How to Make Money Trading with Charts

Author: Ashwani Gujral and Prasanna Khemariya Categories: Technical Analysis, Beginners

Quick Summary

A comprehensive guide to chart pattern analysis for the Indian markets, covering the ADX indicator for trend identification, trend lines and channels, reversal patterns (head and shoulders, broadening formations), continuation patterns, volume analysis, momentum indicators, and money management. Includes a chapter on the Railway-Line Theory and over 175 real market charts.

Detailed Summary

Ashwani Gujral and Prasanna Khemariya's How to Make Money Trading with Charts (first published 2008, 3rd edition 2018, Vision Books) is a chart analysis reference book designed to help traders profit in any market condition by identifying and trading chart patterns.

The book begins with an introduction to the Indian stock market infrastructure, the distinction between trading and investing, derivatives basics (futures contracts), and the fundamentals of technical analysis and charting. The types of charts (bar, candlestick, line) are explained along with the broad classification of chart patterns and the importance of multiple timeframe analysis.

Chapter 2 introduces the ADX (Average Directional Index) as the primary tool for determining whether a market is trending or range-bound, including the construction and interpretation of DI+ and DI- lines. Chapter 3 covers trend lines in depth: drawing technique, validation criteria, internal trend lines, trend lines as dynamic support/resistance, trend channels, and integration with candlestick patterns.

The chart pattern coverage is organized into reversal patterns (head and shoulders, inverse head and shoulders, basing formations, broadening formations) and continuation patterns. Each pattern is presented with identification criteria, volume characteristics, measured move targets, and trading rules including entry, stop-loss, and target levels.

The book covers volume analysis as a confirmation tool for price patterns, momentum indicators (RSI, MACD, stochastics) for refining entries and exits, and money management rules for protecting capital. The Railway-Line Theory chapter, added in later editions, presents a proprietary concept for identifying trend continuation.

Throughout, the emphasis is on practical application with real Indian market charts, making this accessible to traders who work in that market ecosystem while teaching universal technical analysis principles.