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Principles Of Risk Management One of the main topics, and perhaps the most important, is the topic of risk management and risk reward. Beginners often do not take this topic seriously, trying to hit the jackpot in every transaction, risking all or almost all of the capital and not realizing what the consequences of such actions may be. Whatever trading style you use, whether it's day trading or scalping, the way you manage risk will still be decisive in the question of whether you will be profitable at a distance or not. Margin trading gives a lot of advantages, but most often it ruins newcomers who open deals with a large volume and quickly lose money when the price goes against them. The ability to manage risks correctly will help you stay in the game for a long time and be profitable at a distance. Focus on protecting what you have. In the pursuit of profit, traders forget about risks, forget about capital protection. It is important to remember that after each loss, the percentage of profit that needs to be returned to breakeven increases exponentially, depending on how much you lose. Fundamentals of Risk Management The market is changing every second and at any moment there may be news that will make the price go against you. The desire to risk everything in one transaction leads to the closure of novice accounts, instead, it is better to manage risks and stay in the game for a long time, making a profit. Anything can happen in the markets and it is simply unwise to risk everything in one transaction. You must remember: 1. You should not risk more than you can afford to lose. 2. Each trade must be opened with the correct risk reward ratio. (RRR) The Risk Reward Ratio (RRR) is how much you are willing to lose, compared to the expected profit in each trade. You should strive for a ratio of less risk / more profit. One of the best ways to manage risk is the 1% method. This method of risk control means that in each transaction a trader risks 1% of his capital. This is correctly used even by managers of large hedge funds and they do it for a reason. Do not think that only 1% of the capital can be traded. You can use at least all your capital for trading, but your stop loss should be no more than 1% - this is your risk. You can use leverage if you need to, but don't lose more than 1% in one trade if you want to become a professional. The Best Risk-Reward Ratio For Trading Before opening a position, you should know how much you can lose and how much you expect to win, and the ratio should not be lower than 1:1. A ratio below 1:1 means that you lose more than you can win, and this is an extremely dangerous activity that can eventually lead to the loss of the entire account. If the ratio is 1:1, you will be at breakeven, even if 50% of your trades are unprofitable. If the ratio is higher than 1:1, then you will be in the black, even if more than half of your trades are closed in the negative. Do not forget that it is impossible to win in every transaction and without proper risk management, such a game will lead to big losses. Do not forget about the rules of risk management, use a profitable strategy and act according to the rules, do not give in to emotions and then success awaits you. ------------------- Share your opinion in the comments and support the idea with Like. Thanks for your support!
Education
by DeGRAM
1
TRADING PRINCIPLES THAT EVERYONE SHOULD KNOW. PART 2.Hello traders! Today we will continue to explore the principles that every trader should know and do. READ THE NEWS. The impact of news on ALL markets is enormous. Every news can turn the market against you and break any trading plan. Read news, professional analytics, reports, any information that may be useful. You should always be up to date with the latest news in order to correctly assess future movements. MAKE A TRADING PLAN. Every trader should have a well-built strategy and a clear plan of action. Before each trading session, the trader analyzes the market and outlines the possible direction of the market and opportunities for opening positions. Even before the market opens, you should be ready and know what you will do. After each trading day, you have to analyze positions and work on mistakes. BE RESTRAINED AND DISCIPLINED. Do not give in to emotions. Don't go into a new position often. Don't change your mind every five minutes. Don't forget about the risks! A good strategy will help you not to drown in this emotional storm. ACCEPT YOUR LOSSES AND MOVE ON. There are thousands of profit opportunities on the market every day. But if you lose all your money in the pursuit of winning back the lost money, you will not have the opportunity to trade for a long time and will not have the opportunity to become a successful trader. Trading is a long distance where you need to be able to stay on track, be able to accept losses and move on. Traders, if you liked this idea or if you have your own opinion about it, write in the comments. I will be glad 👩💻
Education
by Lingrid
12
UNSUCCESSFUL vs. SUCCESSFUL TRADERUnsuccessful Trader You are trading without a Specific Trading Strategy The main reason for opening positions for you is not clear strategy rules, but your own intuition. And even after several failures, you continue to repeat your mistakes due to the lack of discipline and the lack of a trader's trading journal. You often over-trade and get Margin Calls Your instincts make you trade too much, open new positions again and again, forgetting about the risk and thus getting frequent margin calls. Because of such disorderly market entries, you become very emotional, lose control and lose money quickly. You get attached to Open Positions Following your own emotions, you often hold on to an open position for too long, hoping that the profit will become even greater, while forgetting about the take profit that you set yourself. As a result, a profitable position becomes unprofitable, and you begin to believe and expect that it will become profitable again, overstaying the unprofitable position. You're Too Emotional Your mood changes with every price reversal. Forgetting about the analysis, you often open new positions and lose more than your risk management can afford. Successful Trader You have an Effective Trading Plan You have written on a piece of paper a strategy of actions for any market situation and always follow the rules prescribed in the strategy. You often analyze your trades in a trade journal and always remember your mistakes and hits. You Understand What Risk Is You have clear rules of risk management. Even before opening a position, you know how much you can lose in this trade and do not lose more than allowed by the rules of risk management. You don't move your stop loss and you don't act emotionally. You Control Your Emotions You clearly follow your strategy, leaving no room for emotions. Even before opening a deal, you have analyzed everything and know exactly what to do – you have a plan of action. You always fix a part of the profit You do not forget to protect your capital, so you close part of the position in plus or zero, and let the rest of the position grow further. Now you will not only not lose your money, but you can also earn. ------------------- Share your opinion in the comments and support the idea with Like. Thanks for your support!
