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Harmonic Patterns

RLinda | Market cycles and the role of the market maker 🤠The price channel is a limited trading range in which the price moves during a certain period of time. In other words, it is a "corridor" on the price chart. The boundaries of the price channel are outlined by two lines: resistance and support. A resistance level is a price level from which price reverses as it approaches from the bottom to the top. This level is as if it is resisting the price, preventing it from going higher. A support level is a price level from which price reverses when approaching from above downward. This level as if supports the price, not allowing it to go lower. A resistance level is a price level from which price reverses on the downward approach. Accumulative flat is a limited area within which there is only a slight fluctuation in price. In some cases, a consolidation is referred to as a sideways trend movement in which there is only a slight change in price, varying within a fairly narrow corridor. A bear market is a period when the price of an asset has fallen by about 20% or more from recent highs. At this point, the investor fear index increases and panic is possible in the market. A bear market is the same as a bear market, it is also called a downtrend. It is opposed to a bull market. Bullish - vice versa ----------------------------------- Always before a move in one direction, the market maker forms an accumulative flat, the price in it trades from border to border. An accumulative flat can form for a long time. The narrower and the longer is the consolidation, the stronger is the momentum. Before a large impulse movement, a large player forms a shakeout relative to the upper and lower boundaries, determines positions, and after all bids are activated, moves towards the larger accumulation of players. Then a distributive drop (free) is formed where there is no resistance from the support side, since earlier the balance was already broken. Bids are collected and the ratio of buyers and sellers begins to change. Price passes into consolidation after the fall. The subsequent fall is the entry of liquidity from those players who had previously entered at the highs The price after the fall goes into consolidation, if we see that there is no deep pullback, it means that the big player is not interested and the resistance limit zones do not allow the price to grow. To determine the boundaries and consolidations, to understand where the big player is gaining and where he distributes them, it is better to use the higher timeframes, and for entry points - the lower ones. Sincerely, R. Linda! *The wording is taken from google
Education
by RLinda
33
161 Rejection Strategy Strategy Name: 161 Rejection Type of strategy: A reversal strategy. Conditions for use: This strategy is used if there are valid Elliot wave trend legs. It is used to attempt to trade the reversal of wave 5 into the ABC correction. Drawing the fib swing: In Elliot wave, there should be a consistent trend and then this starting to get a bit more messy. The messy stuff will usually have a false reversal. A range and breakout of the range making it look like the trend has ended. From this there will come another big trend leg (Wave 5). We are able to draw our swing when we have seen: A steady trend with few dips. Starting to pick up pace. The trend getting choppy and probably false reversals. A new high/low being made in the trend. Once we have these, we can fib the range and the 161 - 220 of this is our intended zone of entry for reversals. Also where we want to be protective of any profits we have from trading the trend. Even if not betting on reversal, it’s wise to trail stops tight into these levels. 161s can create reversals. When a strong wave 3 has transitioned into a range and a pullback in the trend, this is when we can draw fibs on the pullback and look for this trade. Basic strategy theory: In the guidelines for Elliot wave 161 extensions are mentioned as a common ending point. And if you go through lots of examples of reversals you’ll probably come to see that has a point. Strategy is based loosely on that Elliot wave guideline. That it should be obvious seeing the hyper strong wave 5 into 161 extensions if you draw them. To make a guideline into a practical strategy we need to work out entry and exit criteria. In testing I’ve found the reversal usually will come from the 161 or close to the 220. Sometimes just kissing the 220 fib. In most instances price is able to break the 220 the planned trade will fail. That’s why the stop is there. Things we usually see before the strategy trades: An early spot to notice this setting up is late into wave 3. Late into wave 3 the trend in question will be getting a lot of attention. You should look for strong trends that seem to be getting stronger and if it’s a big move there should be a lot of public chatter about it and forecasts getting increasingly more optimistic. This obviously strong trend should transition into a messy range and/or sharp pullback. Then there should be the fastest move of the trend so far when this pullback reverses. Confidence in the trend should be ultra high and price should be consistently trending up to the 161. Thing we usually see when strategy is not working (Stop loss conditions): This is a great strategy when it works but it fails when used in the wrong part of a move in a big way. The rules for this strategy are price reverses at or before 220 fib. When it fails we either break the 220 and head into a strong trend or we go a bit over, make pullback smaller than we were targeting and the 220 make big break next time. It’s best to stop out over the 220 in case a big trend move comes. Unfortunately, it’s also the case that a lot of time price will go just over the 220 and then pullback. It won’t be the target swing the trade was taking, but it would have put the trade in profit. Which means you can stop out at the worst time. After a 220 break the probability of a bigger pullback decrease. It’s usually better to switch to following the trend and enter into any big pullbacks retesting previous support/resistance levels. Which is worth noting, it’s tempting to enter again if stopped out and it looks like it’s working. Often a trap. Strategy strengths: Can be very high risk:reward. Helps a lot with protecting profits in a running trend trade. When this is working once the swings targeted start they are often strong and smooth and easy to take close to the full value of the move. Trailing stops do not hit and big profit targets can. Strategy weaknesses: When used in a move that is not forming a wave 5 (For example using it through wave 3) this strategy generates false signals that price will usually trend against. Losses not cut can be devastating. Entries can sometimes be spiked out at the end of a move just over the 220 fib.
