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Capital Protection Guide: Learning from Catastrophic DrawdownCapital Protection Guide: Learning from Catastrophic Drawdowns - LRN Case Study Overview Catastrophic drawdowns—sudden, severe price declines of 30% or more in a single session—can devastate trading accounts, especially for beginners. This tutorial examines the real-world case of NYSE:LRN (Stride Inc.), which lost over 50% in a single day on October 29, 2025 , and provides practical strategies to protect your capital from similar disasters. Understanding how to identify warning signs and implement proper risk management is essential for long-term trading success. While no strategy can guarantee complete protection, recognizing red flags and following disciplined capital preservation rules can significantly reduce the risk of catastrophic losses. Understanding Catastrophic Drawdowns What is a Catastrophic Drawdown? A catastrophic drawdown occurs when a stock experiences an extreme price decline in a very short period—typically 10% or more in a single trading day . These events can be triggered by: Earnings surprises: Missed expectations or guidance cuts Regulatory news: Government actions or policy changes Sector rotation: Money rapidly exiting entire sectors High-frequency trading: Algorithmic selling creating cascading effects Margin calls: Forced selling accelerating declines Black swan events: Unexpected crises affecting specific stocks or sectors Why Beginners Are Most Vulnerable Beginners face unique challenges when catastrophic drawdowns occur: Position Sizing Mistakes : Often risk too much capital on single trades Lack of Stop-Loss Discipline : Emotional attachment prevents cutting losses Overconfidence : Good runs create false confidence in risky positions Ignoring Red Flags : Missing early warning signs of trouble Averaging Down : Doubling down on losing positions instead of exiting Case Study: NYSE:LRN -50% Crash on October 29, 2025 The Event On October 29, 2025 , Stride Inc. ( NYSE:LRN ) experienced a catastrophic one-day decline. The stock closed at $68.04 on October 29, down from $153.53 the previous day—a drop of approximately 55.7% (close-to-close). According to multiple sources, the stock experienced between 41-49% premarket/intraday declines , with some sources reporting up to 51.5% decline over a 4-week period following the earnings announcement. The close-to-close decline represents one of the most severe single-day drops in recent market history. Key Event Details: • Crash Date: October 29, 2025 • Previous Close (Oct 28): $153.53 • Crash Day Close (Oct 29): $68.04 • Drop Magnitude: ~56% close-to-close (reported 41-49% intraday/premarket) • Primary Causes: Weak FY26 outlook, failed platform upgrade, legal allegations • Enrollment Impact: 10,000-15,000 student shortfall • Growth Forecast: Slashed from 19% historical to 5% projected • Earnings Report: Q1 FY26 reported October 28, 2025 (beat estimates but weak guidance) What Happened - Timeline of Events Summer 2025 : Stride attempted to implement an upgraded platform that failed to proceed as planned, resulting in poor customer experience and higher withdrawal rates. September 14, 2025 : Gallup-McKinley County Schools Board of Education filed a lawsuit against Stride, alleging fraud, deceptive practices, and inflated enrollment figures. This was a major red flag that appeared 6 weeks before the crash. October 28, 2025 : Q1 FY26 earnings reported after market close—beat estimates ($1.52 vs $1.23 expected) BUT guidance for FY26 was weak (only 5% growth vs 19% historical). October 29, 2025 : Market opened and stock crashed: • Premarket: Down ~41% • Intraday: Declined further to ~49% intraday • Close: Stock closed at $68.04 (down ~56% from previous close of $153.53) • Weak financial forecast for FY26 confirmed fears • Platform upgrade issues causing enrollment shortfall confirmed The Math of Recovery Critical lesson for beginners: If stock drops 50% , you need 100% gain just to break even. If stock drops 75% , you need 300% gain to recover. Prevention is infinitely easier than recovery. Red Flags That Appeared Before the Crash Red Flag #1: Legal Allegations (September 14, 2025) What Happened: • Lawsuit filed by Gallup-McKinley alleging fraud and deceptive practices • Claims of artificially inflated enrollment figures • Allegations of insufficiently licensed teachers Why It Mattered: • Legal issues are often a precursor to financial problems • Governance and ethical concerns can destroy investor confidence • This appeared 6 weeks BEFORE the crash - ample warning time How to Monitor: • Set up Google Alerts for " lawsuit" or " legal" • Check SEC filings regularly • Monitor news sources like Globe Newswire, MarketWatch Red Flag #2: Operational Challenges (Summer 2025) What Happened: • Failed platform upgrade causing poor customer experience • Higher withdrawal rates than anticipated • Lower conversion rates • Estimated 10,000-15,000 enrollment shortfall Why It Mattered: • Operational failures directly impact revenue • Customer dissatisfaction leads to lost business • Enrollment declines = revenue declines How to Monitor: • Read company earnings call transcripts • Monitor customer reviews and complaints • Watch for guidance reductions or warnings Red Flag #3: Guidance Cut (October 29, 2025) What Happened: • FY26 growth forecast slashed from 19% historical average to only 5% • This represents a 74% reduction in expected growth • Investors immediately understood the implications Why It Mattered: • Growth rate cuts signal fundamental problems • 5% growth vs 19% historical = massive disappointment • Forward-looking statements are often more important than past results How to Monitor: • Compare new guidance to historical performance • Watch for percentage reductions in growth forecasts • Compare to analyst expectations Red Flag #4: Volume Expansion (Days Before Crash) What to Look For: • Volume spikes of 2.5x+ average volume • Unusually high volume on down days • Declining volume on rallies (bearish divergence) Why It Matters: • High volume + falling price = Institutional selling • Volume often leads price action • Large players exiting before the crash How to Monitor in TradingView: Add Volume Moving Average indicators (20 and 50 period) Compare current volume to averages Set alert when volume > 2.5x average Red Flag #5: Support Level Breakdowns What to Look For: • Price breaking below key support levels • Support levels tested 3+ times before breaking • Volume increase on support breaks Why It Matters: • Support breaks often trigger further selling • Each failed support test weakens the level • Break below major support = potential cascade How to Identify in TradingView: Use pivot low function to find support levels Draw horizontal lines at key support using drawing tools Track number of touches (3+ = strong support) Exit immediately when support breaks Red Flag #6: Volatility Expansion What to Look For: • Average True Range (ATR) exceeding 2x normal levels • Increased daily price ranges (high-low spreads) • Unusual intraday swings Why It Matters: • High volatility often precedes major moves • Sudden volatility expansion can signal institutional activity • Increased uncertainty = increased risk How to Monitor in TradingView: Add ATR (Average True Range) indicator Compare current ATR to 20-period average Calculate ratio: Current ATR / Average ATR Alert when ratio exceeds 2.0 (volatility spike) Capital Protection Strategies Strategy 1: Position Sizing Rules The Golden Rule: Never risk more than 1-2% of total capital per trade How to Calculate Position Size: Position Size = (Account × Risk %) / Stop-Loss % Example: If you have $10,000 and want to risk 2% ($200) with a 5% stop-loss, your maximum position would be $4,000. This ensures that if your stop is hit, you only lose 2% of your account, not more. Why It Works: Limits maximum loss on any single trade Allows you to survive multiple losses Preserves capital for better opportunities Strategy 2: Stop-Loss Discipline Always Use Stop-Losses - No Exceptions Types of Stop-Losses: Fixed Percentage Stop : • Example: 5% below entry • Pros: Simple, consistent • Cons: May not account for volatility Support-Based Stop : • Place below nearest support level • Pros: Respects technical structure • Cons: Requires chart analysis ATR-Based Stop : • Stop = Entry - (2 × ATR) • Pros: Adapts to volatility • Cons: May be too wide in volatile markets Trailing Stop : • Moves up as price increases • Pros: Protects profits automatically • Cons: Can exit during normal pullbacks Critical Rules: ✅ Set stops immediately after entry ✅ Never move stops away from price ✅ Only move stops closer (trailing up) ✅ Never remove stops "temporarily" ✅ If stopped out, stay out (don't revenge trade) Strategy 3: Early Exit Discipline Why This Matters: If a stock drops 50%, you need it to gain 100% just to break even. That's why early exits are crucial—better to exit at -10% than wait for catastrophic losses. Accept small losses as the cost of doing business. Strategy 4: Diversification Rules Never Put All Eggs in One Basket Diversification Guidelines: Maximum 5-10% of capital in single stock Diversify across sectors (not just stocks) Keep 20-30% cash for opportunities Don't over-concentrate in similar stocks Example: Instead of putting 50% in one stock, spread it across multiple sectors: 5-10% in Tech, 5-10% in Healthcare, 5-10% in Energy, etc. This way, a single catastrophic drawdown can't destroy your entire account. Why It Works: Single catastrophic drawdown can't destroy account Other positions can offset losses Cash available for opportunities Strategy 5: Risk Monitoring System Create Your Own Risk Score: Monitor these factors daily: Volatility (0-25 points) • ATR > 2x average = +25 points Volume (0-20 points) • Volume spike = +20 points Support Breaks (0-25 points) • Major support break = +25 points Momentum (0-15 points) • RSI overbought = +10 points • Bearish divergence = +15 points Gap-Downs (0-15 points) • 3%+ gap down = +15 points Legal/Operational Issues (0-25 points) • Lawsuit filed = +25 points • Guidance cuts = +20 points Risk Score Interpretation: 0-29 : LOW risk - Normal trading 30-49 : MODERATE - Increase caution, tighten stops 50-69 : HIGH - Reduce position size by 50% 70-100 : CRITICAL - Exit immediately Example: If a stock has a lawsuit filed (+25), operational issues (+20), volatility spike (+25), and volume anomaly (+20), the risk score would be 90—triggering an immediate exit signal. How Early Detection Could Have Helped In the LRN case, red flags appeared weeks before the crash: September 14, 2025 (6 weeks before): Lawsuit filed → Risk score +25 → Monitor closely Summer 2025 : Platform upgrade failure → Risk score +20 → Total 45 = MODERATE → Reduce position size October 29, 2025 : Guidance cut → Risk score +20 → Total 65+ = CRITICAL → Exit immediately By monitoring these red flags and following the risk scoring system, traders could have exited before the catastrophic crash, preserving capital for better opportunities. Why Protection Matters: Without Protection: • Lost ~56% in one day • Account severely damaged • Needs 127% gain just to break even With Protection: • Exited at -5% to -10% (after red flags appeared) • Small, manageable loss • Capital preserved for better opportunities • Can trade another day Daily Protection Routine ✅ Morning: Review positions, check news/lawsuits, verify stop-losses ✅ During Trading: Monitor for red flags, watch volume/volatility spikes ✅ End of Day: Review alerts, adjust stops (only closer, never further) Key Takeaways Capital preservation is #1 - You can always find another trade, but lost capital is hard to recover Always use stop-losses - Set immediately after entry, never move away from price Watch for red flags - Multiple warnings = exit signal. Better to exit early than late. Position sizing matters - Risk only 1-2% per trade, maximum 5-10% in single stock Monitor news daily - Legal issues and guidance cuts often precede crashes Use the risk scoring system - Combine technical indicators with fundamental news for better protection Conclusion Catastrophic drawdowns like NYSE:LRN 's ~56% crash can devastate trading accounts, especially for beginners. However, by understanding red flags (like the lawsuit that appeared 6 weeks before), implementing proper risk management, and maintaining discipline, traders can significantly reduce the risk of catastrophic losses. While no strategy can guarantee complete protection, combining technical analysis, fundamental monitoring, risk management, and discipline can help protect your capital and ensure you can trade another day. Remember: The goal isn't to avoid all losses—it's to avoid catastrophic losses that can destroy your trading account. Stay disciplined. Protect your capital. Trade another day. 🛡️