Education
by DeGRAM
2
Bites Of Trading Knowledge For New TOP Traders #6 (short read)Bites Of Trading Knowledge For New TOP Traders #6 --------------------------------------------------------------- What is Hedging? – Hedging is the action taken through the use of a financial instrument to minimize the loss or risk of the loss of value of an asset due to adverse asset price movements. Who are Hedgers? – Hedgers are market participants such as commodity producers who want to lock in selling prices of commodities they produce, or food manufacturers who want to lock in buying prices of raw materials purchased. Market participants also include financial institutions handling financial assets and use derivative products such as futures to manage the risk of a portfolio of financial assets. What is the difference between Physically Delivered vs Cash Settled Futures Contracts? – Physical delivery is a term in a futures contract which requires the actual underlying asset to be “physically delivered” upon the specified delivery date, rather than being traded out with an offsetting contract. Cash settled futures on the other hand allows for the net cash amount to be paid or received on the settlement date of the futures contract. Futures exchanges may offer both types of contracts to market participants who have different purposes for trading futures contracts. RISKS AND OPPORTUNITIES FOR CORPORATES AND INDIVIDUAL INVESTORS – Diversification: Correlation in Futures – Investors could allocate a portion of their portfolio to establish a managed futures position to deliver non-correlated results under most market conditions, which may serve as a risk mediator within an overall portfolio. This may deliver lower relative returns during periods of price stability. However, during periods of market stress, managed futures could outperform the broad market. For example, the Asia Tech 30 index which has no Thai companies as a component stock would not be expected to have any Thai Baht (USDTHB) currency exposure and which could be included in a managed futures portfolio at times where there is no or low correlation between the two markets and could be used as a hedge during times of negative correlation. Source: ICE Connect Diversification: Portfolio Focused on Asset Returns – Individual investors who have a portfolio of foreign stocks will have a return that is composed of the return of the foreign currency-denominated stock plus the change in currency exchange rates. Therefore, investing abroad means having exposure to two different sources of risk and return made up of the underlying asset and the exchange rate. For a long-term investor, the focus on return-generating assets may be the priority rather than returns from currency exchange rates. This could imply removing currency risk through a clearly defined hedging strategy process initially, and then adding back currency exposure at a later stage if it is determined that currency exposures could improve a portfolio’s return. Investors would need to analyze their expected returns with and without currency exposures and determine their net currency exposure to be removed. U.S. Dollar based portfolios could use futures contracts such as the Mini US Dollar Index ® Futures to hedge a basket of foreign stocks denominated in their respective domestic currencies. TRADDICTIV · Research Team -------- Disclaimer: We do not provide investment advice, nor provide any personalized investment recommendations and/or advice in making a decision to trade. Before you start trading, please make sure you have considered your entire financial situation, including financial commitments and you understand that trading is highly speculative and that you could sustain significant losses.
ICESG:SDX1!Education
by traddictiv
TRADING PRINCIPLES THAT EVERYONE SHOULD KNOW. PART 1.Hello traders! For a long time, the Forex market has created a large number of trading methods. Finding your strategy that suits you specifically is one of the main steps in achieving success in the Forex market. And it is worth remembering that successful traders do not use anything magical in their trading. Everything has been invented for a long time for both a novice trader and a successful trader. The main task of beginners is to choose a fairly easy strategy and strictly follow its principles and rules. So what does a beginner need to know in order to trade profitably? Price levels. It is difficult for a beginner to determine price levels and trade them correctly. There are no specific rules in this topic, since the price does not draw clear points, but forms zones. Many traders use support and resistance levels in their trading and for beginners, the main task at the beginning of the journey will be the concept of selling from resistance and buying from support. There are three types of trading systems based on price levels. 1. If the price moves within the framework of a sideways movement, the trader can sell from resistance and buy from support. 2. If there is a prevailing trend in the market, for example, bearish, a trader can sell from resistance and expect support to break through. 3. The same rules work in the bull market, only in a different direction. If the price breaks through the resistance, then this zone becomes a support from which you can buy. Consider the principles of trading from price levels. #1 Understanding the market context. The key to profitable trading from the levels is the ability to correctly understand the market context. Bearish pressure leads the market movement through an impulse movement that breaks through support and creates new lows – in this context, selling strategies will not work well. That is why it is so important to follow the concept of the market context: When the market falls, creating new highs and lows, we are talking about an impulsive bearish context. The correction is created by an impulse that is weaker than the main trend. A sideways movement occurs when both demand and supply are approximately equal and the price cannot move in a certain direction. As soon as the bulls or bears take over, the price will make an impulse in the direction of the strong side. #2 Top-Down Analysis The market is ruled by big money, which pays great importance to large timelines. And it is vital for an ordinary trader to know where smart money is pushing the market. To do this, it is worth noting strong levels on the monthly-weekly-daily timeframes in order to know exactly where the price is most likely to rebound. On the other hand, if the price is above the key levels, then the market is bullish. #3 Candlestick Patterns Almost every trader uses candlestick patterns in his analysis, which are a very strong analysis tool. Reversal candlestick patterns create an excellent opportunity to enter a trend reversal. The higher the timeframe on which the pattern was formed, the stronger its signal will be. Knowing candlestick formations is a very important part of a trader's professional growth. #4 Risk Management Any trader should be aware of the risks and be able to control them. Although this topic goes beyond the definition of the market context, it is still very important. There are many ways to control risks. An important rule is to set a stop loss and risk in each position, as recommended, no more than 2% percent. Hedge fund managers risk an even smaller percentage in each transaction, sometimes 1% or even lower. It is better to grow slowly than to fall quickly. If you lose 2% of the capital, in the next transaction, in order to get your money back, you will already need to make 4%, which in general is not difficult to do. But if you lose 50%, you will need to make 100% profit already, which is almost unrealistic. Conclusions Summarizing the above, you can make the following sequence of actions: Identify the key support and resistance levels. Wait for the candle to form in the desired direction. Stop loss above or below the candlestick pattern. Take profit is placed at the following support or resistance levels. Always make sure to use proper money management for each trade, and never take on a risk that exceeds the return. Traders, if you liked this idea or if you have your own opinion about it, write in the comments. I will be glad 👩‍💻
