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Masterpattern

The Power of Candlestick Encapsulation in Trading: Utilizing theTrading is a captivating and intricate field that demands a profound understanding of financial markets, investment strategies, and technical analysis. Among the many techniques employed by traders, candlestick encapsulation is one that can prove to be particularly powerful. In this article, we will explore the concept of candlestick encapsulation and how one can harness the 50% of the first candle's length as a potential support or resistance level. What Is Candlestick Encapsulation? Candlestick encapsulation, also known as an "inside bar," is a price pattern that occurs when a subsequent candle develops within the boundaries of the preceding candle. In other words, the price range of the second candle is entirely contained within the range of the first candle. This pattern can appear on any time frame, from daily candles to one-minute candles, and is often used by traders to identify potential turning points in the markets. How to Identify Candlestick Encapsulation? To identify candlestick encapsulation, follow these steps: * Examine the First Candle: Begin by observing the most recent candle on your price chart. This will be the "mother candle."
 * Take a Look at the Next Candle: Next, examine the candle that follows the mother candle. This candle should have a price range that is completely contained within the range of the mother candle.
 * Confirm the Pattern: To confirm candlestick encapsulation, the second candle must close within the range of the mother candle. Using the 50% Level as Support or Resistance Now that we understand what candlestick encapsulation is, let's explore how to leverage the 50% of the first candle's length as a potential support or resistance level. * Calculate the Length of the First Candle: Measure the length of the mother candle from its high to its low.
 * Calculate 50% of the Length: Now, calculate exactly 50% of this length. You can do this by adding the high and low of the mother candle and dividing by two.
 * Draw the Horizontal Line: Plot a horizontal line on your price chart at the level you calculated as 50% of the mother candle's length.
 * Observe Price Behavior: This horizontal line represents a potential support level if prices move below it or a resistance level if prices stay above it. Observe how prices react when they reach this level. Interpretation and Strategy The use of the 50% level of the mother candle's length as support or resistance can be applied in various trading strategies. Here are some important considerations: * Breakout Strategy: If prices break above the 50% level, there may be a potential bullish breakout. In this case, traders may look for buying opportunities.
 * Pullback Strategy: If prices return to the 50% level after a breakout, this could be an opportunity to enter positions in the direction of the prevailing trend.
 * Stop Loss and Take Profit: Traders can use the 50% level as a reference point to place stop-loss or take-profit orders. Conclusion Candlestick encapsulation is a technical analysis technique that can provide valuable insights into potential turning points in financial markets. By using the 50% level of the mother candle's length as support or resistance, traders can add another tool to their trading toolkit for making informed trading decisions. However, it is important to remember that no technique is foolproof, and trading always involves a degree of risk. Therefore, it is advisable to combine this technique with careful risk management and a solid understanding of financial markets.