IDX:KIJAEducation
by holeyprofit
1
Here's Why the Tech-Led Selloff is Likely Over (for now)In this post, I will attempt to provide evidence to show why the tech-led selloff is likely to be over (for now). I will use the Nasdaq 100 (QQQ) and its inverse derivative, SQQQ, as my argument's basis. The inverse (short) ETF of the Nasdaq, SQQQ, has never closed a weekly candle above the Leading Span B of the Ichimoku Cloud (pink line in chart). Last week and the previous week, the weekly candle was very strongly resisted at this level. Now, the weekly and monthly momentum oscillators started to move in the opposite direction. This will not only make it much harder for SQQQ to pierce the line, but it could also result in SQQQ plummeting quickly, and therefore QQQ and the Nasdaq rebounding quickly. For comparison, many data points are covered in this chart, and there is a high statistical probability that the Nasdaq has bottomed. Not even during the peak fear of COVID-19, when the global economy shut down and governments feared millions of deaths, did SQQQ pierce the weekly Ichimoku Cloud. In December 2018 when the Fed was starting to rapidly roll off assets on its balance sheet and was raising interest rates, SQQQ still did not pierce the cloud. This fear is very similar to today's fear. Even further back, not even during the major flash crash in 2015 or on Black Monday in 2011 when the market crashed did SQQQ pierce the cloud. Today, hardly anyone remembers these episodes in stock market history. Similarly, in ten years or so, few people (except maybe those who sold all their positions at the market bottom) will remember what happened in May 2022. The NDTH is a chart of the percentage of Nasdaq 100 stocks that are above their 200-day moving average. It dropped to nearly 10 in May 2022, meaning almost 90% of Nasdaq 100 stocks were below their 200-day moving average. The last time this level was reached was in March 2020 right at the bottom of the COVID market crash. The NDTH has never dropped below 15 except during significant bottoms on the Nasdaq. There are many other examples in which the charts suggest, with high probability data, that we just experienced a significant bottom on the Nasdaq 100. (Eg. The Nasdaq 100 was supported on the monthly base line, the monthly candle is extremely bullish, the monthly EMA ribbon of the QQQ/SPY ratio chart strongly held the outperformance trend in place, inflation and interest rate charts are cooling. Although this may be a significant bottom, it does not mean a years-long bull span is ahead. Rather the charts suggest the panic selling has ended for at least the short to intermediate-term. To be fair, some charts suggest that the QQQ/SPY outperformance trend could be nearing the end of its decades-long run. (Credit to @Breakout_Charts for identifying this) If this occurs, then it could be the start of a new cycle, or even super cycle, whereby the Nasdaq underperforms for years. Finally, a point about market psychology. Bottoms occur when 'extreme fear' turns into just 'fear' (yes, there's actually an indicator that measures this). That indicator has moved significantly from 'extreme fear' towards 'fear'. With this said, there might be a lot of people who might comment on this post and say scary-sounding things about the state of the economy or stock market. If none of these fears existed among market participants, we would never even have gotten to this bottom. Never sell because of fear alone. Not financial advice. As always anything can happen. Just my thoughts. Leave a like if this was helpful and you'd like me to post more analyses. Please feel free to comment below if you have additional thoughts.
NASDAQ:SQQQEducation
by SpyMasterTrades
5
How To: Size your position using 'Historical Volatility'Wassup folks! In today's vid I'm explaining a new topic - How to size your position (read: how to size risk per trade). Necessary Indicators: Historical Volatility Prerequisites: 1. Have a defined trade plan. 2. Know the outcome you're expecting. 3. Have a hypothesis on how long you plan to hold the trade. 4. *not mentioned, but obviously have a way to protect downside risk (stop loss, psychological cut off level) Because Bitcoin is in a range, and also because the moves have been _somewhat_ easy to anticipate, I came to the conclusion utilizing previous price action that in order to make 10%, I'd probably have to hold this trade somewhere between 3-5 days. After knowing my end goal, and time horizon, I then needed to know how much added risk (leverage) I needed in order to reach my goal in 4 days with the expected volatility. Calculation: Expected Gain/Expected Volatility = Leverage 10/23 = 0.43x Leverage Keep in mind that past events cannot predict future outcomes. We can only use them as a guide to give us a probable outcome, nothing can truly be predicted. This indicator something I've recently learned and thought it would be good to share, which also helps me understand it better by having to break it down to someone else. I haven't used this indicator before to make trades, however I plan to test this hypothesis out and will update this idea thread on the results in 3-5 days. If you have more insight on this indicator on how you use it or any tips, feel free to leave a comment below.
