EMA (Exponential Moving Average)

Introduction: The EMA (Exponential Moving Average) gives more weight to recent prices, making it more receptive to new data than the simple average. It assists traders with spotting trends faster.

Terminologies:

• Weighted Average: A average that assigns more significance to fresher data points.

EMA_t = [(P_t − EMA_t-1) ÷ (n + 1)] + EMA_t-1

Where:

• EMA_t: Exponential Moving Average at time t
• P_t: Price at time t
• n: Smoothing period
• EMA_t-1: EMA from the previous time period









• Exponential: A numerical method for expanding the weighting of recent prices more quickly.

Explanation:EMA responds quicker to price changes than the simple average, which makes it more reasonable for distinguishing short-term trends.

Example:Stock ABC's EMA responds quicker than its SAM to price changes, making it a superior instrument for spotting when the price could pivot rapidly.

How to Use:

• Buy: When the price crosses over the EMA, flagging an uptrend.
• Sell: When the price crosses underneath the EMA, flagging a downtrend.

Scenario: Stock XYZ's price crosses over its 20-day EMA, recommending the beginning of an uptrend. This could be a buy signal.

Adaptive Moving Average (AMA)

Introduction: The Adaptive Moving Average (AMA) is a kind of moving average that changes its responsiveness in light of market Volatility. It assists traders with distinguishing trends and stay away from misleading signs.

Terminologies:

• Volatility: The level of variety in trading prices over the Long-Term.

Explanation: AMA adjusts to changing market situations by utilising a mix of the simple moving average and the exponential moving average, smoothing price movements in view of Volatility

Example: In the event that Stock XYZ has an exceptionally unpredictable period, the AMA will respond rapidly to price changes, demonstrating potential entry or exit points.

How to Use:

• Buy when the price crosses over the AMA, showing an potential upward trend.
• Sell when the price crosses beneath the AMA, showing a potential downward trend.

Scenario: In the event that Stock ABC's price reliably remains over the AMA, it might flag strong bullish trend.

The formula for AMA is:

AMA_t = AMA_t-1 + SC × (P_t − AMA_t-1)

Where:

• AMA_t: Adaptive Moving Average at time t
• AMA_t-1: AMA from the previous time period
• P_t: Price at time t
• SC: Smoothing Constant, calculated as:
  SC = [ER × (2 / (n_fast + 1) − 2 / (n_slow + 1))] + 2 / (n_slow + 1)
• ER: Efficiency Ratio, calculated as:
  ER = |P_t − P_t−n| ÷ Σ |P_t − P_t−1|

ADX (Average Directional Index)

Introduction: The ADX (Average Directional Index) measures the strength of a trend, whether it's upward or downward. It assists traders identifying the market is moving or it's probably going to remain range-bound.

Terminologies:

• Trend: An overall direction where the price of a stock manoeuvres, either up or descending.
• Range-bound: An market situation where the stock price moves between two levels without a reasonable trend.

Explanation: ADX is a non-directional indicator, meaning it just measures the strength of the trend, not the direction. ADX values over 25 commonly show areas of strength , values under 20 recommend a feeble or sideways market

Example: If Stock XYZ has an ADX value of 30, it implies the stock is in a strong trend, whether or not it's going up or down.

How to Use:

• Buy: When ADX is over 25 and the stock price is rising.
• Sell: When ADX is over 25 and the stock price is falling.

Scenario: Stock ABC has an ADX value of 15, demonstrating a frail trend. You could try not to trade this stock as it is probable reach bound with little price movement.

The formula for ADX is:

ADX = (|DI₊ − DI₋| ÷ (DI₊ + DI₋)) × 100

Where:

• DI₊: Positive Directional Index
• DI₋: Negative Directional Index
• DI₊ and DI₋ are calculated as:
  DI₊ = (Smoothed +DM ÷ ATR) × 100
  
  DI₋ = (Smoothed −DM ÷ ATR) × 100
• +DM: Positive Directional Movement
• −DM: Negative Directional Movement
• ATR: Average True Range

Smoothed +DM, −DM, and ATR are calculated over a specific period (commonly 14 days)

SAM (Simple Average Method)

Introduction::The Simple Average Method (SAM) calculates the average price of a stock over a specific period. It's one of the least complex ways of streamlining transient value variances and see the more extensive trend.