OANDA:XAUUSDEducation
by AleSaira
[Viking Pattern] Whales' Favorite Trap#Viking #Whipsaw #bulltrap #beartrap Recent financial market seems to be distinctively perplexing and bizarre, often leaving us traders in a state of confusion. Ultimately, our job as traders is to structure market fluctuations, which occur with certain probabilities, into trends and Price Actions based on time and price. The so-called scam moves and abnormal trends that have been frequently observed recently also tend to have patterns and can be somewhat formalized. Today, I would like to introduce a pattern that I have deducted and modeled based on insights of recent data. Those of you who have been trading a lot recently will probably be quite familiar. Interpreted from the perspective of Wyckoff Theory and the Master Pattern, this model ultimately intends to derive Price Action by distinguishing Accumulation and Distribution Phases in terms of horizontal Volume Profile. To systematize this pattern, various technical elements such as LVP (Low Volume Peak), HVP (High Volume Peak), Fibonacci Extension & Projection, Time Fibonacci Extension, trend lines, and parallel channels were utilized. Let me briefly explain features of the periodic phases that compose this model. 1. First and foremost, a significant volume structure forms in the horizontal level as various patterns including triangles (Ascending, Descending, Symmetric triangles, and Wedge, etc.), parallel channels, and diamonds, etc. It would consist of upper and lower bounds derived as either horizontal line (LVP) or sloped line (Trend line). Make sure to clearly mark these lines to later spot the meaningful breakout. 2. A strong breakout through upper or lower LVP (horizontal line) will take place, leaving the volume structure as consolidation zone or sideway channel above or below. Now the market has entered a distribution phase where the direction of a market trend clearly shows. We can target this level with Fibonacci Projection and Extension tools, but I find it quite risky entering against the trend, which would be a counter-trend strategy. In this study, the extension and projection levels utilized are 1, 1.13, 1.272, 1.414, and 1.618. 3. The impulsive momentum, whether bullish or bearish, eventually loses strength at some point forming a significant high or low. After, a new volume structure is generated again at a different level above or below the first structure. If this new structure shapes as relatively rounded or forms potential trend-reversal pattern, such as Cup with Handle, Adam and Eve, or Head and Shoulders, the probability of Viking pattern increases. Typically, the range of the second volume structure tends to be shorter than the first structure both vertically(pricewise) and horizontally(timewise). 4. Another breakout of the second consolidation, with the direction towards the first volume structure appears. According to the textbook, the confluence area where the LVP (which has been SR Flipped) and the trendline of the first volume structure overlap, is most likely to show retest support or rejection. However, if the price breaks through this very spot, which is defined as a POR (Point of Recognition) in this theory, a further impulsive trend is highly likely to follow. The essential part of this model is to spot potential PORs and apply trading setups using this very price momentum. 5. Fibonacci time zone extension tool were applied based on the periodic range of the first volume structure. Most of the time, the horizontal range of the first structure is longer than the length starting from the first breakout to the POR (Second breakout). In other words, if the second volume structure extends the previous one, the probability of occurrence decreases. The periodic extension levels used for targeting POR in this model are 1.13, 1.272, 1.414, 1.618, and 1.818. Here are some examples from various commodities and timeframes. - Bitcoin - Tesla - Microsoft - DXY (US Dollar Index) - ECOPRO 4hr Further studies and reviews of this model are to be updated later. Your subscription, comments and likes are huge motivation for me. Thank you.
Education
by Tommy_Trader
2
Accumulation Cycle Continues 🔁♻This pattern is so important to understanding how institutions accumulate and take profits in this market. This pattern isn't a completely unique framework to EURUSD, but it's part of this market's DNA. Finding these patterns requires linear regression (which works best with high resolution data; lower time frames), to extrapolate a central channel which will act as support and resistance as price dances around it during the accumulation phase of the market. These patterns can appear as week long ranges or just a few hours for a pull back. Either way, these patterns are a crucial tool to staying on the right side of the market during breakouts. Taking a counter intuitive approach to the market is the only way to profit long term. When price is below the channel, I'm looking for long set ups, and vice versa for short setups. Right now, institutions are taking profit from Tuesday's massive drop, while also accumulating inventory to sell to buyers to fuel the next big short. The regression confirms this activity, because you can clearly see price creeping up. I'm anticipating that price will break above the key resistance level (key framework; kf) and institutions will then short retail traders' long positions and drive price back down to new lows where this cycle will start yet again. This pattern confirms institutional presence in the market. When you don't see it you're in a trap, and you should stay out of the market until it reappears. That's EURUSD in a nutshell. Best market there is, hands down!
Education
by NeoDaNomad
This is getting old!I'm genuinely tired of seeing this pattern in the market, then watching the feed and seeing all the poor traders getting sucked into this same cycle. It's not even fun anymore. Stop giving up your money so easily, please. If you're losing money today, please just look over my last couple posts and start trying to find this pattern on your own. literally every time we see a flat range like the one in the photo, this is how it ends. You can't afford to keep falling in the same trap over and over and over again. There's trillions of dollars on this market for all of us. There's no reason you need to keep losing!