GEMINI:BTCUSDEducation
by N0ST0PL0SS
Price Inefficiencies + Fair Value GapsNote: The bigger the gap (stronger momentum move) the more likely for price to retest that area. Dont use this as an indicator to buy or sell, use it in conjunction with other strategies you may have. This is just one way to come to a conclusion about price. I will link another video that will show the same thing utilizing other indicators. Note: I know my explanation of price inefficiencies isnt scientifically correct, however it's explained in a way that makes it easier to understand.
GEMINI:BTCUSDEducation
by N0ST0PL0SS
2
Bearish Cyphery Pattern - Elliott Wave Analysis Bearish Cypher Pattern , in Elliott Wave Analysis is Irregular Flat Correction or Running Flat Correction Rules The B point stands at the end of the AB leg, which is a retracement of the XA leg. The B point must lie between a 0.382 and 0.618 retracement of the XA leg; The C point lies at the end of the BC leg and should be a 1.272 to 1.414 projection of the XA leg; Point D should be a precise 0.786 retracement of the line between X and C (XC). The D point is the end of the pattern.
NYSE:DSXEducation
by Trade_Your_Way
Bullish Cypher Pattern - Elliott Wave Analysis Bullish Cypher Pattern , in Elliott Wave Analysis is Irregular Flat Correction or Running Flat Correction Rules The B point stands at the end of the AB leg, which is a retracement of the XA leg. The B point must lie between a 0.382 and 0.618 retracement of the XA leg; The C point lies at the end of the BC leg and should be a 1.272 to 1.414 projection of the XA leg; Point D should be a precise 0.786 retracement of the line between X and C (XC). The D point is the end of the pattern.
NYSE:DSXEducation
by Trade_Your_Way
Bearish 5-0 Pattern - Elliott Wave Analysis The 5-0 Pattern has the following ratios. A no specific retracement level AB leg extends XA leg between 113% – 161.8% BC leg extends 0X leg between 88,6% - 113% 113% BC leg is also an extension of AB by 161.8% – 224% CD leg should to be 50% retracement of BC The first part of 5-0 Pattern is Shark Pattern. The A-B-C leg of Shark Pattern is in Elliott Wave (w) - (x) - (y), legs of Wave A from Flat Correction The second part of 5-0 Pattern is Shark Pattern is D. D leg in Shark Pattern, in Elliott Wave is Wave B , leg of Flat Correction That is mean after B we are waiting Wave C and then PRZ
TVC:DXYEducation
by Trade_Your_Way
1
Bullish 5-0 Pattern - Elliott Wave Analysis The 5-0 Pattern has the following ratios. A no specific retracement level AB leg extends XA leg between 113% – 161.8% BC leg extends 0X leg between 88,6% - 113% 113% BC leg is also an extension of AB by 161.8% – 224% CD leg should to be 50% retracement of BC The first part of 5-0 Pattern is Shark Pattern. The A-B-C leg of Shark Pattern is in Elliott Wave (w) - (x) - (y), legs of Wave A from Flat Correction The second part of 5-0 Pattern is Shark Pattern is D. D leg in Shark Pattern, in Elliott Wave is Wave B , leg of Flat Correction That is mean after B we are waiting Wave C and then PRZ
TVC:DXYEducation
by Trade_Your_Way
Bearish Butterfly Pattern - Elliott Wave Analysis Motion AB: Point B is the most important level of the impeller pattern, which should be at 78.6% of the XA wave. BC movement: BC movement should continue until the Fibonacci retracement of 38.2% or 88.6% of the AB wave. CD Motion: If BC is 38.2% of the AB wave, the CD wave is likely to reach 161.8% of the BC wave. But if BC is as much as 88.6% of the AB wave, CD motion is likely to continue up to 261.8% of the BC wave. AD Motion: Finally, the total AD motion, which includes BC, AB and CD waves, should be at the level of 127% or 161.8% of the XA wave.
