The Qstick indicator is a momentum indicator that provides a measurement of buying or selling strength in a market. It’s basically a calculation of the difference between the open and close prices. The indicator is designed to indicate net price gains or losses over a specific time period. This type of indicator was designed by a scientist, inventor, author, and trader Tushar Chande. He has a Ph.D. in engineering and holds nine U.S. patents.
Features of the Qstick Indicator
- Transaction signals come over there whenever the Qstick Indicator crosses through the 0 lines.
- Moreover, it is also useful in highlighting particular market conditions, such as market strengths, weaknesses, and other trends developing in financial markets.
- It gives a representation of a security’s exponential moving average (or EMA), opening price, closing price, and their difference, along with their simple moving average (or SMA).
- This portrayed indicator is just like the well-known MACD or moving average convergence divergence.
- This momentum indicator like the Qstick often provides an early indication of failing the momentum and this market trend that is exhausting itself and about to change direction.
The Formula of the QStick Indicator
QSI = [closing price – (opening price X n)] X SMA
Here, n = period of time
The QS simply builds a moving average for n-periods that would show the difference between close and open prices.
QStick = MA(n, (Close – Open)). [Where n is the number of periods for calculating the moving average.]
How to Attach the QStick Indicator to Your Chart?
In the Zerodha Kite platform, traders can find the Qstick indicator under the STUDIES section. This indicator is also available in the Kite mobile App. The Period is 8 and you can set the value of it high and low in Zerodha kite. The Moving Average Type is simple you can change it also. You can check the image below to get an idea of how we attached the Qstick indicator to Reliance Industries’ shares price chart. You can attach the QS indicator to any chart like daily, weekly, monthly, or intraday.
The next part is with Upstox Pro. The setting is also quite simple here. First, log in to Upstox and then open a chart. After opening the chart, search for the indicator and click on apply.
Trading Strategies for the Qstick Indicator
The QS indicator can easily identify both overbought and oversold conditions. There are multiple ways to trade the Quick Stick indicator.
Identifying Overbought & Oversold Levels
When the indicator crosses the zero lines and goes much above, it is overbought. In another way, if the indicator crosses zero lines and goes below, it is oversold.
If the Qstick indicator is at an extremely low level. And turning up then buy and reversely when the Qstick indicator is at an extremely high level and turning down then sell or short sell.
Trading the Crossovers
Once the indicator crosses above zero then buy and oppositely, when it crosses below zero lines then sell or short sell.
Trading the Divergence
This indicator can also identify divergence on the charts. Buy the security if the QS indicator not moving down with the price. And, when the QS is moving down and prices are moving up then it will be sell or short sell. You can confirm the reversal after the divergence with a trend line.
Important Notes on the Qstick Indicator
The Q-Stick Indicator is quite a versatile tool. There are various techniques for using it. Besides, turning to the exponential moving average or EMA as a signal line, one can employ it to point out market conditions, strengths, and weaknesses along with different kinds of incoming trends. To minimize the chances of possible losses, it is advisable to always wait for an indication or a price confirmation.
Key Points on Trading the QStick Indicator
- Calculate the simple moving average (SMA), and you can use it as a trigger point; buy or sell depending on the results.
- You can buy it once the tool crosses over 0. Reversely, you can sell once it fails to cross 0 or remains under 0.
- One can buy if the tool is indicating an uptrend or once the market prices are going down. Oppositely, sell once it is indicating a downtrend or once the market prices are heading upwards.
- Lastly, buy once the tool is indicating an extremely low level and, sell once it is indicating an extremely high level.
The Q Stick indicator is a technical analysis tool that measures the momentum of a stock by analyzing its price movements. It calculates intraday trends and signals when there could be an opportunity to take action.
The formula for the QStick Indicator is (Close – Open)/Open * 100. This gives you a percentage value, which can then be used to identify overall stock trends.
There are many different types of indicators that investors consider when looking at stocks, such as Moving Averages, Relative Strength Indexes (RSI), Stochastics, Bollinger Bands, MACD, and Price Channel patterns. Each one provides insight into market sentiment and potential reversals in asset prices depending on whether it’s bullish or bearish.
Technical analysts often use an array of math-based tools to analyze charts so they can anticipate what might happen with future price movements based on past data and behavioral patterns; these tools include Fibonacci Retracements, MACD Indicators & Exponential Moving Averages (EMA). People also use standard deviation calculations along with trendlines to determine how volatile certain assets may become in comparison with peers within their chosen industry sector or as part of a larger economic context over time.
Tushar Chande wrote the Beyond Technical Analysis book where he discussed this QStick Indicator. The specific indicator easily devised the trading strategy which seeks to take advantage of certain market turns, either in intraday swing trading or in relation to the longer-term market trends.