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Thread: Central Pivot Range (CPR)

CPR is another popular tool. Three lines are plotted on the chart when we plot CPR.

The three lines are: CPR, TC and BC.

Let’s understand the calculation.

 You may recall that I explained the calculation of Pivot levels in an earlier thread. CPR stands for Central Pivot Range. It is always a center line of the three lines that gets plotted in the chart.

CPR is a Pivot price. Pivot is average of HLC as explained in the prev thread.
We also discussed about Mid-range of the session. Mid-range is average of High and low price of the session.

The mid-range of the bar is known as BC in the CPR calculation. BC stands for Bottom central pivot.
Pivot level captures the relationship of the closing price to the range of the session.

Pivot price above mid-price = bullish pivot
Pivot price below mid-price = bearish pivot
So, CPR line is Pivot and BC line is Mid-range.

What is the difference between both?
Mid-range is average of High and Low.

Pivot is average of High, Low and Close.
What will make the difference between the two?

Close.
Difference between CPR and BC shows how is closing price placed compared to the mid-range of the session.

If close is near to the mid-range, the distance will be low. If close is far, the distance will be wide. We’ll come back to this discussion in a while.
Let’s discuss TC.

TC stands for Top central Pivot.
You will easily find the formula if you google it:
TC = (CPR – BC) + CPR

Why this formula? What does that mean?

Itna sab kyun sochna hai. Dimag ko itna taklif nahi dene ka, software sab plot karta hai, use karne ka😊
The idea of TC is to create the equidistance bands.
If the difference between CPR and BC is 1 point, TC will be placed at -1 point from CPR. If the distance between CPR and BC is -1, TC will be placed at +1 point from CPR.

Clear? Let's discuss more.
Since calculation is CPR minus BC and add back to CPR, the distance between CPR and BC will be a positive number if CPR line is placed above BC (Bullish Pivot). If CPR is below BC then difference will be a negative number (Bearish Pivot).
Meaning, the difference between CPR & BC, and CPR & TC will be equal. CPR will always be at center.

If the difference is positive, TC will be placed above CPR and at same distance. If difference is negative, TC will be placed below CPR at same distance.
In simple words, CPR are equidistance bands created based on difference between pivot and mid-range of the previous trading session.

You may or may not trade this, but understanding various concepts will definitely help you in the long-run.
When the distance between the bands is narrow, it’s a narrow CPR. When distance between bands is wide, it’s a wide CPR.

Have a look at the images below to get an idea about Narrow, too narrow, Wide and too wide CPR bands.
Ask yourself when will the bands will be narrow?
The answer is when the distance between Pivot and Mid-range is small.

And when will they be wide?
When the close is away from the mid-range?

When will that happen?
During strong trend... right?
Narrow bands would mean that the close was near the mid-range. Even if trend was strong during the day, it turned weak towards the close.

Wide bands would mean trend was strong towards the close. Large length bar can occur during strong trends, or high volatility.
If you wish to explore these concepts further, you can read the following books:

•The logical trader by Mark Fisher
•Secrets of a Pivot boss by Franklin Ochoa.
Have a look at the recent Bank Nifty chart shown below.

A is Narrow band
B is Too Wide
C is Too narrow
D is Wide

Study the earlier day trend to understand the shape of bands.
When the price is away and bullish from the CPR bands – it’s a strong up trend.

When the price is away and bearish from the CPR bands – it’s a strong down trend.

Stronger the trend, wider the CPR.
CPR band area could be regarded as important support & resistance area during sideways market, and important pullback area during strong trending markets.

Price will remain within CPR bands, if a strong trend candle is followed by a narrow or medium range market.
If strong candle is followed by another strong candle, price will drift away from CPR bands.

Current day Band above previous day pivot band is considered as bullish and bands below previous day are considered as bearish.
Price opens above band and trading at significant distance from pivot is a strong trending market. It’s a strong trend day when price do not even touch CPR bands. This is also called as Virgin CPR.

Two imp uses of CPR: Pullback area during strong trends & virgin CPR sessions.
These studies are mainly for short-term traders. You can combine it with other tools, patterns, and indicators. You can add Pivot tables and camarilla along with this study.

You can plot them on noiseless chart as well. CPR is calculated based on previous day bar range.
It is more important that you understand what it is. Detail understanding of various studies hv helped me a lot. That way, I think we can benefit from every study.

Hope you found the thread informative. I ve lot more to discuss. I’ll explain Camarilla levels in the next thread.

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Prashant Shah
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Thread: Super trend indicator:

Developed by Olivier Seban, Super trend is an indicator plotted on the price chart like a moving average.


Let us discuss three important components of this indicator.

1: Range-price.

In every bar or candle, we have four prices - Open, High, Low, Close.