Terminologies:

• Simple Average: A math mean of all prices in a period
• Smoothing: Decreasing the noise from day to day value variances to uncover the general trend.

Explanation:SAM is determined by including the end prices of a stock over a set period (e.g., 10 days) and afterward partitioning by the quantity of days. It assists traders with distinguishing whether the price is uptrend or downtrend.

Example:For Stock XYZ, in the event that the prices throughout recent days are ₹100, ₹102, ₹101, ₹103, and ₹104, the SAM will be the normal of these prices.

The Simple Average Method (SAM) calculates the average of a series of values over a specific period.

The formula for SAM is:

SAM = (P₁ + P₂ + ... + P_n) ÷ n

Where:

• P₁, P₂, ..., P_n: Prices over a given period
• n: Number of periods (days, months, etc.)

How to Use:

• Buy: When the stock's price moves over its simple average, showing a vertical trend
• Sell: When the price falls underneath its simple average, demonstrating a descending trend.

Scenario:The SAM of Stock DEF throughout the course of recent days is ₹50, and the current price is ₹52. This demonstrates a potential vertical trend, flagging a purchasing a valuable opportunity.

Incremental ADX

Introduction: Incremental ADX is a variation of the ADX indicator that shows the rate of change in the ADX after some time. It assists traders with perceiving how rapidly a trend is acquiring or losing strength.

Terminologies:

• Rate of Change: The speed at which a value changes over the Long-Term.
• Momentum: The power behind a price movement, showing how rapidly or gradually the trend is speeding up.

Explanation:Incremental ADX gives bits of knowledge into whether the trend strength is expanding or diminishing. If the Incremental ADX is positive, the trend is acquiring strength. In the event that it's negative, the trend is losing strength

Example:If Stock XYZ has a Steady ADX worth of +5, the trend is getting more grounded. On the off chance that the Steady ADX is - 3, the trend is debilitating.

How to Use:

• Buy: When Incremental ADX is positive and expanding, flagging a fortifying trend.
• Sell or Stay Cautious: When Incremental ADX is negative, as the trend is debilitating.

Scenario:You see Stock DEF has an ADX of 25, however the Incremental ADX is falling, demonstrating the trend may before long debilitate or turn around. You could try not to enter another trade as of now.

Formula:

Incremental ADX is calculated by taking the difference between the current ADX value and the previous ADX value over a specific period.

Parabolic SAR (Stop and Reverse)

Introduction:The Parabolic SAR is a trend following indicator that gives possible entry and exit points. It places dots above or beneath the price to flag where a trend could pause and opposite.

Terminologies:

• Stop and Reverse: Where a latest trend is supposed to switch direction.
• Trailing Stop: A technique for submitting a stop-loss request that moves as the value moves to Protect profits.

Explanation:Parabolic SAR places spots over the price during a downtrend and underneath the price during an uptrend. At the point when the price crosses the spots, it flags a likely reversal in trend.

Example:In an uptrend, the specks of the Parabolic SAR are beneath the price. When the price crosses underneath these specks, it flags an reversal, and brokers could sell or short the stock.

How to Use:

• Buy: When the price crosses over the Parabolic SAR dabs.
• Sell: When the price crosses beneath the dabs.

Scenario:Stock XYZ has been in a consistent uptrend with Parabolic SAR specks beneath the price. At some point, the price crosses underneath the specks, flagging a trend reversal. You could leave your position to secure profits.

Formula:

Parabolic SAR is calculated using the following steps:

• Extreme Price (EP): The highest high or least low of the latest trend
• Acceleration Factor (AF): Used to change the SAR nearer to the price as the trend advances.