Education
by Lingrid
113
Psychology of the market circle Hello traders! Euphoria and Anxiety, Fear and Greed Psychology of the market cycle Any trader finds himself under the influence of changing market cycles. At favorable moments, investors feel joy and are overwhelmed with self-confidence. On dark days, the investor falls into despair and feels anxiety attacks. The only way not to succumb to such an emotional influence is to follow the clear rules of a properly compiled system. Unfortunately, most traders have no plan and no strategy. In order not to become a victim of emotions, a trader must have an idea of the emotional stages of the market cycle. Psychological stages of trading An uptrend is a trader's emotions. Optimism When the market is growing, the trader sees an opportunity to earn and invests money. The economy is growing, the price is rising, profits are growing. At such a moment, the trader feels confident, begins to open new positions after each pullback, which eventually turns into a kind of instinct. At this stage, the trader begins to forget about the risks. Enthusiasm and Abundance The market is starting to accelerate. Traders experience pleasant feelings of joy and enthusiasm. The trader begins to lose his head, confidence overwhelms him. Euphoria After that, the last stage of the upward trend comes - Euphoria. Money comes very easily, the trader is overwhelmed with confidence in his actions and decides to open positions using leverage. At some point, the trader begins to think that he is a professional analyst, and it is not he who is following the market, but the market is following him. This stage in the market helps large investors to discount their shares to self-confident traders who buy everything in a row, believing in the continuation of the upward trend. In fact, this phase is the most risky, after which the trend is reversed. Emotional stages of a Downtrend in the market Anxiety The price is starting to slow down, there are fewer and fewer sellers, bears are gaining momentum. For a trader blinded by luck, this phase looks like another correction. But the market can no longer create new highs and falls, forming new lows. Such a fall creates anxiety in the trader's soul, easy profits begin to melt. Denial and Fear Fear fills the market, traders are afraid to be wrong, because recently they ruled the market. At this stage, the trader denies that he is wrong and tries in every way to justify holding unprofitable positions. Like any beginner, a trader believes that sooner or later the price will not only return, but also go beyond the maximum. Denial brings the trader to a state of helplessness and inaction, from misunderstanding of the situation on the market. The trader gets lost, not knowing what to do and waits without knowing what, without closing unprofitable positions. Despair and Panic The price continues to fall, and the trader falls into despair, because the confidence in holding a losing position is already beginning to disappear. This phase is the most painful, because the severity of losses presses too hard to stay calm. Surrender The unprofitability of the position is increasing, traders can no longer tolerate this pain. In this phase, traders have to capitulate just to stop these torments. Traders are starting to close positions and it is here that large companies are included, for which this moment gives a new opportunity for large profits. Asset buying begins, because a reversal is possible soon. Despondency and Confusion As it often happens, as soon as a trader has closed a position, the market begins to grow. It looks like the law of meanness. This phase drives the trader into despondency, because the position was closed a moment before the rise. It is here that newcomers begin to think about whether it is worth investing further. Hope The market is starting to revive. The price shows new highs and the investor has hope. It seems that here it is, a new opportunity. The trader begins to enter the market, forgetting about the past, without drawing conclusions. A trader enters the market when the price has already accelerated, at points where the risk is again close to a critical value, the cycle begins again. Traders should keep this cycle in mind. Such emotional roller coasters can ruin anyone. A well-designed strategy can help avoid these painful blows. Remember the risks, remember the cycles, work on the mistakes, and victory will not take long to wait. Traders, if you liked this idea or if you have your own opinion about it, write in the comments. I will be glad 👩‍💻
Education
by Lingrid
40
FALSE BREAKOUTS | SPOT/AVOID/TRADE THEM LIKE PRO📈📉 FALSE BREAKOUTS | SPOT/AVOID/TRADE THEM LIKE PRO📈📉 How often have you opened a key level breakout trade, and then the price turned against you? False breakout happens quite often and it is a problem for many traders who buy at highs and sell at lows. ❗️Breakout trading is a fairly popular and viable trading strategy. However, some breakouts often turn out to be false. This can be quite frustrating, not to mention that it can often lead to a losing trade. However, in many cases, an experienced trader can analyze the market situation and react to it accordingly. False breakouts can make a profit if you know how to trade them correctly. ⚠️A false breakdown is a situation when the price violates an obvious level, but then suddenly changes direction. When the initial breakout of the level occurs, many traders open a trade in the direction of the breakdown. These traders are trapped when the price reverses, which triggers a series of stop losses. New traders are also entering the market, and this puts additional pressure on the price. This often turns the price into a new trend, the opposite of the initial breakout. A breakout that turns out to be false is a sign of strength in a downtrend or weakness in an uptrend. As you can see, a false breakout can easily cause significant losses for any trader. Some traders develop their entire strategy around trading false breakouts, as this can be a very powerful trading approach. Some of the best trades happen when market players fall into a trap and their stops start to work. ✅How to find patterns of false breakouts? 🟢If you do not learn how to correctly identify false breakouts, you will not be able to trade them profitably. For example, there will be situations when the price returns to the breakout point, and only then continues its movement. 🟢One of the ways to detect false breakouts is to monitor the volume. Real breakouts are usually accompanied by strong indications of trading volume at the time of the breakout. When this volume is absent, there is a higher probability that the breakout will not happen. 🟢Thus, if the trading volume is low or it decreases during the breakout, a false breakout is likely to occur. In contrast, if the volume is large or it increases, a real breakdown is likely. 🟢It is also useful to monitor not only the trading volume but also the price movement on the lower timeframe. In many cases, you will see that the price makes a very sharp pullback on the lower timeframe, which is not visible on the higher timeframe. ✅False Breakout Trap 🔴After all, many trading textbooks say that a breakout can be considered confirmed when a candle closes above the resistance level. However, the price moves in your direction for a while and then turns 180 degrees. As a result, you have a stop loss triggered. 🔴The false breakout trap includes several candlesticks, usually 1-4, that go beyond the key support or resistance level. Such breakouts occur after a strong movement, as the market has reached an important level, but the price momentum still retains its strength. Have you ever been trapped by a false breakout?