We have the option to select any price of above to define the trend.

For example, we may define an uptrend as today’s close being above yesterday’s close.

We can also calculate range price of every bar. It is also known as Average price or Mid-price.

Range price = (High + Low) / 2


Have a look at the images below.

In the first Image below , the closing price of each candle is connected to the closing price of the next candle.


In the below chart, the “range-price” or the mid-point of each candle is connected.
SUPERTREND
Prashant Shah
Prashant Shah
@Prashantshah267
Thread: 5 Important bullish & bearish chart patterns in technical analysis.

Triangles, Broadenings and Rectangles.

#trading #investing

Many traders analyse and practice western chart patterns. There are many such patterns and enough is talked about them in various books and resources.
Long back, I read a book “Encyclopedia of Chart Patterns” by Thomas N. Bukowski. It’s a brilliant work (Must read).

He backtested many patterns & ranked them based on their performance. Most imp is that he separated the patterns based on their performance in uptrend & downtrend.
I read about those patterns at many other places & in different theories and I realised that most of them are-

-variations of broad category of patterns. I have bifurcated these patterns in various categories.

Triangles, Broadenings & Brackets or Rectangle patterns are most common & effective patterns. Below are 5 bullish & bearish proven, time-tested patterns of these categories.

Bullish Patterns:
Rectangle Breakout:
Horizontal pattern breakout. Price remains between two horizontal lines before upward brkout. Its a decent continuation breakout pattern when appears in uptrend. Reversal pattern when appear in downtrend (Decent Risk-reward). Tend to pullback
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Prashant Shah
Prashant Shah
@Prashantshah267
Thread: Camarilla Levels

Continuing our discussion on pivot levels, we look at the Camarilla levels which is another widely followed tool.

Word ‘Camarilla’ is borrowed from Spanish. It translates to a group of confidential & private advisers of the King or person in authority.


The Camarilla equation was first developed by a bond trader named Nick Scott in 1989. It is said that he didn't disclose the equation, but people studied the levels & reverse engineered it to find the formula. There r different versions of this formula.

We discussed about ‘Range’ in the earlier thread. The range is basically the difference between High & Low of the session.

High – Low = Range of the session
Continuing with the same levels as an example, If High of the day is 105 and Low is 95, Range of the session is 10 points.


Range shows us activity during the session irrespective of the trend.
Narrow range = Not much movement
Wide Range = Strong activity

Camarilla calculation depends on the Range of the session.

Let’s expand the range to 110%. If Current range is 10, let us make it 11.


Let’s now divide this Range in four parts.

9.17%, 18.33%, 27.50% and 55% of the range.

So, if Range is 10 points:
10 x 9.17% = 0.92
10 x 18.33% = 1.83
10 x 27.50% = 2.75
10 x 55% = 5.50
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Prashant Shah
Prashant Shah
@Prashantshah267
Thread: Parabolic SAR Indicator

Parabolic SAR (PSAR) indicator was developed by J. Welles Wilder.

#PSAR #Indicators #Definedge


The calculation of this indicator is a bit complex, but the concept is extremely useful. I will try to simplify it and explain the logic. I will briefly explain the concept, calculation and reading.

Let us think about creating an indicator that shows the trend.

Using the indicator, we can identify & ride the trend using the trailing stop-loss method.

For trailing the stop in uptrend, indicator needs to be placed below the candle. Similarly, it should be placed above the candle for trailing in a downtrend. We will plot it using ‘dots’.


So, the indicator & stop-loss will be rising in uptrend & falling in downtrend.

Let us define the trend as:

If Low of the candle > Stop-loss level in bull market = Trend remains bullish.

If High of the candle < Stop-loss level in bear market = Trend is bearish

Imagine you are driving a car on highway; you would like to accelerate if the road is clear. You will slow down if the road is bumpy.
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Prashant Shah
Prashant Shah
@Prashantshah267
Back-testing of some candlestick patterns 🧵

I hv back-tested patterns shown below on 500 stocks (Nifty 500 stock group as on today) since inception on daily timeframe charts.

Below is some interesting information.


I was doing to design multi-chart setups. But the information in the thread can be useful for people practicing candlestick chart patterns. There are many patterns & we keep coming across more. The data can give you a rough idea about the past performance of patterns.

Patterns are defined based on the popular rules of identifying them. I have also tested bearish patterns for bullish trades and vice versa (Contra approach).

Criteria: Hit ratio & returns of pattern giving 1:1 risk-reward if the entry is at the closing price of the pattern.

Some top bullish patterns have below hit ratio:

Inverted Hammer or Shooting Star – 74.72%
Multi-Harami breakout - 65.23%
Bullish Harami cross – 64.6%
Bullish Kicker – 63.53% (Got better returns)
Bullish separating line – 61.69% (It has got better returns)


Doji breakout hit ratio is decent (63.71%) but occurrences are v high so need more confirmation.