Education
by NeoDaNomad
An Idiot's Guide to EURUSD: 5 Steps to Success 💲💲💲Synopsis If you trade Forex then you know the weekends are the best time to analyse the market. Everybody likes to talk about how volatile EURUSD is, but what they don't tell you is that the market is ranging a good 80%-90% of the time; good deals do NOT last long. In fact, half of a days price movement can play out in 15-45 minutes, It's that fast. The best entries are usually snatched up in a matter of minutes, meaning that slow momentum oscillators and lagging trend following indicators don't perform well in these conditions. EURUSD in my opinion trades a lot like CL (crude WTI), where trading decisions need to be made while volatility is low to mitigate risk. Translation: if you can't win in a range, you're going to blow your account in this market, trust me. I see so many people on here setting targets 2-3 times the daily atr with the expectation that they'll be paid by the end of the day or the next day. Don't do that, please. It's not a sprint, it's a marathon. Long term gains depend on practical consistent returns, not 10:1 RRs. It's actually a lot more realistic to take ZERO to two 20-40 pip trades per day. Over the course of a week it adds up. The chart: This week we came off of a really strong bullish surge away from parity, and the market then did what it does best, range. And the way that prices are moving right now is just classic EURUSD, I love it...I get so nostalgic, because ranges like these are how I learned to trade; the way that the market recycles over and over makes it so fun to trade, it never gets stale. Since it's the weekend and the markets are closed, I wanted to take this opportunity to share with anyone who might be wondering what it's like to day trade this market. How to trade ranges: Step 1: Find your levels... The easiest way is to map out support and resistance zones. On the chart, I use my own variation of the Williams fractals indicator (I call them Neo fractals 😎) for every prominent swing high or swing low, the indicator draws a horizontal ray from the highest, lowest close and projects it out into the future. You can see the spots where lines start stacking up in a certain price range act as stronger support or resistance than the areas with only one dotted line. It only takes about 5-10 minutes per day to do this by hand though, so an indicator definitely isn't necessary. It's really important to be able to eyeball pivot points yourself anyways. Step 2: Determine market phase... After you've mapped everything out, it becomes a lot clearer what's happening in the market, and if the market is ranging or trending. If the market's ranging, you will see far more s/r lines on your chart especially once you start seeing s/r lines stacking up close to one another. A clear giveaway that the market is ranging is when price makes strong moves in one direction, only to return back from where it came, later in the day. Once you've determined what phase of the market you're even closer to spotting high quality trades. Step 3: The next step is to find areas of value... In general you want to find the areas within the range which provide the most exclusive prices, And steer away from price ranges that hold 80-90% of the activity on the cart. Being 5-10 pips in profit before a big move will completely change the way you feel about a trade when it starts to go against you (plenty winning trades will go against you, especially if you're trading reversals). On the chart you can see that the supply and demand zones only produced 2-4 trades this week, but all of them were for over 50 pips. These aren't the only trades you can take, but they're definitely the highest RR trades, you can get in a ranging market. Step 4: What for confirmation... There are so many ways to confirm a move, but my favorite for this market is a phenomena that I like to call a spike. (There's probably an actual name for it, but I'm self taught so I just make stuff up as I go 😅) Find a hammer or star candle on a higher chart like the daily or 4hr and it look at that time period again on a lower timeframe, what you'll see is that the hammer or star is actually just a large price movement in one direction followed by an equally large movement in the other direction. What might appear as a spike on a lower timeframe will appear as a hammer or star on a higher time frame, and the larger and longer the chart pattern takes to complete, the larger and longer the move will be in the opposite direction. These are the Rolls Royce of signals. When you realize that a head and shoulders pattern is really just a series of spikes, it will completely change the way that you trade. In my experience, trading price spikes alone out performs every other chart pattern there is, because most candlestick and chart patterns are made up of a series of spikes anyways. Most consolidation periods end in a large spike followed by a 1-200 pip surge in the opposite direction. They appear most often on higher timeframes as hammers and stars, or large engulfment. but on the lower time frames you can watch these things play out over 5 ,10 or even 100 periods sometimes. The key is to have very strict rules for what you consider a spike to be, how many pips? What kind of ratio are you looking for? is it happening in an area of value? etc. Step 5: The range leads to the trend... The reason that trend following strategies under perform in this market is because strong trends don't last long on EU AND getting good value is insanely competitive. The key is to spot these trends early, you have to be looking when nobody else is looking. That means waking up earlier than everyone else and having a plan in place before the move happens...Not seeing a big candle and just hopping in. I try to have a daily strategy in place before the Asian session ends, that way, I''m ready for London and NY. I live in the US, so that means I'm waking up everyday around midnight to 1 in the morning. But most of the time, if my trade starts well, I go back to bed and check back in around 7. If you want to trade EURUSD, that's what it takes though. There might have to be lifestyle changes that you have to make (especially for North and South American traders) in order to really commit yourself to this market and give your trading it the attention that it needs.