BITFINEX:BTCUSDEducation
by TopTradingSignals
8
Morning Star Candlestick Pattern: Trading strategy!🌟🕯️ ✳️The Morning Star candlestick pattern is a candle formation that can often be seen on price action charts. It has a bullish character and can often determine the main minimum of market fluctuations. ✳️Three candles in a figure are one of the mandatory conditions of the pattern. Nevertheless, it is quite easy to find the morning star on the chart. It's easy to make sure of this – just look at the shape and location of the “Morning Star" figure. ⚠️ The shape of the Morning Star pattern So, the formation consists of three Japanese candlesticks. Each of them must meet certain requirements. 🔵 The first candle is a bearish one with a rather large body and the absence of wicks or their presence with a very small length (no more than 10% of the body); 🔵The second candle is with a small body or completely without it. The candle should be with small wicks. The color of the second candle does not matter; 🔵The third candle is bullish with a large body. The body of the third candle should cover most of the body of the first candle (or engulf the whole body). Also, the candle should be without shadows (ribose) or with very small shadows; 🔵There should be a gap between the central candle and the other two. But, as practice shows, it is not always a prerequisite. ❗ Location of the candle model "Morning Star" ❗ The morning star is a bullish formation. Therefore, it is located at the end of a downtrend. The central candle is the local minimum of the downtrend. After the formation of this Price Action pattern, you should buy an asset. ❗ Signal amplification of the Morning Star model ❗ 🔴If the central candle was formed without a body, then the pattern gives almost 100% about the change of the downtrend to an uptrend. This model is also called the "morning star Doji" or "abandoned baby"; 🔴The presence of a gap between the central candle and the other two candles strengthens the trading signal; 🔴The bullish central candle is stronger than the bearish one. But the strongest is bodiless; The third candle completely covers the first candle; 🔴The presence of a small trading volume at the first candle and a large volume at the third candle strengthens the model. ✅ When to enter into a transaction We enter into the transaction after the closing of the third candle. It is confirmatory in the "Morning Star" pattern. This is a kind of guarantor of the model. ✅ When not to enter into a transaction Everything is simple here. If the pattern does not satisfy the main conditions, then we do not enter into the transaction. It will no longer be a morning star model, but something else. ❤️Friends, If you want more of these articles, like comment and subscribe❤️
Education
by TopTradingSignals
22
The Opening Range TradeThis is one of my favorite trades to make because of the outsized risk reward ratio that it can offer. We're talking 10:1 or better some days. We are going to look at an example of an opening range trade in the S&P 500 E-mini this past Friday, October 29, 2021. What is the opening range? In the days of screen trading, the opening range can be considered the first 60 seconds of the normal cash session. This is when all the orders that were set to trigger on market open come flooding in. You can think of this as the moment when ALL of the institutional traders begin to step in and have an opinion about what happened in the overnight session. It is very telling therefore to see how big of a bite this opening range carves out of the orderbook. On a very directional day, this opening range will be left as the high or low of the session. This is even more likely to happen if we are opening with a gap from the previous day's range and value. When to take an opening range trade: 1. The opening 1 minute range is narrower than 2x your risk tolerance for stop loss placement. 2. The opening range is left at the high or low of the session. 3. The opening range leaves a gap from the previous day's cash session. Rule 1 and 2 must always be true, while you can think of rule 3 as an additional validator. How to take an opening range trade: See the chart above for reference. We are opening within yesterday's range, so no gap. We wait for the 08:30(central) 1 minute candle to paint itself as the market opens. As soon as the candle is complete we mark it's high and low. We have a fairly large range of 20 ticks. The next 1 minute candle dips back into the opening range before extending above it. Because this candle does not reach the center of the opening range, we can go long when it begins to extend above. We set our stop loss at the center of the opening range. A note about stop placement: For what it's worth, I was taught, (and most traders I know do it this way) to use the ENTIRE opening range for my stop loss. What I've noticed however, is that if price action returns to the center of the range, there is a high probability of it violating the other side. Therefore, you can use half the opening range, thus cutting your risk in half, and the money saved will by far outweigh the handful of trades per year that you miss due to being stopped out. You could have taken this trade for very little risk and carried it all the way to the close for a 10:1 reward over risk. The opening range trade is simple to implement, and you won't have to wait very long to find out if you're right or not. Typically, if this trade is wrong then you'll be stopped out in a few minutes and can move on. If the opening range IS left as the high or low of the session, then you can expect a substantial move in your favor. Now you have one more tool to keep in your toolbox. I hope it helps. Trade well everyone.
CME_MINI:ES1!Education
by iamroot
4
De-Annualizing IVImplied Volatility is the expected volatility of a given asset and can be used for ones advantage De-Annualizing IV allows one to apply annualized IV and alter it towards ones desired time frame As some may know, Implied Volatility or IV is an annualized figure, meaning we have to do extra work to get what we want Applying IV To gain a greater understanding of this topic we will be applying this method to SPY(461.90) as of 11/3/21 In order to get IV of our desired time, we first have to get the 1-day expected volatility and to do so we use the formula as follows IV ÷ √256(256 trading days in a year) and will be 0.1245 ÷ 16 for our case, which gives us a 1-day expected volatility of 0.00778 or .78% After getting our 1-day expected volatility we then use the formula as follows IV ÷ √256 x √Number of Trading days in period and once applied to SPY will become 0.00778 x √22 which gives us 0.036497298 or a monthly expected volatility of 3.65%. We are using 22 in our formula since there is 22 trading days in a month. Conclusion After calculating our monthly volatility we can then multiply the desired asset by it to receive the range in which this asset will most likely stay at For example, regarding SPY at 461.90 we can multiply it by 1.0365 or 0.9635 to receive the prices in which there is a 68% chance that the desired asset will stay at. Regarding SPY this means there is a 68% chance of SPY closing between 478.75 and 445.
