CPR BY KGS Notes

“CPR by KGS”
a signature program by,
K. GOMATHI SHANKAR, MTech

Founder & CEO
Guest Speaker at Goodwill Commodities Pvt. Ltd,
LIBA Certified in Finance Management,
NISM Certified Research Analyst in Stock Market,
NCFM Certified Technical Analyst in Stock Market.
Scalper’s Trading Academy
www.scalpers.in
Prime Mover,
Mr. Gomathi Shankar MTech (Biotechnology)
Contact,
Whatsapp : +91-730-5432-730
E-mail : kg18shankar@gmail.com
Twitter : www.twitter.com/kg18shankar
Trading view : https://in.tradingview.com/u/KGShankar/
Gomathi Shankar, Founder & CEO

Scalpers Trading Academy www.scalpers.in
My credits and gurus
OLIVER VELEZ FRANK OCHOA
ASHWANI GUJRAL

Classification of Derivatives trading
Underlying asset
(Apple)
(Stocks, Index, Commodities)
Derivatives contract (Apple juice)

(Futures & Options)
Futures contract Options contract
Similar to equity cash, with Contains options terminologies

predefined quantities along with predefined quantities
Call option Put option
Market bullish Market bearish

Buy call option Buy put option

Why Derivatives trading?
From Underlying asset Any type of contracts/agreements

(Apple) (Stocks, Index, Commodities) have an expiry.
E.g. Monthly rental contracts;
Yearly rental contracts
We are deriving Derivatives contract Similarly

(Apple juice) (Futures & Options)
Futures and Options are
having monthly expiry.
(Index options has weekly
For Hedging
expiry).
Which is
Predominantly used by FII’s and DII’s

What is Hedging?
Assume your holding XYZ company

shares for 5 lakh rupees This is called as hedging
E.g. If the company delivers a poor Now, you can take counter position
quarterly results or if the company in futures and options.
defaults in any of the legal cases e.g. short futures, buy put option,
sell call option.
Company share price decreases, so To recover the losses in your

your holdings 5 lakh will be in loss holdings you need some alternative
of few lakhs ways

Simple example for hedging
Your buying a house. This is called hedging

(buying ABC shares)
Used for paying monthly EMI.

You have to pay monthly EMI. (Temporary loss of ABC company
(temporary loss of ABC company) Profit from F&O of ABC company)
Your renting the house monthly. Money from rented house.

(buying F&O of ABC company) (Profit from F&O of ABC company)

Futures trading
• Futures contracts are introduced similar to forward contracts.
• Futures contracts have pre-defined quantity of shares called market lot.
• Future is a contract (agreement) so it have expiry on last Thursday of every month.
• If future price is lesser than spot price we call it as discount.
• If future price is greater than spot price we call it as premium.
• On the day of expiry both future and spot price becomes equal.
Forward contract Futures contract
Organized contract
Contract made directly made through an
between two person. exchange
Since it is regulated by
Possibility of counter the exchange no counter
party risk party risk
Types of participants
Three types of market participants in derivatives market:
Hedgers:
Corporations, investing institutions and banks all use derivative products to hedge.
Speculators/Traders:
They try to predict the future movements in prices of underlying assets and based on the view, take
positions in derivative contracts.
Arbitrageurs:
Arbitrage originates when a trader purchases an asset cheaply in one location and simultaneously
arranges to sell it at a higher price in another location.
Types of contracts
Futures and Options have three month contracts:
• Near month contract (Current month – February)
• Next month contract (March)
• Far month contract (April)

OPTIONS BUYING When you will make profits?
News: Shopping
30 L worth house House value
mall comes near
increases to 50 L
house
When you will