Ichimoku Cloud (Ichimoku Kinko Hyo)

Introduction:The Ichimoku Cloud is a complete indicator that shows support and resistance levels, momentum, and trend direction. It is comprised of five lines and a "cloud" that assists traders with settling on conclusions about market trends.

Terminologies:

• Support: A price level where a stock will in general quit falling and may switch up.
• Resistance: A price level where a stock will in general quit rising and may switch descending.
• Momentum: The speed at which a stock's price moves, demonstrating strength or shortcoming in the trend.

Explanation:Ichimoku utilises a cloud, otherwise called the Kumo, to decide the trend. At the point when the price is over the cloud, the stock is in an uptrend. At the point when it's beneath the cloud, it's in a downtrend. The thickness of the cloud additionally shows Support and resistance levels.

Example:Stock XYZ is trading over the cloud, demonstrating trend. You should seriously mull over purchasing, as the price is upheld by the cloud.

How to Use:

• Buy: When the price breaks over the cloud, flagging the start of an uptrend.
• Sell: When the price falls beneath the cloud, flagging the beginning of a downtrend.

Scenario:You see Stock ABC's price break over the cloud subsequent to being in a downtrend. This could demonstrate another vertical trend, and you could enter a buy position.

Formula:

• Tenkan-sen (Conversion Line):

  (Highest High + Lowest Low) ÷ 2 over the last 9 periods

• Kijun-sen (Base Line):
  

  (Highest High + Lowest Low) ÷ 2 over the last 26 periods

• Senko Span A (Leading Span A):

  (Tenkan-sen + Kijun-sen) ÷ 2, plotted 26 periods ahead

• Senko Span B (Leading Span B):

  (Highest High + Lowest Low) ÷ 2 over the last 52 periods, plotted 26 periods ahead

• Chikou Span (Lagging Span): Closing price, plotted 26 periods behind

Aroon Indicator

Introduction:The Aroon indicator is utilised to decide trend and its strength. It comprises of two lines: Aroon-Up and Aroon-Down, which measure the time since the highest high and the least low, individually

Terminologies:

• Trending Market: When the price of a stock is moving reliably in one heading.
• Range-bound Market: When the stock's price vacillates inside a characterised range without an unmistakable trend.

Explanation:Aroon values range from 0 to 100. At the point when Aroon-Up is over 70, it shows major areas of strength for a. At the point when Aroon-Down is over 70, it shows major areas of strength for a.

Example:Stock XYZ has an Aroon-Up of 80 and Aroon-Down of 20, flagging strong uptrend.

How to Use:

• Buy: When Aroon-Up is over 70 and Aroon-Down is under 30, demonstrating strong uptrend.
• Sell: When Aroon-Down is over 70 and Aroon-Up is under 30, demonstrating strong downtrend.

Scenario:Stock DEF's Aroon-Up is at 75, while Aroon-Down is at 25. This proposes strong uptrend, and you should seriously mull over purchasing.

Aroon Indicator Formula

The Aroon Indicator is used to measure the strength and direction of a trend. It consists of two lines:

• Aroon-Up: Measures the number of periods since the highest high within a specified period.
• Aroon-Down: Measures the number of periods since the lowest low within a specified period.

The formulas for Aroon-Up and Aroon-Down are:

Aroon-Up = ((Current Period - Highest High Period) / Period) × 100

Aroon-Down = ((Current Period - Lowest Low Period) / Period) × 100

Where:

• Period: The number of periods over which the Aroon is calculated (typically 14 days).
• Current Period: The current day being analyzed.
• Highest High Period: The number of periods since the highest high in the given period.
• Lowest Low Period: The number of periods since the lowest low in the given period.

Heikin Ashi

Introduction: Heikin Ashi is an outlining strategy that assists traders with picturing trends all the more obviously by smoothing price information. It sift through market noise to give a more clear perspective on price activity.

Terminologies:

• Trend: The overall direction where the market is moving, either up or down.