NYSE:LRNEducation
by TradeVizion
10
BEYOND MEAT: How One Trader Pumped A Stock 1500%! BEYOND MEAT: How One Trader Pumped A Stock 1500%! 📈What It's All About: The chart you are looking at is not one of a sh*tcoin, it’s a stock listed on the New York Stock Exchange! The company is called Beyond Meat, a pioneer of the artificial meat market. A set of commercial failures and debt problems brought the stock down by 99.79% from the highs when the pump started! 📈The Pump: A Reddit account called "Capybara Stocks" disclosed buying roughly 3.1 million BYND shares around mid-October and published a detailed bullish thesis, arguing the note exchange plus equity issuance, which triggered dilution fears, actually reduced bankruptcy risk and improved the balance sheet. His post highlighted heavy short interest/borrow costs and retail options flows that amplified the upside. 📈What Happened Next: It was a typical short squeeze on an epic scale. With the 54% short float, a sudden buying spree started triggering stop losses and key options levels. People who sold the options and expected to make easy $100 were now looking at $1,000+ potential losses and were scrambling to buy shares to "cover" their sold options. 📈GameStop Case: This scenario closely mirrors the GameStop stock pump ( NYSE:GME ) during 2020/21 when the stock was pumped by Reddit trading group WeTradeStocks from $17 to $483 within days (a 2,840% surge), driving some hedge funds into near bankruptcy. 📈What Now: As BYND stock price has already lost 50% from the recent highs and seems to want to go lower, the company’s current prospects remain bleak with revenue projected to drop 14% next year. But the CapybaraStocks trader made $10,000,000 in profits and says he kept a sizeable position in the stock as he believes in it “long term.” Many option traders made small fortunes, and the people who were on the opposite side of the trade went bankrupt overnight. 📈Conclusion: Hats off to the legends who pumped the stock to the moon and HODLED! To those who lost money: C’est la vie 😎 Yours Truly, Greg🌹
NASDAQ:BYNDEducation
by TopTradingSignals
11
Commodity Futures in World Trading1. Understanding Commodity Futures A commodity future is a standardized legal contract to buy or sell a specific quantity of a commodity at a predetermined price on a future date. Commodities can be broadly classified into hard commodities—such as crude oil, gold, and natural gas—and soft commodities like wheat, coffee, sugar, and cotton. These contracts are traded on regulated exchanges like the Chicago Mercantile Exchange (CME), London Metal Exchange (LME), Intercontinental Exchange (ICE), and the Multi Commodity Exchange (MCX) in India. Futures differ from spot trading because they involve agreements for future delivery, though in most cases, contracts are settled financially rather than through physical delivery. Traders use futures to hedge against risk or to profit from anticipated price changes. 2. Historical Background of Commodity Futures The origin of commodity futures can be traced back to the 17th century Japanese rice markets, where merchants and samurai used forward contracts to lock in rice prices. However, the modern system began in 1848 with the establishment of the Chicago Board of Trade (CBOT), which formalized futures trading for agricultural commodities like corn and wheat. Over time, the system expanded to include metals, energy, and financial instruments, transforming commodity futures into a sophisticated tool of global finance. 3. Key Players in the Commodity Futures Market The commodity futures market involves several participants, each playing a distinct role: Hedgers: Producers and consumers who use futures to protect themselves from adverse price movements. For example, an oil producer may sell crude oil futures to lock in prices, while an airline might buy fuel futures to stabilize costs. Speculators: Traders and investors who take positions to profit from price fluctuations. They provide liquidity to the market. Arbitrageurs: Professionals who exploit price differences across markets to earn risk-free profits. Clearing Houses: Entities that guarantee contract performance and minimize counterparty risk. Exchanges and Regulators: Institutions that oversee trading and ensure transparency and fairness. 4. How Commodity Futures Work When two parties agree on a futures contract, they commit to buy or sell a commodity at a set price on a specific date. Each contract specifies: Quantity and quality of the commodity Delivery date and location Standardized terms set by the exchange Traders must deposit an initial margin, a small percentage of the contract value, as a performance guarantee. Prices are marked to market daily—profits and losses are settled based on daily price changes. This ensures that both parties maintain sufficient capital to cover their positions. At expiration, the contract is either settled by physical delivery (actual exchange of goods) or cash settlement, where differences between the contract and market prices are paid. 5. Importance of Commodity Futures in Global Trade Commodity futures are indispensable in global trade for several reasons: a. Price Discovery Futures markets provide a transparent mechanism for determining global commodity prices. Since prices are driven by collective expectations of traders worldwide, they reflect real-time supply and demand conditions. b. Risk Management Producers, exporters, and importers use futures to hedge against price volatility. For instance, a farmer can lock in the price of wheat before harvest, ensuring stable income despite market fluctuations. c. Market Liquidity Speculators and institutional traders bring liquidity to the market, enabling quick transactions without major price disruptions. d. Global Economic Stability By mitigating price risks and ensuring consistent supply chains, futures contribute to macroeconomic stability, especially in energy and food sectors. e. Investment Diversification Commodity futures allow investors to diversify portfolios beyond traditional assets like equities and bonds. Commodities often move differently from stock markets, providing a hedge during inflationary periods. 6. Major Commodity Exchanges Around the World Several global exchanges facilitate commodity futures trading: Chicago Mercantile Exchange (CME) – The largest futures exchange, trading in energy, metals, and agricultural commodities. Intercontinental Exchange (ICE) – Known for energy products like crude oil and natural gas. London Metal Exchange (LME) – Specializes in base metals like copper, aluminum, and zinc. Tokyo Commodity Exchange (TOCOM) – Trades energy, metals, and rubber. Multi Commodity Exchange (MCX), India – A leading exchange for gold, crude oil, and agricultural commodities in Asia. These exchanges operate electronically, ensuring efficiency, transparency, and real-time global access. 7. Major Commodities Traded in Futures Markets Commodity futures span across several categories: Energy: Crude oil, natural gas, heating oil, gasoline Metals: Gold, silver, platinum, copper, aluminum, zinc Agriculture: Corn, wheat, soybeans, coffee, sugar, cotton Livestock: Cattle, hogs, and poultry Energy and metals are especially crucial to industrial economies, while agricultural futures influence food prices worldwide. 8. Economic Impact of Commodity Futures Commodity futures influence global trade and economic policy in profound ways: Inflation Indicator: Rising commodity prices often signal inflationary pressures. Foreign Exchange Impact: Commodity-exporting nations’ currencies (like Canada, Australia, and Russia) often correlate with commodity prices. Investment Tool: Institutional investors use commodity indices (like Bloomberg Commodity Index) to gain exposure to global resources. Supply Chain Efficiency: Futures stabilize business planning for industries dependent on raw materials, ensuring smoother global supply chains. 9. Risks and Challenges in Commodity Futures Despite their benefits, commodity futures carry inherent risks: Price Volatility: Sharp market swings can lead to heavy losses for unhedged or speculative positions. Leverage Risk: Since futures require only margin deposits, losses can exceed initial investments. Market Manipulation: Large players may attempt to corner markets, influencing prices unfairly. Regulatory Differences: Diverse rules across countries can create barriers to efficient global trading. Geopolitical Uncertainty: Wars, sanctions, and trade disputes can disrupt global supply and impact futures prices dramatically. 10. The Future of Commodity Futures Trading The landscape of commodity futures is evolving rapidly with technology, sustainability, and global economic shifts. Digital Transformation: Algorithmic trading, AI-based analytics, and blockchain technology are revolutionizing trade execution and settlement processes. Environmental Commodities: New futures contracts for carbon credits and renewable energy are emerging as sustainability becomes central to global policy. Emerging Market Participation: Countries like India, Brazil, and China are becoming major players in commodity futures, increasing global liquidity. Integration with Financial Markets: Commodity futures are increasingly intertwined with financial instruments, enabling broader participation from institutional investors. Conclusion Commodity futures are the lifeblood of the global trading system, balancing the interests of producers, consumers, and investors. They not only stabilize prices but also enable efficient allocation of resources and capital across economies. As markets evolve, driven by technology, environmental concerns, and geopolitical shifts, the role of commodity futures will become even more integral to ensuring transparency, liquidity, and resilience in world trade. For businesses, policymakers, and investors alike, understanding and leveraging commodity futures is essential for navigating the complexities of the modern global economy.