NASDAQ:TSLAEducation
by Trade_Your_Way
Triple Screen Method: Trading With The Trend: Commodities Note that this is not a trade recommendation but simply illustration of a particular approach. There are multiple reasons that I wouldn't execute this particular idea at this time, but those considerations are for another post. Those of you who have followed my work for the last few months know that I prefer simple. The triple screen chart perspective is precisely that. A quick, down and dirty trade filtering system that can help traders with their decision process. Even after decades of active trading, it's not often that I take a meaningful trade without taking at least a quick glance, if not at the triple screen, then at least at the trend of higher degree. Happily, it only takes a moment in TradeView to set up a work space. Importantly the setup is fractal (robust across time frames), robust across markets, and it works with simple momentum oscillators and moving averages. Since my personal preference is to derive the trend through the tape, I only use the oscillators as a quick confirmation to the trend. Less experienced traders can default to the trend as defined by the oscillators. · Trades are filtered by the trend of one higher degree. The monthly trend filters weekly perspective trades. Weekly trend filters daily, daily filters hourly, hourly filters 15 minute, and 15 minute filters 5 minute. Time periods are not sacrosanct. You should modify them to reflect your trading style. · A daily perspective buy signal would generally be rejected if the weekly trend was bearish, but could be executed if the weekly trend was rising, flat or ranging. You may extend the same logic up and down the time scale. · If the trend in the higher degree isn't in harmony, find a different market to trade. The beauty of being a multi asset trader is that you can always find a candidate somewhere. · The very best trades often occur when all three perspectives are in harmony. For instance, a daily long trade setup has a much better potential when the weekly and monthly trends are in harmony. · Finally, like everything else in trading, except for risk management, there is a time and a place to ignore the filters. If you have extreme conviction in a trade and you have a solid risk management plan, take the trade. Part of the journey is learning to recognize those nexus points when conditions and sentiment are right to enter counter trend trades. Goldman Sachs Commodity Index: After identifying a potential trade, load the symbol into the triple screen template. If the potential trade is in the daily perspective (as in this example) load daily, weekly and monthly charts. Begin with the longest time perspective and work your way lower to the perspective in which you are considering the trade. In this template I use a simple 14 period RSI and a 21 period exponentially smoothed moving average, but almost any momentum oscillator and moving average combination will work. The daily chart appears to be under re-accumulation and may be setting up a bullish breakout. Each decline has been met with strong buying at consecutively higher levels, price volume behaviors are consistent with accumulation, price is attempting to clear the top of the consolidation pattern and there is reasonable upside potential before the next resistance. Assuming the market met the rest of my buying tests, including liquidity considerations (which I doubt this one does), and the risk reward potential fit my risk management framework, I would consider tactics that would allow me to build a long position. However, before taking a deeper dive I would take a step back and load the symbol into the triple screen. Monthly: The trend is undeniably higher and there are few signs that it is in immediate danger of ending. · In a sign of strength, price moved above the top of the trend channel and stayed that way for the better part of four months. · Dips to test the top of the channel have repeatedly uncovered demand. · The oscillator, in this case a simple RSI, became overbought in September 2021, dipped slightly and then pushed to a new high. · There are no momentum divergences. · The moving average is also trending higher. · While the trend appears somewhat overextended there are no overtly bearish behaviors evident. Weekly: Another strong uptrend that appears to be on the verge of reestablishing momentum. · The overbought condition that had accrued in late February has been relieved via lateral movement. · The initial dip found support at a very high level. · The higher supports and flat top across the consolidation suggests accumulation. · This chart in in harmony with the chart of one higher degree. With the monthly, weekly and charts in harmony I would begin working my way through the rest of my analytic and risk management tests and screens. Remember though, for a daily perspective trade the most important level of conformation is at the weekly level. The strength in the monthly chart is simply a bonus. I also generally ask myself if the trade generally makes sense given my world view? But while having a fundamental underpinning for a trade is nice, it’s not a requirement. Sometimes it’s all about the pattern and momentum, particularly in the shorter time frames. Notes: In the Trading View setup it’s easy to synchronize the symbol and the crosshair. My preference is to synchronize the symbol but not the drawings or time period. Good Trading: Stewart Taylor, CMT Chartered Market Technician Shared content and posted charts are intended to be used for informational and educational purposes only. The CMT Association does not offer, and this information shall not be understood or construed as, financial advice or investment recommendations. The information provided is not a substitute for advice from an investment professional. The CMT Association does not accept liability for any financial loss or damage our audience may incur.