Education
by NeoDaNomad
What makes trading different from gambling? [No Trading Zone]#Notradingzone #Tocademy #PrincipleTrading #Confluence Hello traders from all over the world. Observing thousands of retail traders during my lessons, lectures, and consulting, I realized that a lot of novice traders in contemporary market have some bad trading habits. Especially if you are a daily trader or scalper who usually take small and many short-term trades, please pay attention! Someday in the future, hopefully, you will eventually realize that the best and most ideal position in the world is to take neutral position. What I mean here doesn't imply that you should not trade at all and rest the whole time. After entering this world of trading, within the process of becoming a mature trader there is a time when you realize the power of the TA(Technical Analysis). Once you start to practically utilize what you have studied and even see how the numbers on your account grow, you literally become mesmerized. This magical thing called ‘Trading’ would feel like the ONE you have been searching for the whole life. I know, calm down! It feels great when the price reacts to the lines and indicators you have drawn and put on the chart by yourself. In this particular stage, I see many traders sit in front of the monitors or watch their smartphones all day long, being addicted to trading. Well, here’s a truth that I deducted through years of my trading career and the data that I have researched; addictive traders hardly become successfully. Always remember that our ultimate purpose of trading is to solely make money, not just for fun. Of course, making money would be fun but for some of you, the priorities of these two are switched. Before you even notice, you might find yourself gambling rather than trading. Now put your hands down, close your eyes, and think for a minute. Are you anxious when you are not in a position? Do you frequently regret that you closed your position too early? Do you become angry when you miss big long or short? Are you so urgent to recover your loss as soon as possible? Does trading disturb your primary work? (Hard to focus both, isn’t it?) Does trading masses up your lifestyle and relationship with people? If you replied ‘Yes’ to majority of the questions, please cancel all of the pending orders right now, turn off the chart, get some rest, and forget about trading just for a while. I understand more than anyone that you are full of desire to chase all these micro trends or minor waves in 1 minute chart. Especially those who are trying to recover all the losses you made this week ASAP, before you encounter a bigger loss, trust me, take some time, and cool your head. I am sorry to say but you might be more of a gambler than a trader right now. Sure, there would be few that still do fine with all those conditions but if you eventually keep ending up bad due to excessive entries or lose entire seed at one cue after series of consecutive wins, your addiction might be interfering your judgment. Irrational trading decisions are the biggest risk that human traders have to face and restraining our emotions during trading is integral. (Please click the image/link below for details) As the image below indicates, since we humans cannot perfectly control our emotions every single day, the total number of trades and the net performance are not always proportional in a short-term period. In other words, spotting thousands of entries in a single day does not always lead to daily accumulative profit. Not only you pay high transaction fees, but your physical and mental exhaustion can lower your concentration seducing your irrationalized perceptions to break your trading principles. Accordingly, the more excessive amount of time spent looking into the chart, the more likely our logical sense becomes numb and vague which can easily cause FUD and FOMO. Researches have shown