AMEX:SPYEducation
by ddcakez
2
Bites Of Trading Knowledge For New TOP Traders #5 (short read)Bites Of Trading Knowledge For New TOP Traders #5 --------------------------------------------------------------- What is the bid-ask spread? – Bid-ask spread is the amount by which the ask price exceeds the bid price for a market. The bid-ask spread is the difference between the highest price that a buyer is willing to pay and the lowest price that a seller is willing to accept. An individual looking to sell will receive the bid price while the one looking to buy will pay the ask price. A wide spread may indicate low supply or demand for a market at that point of time during the trading period, while a narrow spread would indicate sufficient supply and demand for a market meaning strong buying and selling competition is at play. What is the role of a market maker in the financial markets? – Market makers are market participants who ensure there is enough liquidity and volume of trading in the markets and offer to sell a market at the ask price and will also bid to purchase a market at the bid price to traders and investors. How does the bid-ask spread relate to liquidity of a market? – The size of the bid-ask spread from one market to another differs mainly because of the difference in liquidity of each market. Certain markets are more liquid than others and that commonly is reflected in their lower spreads. Price takers demand liquidity while market makers supply liquidity. For example, foreign currency futures would have very low spreads during the trading day given the use of currencies as a medium of exchange to do business globally compared to live cattle futures, which relates more to businesses in the United States domestic market. RISKS AND OPPORTUNITIES FOR CORPORATES AND INDIVIDUAL INVESTORS – Diversification: Futures Spreads with Currency Futures – A futures spread is usually created when one futures contract is sold simultaneously to the buying of a second related futures contract in order to capitalize on a discrepancy in price. Currency futures spreads combine the use of different currencies usually paired to the U.S. Dollar with the same contract month to express a relationship between the two currencies usually taking into account their strength or weakness relative to each other. For example, the Singapore Dollar (USDSGD) may be seen to be strengthening (price movement is downward) while the South Korean Won (USDKRW) may be seen as being very weak (price movement is upward). To take advantage of this observation, we would want to buy Singapore Dollar (sell the USDSGD future) and sell the South Korean Won (buy the USDKRW future) and as a result eliminate the U.S. Dollar. However, it must be noted that not all currencies are quoted in the same way like the Australian Dollar futures is quoted “AUDUSD”. It means then that to take advantage of a strong Australian Dollar and a weak South Korean Won quoted as “USDKRW”, an investor would need to buy both the AUDUSD future and the USDKRW future. Diversification: Portfolio Risk Using FX Futures – Individual investors taking a portfolio approach with managed futures and spot foreign exchange could be entering into emerging market currency positions including for example Hong Kong Dollar, Singapore Dollar or South Korean Won. Depending on the view of each of the currencies in the portfolio, it could be constructed to eliminate exposure to the U.S. Dollar. However, there may be a time during which investors would like to introduce U.S. Dollar exposure and they could do so by using Mini U.S. Dollar Index ® Futures with a contract value of $10,000. For example, the U.S. Dollar Index ® may be observed to be in a medium term uptrend and an investor may want to consider entering into a long position in the Mini U.S. Dollar Index ® Futures based on their strategy of choice and exit the position when either their profit target is achieved or their loss limits are triggered. TRADDICTIV · Research Team -------- Disclaimer: We do not provide investment advice, nor provide any personalized investment recommendations and/or advice in making a decision to trade. Before you start trading, please make sure you have considered your entire financial situation, including financial commitments and you understand that trading is highly speculative and that you could sustain significant losses.
ICESG:SDX1!Education
by traddictiv
SUPPORT & RESISTANCE. Explanation For Newbies👨‍🏫 ✅Support and resistance levels are the price areas on the chart where the price has ever changed its direction. This place always attracts traders, because near the levels there are obvious places for setting stop losses and entering into a deal. Also, there are always limited orders of large buyers or sellers near the levels. ❇️We can say that the level is a price area in the market where traders consider the price to be overstated or undervalued, depending on the current market dynamics. Therefore, it is always important to pay attention to the key levels at which support and resistance have reversed roles or there has been a strong rebound in the price. ⚠️What is the support level? 🟢In theory, the support level is an area below the current market price where participants will make purchases and there are high chances to keep this area under pressure from sellers. At the time of the test of the support level, prices are repelled and begin to rise, therefore, the pressure from sellers decreases, since they cannot gain a foothold under the level to continue moving down. We can say that the buyers, in this case, were stronger. 🟢As a rule, such levels can be determined in advance on price charts. These can be both daily and hourly charts. However, experienced traders identify higher time intervals as more important. For example, the support level on the daily chart will be much stronger than the support area on the five-minute timeframe. 🟢On a daily time interval, prices can test support for weeks before bears can push the price lower. On a five-minute chart, sometimes one test is enough to gain a foothold below and move to the next level. 🟢Also, with the breakout of the support level, we can state the completion of the development of the upward movement. If prices are rising, and after the test of the support level, we constantly observe a rebound and a continuation of the rise. In this case, we can talk about the continuation of the upward trend. If at some point we observe a breakout of the support level, then we can think about the end of the upward trend on the chart. ⚠️What is the resistance level? 🔴The resistance level is the opposite of the support area. If the support is below the current market price, then the resistance area is above the current market price. Thus, resistance indicates an area where the pressure from sellers is much higher than the pressure from buyers, prices are repelled and a drop occurs. Therefore, at the moment of testing a strong resistance level, prices quickly push off and begin to move in the opposite direction. 🔴With the development of a downward trend, resistance levels represent a place for conservative selling in the direction of the current trend. Recall that the basic rule is to sell on resistance and buy near the support area. Therefore, if the trend goes down, then a correction occurs, after which prices test resistance. In this case, the buyers' strength runs out and there is a decline in the direction of the current trend. ❗️The ability to correctly draw support and resistance levels is one of the basic skills that every trader should have. Levels are also the basis for trading strategies and the right risk-to-profit ratio. ❤️ Please, support our work with like & comment! ❤️