SP:SPGSCIEducation
by CMT_Association
48
How To Develop A Profitable Trading MindsetIt’s an unavoidable reality that your forex trading success or failure will largely depend on your mindset. In other words, if your Forex trading psychology is not right, you aren’t going to make any money! Unfortunately, most traders ignore this important fact or are unaware of how critical having the proper mindset is to Forex trading success. If you do not have the correct trading mindset, it doesn’t matter how good your trading strategy is, because no strategy will ever make money if it’s used by a trader with the wrong psychology. Note: I would love to hear how you plan on using the points discussed here to improve your Forex trading mindset. Please leave me your comments and feedback below after reading today’s lesson! First, you need to change how you think about trading One of the things that gives traders a lot of trouble, is getting too attached to any one trade. In fact, you should have zero emotional or mental attachment to any one trade you take. As I discussed in my article on randomly distributed winners and losers, whilst your trading edge might have a certain winning percentage, let’s say 60%, you need to understand what that means… What a 60% winning percentage means: It means that over a large enough sample size or series of trades, you can expect to win about 60% of the time. What a 60% winning percentage does NOT mean: It does not mean that any one trade has a 60% chance of being a winner. Many traders get confused into thinking that ‘this’ trade will be a winner, or even that ‘this’ trade has a 60% chance of winning, when in fact this is simply not the case. To think about this from a different perspective, imagine a large jar of marbles of two different colours, let’s say red and blue. Let’s say each marble represents a trade that you took, there are 100 marbles total, 40 red and 60 blue. The red marbles are losing trades and the blue marbles are winning trades. So, you have 60% winners and 40% losers, when translated to your trading method, this shows that you can expect to win 60% of your trades. HOWEVER…here’s where the thinking part gets tricky. If you shake up that jar of marbles so they are randomly distributed within the jar, and you stick your hand in blindly and pull one out, you don’t know if it will be a red or blue marble. Thus, you would not be ‘expecting’ a blue marble, because you know there are red ones in there as well, randomly distributed. This is how you need to think about your trades. You need to think about them being randomly distributed events, even if you expect to win 60% or even more, over time. Once you begin to realize that any given trade has an equal chance of being a winner or loser, you will stop giving too much emotional and financial importance to any one trade. Once you do this, it opens up the pathway to carefree trading and allows you to truly induce the proper trading mindset. I get emails from traders telling me they are ‘excited’ about a trade setup. This makes me cringe because it implies they’re expecting something from that trade setup, they’re expecting it to work out for them. But, they shouldn’t. They should have no expectation of any ONE setup, because each setup has a random outcome. It’s the SERIES of trades while trading our edge (price action) that gives us a chance to make money. When you remove all expectation and attachment to any one trade, you automatically begin to do other things properly, like managing your risk properly and not fiddling with trades after they’re live. Because you realize that each trade setup may or may not work out, you don’t want to over-commit to it and you don’t want to get in its way. You risk an amount you’re OK with losing and you let the market do ‘its thing’, because you’re just letting your edge play out over a series of trades. Think in probabilities to avoid emotional trauma Think about a slot machine for a minute. You put money into a slot machine knowing upfront that it’s a random event, so you have no real expectations of winning or losing on any pull of the arm. Thus, expectations of the outcome of a slot machine are in alignment with the reality of the event itself. In trading however, you see a pattern form in the market and because maybe the same pattern worked for you last time you start to expect that it will work again this time. Once you commit to this way of thinking you are setting yourself up for potential disappointment and emotional trauma. You are forgetting that each trade has a random outcome that is unconnected to your recent trades. Just because this same exact pin bar was a winner before, does not mean the next one will be, even if it’s exactly the same. Now, obviously if you have an effective trading edge like my price action strategies, you can greatly improve your chances of a winner over a slot machine, but still, the outcome of any one event (trade) is random. So, you cannot allow yourself to be affected by the result of any one trade. This trade has no influence or connection to the next trade. If this trade was a loser, the next trade might be a winner (or loser) and if this one was a winner the next one might be a loser (or winner). If you have a 60% win rate on your edge, remember that it is realized over a SERIES of trades, and that might mean you have 5 or 10 losing trades in a row. It doesn’t mean you panic though. You stick with your plan and strategy and you keep taking the trades as they form, because you need to trade a large enough sample size to see your edge play out. Your goal should be to eliminate the potential for the market to disappoint you by realizing that trading is not about being right or wrong. This is how you to need change. You need to eliminate any potential for disappointment from your trading by thinking in probabilities. Remember the jar of red and blue marbles the next time you enter a trade. You are simply blindly dipping your hand into the marble jar each time you take a trade, so don’t expect to pull out a blue marble, just know that it will be EITHER a red OR blue marble, and that once you pull them all out, you will have 60 blue (winners) and 40 red (losers). IF you can do this, you will be thinking in-line with how the market actually exists and you will be putting yourself in position to profit from the market, rather than getting battered by it like you probably are now. How to eliminate trading mistakes and start making money All blown out trading accounts are the result of a snowball effect of trading mistakes. You get too attached to a trade that you ‘just know’ looks ‘so perfect’ it ‘can’t possibly fail’, and