that the relationship between the entry rates and the performance (per certain period of time) of retail traders is averaged out as a curved shape with a local maximum coordinate. This peak point implies the ideal amount of profit and entries of a trader. It would be different for each trader depending on their preferences, capabilities, and other circumstances. For instance, 3~4 entries and $10,000 profit per day might be ideal set or oriented goals for some traders, while 10~15 entries and $100 profit per day might be those for other traders. Hence it is important for us to figure out each of our own boundary and refer to it when designing strategies and PnL first of all. Therefore, a well systematically designed strategy that can effectively weigh and quantify technical signals based on the scientific and reliable evidences must be adapted. Once validities of each are scaled, we would be able to comprehend which signals are relatively more reliable than others. Shown on the main image above, even though entering a 80% credibility zone will provide low entry rate, higher RR ratio and win-rate can be achieved. We need to train ourselves to be able to call “No Trading Zone” when the identified trends and derived price action zones do not meet the minimum standards of our own. Some of the talented and successful daily traders I’ve met are not very much different from most of us here. They analyze the market and design trading setups just like we do. If anything, that made them superior, they have a proficient sense for spotting the “No Trading Zone”. They are amazingly good at consistently stepping aside if the signals are not reliable enough or do not meet their standards. They know time is on their side and they wait in patient. It's just simply deciding whether to take certain trades or not, filtering out some of less potential entries and maintaining no position when they are less convinced about the signals, but these tiny differences ultimately result in a huge difference in performances. Investors who trade with technical charts like us can measure the credibility of signals based on the confluency of technical signs and indicators. Here are two traders: trader A and B. Trader A considers eight signals (techniques, indicators, and theories). For example, trader A observes volumes, trendline, Fibonacci levels, moving averages, Bollinger band, Ichimoku cloud, RSI, Stochastic, and Elliott wave theory. Trader A won’t enter position unless majority of those signals are giving signs simultaneously relatively at the same price and time. On the other hand, trader B only considers trendline and moving averages. If only one of the two gives a signal, trader B enters immediately. Which trader would be more successful? Even though entry rate is low, trader A would be able to secure higher RR ratio and win-rates because the trends and price action zones that trader A has deducted through TA are more reliable than those deducted by trader B. As mentioned, Confluence Zone is an area where multiple technical evidences overlap at the same price or time period. In TA world which is 2-dimensional, a price action zone would be expressed with a dot, a line or a box. When multiple indicators signal certain trends and PRZs both in price and time wise, we need to keep our eyes on those coordinates. We as a trader, need to utilize these confluence zones which indicate major price range within certain time period, to design trading setups. The more overlapping elements there are, the higher RR ratio and win-rate we can secure. And this is what makes gambling different from trading. Both of us fight with numbers, but we can control that numbers while gambler cannot manipulate the RR ratios and the win-rates they are given. Thanks for reading my post. I will see you guys next time! Your subscriptions, likes, and comments are the greatest motivations for me to write more posts!
