Gopalakrishnan Range Index or GAPO is developed by Jayanthi Gopalakrishnan in the January 2001 issue of the STOCKS & COMMODITIES magazine. It attempts to determine the variability of price data based on the log of the price range over a user-defined n-periods. Gopalakrishnan Range Index intended to measure volatility in a stock or commodity. It does not incorporate volume. The indicator is calculated over a set time period (default 5 periods) using only price action. Gopalakrishnan Range Index calculates the natural logarithm of the highest high minus the lowest low and it divides the result by the natural logarithm of the number of periods.
In Zerodha Kite, traders can attach this indicator to a chart from the STUDIES section. By default the period of the indicator is 14 as shown in the Reliance Industries chart below, but traders can increase or decrease the parameter of the GAPO as per choice.
Gopalakrishnan Range Index has by default 14 periods. If the indicator is positive zone, then the top represents the Close and High if there is no extending tail and bottom is the Open and Low if there is no extending tail. If the indicator is in the negative zone, then the top represents the Open and High if there is no extending tail and bottom is the Close and Low if there is no extending tail.
In simple terms, a low value of Gopalakrishnan Range Index identifies a state of a market where there are no gaps in the charts. Whenever the charts start making overnight gaps the GAPO starts to rise. This indicator has nothing to do with a buy or sell signal. Rather it gives an idea of the market volatility. Few traders love to trade a gaping market, a high value of GAPO is good for them, whereas few traders love to trade a continuous market, where there are hardly any overnight gaps. They should go for a low reading of the GAPO.