OANDA:XAUUSDEducation
by SignalProvider
15
Money missed and how to catch it next time!There's a lesson to learn in keeping your chart clean and referring back to you notes! I predicted a relative strength index divergence on October 25th in a related published idea. Made a purchase at the first blue horizontal line, 0.00004207. I sold at the second blue horizontal line, 0.00004926, for roughly a 16% increase, only doing so assuming it was the top of the breakout. If I would have referred BACK to my previous published idea (linked below), I could have looked for a divergence, seen as the purple horizontal lines on the R.S.I. Noted though, it is difficult to see. Instead of selling the token, there was an opportunity to catch the easier to spot divergence . This would have allowed an additional 9% increase, if sold at the top green horizontal line, 0.00005388 Ways to have prevented/predicted this increase: referring back to some of Thomas Bulkowski's writings, specifically "Getting Start in Chart Patters" Second Edition, he mentions a 25% increase, and to look out for this as a possible "top" to an upward movement. At the time of writing this (11:33 P.M on 10/26/2021) Shib is attempting to break resistance at, 0.00005361. Shibainu might reach a peak of 0.00005555-0.00005600 at a later point. A 30% increase seems to be an "average" for larger moves in the crypto-market, with a target around 0.00005750 (possibly). Upside: Selling at the 0.00004926, for roughly a 16% increase is still a "smart" move, as selling at an increase is preventing any loss by a down-trend. This of course excludes larger uptrends, like the one seen here to 25%. Thomas Bulkowski also warns that 15% is a good selling point. Additional upside, it is clear (at the time of writing this) the SHIB is struggling to break/keep the resistance line, green horizontal line, 0.00005388. Plus, as Mr. Bulkowski puts it, you never go broke taking profits. *for additional trading information, visit: thepatternsite.com (Thomas Bulkowski's' free Site), or see my previous published ideas. related SHIB published idea linked below:
Education
by marcosdaunte
5
How to Tweak & Sync Indicator Settings? (and Why should I care?)This post is dedicated to exploring and reviewing key concepts specific to configuring technical indicators - these concepts may be obvious to those who have been doing charting and technical analysis for a long time, but hopefully useful to some who are new to charting and the world of technical indicators. Also once we are familiar with these concepts, we are able to leverage them with almost any chart setup, any indicator, any trading style, any timeframe - or choose not to use them at all - or to partially use them - we will have the necessary background to make an intentional decision to develop our own configurations. in this exercise, we will attempt to answer few -but very common- questions: 1. what are the best settings i should use for my indicator(s) ? 2. what are "correlated indicators" ? 3. Why should i use indicators on the chart - The price action has all the information i need. First a quick, fun exercise............. What's wrong with the above chart ? Nothing, right? we're looking at a daily chart of the Q's - we're using 3 of the most famous (built-in) indicators: The Moving Average Ribbon - on the price panel- and the MACD and the RSI - on lower panels- all 3 indicators are used with default settings (you may say "no one does that?" - we will for now - just for the sake of the exercise, and to explain couple of concepts, so hold that thought). (for this exercise, assume i am a QQQ trader who traders the daily timeframe. I open and hold positions for few days to few weeks) Now, let's use the chart above to identify long or short trades based first on the MA cross-over (looking at the 2 faster MA's in the ribbon) and check for confirmation from the MACD and the RSI in the lower panels. Should be easy, right ? we'll start by marking the MA cross-overs with a vertical line that cuts thru the MACD and RSI and see what we get. here's the chart showing this part of our exercise we have found 4 possible trade setups, based on the (2 fast) MA cross-overs on the price panel - but when looking for confirmation from MACD and the RSI, we ended up with 3 with confusing signals and 1 that's a "Maybe Long" (... if you find yourself in this situation -regardless of what is being traded, what indicators you use or the timeframe, then hopefully this post may help) Question 1: So how to tweak and sync my indicator settings to get good, reliable trading signals across multiple indicators? there are 3 steps to answer that question and get our "no confusion" chart setup completed. Step 1: identify your trader's preferred timeframe and trader's time horizon let's quickly review these 2 core concepts a. The Traders Preferred Timeframe each trader has one (or more) preferred timeframe that works best for what and how they trade (full-time vs part-time, stocks, futures, forex, options, crypto..etc etc), their trading style, their risk appetite and tolerance, their capital, and some other variables. the first thing i need to determine is what is my preferred timeframe. for example, for me, it is the daily (1D) - i have tried the hourly, the 10min, and also the weekly...etc before, and i found i am much more comfortable with the 1D timeframe. it suits my trading style and goals - i have enough time to adjust trades, don't need to watch charts all the time...and many other reasons. so 1st requirement: identify preferred trader timeframe: daily (check!) (what is your preferred trader timeframe?) b. the trader's "time horizon" with the preferred timeframe identified, the next step is to define what is my short, medium, and long time horizon i need to be watching and analyzing to make trading decisions (others may call this something else, let's call it the time horizon) for