1% token advance make profits? 1% token advance
₹ 30,000 While options Increases ₹ 50,000
buying
Reason, house
Definitely you will Result: Your in
value increased
buy the house profit of 20k (20 L)
your in huge profits
OPTIONS BUYING When you will make profits?
You think nifty will

go up as per your News: India wins Nifty will go from
analysis the world cup 10,000 to 12,000
You buy 10,000 call When you will

option (Strike price) make profits? Call option
for ₹ 1000 While options increases from
(Premium) buying ₹ 1000 to ₹ 2000
Reason, Nifty value

increased your call
option also
book your profits profit of ₹ 1,000
increased your in
huge profits
OPTIONS BUYING When you will make losses?
30 L worth house News: Cemetery House value

comes near house decreases to 10 L
When you will

1% token advance make loss? 1% token advance
₹ 30,000 While options decreases ₹ 10,000
buying
Reason, house Result: Your in loss of

Definitely you will value decreased
not buy the house 30k because you will
your in huge loss break the agreement
OPTIONS BUYING When you will make losses?
You think nifty will

go up as per your News: India lost Nifty will go from
analysis the world cup 12,000 to 10,000
You buy 10,000 call When you will

option (Strike price) make loss? Call option
for ₹ 1000 While options decreases from
(Premium) buying ₹ 1000 to ₹ 0
Reason, Nifty value

decreased your call
option also
book losses loss of ₹ 1,000
decreased your in
huge loss
Option seller mindset Option buyer mindset Option selling Option buying

Call option buyer Put option buyer

Options trading
• Option buyer has the right to buy, no obligation (Not compulsory) to sell.
• Option seller has an obligation (Compulsory) to buy.
• Option is a contract (agreement) so it have expiry on last Thursday of every month.
ICE CREAM OPTIONS
Validity, 1 week for index

Validity, 15 mins only options and 1 month for expiry
stock options
After 15 mins ice cream After 1 week/month

becomes zero options becomes zero

Open chain data importance.
Understanding open interest:
Open interest is the total number of option contracts outstanding for an underlying asset (Nifty or Banknifty
or any stocks or commodities).
Either buyers having position not yet sold or sellers having position not yet bought.
Yellow shades represent buyers are maximum which is called as IN THE MONEY (ITM).
White shades represent sellers/writers are maximum which is called as OUT OF THE MONEY (OTM).
Strike price selection:
Strike price is the price per share for which the underlying security may be purchased or sold by
the option holder.
Always we have to select yellow color shaded strike prices for call/put option buying.
Ignore the 1st yellow color shaded strike price and select the 2nd / 3rd yellow color shaded strike price, which is
called as deep ITM. Because, the premium decay will be very less in these strike prices.
Understanding open interest

Strike price selection




Basic terminologies in options.
Strike price:
Strike price is the price per share for which the underlying security may be purchased or sold by
the option holder.
Option price/Premium:
It is the price which the option buyer pays to the option seller.
Expiration Day:
The day on which a derivative contract ceases to exist.
It is the last trading date/day of the contract.
Like in case of futures, option contracts also expire on the last Thursday of the expiry month.
Spot price:
It is the price at which the underlying asset trades in the spot market.
Open Interest:
Open interest is the total number of option contracts outstanding for an underlying asset.

Option buying vs Option selling
Option buying Option selling
Less capital required More capital required
Loss limited to premium Loss is unlimited
Profit unlimited Profit limited
Needs trending market Needs rangebound market
(breakouts in either side up or down) (needs sideways market inside a range)
Needs charts, technical analysis Needs options data
Time is an enemy Time is a friend
Preferred trading is scalping only Preferred trading is intraday; positional

What is scalping?
• Scalping is a trading style specializing in taking profits on small price changes, generally soon after a
trade has been entered and has become profitable.
• It requires a trader to have a strict exit strategy, because one large loss could eliminate the many small
gains the trader has worked to obtain.
• Constant attention is needed.
• Huge wealth creation is not possible.
• P&L restricted.
• Only disciplined trader will succeed (scalping success ratio 5% and failure ratio is 95%).

Why banknifty scalping?
• Banknifty is always a liquid instrument.
• Best volatile instrument available in indian stock market which is suitable for scalping.
• You can make profit in any direction (up or down).
• Gives good return on our capital (even 100% returns).
• We can do many trades in a single day.
• Don’t want to study and research a lot.
• Zero overnight position risks.
• We can start with small capital.

