graph. my doubt is the in the graph at the first vertical from the left the cross over occurs the MACD signal(red line) actually goes above the MACD line(black line), but the in the above paragraph quoted from the chapter it mentioned that the MACD signal lies below the MACD line which is contrary to what’s seen in the graph. Hope you have understood my query and let me know where i am going wrong.

Uau! Thanks for pointing this, your observation is correct. I need to make this correction.

Hi Karthik, I was about to send the query exactly same as that of Teja and just noticed this comment. Is the correction is not made or is it just my understanding gap.

Oops I;ve missed this completely. I will look into it shortly.

I am still not clear about MACD line and MACD signal example of Asian Paints. The correction has been made on it or not? As I am still confused about it.

Gaurav – I will review the entire write up MACD on priority, can you please check back in 2 days? Thanks so much for your patience.

Was the correction made in MACD?

And also I bit confused here that how can a signal line (which is fast and more reactive than MACD) actually lie below MACD when the trend is up? this seems quite opposite to EMA. 9 SMA (Signal Line) should move over MACD when the trend is up since 9 SMA is recent and should be fast and more reactive than MACD. Please correct me if I’m wrong. I can understand all other concepts quite easily but getting confused here.

My bad, I;m yet to make the necessary corrections. Will do as soon as possible.

I am having an excellent learning through Varsity. Muito obrigado.

But I still have the MACD signal vs the MACD line cross over doubt in this article. After reading all the comments, I understood there is/was an issue and I am not able to get to whether it has been solved or not. Can you please elaborate here as to when is a bullish crossover and a bearish one?

If the Signal line (9day) (red) crosses over the MACD line (black, 12 and 26) (ie) after crossing, the red is now above black -> does this denote bullish/bearish.. From what I expect it to be is ‘Bullish’, but what has been mentioned is ‘bearish’. Can you please elaborate and let me know if my understanding is correct or not. Obrigado.

There was an issue, which has been rectified. I’d suggest you give it another read 🙂

thanks a lot for your worthy articles on FA & TA, I have a doubt on the cross overs of MACD and signal line. in some books it indicates that bullish cross over is when MACD line cross over Signal line. where in the above chapter it is in reverse. Pl. esclarecer.

Signal line is a 9 day average line whereas the MACD takes the difference between 12 & 26 day average. Hence the signal line is more reactive to the daily price moves and therefore generates the trigger to either buy or sell.

hi karthik are you sure the signal line is more reactive to the change in prices. i think the macd is more reactive since it the differance and signal is the average its comparatively less reactive to the same change.

Most sources like books and wikipedia say that a bullish signal is when MACD line moves over the signal line. Here it is mentioned the other way round. Could you please clarify?

The upper and lower bands act as a trigger to initiate a trade. Here is it not important that which candle stck is touching the which band. Bullish band touching upper or lower band or bearish band touching the lower band then it is more strong signal then bullish band is touching the lower band. Also its body which is touching the band or even shadow touching the band or crossing the band, same will have same meaning or it gives some sense of strong or weak signal. Please clarify these variable if they are of concerned.

The bollinger band is a volatility, it effective to initiate short trades. I would be happy to see a bullish candle at the lower end of the band while initiating a bullish position. Similarly at the top end I would be happy to see a bearish candle before initiating a short position.

Is there eny one can explain for loding indicator pi Terminal.

It is quite easy to do this, however I would suggest you [ protected] for the same.

dear karthik sir..

here i’m sending bearish macd indicator, stock gravita india ltd. corrected 80 level to 31.

thank you karthik sir…

dear karthik sir…

For example if the 20 day SMA is 7800, and the SD is 75 (or 0.96%), then the +2 SD would be 7800 + (75*2) = 7950. Likewise, a -2 SD indicates we multiply the SD by 2, and subtract it from the average. 7800 – (2*75) = 7650.(karthik sir how to calculate sd 75, bit confuse…thank you sir)

Girish…we will be talking about Standard Deviation (SD) when we take up the chapter on Volatility in the Options module. Request you to stay tuned till then 🙂

confusion abt MACD and signal line crossover would be cleared iff one considers “MACD line” itself being some scrip, and it has its own 9-DMA as usual. we then follow standard method of trading of using MA only.

stock close above it’s n-DMA => long.

stock close below it’s n-DMA => curto.

i wonder , if we can add one more signal line to MACD line (say 21-DMA) and follow 9/21 MA Crossover system to reduce lag?

* how can we add custom indicators (which will have its own graph akin to std indicator viz MACD ) in “Pi” ?

This is an interesting thought, probably needs to be explored more. In fact you can easily backtest this on Pi. By the way for questions related to Pi you need to [ protected]

karthik, You are doing something which is more than EXCELLENT and your courses are Awesome.

Please help me with Intraday Charts Provider who feed market data real time(without 5 or 10 mins Lag). Any Provider will do and i can pay for good service also. I am going to use it for Intraday Trading, Swing Trading, Futures and Options.

Thanks for the encouraging words Sathish – in fact it is not just me there is a small team involved in bringing this content forward on Varsity.

Why dont you opt for Zerodha Pi? Pi has all the features you are asking for. In fact all the charts that I have posted in Technical Analysis module is from Pi. Check out zerodha/pi .

Could you kindly explain which parameters in the stochastic oscillators is best suitable for intraday trading?( particularly in Nifty option and Nifty future)

I would suggest you use Stochastic in a sideways market…stochastic does now work when the markets are trending.

Please elaborate higher the momentum, the higher is the magnitude. Also give detail about momentum n magnitude in basic way mean.

Higher the momentum the greater is the spread between the two averages and hence higher is the magnitude of the difference between the two averages.

Which indicators(any two) we need to look for sideways and trend markets. for example as stated Bollinger bands works well when market is sideways .

Sideways = BB and Stochastic.

Trend = Moving Averages and MACD.

Does this applies to commodities as well for day trading Karthik?

Yup, TA rules apply to Equities, Commodities, and currencies.

can I look for RSI instead of stochastic.