example, as a day traders, who trades only stocks and basic options, i need to look at the price action for the current week, 2 weeks and 4 weeks (almost a month) - that doesn't mean i won't look at charts that show price action for a whole year, or an hourly - but for making a trade decision, the price action for this week and this month are what i need to check the most there, we just solved 2nd requirement - my time horizon let's express this in terms of my timeframe: 1 week = 5 daily bars, 2 weeks = 10 daily bars, and 4 weeks = 20 daily bars (check!) (what are your short, medium and long time horizons as expressed in units of your preferred trader timeframe?) from the above exercise, i identified that i need my indicators to be set to 5, 10 and 20 on a daily chart. this is going to be the most comfortable and relevant settings *for me* to support my trading decision according to *the way I trade* Step 2: Ok, so now let's tweak and sync our indicators in the above chart and see if that improves my ability to find possible trades we'll set the MA ribbon to 5, 10, 20, 50 - we set the MACD to 5 and 10 (don't worry about the MACD smoothing/signal - let's make it 4) - and we set the RSI length to 10 make sure we're using the "close" price as the source across all indicators make sure we're using EMA (vs SMA) as the moving average type across all indicators whenever possible. Here's the *same chart* with my indicator settings tweaked and Sync'ed Step 3: let's make some simple but *really useful* visual enhancements to help us see the chart overall in a "visually clearer" way (this is very useful to the more "visual folks out there) -- here's what we did - we hide the unused (slower MA's) on the price chart (for now) - we added an EMA smoothing line on top of the RSI - and made it easier to see (color, width) - hide the underlying RSI itself - you know how to do that trick, right? - we also tweaked the main MACD line (color, width) to make it stand out - other elements are tweaked to "fade" Now let's see if it's now easier to find those trades - Here's the same chart with Sync'ed Indicators AND our "visual tweaks" - and voila! we can see 5 trades with signals from all the indicators agreeing and confirming. All signals are in sync - no "maybe's" and a lot less confusion - and the best things is, all indicators are tweaked to my preferred timeframe and my trader's time horizons. you can apply the same approach we used here to any other indicators you use. we just used this set as an example and to explain this concept. Question 2: What are correlated indicators ? ----------------------------------------------------------------- to answer that question, look at the last chart we arrived at above - Do you see something surprising in that chart? if you inspect the MACD and the RSI plots, you will find they are - visually and broadly - similar , right? they both cross the base line (0 for MACD and 50 for RSI) almost at the same places - and they have overall similar "plot shape" - why is that? this is because the MACD and RSI when sync'ed and tweaked, are correlated indicators - although the calculation formula is different for each, and one of them (RSI) is a restricted oscillator (+100 / -100) while the other (MACD) is not - they both express price momentum - and when tweaked and sync'ed the way we did above, they will (almost) give the same signals. in fact, in our example, all our 3 indicators (the MA pair on the price panel, the MACD and the RSI) are correlated - they're all ,basically, "saying the same" thing - the signals are triggered at exactly the same time - they are redundant in this setup. what does that mean for me as a trader ? it means i'm not receiving any "valuable, additional" insights by having 2 (or more) indicators that represent the same price attribute (in this case momentum) - unless, -- i intentionally want that - and will change settings for one of those indicators to reflect a different "time horizon". for example, i can set the MA pair on top to lengths 20 and 50 - and use the MACD to get signal on the short term (5 and 10) action while the pair on the price chart act as a long-term filter (only take long trades when the MAs agree). or -- i start looking at utilizing other technical indicators that provide completely different insights - and inform me about other "hidden market action attributes" & variables beyond the ones i already have (volume is an excellent indicator by itself, also can check for indicators of sentiment, strength of move, squeeze...etc) - this is where more technical analysis research will guide the trader - also it's useful to learn from others and what they are using in their trading setups, and asking "why" questions. there's so much to say in this part - but i will leave it there.. just a teaser and hope i was able to make some of you curious to research this further - review your trading setups and see if your settings are out of sync, there is redundancies, and how you can get a better picture of price action thru your chart setup. Question 3: if price action has everything i need, why do i need technical indicators in the first place? ----------------------------------------------------------------------------------------------------------------------------- - this is a big debate .. for me, the answer is simple - can you drive your can without the dashboard that informs you when you're about to run out of fuel, or that you're exceeding the legal speed limit - or less obvious things, like your engine temperature - or when the engine oil is below the (red) limit. if i do that once, and i still get safely to my destination, it's definitely not a sure sign that this is what i should always do, or how everyone should be driving their cars. but then again, it doesn't have to get too sophisticated - if, for my preferred time frame and my time horizon, i can see insights that makes it easier for me to quickly understand the price action (like the dashboard in my car), if i can see the trend, strength / momentum, volume supply / demand, and the prevailing sentiment - i guess that would be good enough. Also, there's that other big topic - that indicators are meant to indicate. again, the dashboard in your car is meant to show these things like fuel, speed, engine temperature and oil level, RPM..etc - but the dashboard will not tell you where to go with the car .. you already have a plan, and that's why you're driving your can in the first place. so indicators do not trade for us -- and all this exercise above, is in the service of (and a function of) the trading plans and goals that you already have in mind, before looking at any indicators. in closing, sorry for the long post :) - hope this post helps inspire some fellow traders to further improve the way they trade. please trade safely.