Qualities of a successful scalper.
• Finding out the right trade setup.
• Perfect entry.
• Perfect risk : reward ratio. (options 20 pts; futures 50 pts)
• Perfect exit.
• Booking partial profits if necessary.
• Good money management.

Scalping
requires
Strong technical
knowledge
When you’re strong, you can easily do
Price Action
Trading (PAT)
using
Price Action
Trading Indicators

Price Action
Trading (PAT)
People think we use only People think we use only
Candlestick patterns Support, resistance, trend lines
But the truth is, we

use indicators.
Indicators enhancing or
supporting or helping in PAT
Moving Average Pivot points

Moving Average
• A moving average is a technique often used in technical analysis because
it is a trend following indicator.
• Simple moving averages (SMA) takes the arithmetic mean of a given set
of prices over the past number of candles, for example over the previous
20, 50, 100, or 200 days.
Simple Moving Average
20 SMA 50 SMA 200 SMA
TWINS, Same character

20 – 50 SMA Tricks
Rising railway Falling railway 20 – 50 flat and 20 SMA attract

track pattern track pattern zig zag candles
Opening trade
Bullish trend Bearish trend Sideways trend
at 09:15
Higher high, Lower low, Use 200 SMA trick,

New day high New day low 200 hate candles
If RTP breaks 200 SMA,

200 SMA Tricks
then it is HP-RTP
The Powerful 20 SMA and 50 SMA
(use only for intraday 5 mins chart)
Simple Moving Average 20 and 50 :
– The 20 and 50 is so important to intraday traders that no chart is ever studied or
viewed without it. That’s because of its power and reliability.
– No chart is a chart unless it is accompanied by this important technical indicator.
– We use it on every time frame or chart we look at.
General character of 20 and 50 –
– Most of your trades should be in sync with the 20 and 50.

– If the 20 and 50 is rising in a smooth fashion, your focus should almost always be
long.
– Conversely, if the 20 and 50 is declining in a smooth fashion, your focus should
almost always be short.
– If the 20 and 50 is flat, your focus should be to avoid trading.

a) Rising Railway track pattern –
– If and when the 20 - 50 is rising, both 20 – 50 it will serve as strong support.
– Higher highs and higher lows are the sign of bullishness.
– In that case, look for buy/long at or near 20 - 50.
– It is safe to enter long when day high is broken with a green candle close.
– Target: Nearest CPR level; SL: Below 20 sma.
b) Falling Railway track pattern –
– If the 20 - 50 is declining, it will serve as strong overhead resistance.
– Lower highs and lower lows are the sign of bearishness.
– In that case, look for sell/short at or near 20 - 50.
– It is safe to enter short when day low is broken with a red candle close.
– Target: Nearest CPR level; SL: Above 20 sma.

Short opportunity
Short opportunity

Short opportunity
Short opportunity

Short opportunity
Short opportunity

Short opportunity
Short opportunities

Short opportunity
Short opportunity
Short opportunity
Short opportunity

Short opportunity
Short opportunity

Short opportunity
Short opportunity

long opportunity
long opportunity

long opportunity
long opportunity

c) 20 – 50 flat and zig zag –
– When a stock is consolidating in a sideways pattern, the 20 - 50 will be flat, zig zag
and usually positioned right in the middle of the sideways trend.
– If and when this is the case, it’s better to avoid the trade.

d) 20 SMA attract candles like a magnet
(UNIQUE CHARACTER ONLY FOR 20 SMA) –
– Stocks cannot remain extended too far above or below the 20 sma.
– If and when stocks get too far, a violent snap back is expected.
– This is when the Intraday Trader can intelligently look to take advantage of a counter trend move.
– We should take position for a very quick scalping, not recommended for trailing profits.
– Reversal most likely to happen exactly at R1/PDH; S1/PDL.
– Target is always 20 sma only.