You can, should not be a problem.

while observing different stocks for Bollinger Brands all most all of them followed Bollinger theory. Iam not understood how is it works in side ways markets only.

BB works on a statistical framework. BB especially works well when the stock is in a sideways trend – for the simple reason that it follows the principle of mean reversion.

Thanks for such great explanation, your courses are awesome. Here I am attaching chart of Apollo Tyres kindly confirm the pattern. As per my observation it should be Tripple bottom. Por favor, responda.

Yes, it certainly looks like one.

What are the consequences of a Triple Bottom or a Triple Top?. I hear people talking about these but don’t understand what would happen after the occurrence of one. And how much can we depend on such an occurrence?.

Triple formation just compresses the price into a range…the longer the price stays in this this range, the expectation of a meaningful breakout (or breakdown) is higher. Verifique este & # 8211; zerodha/varsity/chapter/dow-theory-part-1/

sir, its totally confusing, somewebsites say if MACD LINE CROSSES BUY if.

sir, its totally confusing, somewebsites say if MACD LINE CROSSES SIGNAL LINE BUY if MACD LINE FALLS BELOW SIGNAL LINE SELL U SAY OPPOSITE.

sir, its totally confusing, somewebsites say if MACD LINE CROSSES SIGNAL LINE BUY if MACD LINE FALLS BELOW SIGNAL LINE SELL U SAY OPPOSITE WHICH TO FOLLOW, WHY, WHEN, HOW, PLS EXPLAIN DETAILLY.

Narsimha – I will go tru the MACD chapter again and confirm. Obrigado.

SIR, THERE IS HUGE DIFF IN WHAT U SAY (MACD)&WEBSITES SUCH AS INVESTOPEDIA, STOCK CHARTS, ONLINE TRADING CONCEPTS CHECE&CORRECT IF IAM WRONG.

Can you please tell me what is the meaning of volume candle color red and green.

Volume as such does not have a colour code…but traders usually associate the volume colour with the price. If the price has gone up, then volume bar is green and if price has come down the volume bar is red.

Hi Karthik, But I can see for some days the candle is green but the volume is red for the same day and vice versa.

Ah, this depends on the software really. Volume can turn red if the previous day’s volume is higher than current day’s volume.

when i try to back test an error message is shown please explain.

Sarath – I would suggest all you shoot all questions related to Pi to Zerodha support.

You made an excellent introduction to all the fundamental indicators. I would always take care of my decision using all your TA.

But i think there will be confusion in all traders mind that ” What should be best time frame to view this indicators?”, i personally have problem in this.

Can you make some tutorial as Suitable Time frame one need to watch for all the above mentioned indicators for Short, Med, and Long trade.

Thanks for the suggestion Naitik – just to give you a quick heads up – check out stochastic for intraday, EMA for long term trades, RSI and BB for swing trading. Please note this is just a suggestion, do your due diligence before you act upon it.

The Module on TA is really great. It is so beautifully explained. Thanks a lot Karthik and team. Bravo! 🙂

Thanks Gaurav! Glad you liked the module.

WHAT IS MONEY FLOW INDEX, HOW IT WORKS, IS IT WORTH LOOKING FOR SHORTS AND LONGS.

Yet another indicator. Will discuss almost all the indicators available in another new initiative shortly.

Which stochastic indicator is to be followed Fast or Slow.

Which stochastic indicator is to be followed Fast or Slow.

as I have seen the graph u included on MACD and 9day SMA, I saw buying interest when MACD>9 day SMA and vice versa.

the same I saw in GM Breweries case also. but u have written it opposite. please confirm.

Need to recheck this Romi.

question regarding back testing :-

i am back-testing an indicator on PI , it shows consistent profits on 2 day , 10 day , 20 day run .

when i run for 30 days , it shows loss .

when i run for 40 days , it again shows profit .

i want to use this indicator for pure intraday trading only .

what points should i consider before finalizing a strategy and going ahead with full automation ?

I can only give you few pointers here, but please be aware that there are many variables that you need to consider –

1) Leverage required – if the indicator you have is highly leveraged the think twice.

2) Risk to Reward ratio.

3) Frequency of trade signals.

4) Number of profitable trades to loss making ones.

5) Profitability per trade.

1) i really did not understand “leveraged indicator ”,kindly explain .

i used the indicator on commodity futures , i use simple NRML leverage even when i am aware i will close position within the day itself , just to control against excessive leverage . i am not aware about what exactly u mean when u say ” indicator leverage” .

2) risk to reward ratio , how to check this via back testing , i backtested simple long-short , without any kind of exit parameters .

3) frequency is 3-6 on a day per futures script .

4) generally profitable are higher than losers .

5) profitability per trade , how to check this ?

6) what exactly is ” drawdown “?

hello , any answers for these above mentioned queries ?

1) If the strategy requires you to use excessive leverage – for example buy futures + sell options simultaneously then the position is highly leverage. É isso que eu quero dizer.

2) For you buy 100, with target of 110 and SL of 95, then you are risking 5 for an expectation of 10…risk to reward is 1:2…which is good. However if your strategy gives you a risk to reward of 1:1 then it may not be that great…you are risking 1 for a reward of 1.

3) This seems ok.

5) Divide the over all profit by total number of trades …you will get profitability per trade.

6) Drawdown is a measure of how much the profitability has declined from its highest point. For example if my overall profitability Is currently at 10K…but historically it was at 22K, then the drawdown is 12K. Higher the drawdown, the more volatility the strategy is.

Thank you for this .. i’m a newbie .. i wanted to know if the macd is more sensitive or the Moving average crossover system . I knogw that macd is a derivative of moving averages .

MA is more sensitive to price movements.

Dear Karthik Sir,

I do intraday trading in options and in order to judge the trend in nifty, I use google finance nifty 2 min chart.. I want to know that which EMA period is good for intraday trend judgement? 10, 20 or 40? similarly which period is good for RSI? 10 20 or 40??