NASDAQ:QQQEducation
by RedKTrader
19
Patterns of possible market correction or reversal 📊 Trend reversal or correction chart patterns signify a reversal of the current trend on the observed chart. In a bullish trend, a reversal formation indicates a highly probable reversal and initiation of a bearish movement. In a bearish trend, a reversal patterns leaves bullish clues and indicates a highly probable bullish accumulation. No matter bullish or bullish reversal pattern is spotted, The trigger that we are looking for is a breakout of the pattern’s support/resistance. ❤️ Please, support our work with like & comment! ❤️
Education
by SignalProvider
7
Trade everything that moves. The mechanics of the position set💡 Trading on the market can be regarded as a full-fledged struggle for the right to survival, where the main enemies are two factors, infinite randomness and time. By adapting your positions to what is happening, you risk becoming that very accident and you can only fight with time. The mechanics of the position set includes a theory about the direction of the price. Directivity theory The essence lies in the continuous direction of the price when the distance from the selected zone is inevitable. It is important to highlight the level and work as soon as the price reaches these values. How is the usual set of positions made Opening a position in a certain direction, as soon as the price goes against the desired forecast, closing with a stop loss, abandoning the transaction, searching for a new entry point, and trying to predict the direction, is an extremely difficult task. An example of a set of positions taking into account the theory of price orientation and risk control R The mechanics of position recruitment are based on clear and simple principles of operation, flexible thinking, quick adaptation to market sentiment. If you start to apply these mechanics in practice, you will notice how at first glance simple things are difficult to do the practice. There will be a feeling that nothing will work, there is no logical explanation for this, eventually, everything will be lost and a big chaotic high-speed car will crush you. This is the basic principle, as long as the market is such, you have very little chance of the death of capital. While large funds, investors, and someone else is fighting among themselves for huge movements, we do not necessarily have to accept their rules of the game and play on their territory in predicting the general and long-term direction of the market. You should think with your head and look for benefits primarily for yourself, taking into account all the nuances of what is happening. But how to be flexible? Constantly turning over a position is completely unprofitable, in the final execution, losses exceed the target profit. It is not at all clear where and when to put stops, overturns, and takeaways. This is where the risk control system R will help us She kicks down the door, breaks into our strategy, and, as the most important puzzle, falls into its rightful place! From my experience, the optimal risk per trade for a beginner is $10 With a smaller volume, there will simply be no motivation to work. But it is worth remembering that the deposit should not be extremely small, as it will not withstand a series of unsuccessful transactions For example, if the deposit is $100, 1R= $10, the power reserve is 10 stops, this is extremely small But with $ 400, you can already try, since the probability of getting 40 stops in a row is extremely small Example of risk calculation for a $1000 deposit The risk is reasonably low R=$10 Power reserve 1000/10=100 100 stops I recommend having a power reserve for the 200R series, from practice I can say that for training and the first results will be enough. All calculations are carried out without taking into account the commission A few tips for improving efficiency: - Do not risk your funds in vain, TradingView provides an excellent opportunity for paper trading (demo) completely free of charge, where you can try out any of your ideas and strategies. - Search for highly volatile tools and work with them. - Analyze the broker (exchange) for conditions, commissions play a particularly important role, pay attention and look for more favorable conditions. - Before you start trading, you should have a clear action plan, the most important component of which should be a risk control system. - Your stop should be tied only to the mathematical component of the transaction. ❤️ Please, support our work with like & comment! ❤️
OANDA:XAUUSDEducation
by UnitedSignals
15
DIVERGENCE IS CONVERGENCE ✅There are several main ways to work on the stock exchange in trading. Technical analysis, for example, is recognized as effective and is used by almost all market participants. But the disputes about indicator analysis do not stop for a long time. Some traders talk about the backwardness of the method because trading operations are performed faster every day. Others build successful strategies based on one or more indicators. Still, others combine two methods to find successful market entries and get an effective tool for making money on the stock exchange. Divergence is often used for this, which will be discussed below. 🔴What is divergence Divergence is one of the strongest signals that indicator analysis can demonstrate. To obtain it, one of the possible oscillators is used. The divergence conditions are that the curve of the price chart diverges from the indicator data. For example, with an uptrend, the price continues to move up, while the oscillator shows a decrease in the interest of the main participants of the trading system. In this case, we should expect a change in the direction of the price. Such a change does not always mean a new trend. Sometimes it can be a normal correction or price fluctuation. To determine the exact forecast, the methods of technical analysis of divergence are used. The result largely depends on the timeframe, sometimes on the support and resistance levels. ⚠️There is also an opposite process — convergence when the price of an asset decreases, and the indicator shows growth. This process is called convergence. Both signals are used in the Forex market, but they are known collectively as "divergence". There are bullish and bearish divergences in the Forex market. In addition, divergence is divided into three types: 1️⃣Classic divergence. 2️⃣Hidden divergence. 3️⃣Extended divergence. ❗️To successfully trade currency pairs on Forex, taking into account divergence, you need to learn how to correctly read information from the market. A combination of indicators and fundamentals of technical analysis will help in this. Divergence plays an important role, so its indicators cannot be ignored. ❤️ Please, support our work with like & comment! ❤️
BITFINEX:BTCUSDEducation
by SignalProvider
15
Trend Reversal Patterns📈📉 1️⃣ Pattern head and shoulders After the pattern has become visible, namely, the right shoulder is visible, the trader needs to wait for the breakout of the neckline. Breakouts occur on strong impulses with a sharp increase in volume. Therefore, in order not to miss the entry and enter at the best price, it is better to use a sell stop order. To calculate where the price will go after the breakout of the pattern, it is enough to measure the height of the pattern (vertically from the maximum of the head to the neckline) and postpone it until the breakout point. 2️⃣ Inverted head and shoulders pattern Occurs in a downtrend and foreshadows an uptrend. The rules for working on a figure are similar to the previous ones. It should be noted that "head and shoulders" in its pure form is very rare. Be careful! 3️⃣ Double Bottom Pattern After you have identified the pattern on the price chart, you need to wait for the breakout of its resistance line. If the price has broken through the resistance, then the target will be the width of the pattern's range - the distance from the lowest point to the resistance. 4️⃣ Double Top pattern A double top is like a double bottom. The only difference is that this pattern is reversed and occurs in uptrends. The number of extrema in a pattern can be not only double, but also triple. But the rules of work will be the same for everyone - enter the breakout, postpone the target to the height of the figure and wait for it to be fulfilled. 5️⃣ Diamond We measure the height and wait for the breakdown. If there is a breakout, then the target of the price movement will be the height of the pattern from the breakout point. 6️⃣ Cup and handle Trades are opened when the "handle" is broken upwards. The target is the height of the formation. ❤️ Please, support our work with like & comment! ❤️
BITSTAMP:BTCUSDEducation
by UnitedSignals
11