QUIZ TIME

The Mighty 200 MA
200 Period Simple Moving Average (200ma) –
• The 200 is so universally watched, in all time frames, that for all practical purposes,
• It is the king of all moving averages.
• So, rarely stocks fail to obey the 200.
• It’s power, force, and reliability are so great, We use the 200 on all time frames.
General character of 200 -
a) Flatness is king: -
• While the 20 is most powerful when it is rising and declining (trending), the 200 is most
powerful when it is flat.

b) 200 SMA hate candles when 20-50 are flat and zig zag:
• Candles doesn't have the power to break 200 when 20-50 are flat & zig zag.
• Whenever a stock declines to a flat 200ma, it will almost always experience some form of rebound.
• If the rare cases in which it does not rebound, the stock is almost certain to at least stop for a while.
Similarly,
• Whenever a stock rallies to a flat, overhead 200ma, it will almost always experience some form of resistance back down.
• If the rare cases in which it does not experience a reversal back down, the stock is almost
certain to at least stop for a while.
Trade decision:
• Entry will be exactly at the reversal candle at 200 sma.
• Long/short target will be 20 sma.

QUIZ TIME

c) 200 SMA love candles when 20-50 are forming RTP (High probable RTP):
• Candles have the power to break 200, when 20-50 are forming RTP.
• When candles are below 200 and if 20-50 are forming RTP then we can expect the candles to break
200 easily due to the influence of RTP where 20-50 breaks 200 from bottom to top.
• It also denotes short covering or trend reversal if candles & 20-50 crosses 200 after several days.
Similarly,
• When candles are above 200 and if 20-50 are forming RTP then we can expect the candles to break
200 easily due to the influence of RTP where 20-50 breaks 200 from top to bottom.
• It also denotes long unwinding or trend reversal if candles & 20-50 crosses 200 after several days.

long opportunity
long opportunity

long opportunity
long opportunity

QUIZ TIME

Pivot Points
What is a Pivot Point?
• A pivot point is a technical analysis indicator, or calculations, used to determine

the overall trend of the market over different time frames.
• The pivot point itself is simply the average of the high, low and closing prices
from the previous trading day.
• On the subsequent day, trading above the pivot point is thought to indicate
ongoing bullish sentiment, while trading below the pivot point indicates bearish
sentiment.

Types of pivot points
There are 6 types of pivot points:
• Classic
• Traditional
• Fibonacci All these type of pivot points
Tells us the intraday levels like
• Demark entry, exit, stop loss.
• Woodie
• Camarilla
Why do we use CPR pivot points?

CPR not only shows the intraday levels like entry, exit, stop loss.
But, also the intraday trend through wide variety of strategies which will be discussed henceforth.
So, CPR is a dual role indicator

CPR Pivot Points Formula:

Moving average CPR
Trending: Trending:
• RTP (20-50 parallel) • Narrow CPR

• HP-RTP (20-50 breaking 200) • Inside CPR
• Trend reversal CPR
• Asc or Des CPR
• Virgin CPR
Sideways: Sideways:
• 20-50 flat & zig zag • Wide CPR

• 200 sma hate candles • Outside CPR
• Camarilla + CPR
• Asc or Des CPR
• Virgin CPR

Narrow CPR
(Trending day expected)
R1 as well as PDH
S1 as well as PDL
Wide CPR
(sideways day expected)
R1 as well as PDH
S1 as well as PDL

Narrow CPR:
• Ncpr denotes trending day, but all Ncpr will not be a trending day because we need RTP in a Ncpr.
• Ncpr + RTP = trending day.
• If there is no RTP in a Ncpr then the market will be a sideways or less trending. So, we can expect a RTP
and trending market on the next day.
Wide CPR:
• Wcpr denotes sideways day, but all Wcpr will not be a sideways day because we may get RTP in a Wcpr.
• In that case we need to book quick profits and exit.
• Wcpr + 20-50 flat & zig zag = sideways day.

Ascending CPR
(Bullish trend expected)
Day 3
Day 2
Day 1
Descending CPR
(Bearish trend expected)
Day 1
Day 2
Day 3

Ascending cpr:
In a ascending cpr, the overall trend is assumed to be bullish so our intention should be on the long side only.
Market is expected to take a pull back or retracement at cpr and then the bull rally continues.
In this case PDL will not be broken, if it’s broken and market close below PDL we can expect trend reversal.
Descending cpr:
In a descending cpr, the overall trend is assumed to be bearish so our intention should be on the short side
only.
Market is expected to take a pull back or retracement at cpr and then the bear rally continues.
In this case PDH will not be broken, if it’s broken and market close above PDH we can expect trend reversal.