Education
by GlobalWolfStreet
Purchasing Power vs Gold, Stocks, Real Estate, BTC (1971 = 100)Since the U.S. left the gold standard in 1971, the dollar has lost more than 85% of its purchasing power. This chart compares the dollar’s decline to major assets including gold, stocks, real estate, and Bitcoin, all normalized to 1971 = 100. It shows how value preservation and growth have shifted across different asset classes over time. Source: FRED (CPIAUCSL, SP500, MSPUS) • OANDA (XAUUSD) • TradingView (INDEX:BTCUSD/BLX) Visualization by 3xplain
FRED:CPIAUCSLEducation
by x3plain
Fair Value Gaps: The Market Secret You Shouldn’t IgnoreEver scrolled through a chart and spotted a weird empty space in the candles — like the market just skipped a beat? That’s a Fair Value Gap (FVG). It’s one of those subtle price imbalances smart traders love to hunt for. Understanding how these gaps form and how price reacts around them can seriously level up your chart-reading game. What Is a Fair Value Gap in Trading? A Fair Value Gap happens when there’s a sudden surge in buying or selling pressure that causes price to move so fast, it doesn’t fully balance out between buyers and sellers. In simple terms, it’s an imbalance — a zone where the market skipped over potential orders. When you hear traders talking about FVG in trading, they’re referring to those little pockets of unfilled liquidity left behind during strong moves. So, what is FVG in trading, and why does it matter? Because price often comes back to those areas later to “rebalance” — filling the gap before continuing in the original direction. That’s the core logic behind Fair Value Gap trading. Bullish and Bearish FVGs There are two main types of Fair Value Gaps — bullish and bearish: Bullish Fair Value Gap (bullish FVG): Forms during a strong upward move, when aggressive buyers push price higher, leaving a void below. Price might later dip back into that zone before continuing upward. Bearish Fair Value Gap (bearish FVG): Forms in a sell-off, when sellers dominate and the market drops quickly, skipping over potential buy orders. Later, price often retraces upward to “fill” that gap. Both can act as magnets for liquidity — areas where smart money likes to re-enter the market. Fair Value Gap Example Let’s say Bitcoin jumps from $110,000 to $120,000 in a single bullish candle, with almost no trading in between. That sudden move leaves a Fair Value Gap — the zone between the candle’s high and low where little to no trading took place. If the market later pulls back to that range and finds support before bouncing, you’ve just witnessed a textbook Fair Value Gap example in action. Using a Fair Value Gap Indicator You can spot these zones manually by looking for three-candle structures — one candle that “leaves the gap” and two surrounding it that don’t overlap. But if you prefer automation, you can use a Fair Value Gap indicators: Fair Value Gap Trading Strategies Fair Value Gap trading isn’t about chasing price — it’s about waiting for the market to come back to you. Within Smart Money Concepts, traders often combine FVGs with CHoCH (Change of Character) to confirm a potential shift in structure before entering. A common approach is to mark recent FVGs, identify the broader trend, and wait for price to revisit a gap in line with that trend. In a bullish trend , traders look for bullish FVGs below current price as potential demand zones — ideally after a CHoCH confirms that buyers are stepping back in. In a bearish trend , they watch for bearish FVGs above current price as potential supply zones, again validated by a CHoCH showing a shift in control. Still, it’s important to remember — these setups are not guarantees. The market doesn’t owe you a fill. Use FVGs and CHoCH as part of the Smart Money framework, not as standalone signals. Always manage risk and make your own trading decisions based on your personal strategy and comfort level. Final Thoughts So, what is a Fair Value Gap really? It’s not magic — just the market showing where it moved too fast. Learning to read Fair Value Gaps gives you insight into liquidity, momentum, and potential reversals. Whether you use a Fair Value Gap indicator or mark them by hand, mastering FVG in trading can give you a serious edge in spotting high-probability zones. Just keep in mind — no indicator or setup replaces good judgment. Observe, adapt, and let the charts speak for themselves.
Education
by WhiteBIT
5
The Concept of Competitive DevaluationIntroduction In the complex world of international trade and global finance, currency valuation plays a central role in determining the economic health of nations. A country’s currency value not only affects its imports and exports but also influences investment flows, inflation, and overall competitiveness in the global market. Among the many policies that governments use to influence exchange rates, one particularly controversial and strategic move is competitive devaluation—sometimes referred to as a “currency war.” Competitive devaluation occurs when countries deliberately lower the value of their own currencies in order to gain a trade advantage over others. The main goal is simple: to make exports cheaper and imports more expensive, thereby boosting domestic production and improving the trade balance. While the concept seems straightforward, its implications are far-reaching, affecting everything from global trade relationships to inflation and geopolitical stability. Understanding Devaluation Before delving into competitive devaluation, it is crucial to understand what “devaluation” itself means. Devaluation refers to a deliberate downward adjustment in the value of a country’s currency relative to other currencies. This policy is typically implemented by nations with a fixed or pegged exchange rate system, where the value of the currency is tied to another currency, such as the U.S. dollar or the euro. For instance, if India were to officially lower the rupee’s exchange rate from ₹80 per U.S. dollar to ₹90 per U.S. dollar, it would mean the rupee has been devalued. This makes Indian exports cheaper for foreign buyers but makes imports costlier for domestic consumers. Devaluation is generally used to: Boost exports by making goods cheaper abroad. Reduce imports by making foreign goods more expensive. Correct trade imbalances or current account deficits. Support domestic industries and employment. However, when multiple countries start engaging in devaluation simultaneously to outcompete one another, the practice turns into competitive devaluation—a self-reinforcing cycle that can destabilize global trade. Defining Competitive Devaluation Competitive devaluation is a situation where several countries intentionally devalue their currencies to gain an upper hand in international trade. It’s often described as a “race to the bottom” because every country tries to make its currency weaker to outcompete others. The basic logic is that if one country devalues its currency, its exports become cheaper on global markets. Other countries, fearing a loss of export competitiveness, may respond by devaluing their own currencies. This leads to a chain reaction of devaluations that can distort trade relationships and create volatility in financial markets. In essence, competitive devaluation reflects an international tug-of-war where each country attempts to export more and import less by manipulating exchange rates—often at the expense of its trading partners. Historical Background The concept of competitive devaluation isn’t new; it has appeared in different forms throughout economic history. 1. The Great Depression (1930s) During the Great Depression, countries abandoned the gold standard and devalued their currencies to stimulate exports. Britain devalued the pound in 1931, followed by the U.S. in 1933, and many others soon after. This wave of devaluations led to what economists termed “beggar-thy-neighbor” policies—where one nation’s gain in trade came at the expense of others, worsening global economic instability. 2. Post–World War II Period Under the Bretton Woods System (1944–1971), exchange rates were fixed to the U.S. dollar, and the dollar was pegged to gold. Devaluations were rare but highly significant. For example, Britain devalued the pound by 14% in 1967, and France followed with smaller adjustments. However, competitive devaluation pressures contributed to the eventual collapse of the Bretton Woods system in 1971, when the U.S. dollar was floated. 3. The Modern Era (2008–Present) The global financial crisis of 2008 revived fears of competitive devaluation. With interest rates at historic lows, countries including the U.S., Japan, and China were accused of manipulating currencies to support exports. This period saw the rise of the term “currency wars,” famously coined by Brazilian Finance Minister Guido Mantega in 2010. The rise of quantitative easing (QE)—massive money-printing programs by central banks—indirectly weakened currencies, leading to a new form of competitive devaluation, even if not officially declared. Mechanics of Competitive Devaluation Competitive devaluation typically occurs through monetary policy tools rather than explicit announcements. The following mechanisms are commonly used: Interest Rate Cuts: Lowering interest rates reduces the returns on assets denominated in that currency, making it less attractive to investors. This causes capital outflows and weakens the currency. Foreign Exchange Intervention: Central banks may directly buy foreign currencies and sell domestic currency in the forex market to push down its value. Quantitative Easing (QE): By injecting liquidity into the economy through large-scale bond purchases, a central bank increases the money supply, which tends to lower the currency’s value. Capital Controls: Restricting capital inflows and outflows can manipulate currency movement indirectly. Official Declarations or Peg Adjustments: In fixed exchange rate regimes, governments can officially devalue their currency peg to make exports cheaper. Motives Behind Competitive Devaluation Countries engage in competitive devaluation primarily to achieve short-term economic goals. Key motives include: Boosting Exports: A weaker currency makes domestic goods cheaper in global markets, leading to higher export demand. Reducing Trade Deficits: Costlier imports help reduce trade imbalances. Stimulating Economic Growth: Export-led growth can boost production and employment. Combating Deflation: Devaluation can help raise domestic prices by making imports costlier. Debt Relief: For countries with large foreign debt, devaluation can reduce the real burden when the debt is denominated in local currency. However, while these benefits may appear attractive, the strategy comes with severe side effects, especially when used by multiple countries simultaneously. Consequences of Competitive Devaluation 1. Short-Term Gains In the initial phase, devaluation can indeed stimulate exports and improve a country’s trade balance. Domestic producers gain an advantage, and employment may rise in export-oriented industries. However, these gains are often temporary. 2. Imported Inflation A weaker currency makes imports more expensive. This leads to higher costs for fuel, machinery, and raw materials—especially in countries dependent on imports—resulting in inflationary pressures. 3. Loss of Purchasing Power Consumers face higher prices for imported goods, reducing their real income and purchasing power. 4. Retaliation and Trade Wars When one country devalues, others retaliate to maintain competitiveness. This spiral can trigger global currency instability and even trade wars, where nations impose tariffs or barriers. 5. Financial Market Volatility Rapid currency movements create uncertainty in capital markets. Investors may pull out funds, leading to exchange rate fluctuations and financial instability. 6. Diminished Global Confidence Persistent devaluations erode investor confidence in a country’s economic management, leading to capital flight and loss of foreign investment. 7. Long-Term Inefficiency Instead of improving productivity and innovation, countries may become reliant on devaluation as a shortcut to competitiveness. This undermines long-term structural growth. Competitive Devaluation vs. Currency Manipulation Although the two concepts overlap, they differ in intent and execution. Competitive Devaluation is often part of a broader monetary policy aimed at economic recovery or export promotion. Currency Manipulation, on the other hand, involves deliberate and sustained actions by a country to artificially maintain an undervalued currency for unfair trade advantage, often drawing international criticism (e.g., the U.S.–China trade tensions). Real-World Examples 1. China (2000s–2010s) China was often accused by the U.S. and other nations of keeping the yuan undervalued to boost exports and maintain high trade surpluses. The strategy helped China become a global manufacturing powerhouse, though it also led to significant trade frictions. 2. Japan (Abenomics Era) Under Prime Minister Shinzo Abe (2012 onward), Japan’s policy of aggressive monetary easing weakened the yen, helping Japanese exporters but drawing criticism from trading partners who saw it as competitive devaluation. 3. Eurozone (Post-2015 QE) The European Central Bank’s quantitative easing program weakened the euro, benefiting exporters in Germany, France, and Italy, while raising concerns in the U.S. and emerging markets. 4. United States (Post-2008) Though not a traditional devaluation, the U.S. Federal Reserve’s low-interest-rate and QE policies weakened the dollar, indirectly boosting exports and prompting other countries to follow suit. Global Implications The ripple effects of competitive devaluation go far beyond national borders: Distorted Trade Balances: Export gains in one country often mean export losses in another, leading to global imbalances. Increased Global Inflation: Weak currencies make global commodities like oil and metals more expensive. Tensions Among Trading Partners: Countries may accuse one another of unfair practices, straining diplomatic relations. Unstable Capital Flows: Investors shift funds rapidly in response to currency movements, destabilizing emerging markets. Reduced Global Growth: If all countries devalue simultaneously, the net benefit vanishes—resulting instead in uncertainty and slower trade growth. Policy Alternatives to Devaluation Instead of engaging in competitive devaluation, countries can pursue more sustainable policies such as: Improving Productivity and Innovation: Enhancing competitiveness through technology and efficiency rather than currency weakness. Fiscal Reforms: Managing government spending and taxation to stabilize the economy. Diversifying Exports: Reducing dependence on a few export sectors or trading partners. Enhancing Domestic Demand: Building a stronger internal market to offset external vulnerabilities. Coordinated Monetary Policies: Through organizations like the IMF or G20, countries can align exchange rate strategies to avoid destructive currency wars. Conclusion Competitive devaluation is a double-edged sword. While it may offer short-term relief to struggling economies by stimulating exports and reducing trade deficits, it ultimately creates more problems than it solves when used excessively or simultaneously by multiple nations. The strategy can lead to global instability, inflation, and erosion of investor confidence—undermining the very competitiveness it seeks to enhance. The real solution lies not in weakening currencies but in strengthening economic fundamentals: productivity, innovation, diversification, and fair trade practices. In a world where economies are deeply interconnected, competitive devaluation is less a path to prosperity and more a reminder that sustainable growth depends on cooperation, not competition, in currency markets.