Regards & amp; Thanks in advance….as I know you will answer….

Sooraj – why are you depending on Google for intraday charts when you have super fast streaming via Kite – kite. zerodha/ .

EMA – my personal preference is 9 and 21. RSI – 20 over sold and 80 for over bought.

1) i am still unaware on what exactly is scanner on PI and how to use it ?

2) can we use this EMA+RSI combo for long period stock holding also ?

3) is it possible to fix this strategy on PI scanner & and scan stocks which give this signal ?

For queries related to Pi, please my colleague Srni – [& # 160; protegido]

Actually I am not allowed to carry my personal laptop where I go to work……I just use NEST Mobile Application for trading and use google finance chart in Public PC to view nifty chart. I cannot take risk to log in in public place thats why I dont use kite….

although I have PI software (indeed superb & useful….) that I am able to use only once in a month….

You can use Kite on your mobile, works like a charm 🙂

I do scalping in Option Premiums and use Bolinger Bond, RSI and EMA for technical analysis.

am I doing right Sir? I earn approx Rs 2500 daily (except one big loss Rs 27000…!!).

What according to you best technical indicators for premiums in nifty as they vary a lot….

may i ask what trading capital you use for making 2500 daily ?

As long as you have method to madness you are good 🙂

Also, there is nothing like best technical indicator as each one has its own merits and demerits.

I have around 90000 in my capital. I buy premium on dips whenever RSI is below 20 then sell when premium moves 3 to 4 points….

I am new in the market so I don’t go for positional trade as It has already cost me heavy loss in the very beginning.

RSI below 20 on the premium itself or the underlying ?

even i do only intraday 🙂

1) RSI below 20 on the premium itself or the underlying ?

2) JUST THIS ALONE , nothing else ?

instead of selling it off after a 3-4 point up move , why don’t u simply place a stop-loss and wait if any more profit possible ?

even i do only intraday 🙂

RSI in Nifty Chart only…

I combine Bollinger Bolls with RSI or EMA with RSI when both triggers buy then I buy premiums…

I am new so I donot go for much right now…but I will do as you are saying but it will take some time….

do you trade ITM , ATM or OTM options ?

in this strategy do u calculate option greeks ? or you don’t consider B&S calculator at all ?

i am very thankful , that you are openly discussing your personal trading strategy with me , thanks a ton 🙂

In the beginning of the series I trade in slightly OTM (at least 10 trading sessions say…) later I trade only in ITM as it has more delta( kartik sir tought us….

and dont say thanx as We Zerodha is a Family….

Happy to read this Sooraj 🙂

Good luck Sooraj!

Thanks Karthik Sir for your support….

Please do add Chapter on Put Call Ratio to define market trend…..only you can explain it in simple & easy to understand language..

Sooraj – we will cover Put Call Ration in the ongoing module on Options Strategy.

besides the massive volume surge , what other indicators gave a signal for the massive bullish surge today ?

i have to say i am waiting eagerly for the currency – commodity module 🙂

Thats the next module and hopefully it would be worth your wait 🙂

sure , i still await the answer to above question .

Posting it in here as you advised “Your answers would be of help to many TRADERS like me”

With lots of indicator options to choose from Pi, i have so far tried.

2) Bollinger bands.

3) Elder bull power.

4) Elder thermometer (seems good enough except that it shows the trend only after it peaked/dropped, aint)

after starting my trades in Z ..

The above are apart from what i use normally like.

1) Candle stick patterns,

2) Wedges (rising and falling)

3) Volume price indexes –> balance b/w buy and sell volumes.

4) RSI along with bull/bear sticks (Jap/Ham)

which have helped arrive at good guesses.

But i do find that for the below reasons, some of them are not able to give a clear signal on buy.

1) despite the q stick showing 3 or 3 and above on crude sometimes, the actual trend is correction for volatility being the KILLER.

Unable to go with conviction, that it’s okay to buy based on climbing slope shown as the sell volumes remain Extremely volatile, it happened yday on copper in the eve, even on crude for a while.

& # 8211; & gt; is it okay to use, as it’s misleading in cases like above.

2) B Bands/other averages/band only suggest the avg that can be a safe but can’t be a good bet to realize good enuf profits after all taxes charges by SEBI, Exch & govt,

“ONLY POSITIVE” being “Zerodha’s RETAIL FRIENDLY Brokerage”..

& # 8212; & gt; following THESE indicators only lead to very minimal profits most times. This doesn’t mean a MEAN profit is not respected, but then again as all of us would agree, some more killers by Govt.,

to take care of despite huge risks taken to earn them, no solace from them though they advocate all to invest/trade 😉

3) In your RICH trading experience, what’s the best indicator to use among SO MANY GOOD Ones (given in Pi) to make a near accurate buy/sell call at any point.

4) On shorting, Wedge along with RSI (i try to pick by 70-75 ranges as 80 is not possible always), proxime bear sticks have been helpful but during volatilite volumes every min, unable to judge.

For i love the famous words, “Shorting is the trade for Profits” most ttrying times , if one is sure about the TREND 😀

Thanks for your time to read this, your availability to reply to trivial doubts from clients, willing to share thoughts, inputs despite being a HIGHLY SUCCESSFUL CEO of a terrific Enterprise!

PS: Trading had never been such a delight before using PI (π)

Thanks for posting this, I’m sure readers here will benefit!

Thank You Nithin/Karthik for this wonderful blog and excellent articles , awaiting your answers on the above.

Ram read through your entire comment and i get a feeling your problem could be with time frames. Sometimes simple indicators like moving averages give great results. Super trend seems to be performing really well in these volatile markets. I would suggest you increase the time frame, lower the number of trades to capture larger profits.

I was reading the comments thinking it will solve my confusion. but I found that many people have same confusion as of me about MACD and 9 Day SMA signal. You still haven’t changed the content of MACD and 9 day SMA signal. there is confusion regarding what you are saying and what digram is showing. Please do the correction as you have promised to do it in earlier comments.

and Please Reply.