Virgin CPR
Expected target current day cpr

Case: 1 Current day CPR
Market opens
here or
Market opens
here Virgin CPR
or
Market opens
here
Case: 2 Current day CPR
Expected target current day cpr
Note: For better accuracy, validity of virgin CPR is 1 day.

OPEN TRICKS
DIRECT REVERSAL
(Green candles at R1 and Red candles at S1

(Red candles at R1 and Green candles at S1

DIRECT

DIRECT

REVERSAL

REVERSAL

Inside CPR
DAY 1 DAY 2
1. If day 2 CPR is inside day 1 CPR it’s called as inside CPR.

2. Trending day expected.
3. RTP or HP-RTP expected.
4. If day 2 is not trending, day 3 will be a trending day.

Outside CPR
DAY 1 DAY 2
1. If day 2 CPR is outside day 1 CPR it’s called as outside CPR.

2. Sideways day expected
3. 20-50 flat/zig zag + 200 SMA hate candles expected.
4. If day 2 is having RTP/HP-RTP book small profits.

Trend reversal CPR
DAY 1 DAY 2
Ascending CPR we will

expect a bullish day.
• But, day 2 candles will reject CPR

and will go up or down changing the
trend into bullish or bearish.
• RTP or HP-RTP can be expected
Descending CPR we will

expect a bearish day.

Camarilla pivot points + CPR
Cam R3 inside CPR

For short trade
HP reversal from cam R3 or

• 20-50 flat/zig zag.
Direct downtrend.
• 200 SMA hate
candles expected.
HP reversal from cam S3 or
Direct uptrend.
Cam S3 inside CPR

For long trade

Important candle psychology
(only for intraday 5 mins)
REPETITIVE PATTERNS

GIANT RED CANDLE
• The first candle of 5 mins chart is a giant red candle.
• This should exactly at or near S1/PDL.
• This giant red candle low should be broken at anytime of the day and with another red candle close
below this giant candle.
• Now, short position can be initiated at this closing red candle.
• Note: I have observed this personally in banknifty only for any other instruments kindly backtest once.
(or)
Short here
Short here
MARKET STUCK INSIDE R1/PDH & S1/PDL
• Whole day market stuck inside R1/PDH and S1/PDL.
• Sideways market is expected.
• Apply 200 sma hate candles tricks and dow theory.
• If there is no chance for 200 sma hate candles and dow theory then strictly avoid.

BIG BULL BREAK OUT
(Bahubali or Hero candles)
Big bull break out is nothing but a sideways or range bound channel is
broken upside by a single big bull candle.
It happens when there is no clear trend in the market and only sideways market occurs.

BIG BEAR BREAK OUT
(Bahubali or Hero candles)
Big bear break out is nothing but a sideways or range bound channel is
broken downside by a single big bear candle.
It happens when there is no clear trend in the market and only sideways market occurs.

DOW THEORY

Stock selection methodologies.
For stock selection you can select any methodology but, you have to stick with our tricks for taking position.
Few commonly used stock selection methodologies:
• NR7
• Trendlines breakouts
• 2 days inside day
• Inside day
• Moving averages breakouts
• Narrow CPR

Why traders lose money in trading?

• They don’t know the trend.
Now, you know how to identify the trend using SMA, CPR.

• Multi tasking during trading.
Most traders trade for money. They never consider trading as a business so they multi task while trading by watching 100
stocks in a single time, hearing music's, watching news channels, speaking/chatting through mobile phones.