Education
by Tommy_Trader
4
Good analysts are not always good traders [Principle vs Emotion]#TommyLecture #PrincipleofTrading #TheoryofTrading #Emotion #Management Hello traders from all over the world. This is Tommy. How were your trades lately? The market was quite unpredictable recently showing high level of fluctuation which makes it harder for us retail traders to follow up. It sort of seems like a sideway trend in a big horizontal box but also within that, it also keeps surprising us time to time by showing extensive bullish or bearish rallies at unexpected price and time zones. In this foggy arena, we traders make decisions to minimize risks based on strict criteria and standards of our own. Whether you are a long-term holder, a swing trader, a daily trader, or a scalper, we must take at least some risk for reward(return) and there is no complete risk-free strategy, market, or product in this world. Despite all these uncertainties in the market, as long as proper risk reward ratio and win-rate are secured in every trade, traders eventually will end up profiting theoretically and this is what makes trading different from gambling. To some people, what we do might seem like gambling on certain direction of trends and price action zones, but it surely is different from that we deal with numbers and consistency based on a highly reliable source called ‘Technical Analysis’. Since all of us are humans carrying emotions, we often tend to narrow our sights desperately expecting only the best scenario. We easily get disturbed just by thinking about the unwanted results or potential losses and ignore the risks that we have to face every time. However, there are thousands of possible scenarios that can happen, and the market is not always on our side. Just remember that there can only be two possible outcomes for every trade we take; we either win or lose. There is nobody on Earth who can win every trade maintaining 100% win-rate (Even you, Elon Musk!). Whether you like it or not, we are destined to encounter circumstances when market is just totally not on your side and if you are a wise trader, you would normally admit this very situation as soon as possible. Just because market did not flow as expected, it doesn’t mean that you suck trading. Good traders are not the ones that win every single trade but are the ones that can maximize their profit when market is on their side and minimize the losses when market is against their side. Nevertheless, there are some traders, many actually, who just hate to admit the fact that they are losing during position and they start to let their emotions kick in. Unfortunately, now or later, these types usually end up being in worse situation. In this world, establishing and following consistent principles is much more important than analyzing the market (TA or FA). No matter how good you are at analyzing market, if you keep breaking promises to yourself, you eventually won’t be the survival in this market. I have seen so many traders thriving but end up losing all their money with just one tiny mistake. Always keep in mind that there are many traders who win 99 times and lose everything just by one simple mistake, letting their emotions be involved. Emotion in fact, is the biggest risk here. For example, if you designed your stoploss and target price, execute your trade as you have planned. Don’t change your mind being agitated by lowering your stoploss or exiting position before reaching the target price. Also, if you have set your daily profits and losses, do comply! I have seen so many traders who could not just admit their loss and become irrational, insisting to take more trades and eventually losing much more. You should be familiar with calling a day if the maximum loss for the day, week, or month has been reached. I know very well more than anyone that you desperately want to recover all the losses and I even know that by 50% chance, you will successfully restore all the loss. However, by 50% chance you won’t. This terrible situation will seduce you to lose control, make biased judgement, and you will probably end up regretting. Observing many of my fellow traders, students, and followers, I have performed some researches deeply about psychology and mentality of traders. When and where do most of the retail traders start to not obey their principles and in what process? Compared to the past, in recent market with numerous untraditional patterns and phenomenon, there are much more variables that easily lure traders to trade with emotions. In technical perspective, widening/broadening pattern, V-shaped bounce, long-tailed candle, double SR flip and master pattern, etc. are some of the major occurrences that weren’t quite common in the past. From these unfamiliar price momentum and flow, traders are highly likely to lose their temper and break their principle especially when they face these cases: stoploss hunting, bull/bear trap, target price missed closely, entry price missed closely, and breakout entry hunting, etc. To illustrate in depth about the fundamental process why emotions are regarded as poisons when trading, I developed a simple model that depicts the relationship between trade setup phase and performance. In this world, ideally, if we can manage emotions perfectly like robots, our trading performance (profit or loss) should not affect the trading preparation/setup phase (Designing EP, SL, TP based on the deducted trend) and thus it would be a causal relationship where an independent variable (preparation phase) affects the dependent variable (performance) only in one-way. However, the more we let emotions kick in by breaking our principles, the more it becomes correlated