Sushant, I’m sorry about the delay..its just that I’m caught with the 2 modules on Options. Will probably re write the whole of MACD chapter sometime soon (week or 2) to make things clear. Meanwhile we will be putting up a supplementary notes in TA module by today/tomorrow which will contain quick notes about 10 indicators.

Please define about MACD histogram. How is it different from MACD? Is the former indicator helpful for day trading when plotted in 1 min chart?

I plan to re write MACD chapter altogether, I will include the histogram piece in the new article. I’d suggest you to please wait for few more days. Obrigado.

how to read Rain Bow indicator.

I am a newbie, striving to be a trader !

First of all let me tell you, Varsity course is the most comprehensive, well structured & a detailed course especially for a newbies like me. I have not come across such a course even after googling a lot on the web. I believe, Varsity stands out in the crowd.

Truly respect your efforts and endeavor for providing such a fruitful learning for all of us.

I have been seriously following the course, chapter by chapter and by the grace of God, it was easy to digest until now.

I have a small question for you sir, that your have stressed on a point in this lesson that the low of the candlestick should be around the support price for a long position. My specific queries regarding this are :

1. Why it is so important for the low & support to match?

2. What if the low is way below the support level? e.

3. What if the low is quite above the support level?

Please suggest and guide, What should I infer or draw conclusions in these situation& What should be my action plan on these trade .

Shafeeq, thanks for the kind words and encouragements. Words like this encourage us to do better and better 🙂

1) If the low and Support coincide, then it gives us the confidence that the support level held on and therefore market made a low at support.

2) Then the support becomes the resistance. Remember support and resistance are interchangeable based on the last traded price of the stock.

3) I’d personally be a bit uncomfortable taking long positions when support is still far from low, it gives a feeling that the market could fall further.

Thank you very much Sir .

Appreciate your kind and gentle response to my queries !

“Cleared my doubt, Clearly!”

Regards ! May God Bless You Sir !

A little confused in MACD & Signal line crossovers when to go long & curto.

Can you please explain in brief ?

This is long due Shafeeq, I will re write the MACD chapter all over again very soon.

i m new & interested intraday trading.

1]which time frame is good for most successful intraday.

2] is their S&R line developed automatically in pi.

3] what details about scanner in pi.

4]whether backtest use for intraday.

esperando sua resposta.

1) Depends on your appetite and there is no straight forward answer to this. I prefer to look at 10 or 15 mins data while trading intra day.

2) Nope, also its best if you can plot it.

I have been confused a lot by your chart of asian paints in the MACD line and the 9 day SMA of MACD line.

I believe that you have explained the strategy to follow in chart wrongly.

I think some modification is to be made to the below paragraph :-

With these two lines, a trader can follow a simple 2 line crossover strategy as discussed in the moving averages chapter, and no longer wait for the zero line cross over.

1. The sentiment is bullish when the 9 day SMA crosses over the MACD Line wherein the 9 day SMA is greater than the MACD line. When this happens, the trader should look at buying opportunities.

2. The sentiment is bearish when the 9 day SMA crosses over the MACD line wherein the 9 day SMA is lesser than the MACD line. When this happens, the trader should look at selling opportunities.

Furthur I think that there has been an error on page 62 point 4 of the checklist, the point written is as follows :-

4. There is also an MACD crossover (signal line turns greater than the MACD line)

In the bracket it should be written that the MACD line turns greater than the signal line for bullish pattern.

I have been very much confused with this whole MACD line and 9 days SMA of MACD line pattern and would like to know weather I’m thinking right over here or there has been a understanding problem by me. Por favor me ajude aqui. Obrigado.

Ayush – There has been some confusion with MACD chapter. Mistake is from my side…and unfortunately I’ve not been able to put up the correct stuff as I’ve been busy with few other things. Will do this as soon as I can.

Yeah, reading all the above comments I became sure that I’m not the only one with the confusion in MACD Chapter.

I just want to make sure that the bullish pattern through MACD line and 9 day EMA of MACD is formed when the MACD line turns greater than the signal line ?

Thanks for your reply and waiting for the updated MACD chapter.

Yes, a crossover of 9 and MACD indicates bullishness. Will update this soon. Obrigado pela sua paciência.

Hi Karthik, from pure intraday trade persepective if i use 12EMA, 26EMA, 9SMA MACD or 20 SMA Bollinger band indicator, then what is ideal intraday chart for checking 1st and 2nd checklist point which you have highlighed in module. Because 1minute, 5 minute or 10 minute chart candlesticks will be different at a particular time.

I know, for all practical reasons, I prefer using the 10mins or maybe 15 minutes chart.

Which data do you choose to select the support and resistance for intraday trading.

as per above tutorials, bullish scenarios occure when EMA9 (signal line) crosses and become more that EMA21. However in expert advisor while coding but script is mentioned as.:

REF(CLOSE,2)< REF(OPEN,2) AND.

Kindly clarify the same sir.. 🙂

buy* script mentioned as:

REF(CLOSE,2)< REF(OPEN,2) AND.

I’d suggest you my colleague Srini for this – [& # 160; protegido]

How can we find the envelope expands? Is there any specific range to be maintained between top and bottom lines to ensure the market is sideways?

You have to track the envelop values, if the market trends then the envelop tends to expand.

Please throw some light on ideal envelope value?

There is no such thing as idea 🙂

Thanks for your wonderful lessons i am slowly getting the hang of the game.

I notice an error In the MACD example of Asian paints i think the Pink line should be MACD line and the black line as signal line if i go by your explanation. Pls correct me if i’m wrong. Thanks.

Yes, the MACD explanation needs to be cleaned up a bit. It been pending for a while from my side.

In between the 2 vertical lines in MACD chart for Asian Paints, there are several instances of the MACD crossover (on both sides)… looks like these are false signals… is there any way we can identify which is a false signal and which is a true one?

Its a tough call, especially when you start off… you will get a sense of this when you practice many trade set ups with MACD.