CME_MINI:MNQ1!Education
by GlobalWolfStreet
What Is CPI and Why It Matters GloballyIntroduction: The Pulse of the Global Economy In the complex world of economics, few indicators hold as much influence and significance as the Consumer Price Index (CPI). Whether it’s a policymaker setting interest rates, an investor predicting market movements, or an ordinary consumer noticing rising grocery bills, CPI plays a role in everyone’s financial life. It acts as a mirror reflecting changes in the cost of living and inflation, shaping everything from global monetary policies to household budgets. Simply put, CPI measures how much prices have increased or decreased for a basket of goods and services that consumers typically buy. However, behind this simple concept lies a powerful tool that helps nations assess economic stability, business competitiveness, and the real purchasing power of their citizens. Understanding CPI: The Basics The Consumer Price Index (CPI) is an economic indicator that measures the average change in prices of a fixed basket of goods and services over time. This basket includes everyday items such as food, housing, clothing, healthcare, transportation, and education — essentially capturing the spending habits of urban consumers. CPI as a Measure of Inflation CPI is the most widely used tool to measure inflation — the general increase in prices and fall in the purchasing power of money. When CPI rises steadily, it indicates inflation; when it falls, it suggests deflation. Inflation can be both a sign of growth and a warning signal. Moderate inflation encourages spending and investment, as people prefer to buy now rather than later. But excessive inflation — as seen in countries like Argentina or Turkey in recent years — erodes savings, raises borrowing costs, and destabilizes economies. Conversely, deflation (a sustained drop in prices) might sound appealing but can trigger economic stagnation. Falling prices reduce business revenues and wages, discouraging spending and investment. Thus, tracking CPI helps governments strike a delicate balance between economic growth and price stability. Types of CPI Economists often use different versions of CPI to capture varied aspects of price changes: Headline CPI: This is the broadest measure, including all goods and services in the consumer basket. It reflects the overall inflation rate but can be volatile due to changes in food and energy prices. Core CPI: Excludes food and energy components, as they are prone to short-term fluctuations. Core CPI gives a clearer picture of long-term inflation trends. CPI-W and CPI-U (in the U.S.): CPI-W tracks the spending habits of urban wage earners and clerical workers. CPI-U includes all urban consumers and is considered the official measure of inflation. HICP (Harmonized Index of Consumer Prices): Used by the European Union, this version allows for consistent inflation comparisons across member states. Each variation of CPI serves a specific policy or analytical purpose, allowing economists to monitor inflation more accurately across different sectors and regions. CPI and Global Monetary Policy CPI plays a central role in shaping global monetary policy. Central banks like the Federal Reserve (U.S.), European Central Bank (ECB), Bank of England, and the Reserve Bank of India (RBI) rely on CPI trends to make key decisions about interest rates and money supply. When CPI shows rising inflation, central banks often raise interest rates to cool down spending and borrowing. When CPI indicates deflation or weak inflation, they lower rates to stimulate economic activity. For instance, during the COVID-19 pandemic, global CPI levels dropped as demand collapsed. Central banks responded with historically low interest rates and massive stimulus packages. However, post-pandemic supply chain disruptions and energy shortages sent CPI soaring globally — prompting rapid interest rate hikes in 2022–2023. These fluctuations show how closely CPI data influences global financial stability, currency values, and investment decisions. CPI and Purchasing Power CPI also helps determine changes in purchasing power — how much goods and services a unit of currency can buy. If wages rise slower than CPI, real income effectively decreases, meaning consumers can buy less with the same money. For example: If CPI rises by 6%, but wages increase by only 3%, then real wages have fallen by 3%. This erosion in purchasing power can reduce consumer confidence and spending — key drivers of economic growth. Governments and labor unions often use CPI data to adjust wages, pensions, and social benefits (a process called indexation) to maintain people’s living standards. CPI as a Global Benchmark CPI data is not just a domestic concern — it has international ramifications. Global investors, financial institutions, and multinational corporations all monitor CPI across different countries to assess economic health and currency risks. Here’s how: Exchange Rates: High inflation (rising CPI) typically weakens a nation’s currency because it erodes purchasing power. Investors may move money to countries with lower inflation and higher returns, affecting foreign exchange markets. Investment Flows: CPI trends help guide foreign direct investment (FDI) and portfolio investment decisions. For instance, a stable CPI and moderate inflation attract investors seeking predictable returns. Trade Competitiveness: Countries with lower inflation maintain price stability in exports, making their goods more competitive globally. Conversely, high CPI growth can make exports expensive and hurt trade balances. Thus, CPI serves as a universal barometer for comparing economic conditions across nations. CPI and the Financial Markets The stock market, bond market, and commodity markets react strongly to CPI reports. Traders and investors treat CPI announcements as key economic events because they directly influence interest rate expectations and corporate profitability. Equity Markets: Rising CPI may hurt company profits by increasing input costs. However, certain sectors — like energy, commodities, and consumer staples — often benefit during inflationary periods. Bond Markets: Bonds are highly sensitive to inflation. When CPI rises, bond yields increase because investors demand higher returns to offset the loss of purchasing power. This inversely affects bond prices. Commodity Markets: Commodities such as gold and crude oil often act as inflation hedges. A high CPI can push investors toward tangible assets that retain value when currencies lose purchasing power. Thus, CPI data can trigger short-term volatility and long-term investment strategy shifts across asset classes. Limitations of CPI While CPI is an essential tool, it’s not without flaws. Economists often debate its accuracy and representativeness due to several factors: Substitution Bias: Consumers tend to switch to cheaper alternatives when prices rise, but CPI assumes a fixed basket — overstating inflation. Quality Adjustments: Technological improvements often increase product quality (e.g., smartphones), but CPI may not fully capture this added value. Geographical Variations: Price changes differ between regions. Urban CPI may not accurately reflect rural cost-of-living changes. Lagging Indicator: CPI measures inflation after it has occurred, meaning policymakers are often reacting to past data. Exclusion of Certain Costs: CPI may exclude investment assets like real estate or stocks, even though they significantly affect household wealth. Despite these limitations, CPI remains the most reliable and widely accepted inflation measure because of its consistency and comparability. Case Studies: CPI in Action 1. United States: Inflation and Federal Reserve Policy In 2022, U.S. CPI surged above 9%, the highest in four decades. Rising food, fuel, and housing costs prompted the Federal Reserve to raise interest rates aggressively throughout 2022–2023. This decision cooled inflation but also slowed economic growth and rattled stock markets. It showcased how CPI data can reshape monetary strategy and ripple through global markets. 2. India: Balancing Growth and Inflation India’s CPI basket is heavily weighted toward food and housing. When food prices rise due to poor monsoon or supply shortages, CPI spikes quickly. The RBI uses CPI as its main inflation target, aiming to keep it between 2–6%. By adjusting repo rates based on CPI trends, the RBI manages both growth and price stability. 3. Eurozone: The Battle with Deflation and Energy Prices For years, the Eurozone struggled with low inflation and deflation risks, prompting the ECB to maintain ultra-low interest rates. However, after the Ukraine conflict in 2022, energy-driven CPI spikes forced the ECB to tighten policy sharply. This swing illustrated CPI’s impact on regional economic integration and fiscal coordination. CPI in the Context of Global Challenges Today’s world faces unprecedented inflationary pressures due to factors like: Geopolitical conflicts (e.g., Russia–Ukraine) Supply chain disruptions Energy market volatility Climate change impacting agriculture Post-pandemic demand surges As a result, global CPI data has become a critical early warning system for potential recessions, stagflation, or monetary tightening cycles. International institutions such as the IMF and World Bank rely on CPI trends to forecast global growth and recommend policy adjustments. Future of CPI: Adapting to a Changing Economy As consumption habits evolve, CPI calculations must also adapt. The rise of digital goods, subscription services, and AI-driven economies is reshaping how statisticians define the “consumer basket.” Future CPI methodologies may include: Real-time price tracking using big data and AI Regional CPI dashboards for urban and rural contrasts Inclusion of environmental costs and green inflation (the impact of climate policies on prices) Better adjustments for technological improvements Such innovations will make CPI a more accurate, dynamic, and inclusive measure of global inflation. Conclusion: The Global Significance of CPI The Consumer Price Index is more than just a number; it is the heartbeat of the world economy. It influences how central banks set interest rates, how investors allocate capital, how governments plan budgets, and how families manage their daily expenses. Understanding CPI is crucial not only for economists but for anyone navigating an interconnected global economy. Whether inflation is surging or stabilizing, CPI tells the story of how value, consumption, and confidence move together in shaping our economic future. In a world of shifting trade patterns, volatile energy markets, and evolving digital economies, CPI remains the compass that helps policymakers, businesses, and citizens alike find direction amid economic uncertainty.