between these two variables. In other words, as we fail to control our emotions, the performance will no longer be independent, and start to affect our judgement when setting up our next trades, either positively or negatively. This will eventually create a vicious cycle where factor A affects B, B affects A, and A affects B again, getting worse and worse just like sinking into a swamp. Therefore, as a wise trader whose task is to manage risk, it is integral to be able to cut this cycle before things get worse. We should know how to stop with a small loss, before it becomes a big loss due to that cycle. Hence, it is extremely critical for us to properly design and obey the strategies consistently and carefully and regardless of the latest trading outcome, we should be as neutral, objective, and prudent as possible. Which set of principles, strategy, and mindset should be adopted to effectively eradicate emotional trades? I hate to say this, but the answer would be different depending on your trading preferences and your economical/technical/physical conditions. So first you need to know yourself. Here’s a fun fact; this thing called ‘trading’ lets you learn deeply about yourself that you did not even know before. Pretty cool huh? It explicitly lets you know how greedy, fearful, doubtful, and jealous you are under this social system called capitalism. Once you find out about yourself through decent self-reflection, you then need to figure out your trading propensities and the strategies you are fond of. It is definitely going to be different for everyone. For some traders, a high RR ratio & low win-rate strategy might suit and vice versa for some else. Some long or short, some short-term or long-term, and some high or low leverage. It is significant to find the optimal combination of trading strategies, theories, and indicators as well as trading products and platforms, that fits your trading preferences and behaviors. To give you a tip, make habit to always consider the risk first, before the reward. Consider the status when you lose money rather than thinking about the profit. In this way, you will naturally get a sense of weighting risks that you are facing. By prioritize risk over rewards, you will be less affected by negative emotions when you actually lose trading and will also help you efficiently manage your risk in advance. Let's all become a wise and smart trader who are always prepared for the worst possible scenario. Remember, it’s not the win-rate that makes you a successful trader. It’s all about minimizing loss and maximizing profit. Thanks for reading my post. Your subscription, comments, and likes are the biggest inspiration for me.
BITMEX:BTCUSD.PEducation
by Tommy_Trader
77
Chart Analysis is not a gambling! Reason why TA is greatHello traders. This is Tommy. Today, I prepared the most basic and at the same time essential materials that every trader should know. Trading is literally the act of exchanging or trading something with a certain value. If we look at the history, we humans have always traded something within the social community from the Neolithic Age to develop into a better civilization or for individual survival when we have enough food or assets. When the surplus accumulation and self-sufficiency economy due to food production was formed, even before the concept of currency or money, buying and selling (trading) was always with us. But when we trade, it is not a reasonable thing to do if we lose money when you buy or sell something, right? We humans have always traded at a value or price that is commensurate with supply and demand, within this immutable fence. And we, who are full of greed, have been trading in such a way as to somehow benefit ourselves a little bit more. In a way, I think this is the basic idea of capitalism. Anyway, our ancestors naturally oriented trades for profit, sometimes seeing losses and sometimes profits through these transactions. And suddenly realized. “Ah, the quantity demanded, and the quantity supplied change over time. Because of this, all objects in this world, even abstract ones, change in value over time. Oh, I can make money if I use this well?” A culture of profit taking has naturally been formed thanks to those who possess the temperament of smart entrepreneurs. In this way, the economy and financial markets were eventually born, and several market participants came in for the sole purpose of generating profits, that is, for investment purposes. People who have properly understood the market principle of supply and demand have been trading with certain standards to make money with it. Some people can trade by the weather (buy when it's sunny, sell when it's raining), some by rolling the dice (buy when it's high, sell when it's low), and someone just by feeling. Of course, economists studied after realizing that trading on unreliable and absurd standards would eventually destroy them. And realized it. “Ah, let’s find the right standard to set the standard. From what I've seen so far, does it make money by trading based on the information about the product and the value of the product that changes every moment? Let’s dig into it properly!” And they created a great science. Analysis through information, Fundamental Analysis (FA), analysis through charts, that is, past transaction data, and Technical Analysis (TA: Technical Analysis). FA is an analysis method that determines whether a product's current intrinsic value is overvalued or undervalued. For example, when we want to invest in a company, that is, if we want to buy shares or stocks in that company, we must first estimate the company's growth potential and potential, right? To do this, you must make