so you double up your risk or triple it, hoping to hit a ‘home run’. When that trade then fails, you experience severe emotional trauma and frustration. This causes the snowball effect to begin. You start feeling mad that you lost, you get angry, so you jump back into the market and risk even more, hoping you make back your lost money. This can go on and on until you blow out your account, which doesn’t take very long. The point is, all of this emotional strife and frustration and the snowball of trading mistakes it causes, can be AVOIDED by changing how you think. That is to say, by thinking about your trades in terms of probabilities, as discussed above, you will circumnavigate the main reason most traders lose money; expectation. Think about when you were demo trading. You probably did awesome, as many forex traders do. Why did you do awesome? Because you had the right trading mindset… You had no real expectation about any trade because no money was on the line so you didn’t care if it that particular trade lost or won. That’s it right there; you have to not care if you lose or win on any one trade, and you do that by thinking in terms of probabilities. IF you can do that, you will be well on your way to finally making consistent money in the markets. A lot of people seem to be unaware of the fact that they are trading with a mindset that is inhibiting them from making money in the markets. Instead, they think that if they just find the right indicator or system they will magically start printing money from their computer. Trading success is the end result of developing the proper trading habits, and habits are the end result of having the proper trading psychology. Today’s lesson is going to give you the insight you need to develop a profitable trading mindset, so read this lesson carefully and don’t dismiss any of it, because I promise you that the reason you are struggling in the markets now is because your mindset is working against you instead of for you. Step 1: Have realistic expectations The first thing you need to do to develop the proper Forex trading mindset is have realistic expectations about trading. What I mean is this; don’t think you’re going to quit your job and start making a million dollars a year after 2 months of trading live with your $5,000 account. That’s not how it works, and the sooner you ground your expectations in reality, the sooner you will begin to make money consistently. You need to accept that you cannot over-trade and over-leverage your way to trading success, if you do those two things you might make some quick money temporarily, but you will soon lose it all and more. Accept the reality of how much money you have in your trading account and how much of that you are willing to lose per trade. Here are some other points to consider: • Only trade with disposable ‘risk’ capital – Disposable capital is money you don’t need for any life expenses, including retirement or other long-term things. If you don’t have any disposable or risk capital, then keep demo trading until you do, or stop trading all together, but whatever you do, do not trade with money you are going to become emotional about losing. Always assume you could lose whatever money you have in your account or in a trade…if you’re truly OK with that, then your good to go, just make sure you don’t lie to yourself…REALLY BE OK WITH IT. Trading with ‘scared’ money (money you can’t afford to lose) will lead to severe emotional pressure and cause ongoing losses. • Make sure you can still sleep at night !– This is related to the above point about disposable capital. But the difference is that you need to ask yourself before EVERY trade you take if you are 100% neutral or OK with potentially losing the money you are about to risk. If you can’t sleep at night because you’re thinking about your trade, you’ve risked too much. No one can tell you how much to risk per trade, it depends on what you’re personally comfortable with. If you trade 4 times a month you can obviously risk a little more per trade than someone who trades 30 times a month…it’s relative to your trade frequency, your skills as a trader, and your personal risk tolerance. • Understand each trade is independent of the previous one – This point is important because I know that many traders are way too influenced by their previous trade. The fact of the matter is that your last trade has absolutely ZERO to do with your next trade. You need to avoid becoming euphoric or over-confident after a winning trade or revengeful after a losing trade. The fact of the matter is that every time you trade it should just be seen as another execution of your trading edge; if you just had 3 consecutive winners you need to avoid risking more than usual on your next trade just because you are feeling very confident, and you need to avoid jumping back into the market right away after a losing trade just to try and “make back” what you lost. When you do these things you are operating 100% on emotion rather than logic and objectivity. • Don’t get attached to your trades – If you follow the 3 points we just discussed you should have little chance of becoming too attached to your trades. Don’t take any trade personally, just because you lose on a few trades in a row doesn’t mean you suck at trading, likewise if you win on 3 trades in a row it doesn’t mean you are a trading “God” who is immune to losing. If you don’t risk too much per trade and you aren’t trading with money you need for other things in your life, you probably won’t get too attached to your trades. Step 2: Understand the power of patience I think one of the biggest realizations that allowed me to turn the corner in my own trading was that I didn’t have to trade a lot to make a decent monthly return. Think about it, most people consider a 6% annual return very good for a savings account, and if you average 12% a year on your retirement fund you are pretty happy. So why is it that most traders expect to make 100% a month or some other unrealistic return? What’s wrong with making 5 or 10% a month? That’s still exceptional over the course of one year. Whilst I can’t imply you will make a certain percentage per month, if you just understand that slower and more consistent gains are the way to long-term success in the markets, you will be far better off at the end of each trading year. Here are some other points to consider about patience: • Learn to trade on the daily charts first – By learning to trade on the daily chart time frames first, you will naturally take a bigger-picture approach to the markets and you’ll avoid most of the temptation to over-trade that the lower time frames