5X13 EMA with ADX and RSI combo seems to be working for me to earn consistent decent profits intra day basis. Thanks for all the great explanation provided here.

Thanks a ton Karthik for the beautiful explanation of all this. I have two things:

1st query is about MACD. After introducing the 9 day SMA signal, we are totally ignoring the negative and positive territory aspect of MACD (i. e. above or below level 0), but the Kite application MACD study still shows the territory. Does it signifies anything standard if the crossover is being made in positive or negative territory.

And the 2nd thing is about the update portion of MACD 🙂 now the time has come for this :). Please update the part of the chapter with this:

1. The sentiment is bullish when the MACD Line crosses over upside the 9 day SMA signal line as MACD Line is more reactive to current prices as signal line is an average of MACD points itself. When this happens, the trader should look at buying opportunities.

2. The sentiment is bearish when the MACD Line crosses over downside the 9 day SMA signal line. When this happens, the trader should look at selling opportunities.

AND A SMALL PORTION OF EXAMPLE:

For example, the first vertical line starting from left points to a crossover where the MACD Line crosses downside the signal line (red one) and hence one should look for a selling opportunity. The 2nd vertical line from left, points to a crossover where the MACD line (black one) crossed upside the signal line, hence one should look at buying opportunity.

We cannot change the way this appears on Kite simply because we have integrated 3rd party charting engine within Kite. I understand MACD needs an update, will surely do this once the ongoing module on commodities is done.

By the way, thanks for the kind words 🙂

how can i install my additional custom indicator on pi?

You can build your own logic using expert advisor feature in Pi.

Karthik, I was going the NSE TAME charts and found this – “Most common signal is MACD crossing over the signal line. A buy signal is generated when MACD crosses up through the signal line, where as a sell signal is generated when it crosses down through the signal line”. This is exactly opposite what is give here (Buy signal is when the 9 day SMA crosses over MACD). Could you please confirm which one is correct ?

What you’ve mentioned is right. I’ve made a mistake in this chapter…and I’ve been meaning to correct it.

The sentiment is bullish when the 9 day SMA crosses over the MACD Line wherein the 9 day SMA is greater than the MACD line. When this happens, the trader should look at buying opportunities.

The sentiment is bearish when the 9 day SMA crosses over the MACD line wherein the 9 day SMA is lesser than the MACD line. When this happens, the trader should look at selling opportunities.

The chart below plots the MACD indicator on Asian Paints Limited. You can see the MACD indicator below the price chart.

The indicator uses standard parameters of MACD:

12 day EMA of closing prices.

26 day EMA of closing prices.

MACD line (12D EMA – 26D EMA) represented by the black line.

9 day SMA of the MACD line represented by the red line.

The vertical lines on the chart highlight the crossover points on the chart where a signal to either buy or sell has originated.

For example, the first vertical line starting from left points to a crossover where the MACD signal (9 day SMA) lies below the MACD line and hence one should look for a selling opportunity. The 2nd vertical line from left, points to a crossover where the MACD signal line lies above the MACD line, hence one should look at buying opportunity.

Sir I have just doubt while understanding the chart and theory together as you wrote the 9 day SMA(red line) is greater than MACD line(black line) then it is a buying signal where in the chart the red line is greater from black line where it is showing sell signal.

What is the exact thing can you please clear?

Sammandar, I’m just about to finish the commodities module, once this is done, I’ll fix the MACD chapter. It high on my priority. Request you to wait for few more days. Obrigado.

The sentiment is bullish when the 9 day SMA crosses over the MACD Line wherein the 9 day SMA is greater than the MACD line.

however Sir when you were discussing on graph at first vertical line from left signal line(red) moves over MACD(black), so that would be the case of long opportunity but there you stated we should look for shorting stock.

Arent these 2 statements contradicting?

For the first vertical line also MACD is less than signal after crossover.

Prakhar, I’ll update the part very soon.

[…] 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) […]

I think there is a mistake in above MACD LINE and MACD SIGNAL example,

In first vertical line from left MACD signal is above of MACD line, one should look at buying stock and in second vertical line from left MACD Signal is below MACD line, one should look at shorting opportunity,

If i am wrong correct me, because i am bit confused after watching the graph second time🙂

I have inadvertently messed up the MACD section. I’ve been intending to fix it for a long time now 🙂

If i want to combine two or more indicators and generate a customized indicator or if i want to generate an indicator(a graphical representation like other indicators not just an alert to signal buy or sell) using a code how do i do it?? in PI and at the same time have access to my indicator in KITE as well??

You can build a custom indicator to use along with both Pi and Kite – however, you need some programming background for this. For Kite you can use our APIs – kite. trade/…and in Pi you can use the expert adviser feature here – zerodha/expert-advisors/

Can you please create an indicator for the below logic:

y = number of time periods ago.

so the indicator would always swing between +10 to -10.

Request you to please please suggest how to code this indicator in PI….

Request you to please get in touch with Sreeni for this – sreenivasulu. m at zerodha.

Topic: Bollinger Bands (BB) (B. Bands) VS Simple Moving Average (SMA)

Hello, I have become a regular reader of zerodha now..

I was looking at a chart and plotted 20 day MA and a Bollinger Band and I was caught by surprise that they both are based on Moving average but the interpretation to initiate a trade are opposite. BB says, If stock price trade above the MA line (near or above the +2 SD) then we should look for shorting opportunities, but the SMA line says look for buying opportunities in such a situation. So, how to deal with this?

One solution I could think of is:

If a stock is trading above the SMA line but below the upper band of BB we should look for buying till it hits the upper band of BB.

Please suggest if I am thinking correctly.

BB is an indicator for the mean reversion strategy, works very well for short term trades. MA is best suited for slightly longish time frame trades.

1.) what if the volumes, S&R levels and indicators confirm a long or short position but there is no evident candle stick pattern then should we take the position? similarly if candle pattern is there with S&R levels and indicators confirming a long or short position but without volume then what ?