SP:SPXEducation
by GlobalWolfStreet
The way Rate Cuts & Other Events Price InContents In this idea we will get in to a small deep dive on how rate cuts and most of the other events price in, how you can position your self accordingly, and more. Lets get in to it! 🔹 Important Question If we were expecting a rate cut and it happens why does price dip in the short term? Lets do a case study. 🔹 Case Study September 17th, 25bps cuts everybody was hyped. Retail was excited, so why did it go wrong? Look into screen shot 1, we highlighted when the FOMC meeting took place. Price pumped before the FOMC meeting. This is because Interest Rates price in before it happens. That is how most events play out, 1-2 weeks prior price prices in and according to the event it plays out. 🔹 Different Outcomes If you were to look at poly market during the last FOMC meeting and the previous ones you could see like 98% people betting its going to be 25bps. That is one indication of what might happen, another on is projections. Many projections were suggesting 25bps as well, so it aligned price priced in before. Lets say instead of 25bps, 50bps happened or even 75bps. Price would pump up reason being, price priced in based on another expectation. The following would have been the outcome: No change: Dump 🔴 (Probably hard dump) 25bps: Dump 🔴 (Because priced in before hand) 50bps: Pump 🟢 (Nobody except for insiders were expecting it) In other words, if a event which is going to be bullish is going to happen price prices in before and based on the event outcome finalization the output plays out. 🔹 Different Type of Events Lets say something instant just happened, type of events price in at that time. So expected events and unexpected events are completely different. They price in/react different ways. 🔹 How to position Well as an example if you know Rate Cuts are going to happen on xyz date, prepare for it 2 weeks before position take positions according to forecasts and high bets like poly market (What people bet on the most happens most of the time). Once the event happens if its a not expected event like instead of 25bps cuts, 50bps happens then keep your position. If its the expected event, then close position. If its like in our rate cut example instead of 25bps its no change then maybe even reverse your position instantly. ⚠️ Disclaimer: Not financial advice. Thank you If you have any questions/comments or ideas comment below! Thank you for reading.
INDEX:BTCUSDEducation
by LyroRS
Markets Dynamics Every Pro Trader Should KnowMarkets move based on fundamental forces that shape pro traders behavior, capital flows, and asset valuations. I will cover the most important concepts that drive market behavior across all asset classes and are fundamental to professional traders. RISK-ON / RISK-OFF DYNAMICS The most important concept is the oscillation between risk-on and risk-off sentiment—investor willingness to take on risk in pursuit of returns. Risk-On: Equities, commodities, high-yield bonds, and risk-sensitive currencies like AUD, NZD rise. Typical triggers are: positive economic data, easy central bank policies, geopolitical stability. Risk-Off: Safe-haven assets : USD, JPY, CHF, U.S. Treasuries, gold strengthen. This happens as money managers and investors prioritize capital preservation. Typical triggers: negative economic data, geopolitical tensions, financial crises. Why USD strengthens during risk-off: USD has a global reserve currency status, and that structurally creates demand; deepest treasury market for holding capital; trillions in global debt denominated in USD. Why JPY strengthens during risk-off: Carry trade unwinding (investors close positions by buying back yen); Japanese institutions bring back home trillions in foreign assets during crises. INTEREST RATE DIFFERENTIALS Capital moves toward countries offering higher real interest rates (real rates = nominal rates minus inflation). This creates currency trends over weeks, months, and years. Higher interest rates leads to higher bond yields, increasing capital inflows, resulting in currency appreciates The Carry Trade: Borrow in low-yield currencies (JPY, CHF), invest in high-yield currencies (AUD, NZD), profit from interest rate differential. Carry trades unwind strongly during risk-off times due to leverage and crowded positioning. INFLATION EXPECTATIONS Markets trade based on where they expect inflation to be in the future, not current readings. Rising inflation expectations means central banks are likely to tighten policy, hence Bond yields rise and that may lead to currency strengthening initially. Key metrics: CPI (Consumer Price Index), PCE, core vs. headline inflation, break-even inflation from TIPS spreads. MONETARY POLICY CYCLES Central banks are the most powerful players in financial markets. They control interest rates and balance sheet operations. Tightening Cycle (hiking rates, quantitative tightening): Strengthens currency, negative for equities, bond prices fall, slows economic activity. Easing Cycle (cutting rates, QE): Weakens currency, positive for equities, bond prices rise, stimulates economic activity. GLOBAL GROWTH AND COMMODITY CYCLES Strong global growth means higher demand for energy/metals = Commodity prices rise = Strengthens commodity currencies (AUD, CAD, NOK, BRL). Key indicators to watch: Global PMIs, global trade data, commodity indices, China growth indicators. TERMS OF TRADE When a country's export prices rise more than its import prices, local income increases and currency typically strengthens. Example: Australia's AUD strengthens when iron ore and coal prices rise. BALANCE OF PAYMENTS Current account measures trade balance, income flows, and transfers. Surplus (exports > imports): This accumulates foreign reserves, and generally supports currency. Deficit (imports > exports): This requires capital inflows to fund deficit, and can pressure currency lower. FISCAL POLICY AND DEBT DYNAMICS Government spending and taxation are another dynamic that can influence economic growth and inflation. Expansionary Policy: Higher spending or lower taxes = short-term growth boost = can increase inflation = increases deficit. Contractionary Policy: Lower spending or higher taxes (this is know as “austerity”) = slows growth =reduces inflation = improves budget balance. YIELD CURVE One of the most important dynamics: it plots interest rates of government bonds across different maturities (2-year, 10-year, 30-year). Normal/Steep Curve: Growth and inflation optimism, typically supports risk-on sentiment. Flat Curve: Uncertainty about future growth, usually in late-cycle economies. Inverted Curve (short rates > long rates): Recession warning. markets expect the central bank to cut rates due to the slowing economy. The inverted curve has preceded almost every U.S. recession in the past half decade. LIQUIDITY CONDITIONS Liquidity means availability of credit in the financial system. High Liquidity: Credit is easy and cheap, supports asset prices, enhances risk appetite. Sources of ample liquidity are central bank QE, low interest rates. Tight liquidity: Credit becomes scarce and expensive, forces deleveraging, triggers risk-off sentiment. Reasons that can lead to low liquidity are central bank QT, rising rates, banking stress. BEHAVIORAL & POSITIONING DYNAMICS When too many investors are positioned the same way (crowded trade), small sentiment changes can trigger strong reversals. Extreme bullishness can signal sell opportunities when everyone is fully invested. Extreme bearishness can signal buy opportunities when selling pressure is exhausted. Key indicators to measure market positioning are: CFTC positioning data, VIX (volatility index), put/call ratios, fund flow data. REAL YIELDS Real Yield = Nominal Yield - Expected Inflation Rising Real Yields: Stronger currency (attracts foreign capital), weaker gold (higher opportunity cost), pressure on growth stocks. Falling Real Yields: Weaker currency, stronger gold, support for growth/tech equities. Real yields drive cross-asset flows through opportunity cost (risk-free alternative return), discount rate changes (affects stock valuations), and dollar funding (global capital flows). BOTTOM-LINE AND DYNAMICS INTERACTIONS Markets are driven by multiple forces simultaneously. The strongest moves occur when multiple dynamics align in the same direction. Identify the dominant theme (inflation? growth? central bank policy?), understand asset class implications, look for alignment, and monitor for shifts. Example Scenario - Fed Aggressive Tightening: Fed raises rates and begins QT → U.S. yields rise → Rising real yields → Tighter liquidity → Risk-off sentiment → USD strengthens, AUD/NZD/EM weaken, gold falls, growth stocks underperform. Success comes from identifying the dominant market theme, understanding implications across asset classes, looking for alignment when multiple dynamics point in the same direction, and monitoring for theme shifts that can reverse the entire market structure quickly. If you have questions or need any explanation don't hesitate to drop a comment.
TVC:GOLDEducation
by Trading_Stream
The Earnings Playbook: How to Navigate Each Quarter Like a ProTraders are in the heat of the earnings season and euphoria is sweeping every corner of the market. The charts twitch, traders stop talking about the Fed for five minutes ( not this week, though ), and online forums turn into a parade of watch-me-trade sessions. It’s that glorious stretch when companies pop open the books and reveal what’s really been happening behind the scenes. For professional investors, it’s data heaven. For retail traders, it’s emotional cardio. Stocks can rise 20% on a single upbeat forecast — or plummet before your coffee cools. The trick isn’t just to survive it. It’s to navigate it like a pro. 💼 Know the Seasons (and the Mood Swings) Earnings season comes four times a year — January, April, July, and October — and each has its own flavor. Q1 (April): That’s the hangover quarter. Holiday sales meet new-year cost cuts. Traders recalibrate expectations and reality collides with ambition. Q2 (July): The mid-year checkup. CEOs brag about “momentum,” analysts start sharpening their red pencils. Markets get twitchy. Q3 (October): The credibility test. Guidance revisions and cautious tones dominate. If the year’s been good, this is where the victory laps start. Q4 (January): The scoreboard reveal. Everyone tallies their annual wins and losses, and traders begin to bet on who carries the next year’s momentum. Each cycle has a similar rhythm: hype, reaction, digestion, and speculation. Think of it like a four-act play. 📊 Mind the Gap One thing to keep in mind whenever you find yourself in the earnings bonanza: the actual numbers matter less than the narrative. ( Looking at you, Oracle NYSE:ORCL ) A company can beat on revenue, miss on profit, and still rally — if the CEO sells a compelling story about the next quarter. Conversely, it can post record earnings and tank because analysts wanted even more. The pros know to look beyond the headline EPS. They dig into guidance, margins, and segment performance. Is revenue growing because of genuine demand, or just creative accounting? Are margins improving, or did the company quietly cut R&D? Markets don’t price what’s happened — they price what’s next. That’s especially true for growth stocks like t echnology companies . 🎯 Don’t Chase the Knee-Jerk Every earnings season has its share of instant overreactions — the “up 10% at open, down 8% by lunch” kind of chaos. That’s when seasoned traders sit back and let volatility do the heavy lifting. Smart money avoids buying into the frenzy or shorting into despair. Instead, they wait for the second move — when dust settles, algorithms calm down, and humans return to their desks. 🧠 Build Your Own Playbook To trade earnings season like a pro, you need a plan. Here’s how the veterans prep: Start early. Check the earnings calendar and mark high-impact names in your portfolio or watchlist. Study the setup. Look at how the stock’s performed heading into earnings. A big pre-report rally can mean expectations are too high. Focus on guidance. Earnings beats are old news — future commentary moves markets. Use position sizing. Never bet the farm on one report. Even the best setups can go sideways. Don’t forget the macro. Rate cuts, inflation prints, or a stray tweet from the US President can overshadow the best earnings beat. 🕹️ The Big Picture: Earnings as Market GPS Earnings season is the market’s health check because it tells you which sectors are thriving, which are limping, and how CEOs feel about the future (watch the language: “headwinds” and “volatility” are polite ways of saying buckle up). Taken together, earnings trends shape the broader narrative — from interest rate expectations to sector rotations. In other words, earnings season is where short-term trading meets long-term investing. Now go and prepare for the next batch of earnings — Big Tech is on deck this week with Apple NASDAQ:AAPL and Amazon NASDAQ:AMZN reporting today. Off to you : What’s your strategy this earnings season? Buying the hype or waiting to buy the dip? Share your thoughts in the comments!