induce. Beginning traders especially need to slow down and learn to trade off the daily charts first. Daily charts provide the most relevant and practical view of the market. YOU DO NOT HAVE TO TRADE EVERYDAY to make a solid return each month. • Quality over quantity – I consider myself a “sniper” of the market; I wait and I wait and I wait, sometimes for days or even 1 week without trading, then when I see a price action setup that triggers my “this one is a no-brainer” alarm…I pull the trigger with ZERO emotion. I am always fully prepared to lose the money I have risked on any one trade because I do not trade unless I am 100% confident that my price action trading edge is present. • User your ‘bullets’ wisely – To really hammer-home the power of patience in developing the proper trading mindset, you need to understand that being patient will work to instill positive trading habits within you. Patience reinforces positive trading habits, whereas emotional trading reinforces negative ones. Once you begin to trade patiently you will see how using your “bullets” wisely works…you only need a few good trades a month to make a respectable return in the markets, after you achieve this via patience, you will learn to enjoy NOT being in the markets…because it’s then that you are “hunting your prey”. This in contrast to the frazzled and frustrated trader who is staying up all night staring at the charts like a trading zombie who just will not accept that they need to trade less often. Step 3: Be organized in your approach to the markets You NEED to have a business trading plan, a trading journal, and you need to plan out most of your actions in the market before you enter. The more you plan before you enter the higher-probability you will have of making money long-term. You are ALWAYS going to interpret the market more accurately whilst you’re not in a trade…so pre-planning everything increases your odds of making money since you will be working more on logic than emotion. • Have a trading plan – I know it can be boring, I know you might think you don’t “need” to make one, but if you don’t make a trading plan and actually use it and tweak it as you learn, you will start trading on an unorganized and probably emotional path. A trading plan doesn’t have to be a very dry and boring document; you can get creative with it. You’re trading plan could be that you write your own weekly commentary before each week begins, plan out what you will do and look for in the upcoming week…just make sure you have a “plan of attack” before you enter any trade. • Keep a professional trading journal – You need a track record, you need to record your trades, you need to do this in a forex trading journal. This is a critical component to forging the proper Forex trading mindset because it gives you a tangible document that you can look at and instantly get raw feedback on your trading performance. Once you start keeping a journal of your trades it will become a habit, and you will not want to see emotional results staring back at you in your trade journal. Eventually, you will look at your trading journal as something of a work of art that proves your ability to trade with discipline as well as your ability to follow your trading plan. This is something any serious investor will want to see if you plan on trading other people’s money. • Think BEFORE you ‘shoot’, not after – All of the planning and preemption that I just discussed is analogous to thinking before you shoot. A gun is a very powerful weapon, we all know that we need to think before we shoot one, even if we are just hunting or shooting at a gun range. Likewise, the markets can be very powerful “weapons” in regards to making or losing you money. So, you want to do as much thinking before you enter a trade as you can, because after you enter you are going to naturally be more emotional and you don’t want to put yourself in a position of constantly entering regrettable trades. If you plan your actions before you enter, you should not regret your trades, even when you have losing trades. I never regret any trade I take because I don’t trade unless my edge is present and I’m always comfortable with the amount of money I have risked on any one trade. Step 4: Have no doubt about what your trading edge is Finally, don’t start trading with real money if you aren’t really sure how to trade your edge. You are obviously not going to develop the proper trading mindset if you jump into trading a live account without being 100% confident in what you’re looking for. Whatever your edge is, make sure you’ve found success trading it on a demo account for at least 3 months or more before you go live. Don’t just “dive in head first” without being totally comfortable in your approach…this is what most traders do and most of them lose money too. • Have 100% confidence in your edge – I have 100% confidence in my price action trading strategies…that’s not to say that I am foolish enough to believe EVERY trade will win, but I am totally confident that every time I trade my edge is truly present. I don’t compromise my trading edge by taking setups that look they are “almost” good enough…I simply don’t trade in that case. I only take price action setups that I feel in my gut are high-probability valid representations of my edge. Therefore, I am never fearful or worried about any trade I enter, even if it ends up losing. • Don’t gamble – There are skilled traders, and then there are people who gamble in the markets. If you take a calm and calculated approach to your trading and wait patiently for your trading edge to appear, like a sniper, then you are a skilled trader. If you just “run and gun” and veer off course from your trading plan, you are a gambler. So, are you a Forex trader or a gambler? • Price action trading helps develop the proper trading mindset – My trading edge is price action, and I fully believe that the simplicity of price action trading helped me develop and maintain the proper Forex trading mindset. We don’t need tons of messy indicators on our charts and we don’t need Forex trading robots or other expensive software. All we need is the raw price action of the market and our magnificent human minds to interpret it; it’s up to us to harness this power. The price action of the market gives us a map to follow, and a pretty obvious one at that, if we can ignore the emotional temptations that arise in our minds we will have no problem profiting off of this price action map. I trust today’s lesson has provided you with some insight into how you can develop the proper mindset and ignore the emotions and break the habits that destroy your trading success.