2.) while the volume crosses the average volume of last 10 days most of the price action has already taken place. so do while taking the position do we assume that the same price trend will continue ?

3.) what is one indicator says yes and other says no? eg the current price is at the -2SD of the BB and RSI value tells that the stock is overbought, then what?

1) I would not take it. For me, CS pattern (which is the price action) would matter the most. I may at time turn a blind eye to volumes…but this really depends on many other factors. Like the overall sentiment in the markets/sector/stock etc.

2) Yes, that is the premise of TA.

3) This is bound to happen. You will have to go with the indicator that you trust the most. When I say trust, it has to be by means of rigors back testing.

I am interested to use Keltner Channel indicator in kite with settings 20 EMA and ATR 1 to be used in 5 or 15 minutes chart. But I find in your settings you have given period as 50 and shift as 5. Does it mean EMA and ATR respectively which I can change as 20 EMA and ATR as 1 as per my requirement. please clarify.

I guess you can customizes it to whichever values you need.

So if MACD line crossed the signal line( MACD line above the Signal line) then we consider it as a Bullish and consider it as a buying opportunity. Is my understanding correct? Example Ashok leyland on 25th May, MACD line crossed the signal line.

And also is there any way to scan these stocks where MACD line crossed the signal line.

Yes, a crossover is considered bullish. You can use the expert adviser feature on Pi for scanning – zerodha/expert-advisors/

I wasted 3 days in understanding the MACD and SMA combination, I thought there is something wrong in me but after reading the comment section I got it clarified.

At last, I want to thanks Zerodha Team for providing us with quality products and that too at no cost.

Leitura feliz! Boa sorte!

I have some queries:

1. As you said MACD is an upgraded and more reliable version of MA crossover, then should we discard the moving average as indicator and learn the MA only as a core concept to understand other indicators, or, the MA crossover still have some advantages and reliability over MACD?

2. What does the BB mean when the price around 20 SMA, should we consider it as neutral and neglect it or it also have sth to say?

3.Say we are looking the indicators (MACD, RSI, OR BB) for intraday with 10 min chart, in this case should we wait for the 9, 20 or 14 candlestick to appear for that particular day or we should include the previous days 10 min intraday charts for using indicators?

My concern here is that if we should also include the previous day chart, will the indicators not give false signal incase there is sth important news about the stock (as most of the candles are taken from previous days chart for calculation)?

One more thing I want to ask “Can we use the +2 and -2 values to reinforce our S&R points i. e. can we take a side view on these values to decide our TARGET and SL.

Not too clear about what you are trying to ask. Can you kindly elaborate please? Obrigado.

1) Although MA forms the core of MACD, I like MA for its simplicity. Its like samsung vs motorola…end of they day, they all use sony camera lens.

2) BB should be read wrt to the standard deviations and not really with the averages.

3) You can probably take the previous day’s value…but I’d prefer to look at present day’s data.

I have just started my trading experience. Being an amateur, I have made losses on intraday too much which put me to learn and practice before investing my hard earned money. I would advise newbie’s to go through varsity at least 3 times to get a good understanding of trading.

Now, coming to my question, I have some doubt while applying TA.

Today (21st July,17), Reliance made headlines after AGM. And that caused the company’s share to grow 3.67%.

Now for a newbie trader like me, I was applying my learning and the checklist posted at the end of this chapter to decide whether is this a good time to buy shares or not. Today’s candlestick was bullish marubuzo. RSI level is closed to overbought(75.87). Average Volume(10 points) is also way high than average which confirms buyers at every price point. Now S&R(using Pivot Points) tells me a different view and the closing price has crossed RL1 and RL2. Even MACD and (EMA 25 & EMA 25) indicates that the stock is good for purchase point of view.

Q1) What can be the possible outcome of the situation?

Q2) What is the difference between MACD and moving average crossover system?

I’m happy you are learning through Varsity 🙂

1) When a stock has strong fundamental news, please do not use TA. FA over rules TA around corporate events.

2) MACD uses another round of averaging…whereas a simple crossover system does now.

i would like to know abt the ichimoku indicator ! i cant add it in the PI scanner ! ive seen the formula on algos and strategies but it doesnt get added in the scanner !

Can you please drop an to – [ protected] regarding this?

how to set MACD line in kite please advice.

Click on select and choose MCAD from the dropdown.

if i want to become an investor and invest for long term do i still need to learn technical analysis.

Não, na verdade não. Fundamentals is good enough.

do not i need to learn TA even at all??

No harm learning 🙂

what is Convergence and Divergence??

Convergence in terms of moving averages is when two averages meet and divergence is when the two moving averages move apart.

but how come the two averages there can be only one average.

Since this is a moving average, the average value depends on the time frame. It could be 10 day MA or 20 day MA…really depends on what you choose.

ok ok ok thankyou so much i got it.

the two averages are the no. of sessions u consider for average ie 12 day ema and 26 day ema.

Obrigado por seus esforços.

Can you please help me with the below doubt?

Conversion and diversion as explained in this chapter:

‘When the MACD Line crosses the center line from the negative territory to positive territory, it means there is divergence between the two averages. This is a sign of increasing bullish momentum; therefore one should look at buying opportunities. From the chart above, we can see this panning out around 27th Feb.

When the MACD line crosses the center line from positive territory to the negative territory it means there is convergence between the two averages. This is a sign of increasing bearish momentum; therefore one should look at selling opportunities. As you can see, there were two instance during which the MACD almost turned negative (8th May, and 24th July) but the MACD just stopped at the zero line and reversed directions’

When the MACD is at/around the zero line, it means that the two EMAs have no difference. - & gt; Should not this be considered as ‘Conversion’?

When the MACD line goes over/under the zero line -> The variation between the 2 EMAs is increasing -> Should not this be considered as ‘Diversion’?

When the MACD is at/around the zero line, it means that the two EMAs have no difference. -> Should not this be considered as ‘Conversion’? and the other query you posted – If the MACD is around the zero line, that means that there is no trend. Perhaps the stock is moving sideways. Hence no point trading on MACD.