• They don’t know position sizing.
Taking heavy positions as if they’re competing with warren buffet.
Experienced trader
Beginner
emotion
position
Heavy position

Risk management and Money management
Don’t risk more than 2% per day. Take 2 trades per day with 1% risk each.
Capital : ₹ 1,00,000
Risk : 2% of capital which is ₹ 2,000 (2 trades ₹ 1,000/trade)
Position sizing:
Bank nifty stop loss : 25 points (your target should be minimum 25 pts)
Market lot : 20 quantities (1 lot)
Total risk in rupees : ₹ 500
Since, your risk is ₹ 1,000 you can place 1 more lot i.e. 2 lots only you should trade.
• Continues 3 days losses don’t trade for 3 trading days. Go back to study mode, refresh your mind.
• When your total loss for the month becomes 10% stop trading for the entire month.
• If your in loss of 10% don’t infuse further capital for the month.
• If your profitable take out your profits, keep the capital 1 L as it is.
• Maintaining a trade journal is compulsory, because trading is a business not a game.
Few words by your mentor:
▪ Imagine, Your allowed to take only 12 trades a year. So, 1 trade per month.
Now, will you take this trade?
▪ Think this again and again before taking any trade.
▪ Whether you win or lose, challenge yourself to maintain the starting capital at
the end of the month.
▪ Take small profits initially build up confidence and positivity.
▪ Try playing test match with the markets, don’t lose your wicket.

I wish you all success in your trading journey.
"I fear not the man who has practiced 10,000 kicks once, but I fear the man who has practiced one kick
10,000 times" by Bruce Lee.
“Take up one idea. Make that one idea your life; dream of it; think of it; live on that idea. Let the brain,
the body, muscles, nerves, every part of your body be full of that idea, and just leave every other idea
alone. This is the way to success, and this is the way great spiritual giants are produced.” by Swami
Vivekananda.
As a trading mentor, I advise you to practice my trading method again and again so that one day you
can live your dream life of becoming a full time trader.
THANK YOU.!
“Together we grow, as a price action trading community”
- Gomathi Shankar (CPR by KGS)


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Похожие издания

“CPR by KGS”

a signature program by,

K. GOMATHI SHANKAR, MTech

Gomathi Shankar, Founder & CEO

OLIVER VELEZ FRANK OCHOA

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Derivatives contract (Apple juice)

Futures contract Options contract

Similar to equity cash, with Contains options terminologies

Call option Put option

Market bullish Market bearish

Gomathi Shankar, Founder & CEO

From Underlying asset Any type of contracts/agreements

We are deriving Derivatives contract Similarly

Gomathi Shankar, Founder & CEO

Assume your holding XYZ company

Company share price decreases, so To recover the losses in your

Gomathi Shankar, Founder & CEO

Your buying a house. This is called hedging

Used for paying monthly EMI.

Your renting the house monthly. Money from rented house.

Gomathi Shankar, Founder & CEO

Forward contract Futures contract

Gomathi Shankar, Founder & CEO

When you will

You think nifty will

You buy 10,000 call When you will

Reason, Nifty value

30 L worth house News: Cemetery House value

When you will

Reason, house Result: Your in loss of

You think nifty will

You buy 10,000 call When you will

Reason, Nifty value

Gomathi Shankar, Founder & CEO

Gomathi Shankar, Founder & CEO

ICE CREAM OPTIONS

Validity, 1 week for index

After 15 mins ice cream After 1 week/month

Gomathi Shankar, Founder & CEO

Strike price selection:

Gomathi Shankar, Founder & CEO

Gomathi Shankar, Founder & CEO

Gomathi Shankar, Founder & CEO

Gomathi Shankar, Founder & CEO

Gomathi Shankar, Founder & CEO

Gomathi Shankar, Founder & CEO

Less capital required More capital required

Loss limited to premium Loss is unlimited

Profit unlimited Profit limited

Needs trending market Needs rangebound market

(breakouts in either side up or down) (needs sideways market inside a range)

Needs charts, technical analysis Needs options data

Time is an enemy Time is a friend

Preferred trading is scalping only Preferred trading is intraday; positional

• Constant attention is needed.

• Huge wealth creation is not possible.

Gomathi Shankar, Founder & CEO

• You can make profit in any direction (up or down).

• Gives good return on our capital (even 100% returns).