Engulfing and Harami patterns have got better returns when traded at next candle of confirmation.
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GS Tactical Fund Flows 2021 - some interesting tidbits:

We are set up to see a massive wave of inflows [in 2021]. The “January Effect” will be exceptionally strong this year. Investors are looking to buy the dips, but they remain shallow as there is competition for dip alpha.

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1/ There are a ton of books about Financial & Fundamental Analysis, Scuttlebutt and Technical Analysis. But there aren't many books 'taking risk'.

Among the few that exist, 'Zurich Axioms', written in 1985, is the best. Here are my key takeaways from the book.


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4/ There are 12 'Major Axioms' and 16 'Minor Axioms' (Corollary to the Major Axioms) in the book.

But remember, this is MY key takeaways from the book and not an exact summary. So you might find quotes, phrases and links inserted here and there by me (Not from the Author).

5/ Axiom #1: In order to earn returns, you must take risk. Risk will make you worry.

Risk-taking and worrying go hand-in-hand. If you're not worried about an investment, you're not taking risk.

Spend half your energy towards earning an income and the rest towards speculation.
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அஸ்தினாபுரத்து அரசி👸...
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#தினம்_ஒரு_திருவாசகம்
தொல்லை இரும்பிறவிச் சூழும் தளை நீக்கி
அல்லல் அறுத்து ஆனந்தம் ஆக்கியதே – எல்லை
மருவா நெறியளிக்கும் வாதவூர் எங்கோன்
திருவாசகம் என்னும் தேன்

பொருள்:
1.எப்போது ஆரம்பித்தது என அறியப்படமுடியாத தொலை காலமாக (தொல்லை)

2. இருந்து வரும் (இரும்)


3.பிறவிப் பயணத்திலே ஆழ்த்துகின்ற (பிறவி சூழும்)

4.அறியாமையாகிய இடரை (தளை)

5.அகற்றி (நீக்கி),

6.அதன் விளைவால் சுகதுக்கமெனும் துயரங்கள் விலக (அல்லல் அறுத்து),

7.முழுநிறைவாய்த் தன்னுளே இறைவனை உணர்த்துவதே (ஆனந்த மாக்கியதே),

8.பிறந்து இறக்கும் காலவெளிகளில் (எல்லை)

9.பிணைக்காமல் (மருவா)

10.காக்கும் மெய்யறிவினைத் தருகின்ற (நெறியளிக்கும்),

11.என் தலைவனான மாணிக்க வாசகரின் (வாதவூரெங்கோன்)

12.திருவாசகம் எனும் தேன் (திருவா சகமென்னுந் தேன்)

முதல்வரி: பிறவி என்பது முன்வினை விதையால் முளைப்பதோர் பெருமரம். அந்த ‘முன்வினை’ எங்கு ஆரம்பித்தது எனச் சொல்ல இயலாது. ஆனால் ‘அறியாமை’ ஒன்றே ஆசைக்கும்,, அச்சத்துக்கும் காரணம் என்பதால், அவையே வினைகளை விளைவிப்பன என்பதால், தொடர்ந்து வரும் பிறவிகளுக்கு, ‘அறியாமையே’ காரணம்

அறியாமைக்கு ஆரம்பம் கிடையாது. நமக்கு ஒரு பொருளைப் பற்றிய அறிவு எப்போதிருந்து இல்லை? அதைச் சொல்ல முடியாது. அதனாலேதான் முதலடியில், ஆரம்பமில்லாத அஞ்ஞானத்தை பிறவிகளுக்குக் காரணமாகச் சொல்லியது. ஆனால் அறியாமை, அறிவின் எழுச்சியால், அப்போதே முடிந்து விடும்.
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Oh are we talking about Sheryl Sandberg again? Well, your reminder that disabled feminists, LGBQT feminists, and feminists of color criticised her ‘lean in’ deal from day one. Don’t let anyone retcon that out of existence.

Like, a pretty narrow slice of feminists actually endorse and support corporate feminism, they’re just white, nondisabled, straight, cis, and noisy so their voices have a bigger reach.

So if your impression is that ‘feminism’ gave her a ‘free pass’ maybe you should question your overall impression of feminism rather than continuing to centre a handful of people as ‘thought leaders’ or whatever.

Critics within feminism have been doing this work for a long time and have been getting shat on it for about as long and I'm tired of seeing them erased. But what do I know — I am, after all, not a feminist.

But I WILL say, from my not-a-feminist perspective, that people who aren’t feminists who are criticising feminism should maybe understand the movement more deeply beyond a handful of high profile celebrity feminists.
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