I may be wrong but i do not digest indicator input period being in days. For example, for MACD we r using 12 & 26 days EMA and 9 days EMA for signal line. I think this is fair for long term or positional. But for intraday it should be in hours and minutes because everyday is different. If i want to enter at 12 pm what is the use of above periods, i should be able to plot data from 9:15 am onwards so that i get an indication for that day only. Same doubt for all such indicators. Please reply as I said I may be wrong. Obrigado.

Yes, in case of intrday you need to load this on 5 or 10 mins charts. The the timeframe frequency will automatically refer to intraday data.

Which one is a better indicator among MACD and moving average crossover ?

Both are momentum based, I do have a soft corner for MAs.

Can you give us (stochastic RSI ) indicator in kite.

Currently only stochastic indicator is available.

Will look into this, thanks.

did u looking into this.

stochastic RSI on Zerodha.

We have just Stochastic and Stochastic momentum index on Kite, Girish. Not Stochastic RSI.

did u look into this.

availability of stochastic RSI on Zerodha.. its thr on investing for free. we r paying u 🙂

Girish, the charting engine on Kite and Pi is from a 3rd party. Will pass on the request to include stochastic RSI, hopefully, they should accommodate this.

By the way, the only thing you are paying for is brokerage, that too if you are doing intraday or derivatives. Everything else is free, including Varsity 🙂

pls provide full stochastic on kite,

We have that on Kite already. Goto studies and look for it.

Its wonderful and worth appreciating the efforts put in the development of Pi and Kite so far.

In Kite there is only one Stochastic and another is Stochastic Momentum.

Appreciate if you let the user set the %K, %D and Period values according to his/her preference rather than just allowing the user to enter period.

Each setting gives different result that suits his/her trading style/strategy.

Currently, user can change only period value, while %k and %D values are unknown . and cannot be changed.

Thus, kindly do the needful so that user can use his/her own values for period, %k and %D – there by making this full stochastic.

I understand Vinay, hopefully, this will be fixed soon.

In some websites, the value of divergence is given. What does this indicate ?

Guess I’ve covered this in the supplementary note.

Please add Elder Impulse System indicator in PI. It is available in Kite, but I prefer trading on Pi.

Agradeço antecipadamente.

Nevil, currently we don’t have this indicator available but I’ve given your feedback to the Pi Development Team.

RSI indicator shows in range of 40-60 even if the stocks are at 52 week high or all time high. What could be the reason? I have noticed for many stocks and hence raising this issue.

That means, the momentum (in terms of % change) is not high enough to be classified as overbought/oversold.

So, I have a doubt about the Bollinger Bands. Say, I want to change the MA type from 20 SMA to 10 EMA… How would the calculations of the bands get carried out then ??

Instead of calculating the standard deviation of 20 SAM, the indicator would calculate for the 10 days EMA. Everything else would be the same. Also, you will end up getting a lot more signals to trade with 10 EMA, but please be aware, lot more does not necessarily mean quality.

Good evening Karthik,

Firstly, thank you for the prompt response and advise.

Secondly, while you are calculating the Bollinger Bands on the SMA, you would be calculating the standard deviation of the last 20 close values.

When you get to EMA, what you be calculating the standard deviations on ?

For example (pseudo code) on Today’s NIFTY-

a = [10291.45, 10295.0, 10297.05, 10292.6, 10291.3, 10290.0, 10288.45, 10290.2, 10289.7, 10290.95, 10292.8, 10290.75, 10290.4, 10290.7, 10293.65, 10298.25, 10296.0, 10298.6, 10302.1, 10302.8, 10302.5, 10305.1, 10306.05, 10302.25, 10295.6, 10294.2, 10291.9, 10296.5, 10297.05, 10296.2, 10303.35, 10304.65, 10308.95, 10310.55, 10306.6, 10300.0, 10302.85, 10301.1, 10299.5, 10298.7, 10299.85, 10302.1, 10303.4, 10302.35, 10304.45, 10302.2, 10303.65, 10305.35, 10307.7, 10313.9, 10313.95, 10317.1, 10319.15, 10321.5, 10319.3, 10320.65, 10322.2, 10322.3, 10323.6, 10325.2]

standard_deviation(a) // This is the Standard Deviation for the SMA or in other words, the width of the bands.

However, this would not be the same calculations for EMA.

Even if you look at the Kite app, both the width and the location of the EMA Bollinger Bands are different from the width and the location of the SMA Bollinger Bands.

Could you please confirm ?

Thanking you in advance,

That’s because EMAs are calculated differently than SMA.

Hope you are doing good.

While reading through the above comments, one of the user “Sooraj J Mishra” had wrote that he was buying premium.

Being a novice, this is confusing me. I would appreciate if you could tell me what he meant when he said he was buying premium?

As far as your other chapters are concern, you have taught us these below stuff :

Call Option (Buy)

Put Option (Sell)

Call Option (Sell)

Could you confirm what exactly is buying premium.

Ah, I think he meant to say that he has bought an option by paying the premium. Either a buy call or buy put 🙂

Could you confirm, both call option & put option buy, can only be exercised on the expiration date ?

If yes, I am failing to understand the difference between the two. why use one over the other ? Por favor, ajude.

Please confirm when buying CE only for gaining from selling basis on high premium, is the premium only the thing to watch ? What i meant is out of all the values such as strike price, underlying value etc. the value to watch is premium ? Since i would be squaring off most of the time.

If yes, can we check realtime premium value on kite/pi ?

If you doing this on intraday, then yes, you can concentrate on option premium.

Yes, that is because they are European in nature. Have you read the module on Options? If yes, I’d suggest you take a look at this – zerodha / varsity / module / option-theory /

Thanks Karthik for the help !!

Candidly speaking, as far as Zerodha’s services are concerned, Varsity is one of the best and the best part of Varsity is you.

Just one more question though, how to check realtime premium value of options ?