Explanation:Heikin Ashi utilises changed candlestick formulas that reflect average prices over a particular period, recognising trends.

Example:If Stock XYZ's Heikin Ashi candles are reliably green (bullish), it demonstrates areas of strength for a trend.

How to Use:

• Buy: When successive Heikin Ashi candles are green, demonstrating areas of strength for a trend.
• Sell: When back to back Heikin Ashi candles become red, showing a likely negative trend.

Heikin Ashi Formula:

• Heikin Ashi Close:
  

  (Open + High + Low + Close) / 4

• Heikin Ashi Open:
  

  (Previous Heikin Ashi Open + Previous Heikin Ashi Close) / 2

• Heikin Ashi High:
  

  Max(High, Heikin Ashi Open, Heikin Ashi Close)

• Heikin Ashi Low:
  

  Min(Low, Heikin Ashi Open, Heikin Ashi Close)

Where:

• Open: The opening price of the current candlestick.
• High: The highest price during the current candlestick period.
• Low: The lowest price during the current candlestick period.
• Close: The closing price of the current candlestick.

Gann Angles

Introduction: Gann Angles are a bunch of specialised indicators created by W.D. Gann that utilises angles to identify potential support and resistance levels in price movements. They assist traders with gauging value trends and reversal.

Terminologies:

• Support Level: A price level at which a stock quit falling and may return.
• Resistance Level: A price level at which a stock will in general quit rising and may decline.

Explanation: Gann Angles are drawn at explicit points (like 45 degrees) to distinguish expected areas of support and resistance. The points demonstrate potential price movement and reversal points.

Example:If Stock XYZ approaches a Gann Angles of 45 degrees and begins to return quickly, it might demonstrate a support level.

How to Use:

• Buy: When price moves toward a Gann Angles that acts as support.
• Sell: When price moves toward a Gann Angles that acts as resistance.

Gann Angles Formula:

• Angle of 1x1 (45-degree angle): This is the most important Gann angle and represents a 1:1 ratio between time and price. It is calculated as follows:

1x1 Angle = (Price change) / (Time change)

• Other Angles: Other Gann angles can be represented as ratios of 1:2, 1:3, 2:1, etc. Each angle can be calculated as:

Angle of n:x = (Price change) / (Time change)

Where:

• Price change: The amount of price change over a specific time period.
• Time change: The amount of time elapsed over the same period.

Pivot Points

Introduction:Traders often rely upon Pivot Points as important indicator to pinpoint support and resistance levels, in trading activities.They utilise these indicators to forecast price changes by examining the highs,lows and closing prices from the trading day.

Terminologies:

• Support Level: A price at which a stock is expected to stop falling and start moving again.
• Resistance Level: It refers to a point at which a stock might encounter selling pressure and start moving.

Explanation:At the core of pivot points are a pivot, along with support (such as S ̲ ̲ l and S ̲ ̲ r ) and resistance (like R l and R r ) levels that traders rely on for predicting potential changes, in price direction.

Example:Stock XYZ has started trading to its pivot point today.If it surpasses this level and heads upwards towards the resistance levels it could present a chance for buyers to enter the market

How to Use:

• Buy: When the price exceeds the pivot point and interacts with the resistance level.
• Sell: When the price falls below the pivot point and retests the support level.

Pivot Points Formula:

• Pivot Point (P): The main pivot level.

P = (High + Low + Close) / 3

• Support and Resistance Levels: Based on the pivot point, the support (S) and resistance (R) levels are calculated as:
• Resistance 1 (R1):
  R1 = (2 × P) - Low
• Support 1 (S1):
  S1 = (2 × P) - High
• Resistance 2 (R2):
  R2 = P + (High - Low)
• Support 2 (S2):
  S2 = P - (High - Low)
• Resistance 3 (R3):
  R3 = High + 2 × (P - Low)
• Support 3 (S3):
  S3 = Low - 2 × (High - P)

Where:

• High: The highest price during the previous period.
• Low: The lowest price during the previous period.
• Close: The closing price during the previous period.