a final investment decision by referring to the company's financial indicators, good news/bad news, past asset/revenue growth rates, etc. On the other hand, TA is a method of making investment decisions by referring to various theories and indicators with meaning in charts that intuitively show past price movements and momentum. Of course, it would be the best to do both FA and TA, but in these days, retail traders and individual investors, like us, have time/technical limitations to receive information, analyze it, and immediately reflect it in investment. It is not enough that there are various kinds of false information to deceive the traders, and even if it is reliable information, it is highly likely to start at a loss even if it is received a little later than others. It is useful to spot large market trends in the long run, but when this information reaches the public, it is likely that it has already been priced in by institutions (Big Parties). Without huge information power or a computer that can perform FA quickly and accurately, it is difficult to survive in this market with only FA. There is a risk that is too great to carry out an investment with only one FA standard. Therefore, to make a successful investment decision, you need to find a more precise trading position through TA, and in the end, if you are a skilled investor, you must learn TA. The dictionary meaning of TA is known as a technique for predicting future market trends by examining a tool called a chart that digitizes the overall price volatility and momentum of a product. I'm someone who doesn't fully agree with this meaning. The term “prediction” itself is a very dangerous word. Even the most talented investors in the world cannot predict future prices unless they are gods. Technical analysis is closer to the realm of response than prediction. For this reason, our traders look at the charts and always have various possible scenarios in mind and come up with appropriate countermeasures accordingly. With less than 10 years of trading experience, if I dared to define the meaning of the term technical analysis, I would like to say: Personally, all TAs are based on historical data, and through various theories (or methodologies) and technical indicators, first, probabilistically identify the market trend, that is, whether the price is an upward trend or a downward trend, and then determine the price action, that is, support resistance. I think it is an analysis technique that derives the sections with high probability. Some of you may have questions like this. “No, how do you find a trend and price action interval by looking at only historical data?” This is the reason I fell in love with market analysis. This study called technical analysis is a technique that statistically patterned and quantified the psychology of investors (greed, doubt, fear, etc.) with a lot of data from the past. Surprisingly, external variables that can affect the market, such as good news/bad news, are also reflected in this probabilistically. There have been many times when I have felt the greatness of technical analysis, and there were many times when good news/bad news came out amazingly at just the right timing in situations where there was no choice but to rise or fall referring to the chart. Of course, there are situations where Big Parties leak news to the media to take advantage of popular psychology, but even the pattern, timing, or frequency of such good news and bad news is reflected in the study of technical analysis. Anyway, once you have probabilistically derived the market trend and price action section through TA, you need to design a trading strategy according to the situation. There are words that I keep emphasizing like nagging. Just looking at the charts doesn't mean you're good at trading. This trading strategy includes how to structure the portfolio, how to design the profit/loss ratio/range, how much seed to enter, high/low multiplier, and how to set up profit/loss response strategies. In addition, a well-designed principled strategy is essential to prevent non-thinking trading. This principled strategy is easy to design, but incredibly difficult to follow and implement. No matter how well technical analysis and trading strategies are formulated, these principles are of no use if they are not well designed or adhered to. There are individual differences, but honestly, I don't think there is an answer to the principle strategy other than learning or mastering it through long-term practice or entrusting your own technical analysis/trading strategy to a machine/computer/algorithm. The fewer human emotions are involved, the higher the success rate, but how can you trade without emotions when your money is at stake? It's hard. One tip is to start trading with a small amount that you don't mind losing if you want to learn principle trading well. It doesn't matter if you lose it, so you'll be less empathetic that much, and you'll be able to increase a seed little by little. We must become traders who always think of risks (losses) before rewards (returns). Please keep this word in mind. For example, in a trading setup that costs 10 million dollars if you make a profit and 10 million dollars if you lose, rather than a mindset like “Oh, I want to win 10 million dollars quickly~”, “I may lose 10 million dollars. You must trade with the mindset of “Let’s be prepared.” This will naturally match the seed to your bowl. Then I'll wrap up for today. Until now, this was Tommy of the Tommy Trading Team. Your subscriptions, likes, and comments are a big help to me. Thank you.
BITMEX:BTCUSD.PEducation
by Tommy_Trader
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