TA Session 2

1
presents
Technical Analysis

• Suzlon Energy

• CA Capital presentation for future funding
  alternatives

• November 18, 2012

Session 2 Technical Charts
2
Why Charts?
Charts are the working tools of technical
analysts. They are used to plot price and volume
movements over specific time frames.
X-Axis Typically represents time
Y-Axis Typically represents price or volume

• Volumes represent the number of stocks that are
  actually trade hands in a particular price range
• Price movements are more significant when the
  volumes are above average

Price chart
Volume Chart
3
Charts Time Scale
Time Scale Details
Intraday Chart drawn for a time period within a day (minutes/hours etc)
Daily Chart drawn using only end of day data (high/low/close)
Weekly Chart drawn using weekly high/low/close data
Monthly Chart drawn using monthly high/low/close data
Charts are drawn with the X-axis as a time scale,
hence generating a time series plot
Daily Chart
Weekly Chart
4
Types of Charts
Types of Technical Charts
Line Charts
Candlesticks
Bar Charts
5
Line Charts
Line charts are formed by connecting the closing
prices of a stock/market over a period
Advantages

• Easy to visualize the trend of stock/market
• Very simple and easy to understand

6
Bar Charts
Most popular chart used to measure price action
in a stock over a period of time
Advantages

• Very useful for short time periods to gauge price
  movements
• Very useful in quickly spotting trends and
  patterns

Open The left side tick shows the opening
price High The top most point of the chart shows
the high price Low The lowest point of the chart
shows the low price Close The right side tick
shows the closing price
7
Candlesticks
Candlestick charts provide visual insight into
current market psychology
Advantages

• Very easy to visualize the relationship between
  open and close
• Traders consider candlestick charts more visually
  appealing and easier to interpret

Black or Green Bar Close lt Open gt Price has
gone down White or Red Bar Close gt Open gt Price
has gone up High The top most point of the chart
shows the high price Low The lowest point of the
chart shows the low price Open Upper/ower point
of the body based on filled/unfilled Close
Lower/upper point of the body based on
filled/unfilled
8
Author Profile

• AJUSAL SUGATHAN

Ajusal Sugathan is the author and founder of
Alpha Trader. He currently serves as managing
director of Hedge Quants, a quant hedge fund
based in India. He holds a PGDM in finance from
the Indian Institute of Management (IIM),
Bangalore and a BE (Hons.) from the Birla
Institute of Technology Science (BITS). He has
worked with Avendus Capital and Mercedes-Benz RD
in the past. He currently develops quantitative
trading strategies and algorithms for trading
financial instruments. E-mail
ajusal_at_alphatrader.in Linkedin
in.linkedin.com/in/ajusal
Contact Us
Alpha Trader
230/B, AJC Bose Road,  2nd Floor, Opp Minto
Park, Kolkata 700020 E-mail info_at_alphatrader.in