OANDA:BCOUSDEducation
by DaveBrascoFX
Spinning Point(Krasnov Model) Today I want to share with you another price analysis method which was indentified and first described by high level trader from Russia D.B. Krasnov. This method is used to predict price target zone. If you spend enough time training to indentify Spinning point on chart, you will be able to find quite a lot of them and it will help you to improve your trading level. The best way to confirm Spinning point(when you think you found it), is to explore this place on lower timeframe(M1-3-5). While exploring you should "like" how Spinning point looks. Understanding the logic of formation of Krasnov Model will help you to plan your trading. The idea is quite simple: You need to find, while the wave is rising/falling, somekind of a tested point, which price passes through and then comes back and backtests it and continue to rise/fall, this point presumably should be the middle of the wave(it can be local wave or global one). Bar which is tested from both sides shouldn't be consumed/forced through, otherwise Spinning point counts as broken. Usually Spinning point has the lowest horizontal volume(not the volume indicator) in the wave. When Krasnov Model has reached its target, and the price comes back to test it, sometimes we can see resumption of buys/sells. Here are some examples of Spinning point on BTC chart I want to share with you, to make it easier for you to understand what are we looking for. Wish you good trades! May the Force be with you!
COINBASE:BTCUSDEducation
by mikhail_marka
EURO under pressure - Key element to watchEURO under pressure - Key element to watch Context : Since 2000 EUR/USD is evolving between 0,82 and 1,60 providing two clear floor and cap level following the trend of global macro economy and the strategies deployed in the differents major central banks. The last past weeks following the decision to lower the Quantative Easing, the different actions took in the world in order to control the inflation and the good figure confirming the pursuit of the accumulation of the growth (even slower than last year) in the develop countries - The consensus for the Euro were quiet clear => main research highlighted 1,08/1,12 as strong support area and 1,18/1,23 as strong resistance for a further trading range without significant element for EUR or USD to take significant advantage regarding Growth, inflation and monetary policy. Today the situation is a bit different with less visibilty regarding the situation in Ukraine and even if we can exclude potential risk of global war, we can't ignored the risk about bilateral sanction between NATO countries and Russia. It means significant problem with energy/metals/commodities supply and price, political destabilisation, cyber attack, etc... This kind of modification take time to be absorbe and modified in order to set up a new strategy were russia will stay isolated from global economy for a while. The first economy to be impacted will be definitely the Europe in this crisis and the EURO since one week is in a free fall mode. So what to understand from EURUSD chart and what to focus on? : - Only a Weekly Chart Basis 1/ The previous upside trend ABC 0,82 to 1,60 has been follow by a consolidation in ABC towards 1,02 (or a construction of the long-term downside swing within a huge triangle) 2/ For now the ABC downside pattern within the bearish channel seems to be finished with the test of the 1,02 support - Then we are evolving within a range/triangle dynamic (Blue Frame) ---> That the graphical situation illustrating the context above. 3/ If the ABC downside pattern is not finished we gonna see a downside breakout from the triangle/range structure on going (inside the blue frame) to open further downside risk ----> Risk = Irregular running Range (Test of the 1,0075/0,9750) ----> Risk = poursuit of the bearish channel within a complex ABC X ABC pattern towards 0,8450 4/ RSI indicators is approaching support but didn't reached the previous oversold area where bullish reaction started = It is more likely to see more bearish momentum to be developed. 5/ Moving averages are now capping the market at 1,1530 Analysis Regarding the key elements and giving more weight to the Waves structures and the recurrence of Fibonacci levels, we can still giving more credit to see a development of a further trading range (blue frame) than a free fall of the Euro within the bearish channel towards 0,8450. Where it is more tricky to to have conviction is between a range in irregular with the test of parity before swinging up or triangle pattern with 1,0750 as key support before developing a new upside swing The key resistance is for now clearly set at 1,1530 and only a break out of this resitance can lower the downside risk significantly. Trading => Intraday/multi days traders will use 1,0750 as stop loss level to catch the dip and play agressive recovery with for now the Moving Average as Target to watch => Mid-term Institutional trader seems already in restructuration of the strategy by activating action to hedge the commodities upside risk and the pressure on Europe, so i would say that the hedge in place is between 1,0750/0,97 for the downside risk and 1,1530 (Neutrality area protection to adjust option)
Education
by JeanJean1983