SP:SPXEducation
by TradingView
25
Trading Bots: The Future of the Markets?Let’s be real, the idea of a trading bot sounds like the holy grail. Set it up, go to bed, and wake up to profit. If only it were that simple. Most bots don’t fail because of bad code, they fail because of bad logic. A bot is only as good as the rules you give it. What a Trading Bot Actually Does A bot doesn’t predict the market, it reacts to it. It follows a defined strategy: Buy when X happens, sell when Y is confirmed, cut losses if price breaks Z. That’s all. No fear. No greed. No “maybe I’ll wait for one more candle.” The power of bots isn’t in magic,it’s in consistency. They do what most traders can’t: follow the plan exactly as written, every single time. Why Most Bots Fail The truth? Most traders plug in random bots they find online without understanding what’s inside. They win a few trades, feel invincible… and then lose it all when volatility spikes. The reason isn’t the bot, it’s the lack of testing and understanding. If you don’t know your system’s weak spots, you’ll eventually find them the hard way. That’s why backtesting matters. Backtesting: Your First Line of Defense Backtesting shows how your logic performs over hundreds of trades — across bull, bear, and sideways markets. It reveals your system’s strengths, weaknesses, and drawdowns before you risk a dollar. A good backtest should tell you: Your average win rate and risk/reward ratio. How your system handles volatility. How often it hits consecutive losses. Whether your edge actually holds over time. If your bot looks good in backtests and performs similarly in live conditions — you’re onto something real. *Example of one of our indicator How Bots Can Enhance Your Trading You don’t have to hand everything over to automation. In fact, many great traders use bots to handle the mechanical side, while keeping the decision-making human. Here are a few examples: Trade Execution: Let the bot enter trades instantly after your setup triggers. Risk Management: Bots can move stop-losses, take partial profits, or scale positions automatically. Signal Filtering: Use automation to scan hundreds of pairs and alert you only when conditions align. Backtesting Sandbox: Test new ideas safely with data before deploying them live. Bots don’t replace traders, they multiply efficiency. They free your mind from execution so you can focus on refinement. The Real Lesson A trading bot isn’t a shortcut. It’s a mirror, it reflects your discipline, your rules, and your logic. If your plan is solid, a bot will make it unstoppable. If your plan is weak, it’ll just lose money faster. Automation doesn’t fix bad habits, it exposes them. So learn the logic, test it hard, then let the system do what humans struggle with most: follow the plan.
Education
by Green_Squad
12
Fed Overview: The Good and the Not So GoodDriven by an euphoric phase, the S&P 500 has approached 7,000 points, nearing its 2000 valuation record, with six consecutive months of gains without retracement. The key question for investors is now clear: has the Federal Reserve provided enough justification for this confidence, or does Jerome Powell’s caution mark the beginning of the end of this euphoric phase? 1) A Fed slowing the pace without complacency On Wednesday, October 29, the Fed announced another 25-basis-point rate cut, bringing the federal funds rate into the 3.75%–4.00% range. This is the second consecutive reduction, aimed at countering the labor market slowdown. However, the FOMC vote revealed strong internal divisions: one member wanted a deeper cut, another preferred no change. This reflects the delicate balance between supporting employment and avoiding renewed inflationary pressure. Another key signal: the Fed decided to pause its balance sheet reduction (quantitative tightening) starting December 1st, in order to preserve financial system liquidity, as credit markets show early signs of stress. Powell clarified that this pause does not imply a lasting return to an expansionary stance. Finally, Powell cooled expectations for another rate cut in December, stating that “nothing is guaranteed.” Money markets now price roughly a 70% chance of a hold in December, down from nearly 90% odds of a cut before the meeting. 2) Between monetary realism and market excess The Fed is not ruling out further easing, but it refuses to fuel a bullish rally in the S&P 500 that is now considered excessive relative to fundamentals. Current valuations rely heavily on expectations of continued rate cuts. If that narrative weakens, the likelihood of a technical correction in the S&P 500 rises. At this stage, however, the index has not yet signaled a reversal. DISCLAIMER: This content is intended for individuals who are familiar with financial markets and instruments and is for information purposes only. The presented idea (including market commentary, market data and observations) is not a work product of any research department of Swissquote or its affiliates. This material is intended to highlight market action and does not constitute investment, legal or tax advice. If you are a retail investor or lack experience in trading complex financial products, it is advisable to seek professional advice from licensed advisor before making any financial decisions. This content is not intended to manipulate the market or encourage any specific financial behavior. Swissquote makes no representation or warranty as to the quality, completeness, accuracy, comprehensiveness or non-infringement of such content. The views expressed are those of the consultant and are provided for educational purposes only. Any information provided relating to a product or market should not be construed as recommending an investment strategy or transaction. Past performance is not a guarantee of future results. Swissquote and its employees and representatives shall in no event be held liable for any damages or losses arising directly or indirectly from decisions made on the basis of this content. The use of any third-party brands or trademarks is for information only and does not imply endorsement by Swissquote, or that the trademark owner has authorised Swissquote to promote its products or services. Swissquote is the marketing brand for the activities of Swissquote Bank Ltd (Switzerland) regulated by FINMA, Swissquote Capital Markets Limited regulated by CySEC (Cyprus), Swissquote Bank Europe SA (Luxembourg) regulated by the CSSF, Swissquote Ltd (UK) regulated by the FCA, Swissquote Financial Services (Malta) Ltd regulated by the Malta Financial Services Authority, Swissquote MEA Ltd. (UAE) regulated by the Dubai Financial Services Authority, Swissquote Pte Ltd (Singapore) regulated by the Monetary Authority of Singapore, Swissquote Asia Limited (Hong Kong) licensed by the Hong Kong Securities and Futures Commission (SFC) and Swissquote South Africa (Pty) Ltd supervised by the FSCA. Products and services of Swissquote are only intended for those permitted to receive them under local law. All investments carry a degree of risk. The risk of loss in trading or holding financial instruments can be substantial. The value of financial instruments, including but not limited to stocks, bonds, cryptocurrencies, and other assets, can fluctuate both upwards and downwards. There is a significant risk of financial loss when buying, selling, holding, staking, or investing in these instruments. SQBE makes no recommendations regarding any specific investment, transaction, or the use of any particular investment strategy. CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. The vast majority of retail client accounts suffer capital losses when trading in CFDs. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money. Digital Assets are unregulated in most countries and consumer protection rules may not apply. As highly volatile speculative investments, Digital Assets are not suitable for investors without a high-risk tolerance. Make sure you understand each Digital Asset before you trade. Cryptocurrencies are not considered legal tender in some jurisdictions and are subject to regulatory uncertainties. The use of Internet-based systems can involve high risks, including, but not limited to, fraud, cyber-attacks, network and communication failures, as well as identity theft and phishing attacks related to crypto-assets.
SP:SPXEducation
by Swissquote
1
Trust and Release – 4 Times to LET Your Trade GoEvery trader knows the feeling. You’ve done all the homework, lined up every signal, and double-checked your risk. It’s like preparing to jump out of a plane with your parachute strapped on – exhilarating, but just a little nerve-wracking. When you’ve put in the work, planned the trade, and set it in motion, there’s only one thing left to do: Let it go. Trust the process and release the trade. Here are four clear-cut signs it’s time to step back and trust your strategy. SIGN #1: The System Lined Up Perfectly You’ve got a strategy for a reason. You trust it, you’ve backtested it, and it’s made it through countless simulations and reviews. Whether you’re trading Forex, JSE Top 40 or even the Dow Jones Index. When all the indicators in your system align, it’s time to act, not hesitate. Remember, the market rewards action, not perfection. If your system says “go,” then go. No second-guessing. J.T.T.T – Just Take The Trade SIGN #2: Your Entry Orders Are All in Place You’ve placed your entry orders and planned each move with the same precision as a grandmaster in chess. So why keep checking every tick? If you’ve calculated your entry points and set them with intention, then you’ve done your job. This is your chance to let the market do the rest. Obsessing over every micro-move will only drag you into a rabbit hole of doubt. Set it and step away. SIGN #3: It Matches Your Risk & Reward Criteria Your trade has a purpose, and you’ve defined it by setting your risk and reward limits. When your setup meets these criteria, there’s no reason to stick around second-guessing the play. You know your max loss, and you know your target profit. You’ve thought it through rationally, and now it’s time to trust that process. You’re here to be a professional, not a perfectionist. SIGN #4: You’ve Nailed Down Your Trade Size Position sizing is a science in itself, and you’ve already done the math. You’re not risking more than you’re willing to lose, and you’re confident in the upside. If you’ve set your trade size according to your plan, you’ve already protected your capital. The last thing you need is to add or subtract impulsively. Let the size stay as it is and let the market move. Conclusion: Trust and Release Trading is as much about discipline as it is about analysis. If you’ve done the work, checked off every box, and know your limits, the best thing you can do is walk away and let your trade breathe. Micromanaging won’t make you money; it’ll just wear you out. The market is like a river – you can’t force it to flow your way. You can only guide your boat down the path you’ve chosen and let the current do its thing. When you’ve planned the trade, trust yourself enough to leave it alone. So let’s sum up the FOUR signs to let your trade go. SIGN #1: The System Lined Up Perfectly SIGN #2: Your Entry Orders Are All in Place SIGN #3: It Matches Your Risk & Reward Criteria SIGN #4: You’ve Nailed Down Your Trade Size
VELOCITY:US500Education
by Timonrosso
Position Sizing: The Math That Separates Winners from LosersMost traders blow up their accounts not because of bad entries, but because of terrible position sizing. You can have a 60% win rate and still go broke if you risk too much per trade. The 1-2% Rule (And Why It Works) Never risk more than 1-2% of your account on a single trade. Here's why this matters: Risk 2% per trade → You can survive 50 consecutive losses Risk 10% per trade → 10 losses = -65% drawdown (you need +186% just to break even) Risk 20% per trade → 5 losses = game over The Position Sizing Formula Position Size = (Account Size × Risk %) / (Entry Price - Stop Loss) Real Example: Account: $10,000 Risk per trade: 2% = $200 Entry: $50 Stop loss: $48 Risk per share: $2 Position Size = $200 / $2 = 100 shares If stopped out → You lose exactly $200 (2%) If price hits $54 → You make $400 (4% gain, 2:1 R/R) Different Risk Frameworks Conservative (1% risk) Best for: Beginners, volatile markets, high-frequency trading Survivability: Can take 100+ losses Growth: Slower but steady Moderate (2% risk) Best for: Experienced traders, tested strategies Survivability: 50 consecutive losses Growth: Balanced risk/reward Aggressive (3-5% risk) Best for: High conviction setups, smaller accounts trying to grow Survivability: 20-33 losses Growth: Faster but dangerous Warning: Never go above 5% unless you're gambling, not trading. The Kelly Criterion (Advanced) For traders with significant backtested data: Kelly % = Win Rate - Example: Win rate: 55% Avg win: $300 Avg loss: $200 Win/Loss ratio: 1.5 Kelly % = 0.55 - = 0.55 - 0.30 = 25% But use 1/4 Kelly (6.25%) or 1/2 Kelly (12.5%) - Full Kelly is too aggressive for real markets. Common Position Sizing Mistakes ❌ Revenge trading larger after a loss ✅ Keep position size constant based on current account value ❌ Risking the same dollar amount regardless of setup quality ✅ Risk 0.5% on B-setups, 2% on A+ setups ❌ Ignoring correlation risk ✅ If you have 5 tech stocks open, you're really risking 10% on one sector ❌ Not adjusting after drawdowns ✅ If account drops 20%, your 2% risk should recalculate from new balance The Volatility Adjustment In high volatility (VIX > 30): Cut position sizes by 30-50% Widen stops or risk less per trade Market can gap past your stops In low volatility (VIX < 15): Can use normal position sizing Tighter stops possible More predictable price action My Personal Framework I use a tiered approach: High conviction setups (A+): 2% risk Good setups (A): 1.5% risk Decent setups (B): 1% risk Experimental/learning: 0.5% risk Maximum combined risk: Never more than 6% across all open positions. The Bottom Line Position sizing is the only thing you have complete control over in trading. You can't control: Where price goes Market volatility News events But you CAN control how much you risk. The traders who survive long enough to get good are the ones who master position sizing first. What's your current risk per trade? Drop it in the comments. If it's above 5%, we need to talk.