Thanks for the kind words, Saify. I’ll take that compliment on behalf of all my 900+ colleagues 🙂

You can see the real-time premium value on kite itself. Just load the option on your Marketwatch and check out the trades on a real-time basis.

Hi Everyone, I have been studying TA from Zeordha’s Varsity section.

Under indicators (MACD) section, it says, IF SIGNAL (SMA 9) LINE IS ABOVE THE MACD (12-26), ONE SHOULD TAKE LONG POSITION AND IF SIGNAL LINE IS BELOW MACD, ONE SHOULD TAKE SHORT POSITION.”

When I matched the SIGNAL LINE AND MACD CROSSOVER, it did not coincide with the price behavior. That is, Signal line above MACD line but stock was not in uptrend. It moved sideways. I understand that MACD is a trend indicator but how do I know that the crossover will result in trend or whipsaws.

Any indicator which incorporates moving averages cannot really avoid whipsaws, this is the inherent drawback of averages and there is no way you will know beforehand if a move will transform into a trend or die down as a whipsaw.

Understandably so karthik, but JSW Steel behaved totally opposite to what Indicators suggest, I mean, even if Signal Line was above MACD Line the stock was in downtrend.

How do I deal with it? Despite studying the indicators, i am unable to get clarity on a stock.

Manoj, this is not surprising at all. Hence my dependence on indicators is quite low. I prefer to look at the candlestick pattern to make trading decisions and the indicators only sort of confirming the decision. I’ve stated this on the checklist as well.

Sim. You have mentioned it in the book. But there are multiple instances where without any recognizable pattern formation the scrip has moved up. Am I expecting a lot out of indicators?

What should i do to enhance my understanding and to increase my knowledge of Technical Analysis.

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Bollinger Bandwidth – Zerodha Kite Technical Indicator.

We have already learned about the usage of Bollinger Bands indicator. In this post we will discuss on Bollinger Bandwidth (BBW), which is a technical analysis indicator derived from the standard Bollinger bands. BBW measures the percentage difference between upper and lower bands. The Bollinger band is characterized by the following:

The bandwidth decreases as the Bollinger band narrows and increases as the bands widen. Falling bandwidth indicates a decrease in the volatility of stock price. Rising bandwidth shows a rise in volatility.

The BBW uses all standard features of Bollinger Bands. The default parameters are also same as that of Bollinger bands. According to John Bollinger (inventor of Bollinger bands), Bollinger %b and Bollinger Bandwidth are two derivatives of Bollinger bands. Zerodha Kite charts can plot this indicator in no time for traders.

How to set up BBW in Zerodha Kite?

Go to MarketWatch. Choose the stock you are going to trade. Right click on the stock and select chart from graphic icons. Chart window of the stock opens. Go to studies. Select studies. Go to Bollinger bandwidth and click on it. A small window opens with default parameters of the indicator. Once the parameters are selected, the Done command is chosen, the parameters window goes off the screen and the indicator is plotted on stocks price. By default, BBW indicator uses 20-day simple moving average and 2 standard deviations which can be changed as per own requirement.

The indicator shows price trend and fall and rise in volatility The picture above shows State Bank of India (SBIN) stock price movement with respect to BBW. The chart shows 1 min. prazo. The strategy shows the price trend. Understanding price trend from this indicator is important before creating a position. In 1 minute chart, traders may find many whipsaws which will be eliminated if longer time frames are used and this indicator is used with a combination of other indicators.

Traders can use this indicator to understand the market trend and create trading positions as well. Low Bollinger Bandwidth indicator value denotes tight range as the Bollinger Bands squeeze. So once the BBW indicator starts rising it denotes that the Bollinger Bands are expanding again and that can be the start of a new trend. You can use BBW indicator in combination of other indicators like moving average or SuperTrend.

ADX/DMS Indicator On Zerodha Kite – The Trend Meter.

In this series, I will start discussing all the Zerodha Kite indicators one by one. The first indicator on Zerodha Kite is ADX/DMS, so I will start on the ADX/DMS Indicator on Zerodha Kite. What is the full form of ADX/DMS? The full form of ADX is Average Directional Index and the full form of DMS is Directional Movement System.

How to Add the ADX/DMS Indicator On Zerodha Kite?

Now you can see the ADX/DMS indicator attached in the chart. The default settings are ADX Period of 14 and Smoothing Period of 14. See the image below.

How To Trade With The ADX/DMS Indicator On Zerodha Kite?

The ADX/DMS indicator consists of 3 components. The +DI or PDI line – shown on green colour. The - DI or MDI line – shown on red colour. The ADX line – shown on grey colour. The PDI and MDI lines gives buy and sell signals and the ADX line shows the trend strength.

How To Interpret Buy / Sell Signals From The ADX/DMS Indicator On Zerodha Kite?

PDI line crossing above MDI line is a buy signal. PDI line crossing below MDI line is a sell signal. The ADX line rising is a trending market. When the ADX line is abive 25 and rising it is a properly trending market. The higher the ADX value the greater the trend strength. On the other hand ADX line falling and below 25 denotes range.

So a trader can change his / her trading style using the ADX/DMS indicator on Zerodha Kite. When the PDI is above MDI with a rising and high ADX reading he should consider only buy orders (either buy on breakouts or buy the pullbacks). And when the PDI is below the MDI with a rising and high ADX reading he should only consider short selling orders (either short sell on breakdowns or short sell on pullback rallies).

In a lower ADX reading below 25 or best below 20/15, a trader should employ range trading techniques. He can buy on dips as well as short sell on rallies. Both the methods can be used on intraday (5/15 minutes chart) or swing trading (hourly / daily / weekly charts).

A high reading of ADX in JUBLFOOD. PDI is above MDI – the stock is in strong uptrend. Buy the breakouts as well as buy the pullbacks.

The PDI and MDI lines are used for generating buy/sell signals whereas the ADX line is used only to judge trend strength. Remember, a high ADX does not denote a direction, it only denotes the current trend (can be either UP or DOWN) is strong.