IG:NASDAQEducation
by Maaz_BA
Position Sizing: The Math That Separates Winners from LosersMost traders blow up their accounts not because of bad entries, but because of terrible position sizing. You can have a 60% win rate and still go broke if you risk too much per trade. The 1-2% Rule (And Why It Works) Never risk more than 1-2% of your account on a single trade. Here's why this matters: Risk 2% per trade → You can survive 50 consecutive losses Risk 10% per trade → 10 losses = -65% drawdown (you need +186% just to break even) Risk 20% per trade → 5 losses = game over The Position Sizing Formula Position Size = (Account Size × Risk %) / (Entry Price - Stop Loss) Real Example: Account: $10,000 Risk per trade: 2% = $200 Entry: $50 Stop loss: $48 Risk per share: $2 Position Size = $200 / $2 = 100 shares If stopped out → You lose exactly $200 (2%) If price hits $54 → You make $400 (4% gain, 2:1 R/R) Different Risk Frameworks Conservative (1% risk) Best for: Beginners, volatile markets, high-frequency trading Survivability: Can take 100+ losses Growth: Slower but steady Moderate (2% risk) Best for: Experienced traders, tested strategies Survivability: 50 consecutive losses Growth: Balanced risk/reward Aggressive (3-5% risk) Best for: High conviction setups, smaller accounts trying to grow Survivability: 20-33 losses Growth: Faster but dangerous Warning: Never go above 5% unless you're gambling, not trading. The Kelly Criterion (Advanced) For traders with significant backtested data: Kelly % = Win Rate - Example: Win rate: 55% Avg win: $300 Avg loss: $200 Win/Loss ratio: 1.5 Kelly % = 0.55 - = 0.55 - 0.30 = 25% But use 1/4 Kelly (6.25%) or 1/2 Kelly (12.5%) - Full Kelly is too aggressive for real markets. Common Position Sizing Mistakes ❌ Revenge trading larger after a loss ✅ Keep position size constant based on current account value ❌ Risking the same dollar amount regardless of setup quality ✅ Risk 0.5% on B-setups, 2% on A+ setups ❌ Ignoring correlation risk ✅ If you have 5 tech stocks open, you're really risking 10% on one sector ❌ Not adjusting after drawdowns ✅ If account drops 20%, your 2% risk should recalculate from new balance The Volatility Adjustment In high volatility (VIX > 30): Cut position sizes by 30-50% Widen stops or risk less per trade Market can gap past your stops In low volatility (VIX < 15): Can use normal position sizing Tighter stops possible More predictable price action My Personal Framework I use a tiered approach: High conviction setups (A+): 2% risk Good setups (A): 1.5% risk Decent setups (B): 1% risk Experimental/learning: 0.5% risk Maximum combined risk: Never more than 6% across all open positions. The Bottom Line Position sizing is the only thing you have complete control over in trading. You can't control: Where price goes Market volatility News events But you CAN control how much you risk. The traders who survive long enough to get good are the ones who master position sizing first. What's your current risk per trade? Drop it in the comments. If it's above 5%, we need to talk.
IG:NASDAQEducation
by Maaz_BA
Why Most Traders Exit Too Early — Psychology of Taking Profits1. Introduction Most traders obsess over finding the perfect entry. But what really separates professionals from everyone else is how they exit. Closing trades too early kills more profits than bad setups ever will. The problem might be one's psychology. 2. The Two Fears That Control Exits When managing profits, every trader battles two emotions: Fear of Loss – “ What if the PRICE reverses?” Fear of Regret – “What if it keeps running after I close?” Both pull you in opposite directions. One makes you take profit too soon; the other makes you hold too long. The balance between them defines your discipline. 3. Why Most Traders Close Too Early After entering a good trade, emotions rise. As profit builds, so does anxiety. Instead of trusting their plan, traders imagine losing what they’ve just gained, so they close the trade prematurely. In doing so, they trade emotion, not logic. It feels safe in the moment, but long term it destroys reward-to-risk consistency. 4. The Solution: Predefine the Exit The only way to remove hesitation is to plan exits before entering. Decide in advance: – Target levels based on structure or risk-reward. – Conditions that justify partial profits. – Situations that allow for trailing stops. When these decisions are made beforehand, emotions can’t interfere mid-trade. You act according to a plan, not a feeling. Visual idea: Screenshot-style mockup of trade plan with marked “Entry,” “Partial,” “Final Target.” 5. The Real Lesson Profit-taking should be systematic, not emotional. Your job isn’t to catch every little move, it’s to execute your plan without hesitation.
BITSTAMP:BTCUSDEducation
by HyroTrader
15
Upcoming End of the Fed’s Quantitative Tightening?This Wednesday, October 29, 2025, could mark a decisive turning point for U.S. monetary policy and, by extension, for global markets. All eyes are on the Federal Reserve (Fed), which is expected to announce a cut to its main interest rate. But investors are paying even closer attention to another key question: the potential end of Quantitative Tightening (QT) — the process through which the Fed reduces the size of its balance sheet. 1) What is QT, and why might the Fed slow it down again? Since 2022, the Fed has been implementing QT to gradually withdraw the excess liquidity injected during the post-Covid period. In practice, this means allowing part of its Treasury and mortgage-backed securities holdings to mature without reinvesting the proceeds. As a result, the amount of dollars in circulation declines, credit conditions tighten, and global liquidity contracts. Several signals now point toward a shift in stance. The U.S. economy is slowing, some regional banks are showing renewed signs of stress, and inflationary pressures are easing. In this environment, the Fed may conclude that it’s time to ease financial conditions to avoid an excessive economic slowdown. Ending QT — or even slowing its pace further — would effectively inject liquidity back into the financial system. This would mean bank reserves rising again, facilitating credit flows and encouraging risk-taking in the markets. 2) A positive impact on risk assets Historically, each time the Fed stopped shrinking its balance sheet, equity markets rebounded. The logic is straightforward: more liquidity in the system typically leads to higher asset prices. A slower QT would likely come alongside lower bond yields and a weaker U.S. dollar — two factors that generally favor stock market rallies and risk asset performance. This support seems all the more crucial today, as the S&P 500 remains near its all-time high valuations. The chart below shows the QT program since 2022, with a gradually declining monthly pace since 2024. 3) Jerome Powell’s key message Finally, Jerome Powell’s speech will be critical. Markets will react not only to the policy decisions themselves but also to the tone: • What pace for balance sheet reduction? • What flexibility in responding to inflation? • What outlook for 2026? If Powell hints that the Fed is preparing to end QT, the message will be clear: liquidity is returning, and with it, a renewed appetite for risk across financial markets. DISCLAIMER: This content is intended for individuals who are familiar with financial markets and instruments and is for information purposes only. The presented idea (including market commentary, market data and observations) is not a work product of any research department of Swissquote or its affiliates. This material is intended to highlight market action and does not constitute investment, legal or tax advice. If you are a retail investor or lack experience in trading complex financial products, it is advisable to seek professional advice from licensed advisor before making any financial decisions. This content is not intended to manipulate the market or encourage any specific financial behavior. Swissquote makes no representation or warranty as to the quality, completeness, accuracy, comprehensiveness or non-infringement of such content. The views expressed are those of the consultant and are provided for educational purposes only. Any information provided relating to a product or market should not be construed as recommending an investment strategy or transaction. Past performance is not a guarantee of future results. Swissquote and its employees and representatives shall in no event be held liable for any damages or losses arising directly or indirectly from decisions made on the basis of this content. 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Products and services of Swissquote are only intended for those permitted to receive them under local law. All investments carry a degree of risk. The risk of loss in trading or holding financial instruments can be substantial. The value of financial instruments, including but not limited to stocks, bonds, cryptocurrencies, and other assets, can fluctuate both upwards and downwards. There is a significant risk of financial loss when buying, selling, holding, staking, or investing in these instruments. SQBE makes no recommendations regarding any specific investment, transaction, or the use of any particular investment strategy. CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. The vast majority of retail client accounts suffer capital losses when trading in CFDs. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money. 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FRED:FEDFUNDSEducation
by Swissquote
Indicators and Trading Signals — How It WorksWhen you first start trading, indicators feel like the secret sauce. RSI, MACD, EMA, Volume every line promises to reveal what the market will do next. You start stacking them like LEGO blocks, thinking more confirmation = more accuracy. But here’s the hard truth: indicators don’t predict they react. The real skill isn’t using more of them, it’s knowing when to listen and when to ignore. The Role of Indicators Indicators are tools, not magic formulas. They exist to translate price action into structure. That’s it. RSI tells you about momentum. Volume shows commitment. Moving averages reveal trend direction. Volatility indicators show risk zones. The power isn’t in the tool itself, it’s in how consistently you interpret it. That’s why two traders can look at the same RSI line and do completely opposite things. The Trap: Signal Hunting Every trader falls into this phase: jumping from one setup to another, waiting for that “perfect signal.” The problem? There isn’t one. Even the best indicators will fail if your execution and mindset aren’t aligned. Signals don’t make money! Systems do. Systems combine momentum, volume, volatility, and trend logic, so signals confirm each other, not contradict. Signal vs Execution Let’s be real, getting a signal is the easy part. Following it correctly is where most traders fall apart. You get a buy signal… but wait for “one more candle.” You see a sell alert… but hold, just in case it bounces. You close early because “it already moved enough.” That’s why automation matters. It doesn’t second-guess, it executes. From Noise to System If your screen looks like a Christmas tree of indicators, you’re not trading, you’re guessing. Clean it up. Pick a few tools that complement each other, build rules around them, and stick to those rules. That’s how professionals think: less emotion, more structure.
Education
by Green_Squad
11
Graham's Formula for Intrinsic Value of a Stock➡ About Benjamin Graham Benjamin Graham is widely known as the Father of Value Investing. He was a professor, economist, and mentor to great investors like Warren Buffett. Graham’s investment philosophy focused on buying stocks below their intrinsic value to ensure a margin of safety and protecting capital even when markets behave irrationally. His books The Intelligent Investor and Security Analysis remain timeless classics in the world of investing. ➡ His Formula to Calculate the Intrinsic Value of a Stock Graham designed a simple mathematical model to estimate what a stock is truly worth- its intrinsic value. Formula: V=EPS×(8.5+2g) Later, he modified it to account for changing interest rates: V= /Y ​ Meaning of Each Value in the Formula V: Intrinsic value or the fair value of the stock. EPS: Earnings per share (trailing twelve months). 8.5: Base P/E ratio for a no-growth company. g: Expected annual earnings growth rate (for next 7–10 years). 4.4: Average yield on high-grade corporate bonds when Graham proposed the formula. Y: Current yield on AAA-rated corporate bonds (used to adjust for changing interest rate conditions). ➡ How to Calculate Let' sunderstand the calculations with the help of an example of NVDA stock: EPS= 3.5 (TTM) Growth rate= 32.8 (next 3-5years) Y= 4.09 All other values remain the same V= / 4.09 V= 279 So, the intrinsic value of the stock would be around 279 Current price= 186 Difference= 67% Hence the Formula suggests that the current price is still way below its fair value and hence buyable. ➡ Are these Too Aggressive Valuations? Yes, it may be too optimistic. The term '2g' gives very high weightage to growth, which can inflate valuations quickly. In a world where corporate earnings growth is less predictable and global interest rates fluctuate, this approach may overvalue companies that appear to have strong growth potential on paper. ➡ Relevance in the Current Market Scenario While Graham’s formula is historically important and a great conceptual framework for understanding valuation, it should not be used as a standalone tool today. Markets are far more complex and influenced by globalization, technology, inflation, and interest rate cycles. A more balanced approach is to use Graham’s principles (margin of safety, valuation discipline) but rely on modern valuation models like Discounted Cash Flow (DCF) or Relative Valuation Ratios and treat the formula as a learning foundation rather than a precise valuation tool. What do you think about this tool for calculating a stock's valuation? Is it still relevant? Do 🚀 comment 💬 Disclaimer: I am not a valuation analysis expert so apply your due diligence while investing. The stock example taken in this educational post is just for demonstration purpose and not a buy/sell recommendation.
TVC:SPXEducation
by Bravetotrade
The Historical Crashes of Gold — What Really Caused Them ?Hello Traders 🐺 Throughout history, every major bear market in gold has been deeply connected to macro factors, monetary policy, and investor psychology. Here I’ve summarized the key factors behind gold’s biggest crashes since the 1970s 👇 🧩 Key Factors Behind Historical Gold Crashes 1️⃣ Rising Real Interest Rates (↑) The biggest historical enemy of gold. Since gold has no yield, when real interest rates (nominal rates – inflation) turn positive, investors prefer bonds or the U.S. dollar. Example: In the 1980s, Fed Chair Paul Volcker raised rates above 15% to fight inflation. Result: gold dropped from $850 (1980) to around $300 by the mid-80s — a 65% crash, marking the longest bear market in gold’s history (1980–1999). 2️⃣ A Stronger Dollar (DXY ↑) Gold usually moves inversely to the dollar index. When the dollar strengthens (especially vs EUR and JPY), gold comes under pressure. Example: Between 2011–2015, DXY rose from 73 → 100, while gold fell from $1920 → $1050 (≈45% decline). 3️⃣ End of Crises or Return of Market Confidence When fear fades and confidence returns (e.g., after financial crises or geopolitical tensions ease), investors move away from safe-haven assets like gold. Example: After the 2008 crisis, once markets stabilized, gold entered a prolonged bear market (2012–2015). 4️⃣ Central Banks Stopping Gold Purchases When central banks reduce or halt their gold accumulation, supply pressure builds. Example: In the late 1990s, European central banks sold large portions of their reserves (known as the Central Bank Gold Agreement 1999), which accelerated gold’s decline. 5️⃣ Strong Stock Market Returns When equities deliver strong real returns, capital often rotates out of gold. Example: From 1995–2000, the S&P 500 rallied massively, while gold suffered one of its weakest decades. 6️⃣ Low Inflation & Economic Stability Gold thrives on uncertainty and high inflation. When inflation is low and stable, investors see little reason to hold gold. Example: Between 1985–2000, inflation in the U.S. stayed low — and gold traded sideways between $250–$400 for nearly 20 years. 7️⃣ Technical & Sentiment Breakdown When key supports break and sentiment turns bearish, fear-driven selling usually accelerates the downtrend. Example: In 2013, gold broke below the $1550 support, triggering a rapid 20% selloff within months. My final thought: Every time gold enters a euphoric phase, history reminds us that the higher it climbs, the harder it falls. So what do you think right know ? is GOLD about to fall ? let me know in the comment section down below this idea 😉🤔 So stay disciplined, watch the macro shifts carefully — and as always remember: 🐺 Discipline is rarely enjoyable, but almost always profitable. 🐺 🐺 KIU_COIN 🐺
OANDA:XAUUSDEducation
by Kiu_Coin
5 Essentials of Trading Success Trading is the greatest roller coaster you’ll ever ride. Trading has its thrills, challenges, and endless potential for growth. But, before you hit “Buy” or “Sell,” it’s crucial to lay down a solid foundation. Too many traders jump in without preparation, and without knowing the real life variables. When things go great, they feel normal and you feel in charge. When things go bad, you feel it’s the end of the world. So you need to learn to harness each of the 5 essentials to trading success. Essential #1: Build a Solid Foundation of Knowledge You wouldn’t drive a car without knowing the rules of the road, right? Trading is no different. Before placing your first trade, you’ll need to understand the key concepts and market basics that will serve as your roadmap. Key areas to cover include: Market types: Know the difference between stocks, forex, commodities, and cryptocurrencies. Know which is the best stock screener. Also you need to know which markets will work for you and your trading personality. Trading terminology: Terms like “bearish,” “bullish,” “short-selling,” “leverage,” and “margin” might sound like jargon now, but they’ll soon become your everyday vocabulary. Order types: Limit orders, market orders, stop-loss, take-profit. Each of these orders serves a specific purpose. Mastering them is essential for making controlled and effective trades. Essential #2: Select what you want to trade first: The Art of Asset Allocation Trading is thrilling, but let’s face it. No one knows what the market will do tomorrow. That’s why choosing the right mix of assets—and learning the art of asset allocation—is crucial for long-term success. What does asset allocation mean in practice? Diversify your portfolio: Don’t put all your eggs in one basket. Invest and trade across different asset classes to spread out risk. It’s better to trade different portfolios with stocks, Forex, indices and even commodities. Successful trading isn’t about picking one “winning” asset. It’s about managing risk and creating a balanced portfolio that can weather market storms. Diversification is KEY! Essential #3: Risk Management: Strategies to Protect Your Capital If you only remember one thing from this article, let it be this: Risk management is your best friend in trading. Not only do you learn how to be a trader, but also a risk portfolio manager. A smart trader doesn’t only think about potential gains—they think about how to protect their capital when things don’t go as planned. Simple, powerful ways to manage risk include: Set stop-loss orders: Automatically sell a position when it drops to a certain price to minimize losses. Use position sizing: Avoid putting too much of your capital into a single trade. Limit each trade to a small percentage of your total funds—usually no more than 0.5%-2%. Apply the “2% rule”: Never risk more than 2% of your capital on a single trade. This can help prevent one loss from wiping out your progress. Remember, every trader has losses; it’s part of the game. But with a solid risk management strategy, those losses won’t be catastrophic. Essential #4: Charting the Path: Introduction to Technical Analysis Charts are a trader’s treasure map. Learn to interpret them, and you’ll have insights into market trends, price movements, and potential buy/sell signals. Technical analysis allows traders to make data-driven decisions rather than relying on gut feelings. Key tools for technical analysis: Candlestick patterns: These can show trends, reversals, and market sentiment. Patterns like “doji,” “hammer,” and “engulfing” candles can offer powerful insights. Indicators: Tools like moving averages, RSI (Relative Strength Index), and MACD (Moving Average Convergence Divergence) help you assess price momentum and potential reversal points. As you might know by now. I like to stick to three indicators: Breakout patterns, 2 Moving Averages and Trend lines. We need to learn to simplify our strategy because we will be following it over our entire trading career. Trendlines: Drawn on charts, trendlines reveal price direction and potential breakout or breakdown levels. Essential #5: The Psychology of Success: Developing a Trader’s Mindset Trading isn’t just about strategies and technical skills; it’s also a mental game. Emotions—fear, greed, EGO, frustration — can interfere with sound decision-making. If you can’t manage your mind, you can’t manage your portfolio. And that’s why it’s essential to develop a mechanical, professional and calm mind when trading. Developing a disciplined mindset is what separates successful traders from those who burn out. Conclusion Let’s sum up the 5 ESSENTIALS to trading success. Essential #1: Knowledge First: Understand trading terminology, market types, and order types. Essential #2: Asset Allocation: Diversify your portfolio based on your risk profile. Essential #3: Risk Management: Protect your capital with stop-losses, position sizing, and the 2% rule. Essential #4: Technical Analysis: Learn chart patterns, indicators, and trendlines to guide decisions. Essential #5: Trader’s Mindset: Control emotions, maintain discipline, and focus on long-term success. Trading isn’t just a skill—it’s an adventure that rewards preparation, patience, and resilience. Keep learning, stay focused, and remember: your success is built one trade at a time.
TRADENATIONSB:US500Education
by Timonrosso
1