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Relative Strength vs Relative Strength IndexRelative Strength vs Relative Strength Index: What Are the Differences? While the Relative Strength and Relative Strength Index indicators might share similar names, it’s important to know the difference between the two. In this article, we’ll discuss their unique characteristics, offer insights into their differences, and help determine which one is best for you. Understanding Relative Strength Relative Strength (RS) is a method that helps traders assess the performance of a particular security compared to a benchmark or another security. For example, a trader may use Relative Strength to compare the performance of Microsoft’s MSFT stock to the S&P 500 and determine whether the stock is outperforming its benchmark. Relative Strength is expressed as a ratio. It’s calculated by dividing the price of the chosen security by another. In this example, we would divide Microsoft’s current share price of approximately $280 by the market value of the S&P 500, around $3,980. This results in a Relative Strength of ~0.07. In isolation, this figure doesn’t mean much. But plotted over time, it can show the trend of a security’s relative strength against a comparative security or benchmark. If this 0.07 value were to rise, it would mean that MSFT is outperforming the S&P 500, and vice versa if it were to decrease. Relative Strength can be used as a tool to help highlight market leaders and laggards, as well as identify overvalued or undervalued assets. For instance, if an asset’s Relative Strength is well below its historical average, it could be undervalued and ready for a reversal. Understanding the Relative Strength Index While they share similar names, Relative Strength and the Relative Strength Index (RSI) shouldn’t be confused. The RSI is a popular technical analysis tool and momentum oscillator that indicates overbought and oversold conditions in the market. RSI measures the speed and change of price movements, oscillating between 0 and 100. To calculate RSI, the average gain and average loss of the security over a specific period, usually 14, are determined. The ratio of these averages is then used to calculate the RSI value. Formally, RSI can be expressed as: RSI = 100 - (100 / (1 + (Average Gain Over Period / Average Loss Over Period))) An RSI value above 70 indicates overbought conditions, suggesting the security may be due for a pullback. Conversely, an RSI value below 30 indicates oversold conditions, hinting that the price may see a bullish reversal. Furthermore, moves above the midpoint, 50, can confirm bullishness, while action below can show bearishness. Traders predominantly use RSI to find potential entry and exit points in the market. For example, when the RSI moves above 70, traders might consider selling or shorting the security. Divergences, where the price forms a new high or low, but RSI fails to do the same, can offer additional opportunities to find reversal or continuation setups. Want to see how RSI works firsthand? Hop on to our free TickTrader terminal at FXOpen to get started with RSI and dozens of other tools ready to help you navigate the markets. Key Differences Between Relative Strength vs Relative Strength Index So what exactly are the most significant differences between RS vs the RSI indicator? Purpose RS aims to compare the performance of a security to a benchmark or another security. Meanwhile, RSI measures the speed and change of price movements to identify overbought and oversold conditions in a single asset. Calculation This difference can be seen when comparing their calculations. Relative Strength is a simple ratio of two securities’ prices, whereas RSI is calculated using a more complex formula that accounts for average gains and losses over a specified period. In this sense, Relative Strength provides a broad picture of a security’s performance, while RSI is concerned with recent price action. Use Case When putting both into practice, traders will use Relative Strength and RSI in vastly different ways. Relative Strength can show which sectors, industries, or individual assets are outperforming their peers. This might help a trader formulate a hypothesis supporting a decision to invest in a particular market, like a stock or an Exchange Traded Fund (ETF). Meanwhile, RSI focuses on a single asset’s momentum and is used to gauge potential trend reversals or the strength of the overall trend. This makes it better suited for entering and exiting positions rather than conducting top-down analysis. Relative Strength vs RSI: Which Is Better? Determining whether Relative Strength or RSI is better ultimately depends on the individual trader. Both indicators have unique strengths and different utilities. Relative Strength may be better for helping longer-term traders and investors to identify trending markets. Throughout a day’s trading, Relative Strength might not indicate much; MSFT’s comparative performance to the S&P 500 can easily change each day. But, over weeks or months, a strong RS reading can demonstrate that MSFT is likely to continue outperforming the benchmark, making it a potential candidate for swing or position trading. Likewise, traders looking to capitalise on trending sectors can use Relative Strength to determine attractive markets. For example, a trader may consider consumer staples a strong industry that could outperform the S&P 500 and then compare the S&P 500 Consumer Staples Sector ETF’s (ICSU) Relative Strength readings to the S&P 500 to confirm their prediction. In contrast, while RSI can be applied across all timeframes, its focus on short-term price action may make it a better option for those interested in trading recent movements. As a versatile indicator, traders can use RSI to highlight potential reversals and trends through both its absolute value and divergences. This makes it ideal for someone looking to find specific entry and exit points rather than general market trends or long-term outperformance. Relative Strength Index vs True Strength Indicator: What Is the Difference? The True Strength Index (TSI) indicator is another momentum oscillator commonly confused with RSI. It’s calculated by smoothing price differences over a specific period and dividing the result by a double-smoothed average of the absolute price differences. The resulting TSI value oscillates around a zero line, with positive values indicating bullish momentum and vice versa. It also features a signal line, which is an average of the TSI line. While their plots are relatively similar, there are differences between RSI and TSI. The primary difference is in their interpretation. RSI mainly identifies overbought and oversold levels, while TSI indicates the overall trend direction using its value relative to the zero line. Their calculations also differ, resulting in a smoother TSI compared to the more erratic RSI. Test Your Skills Now that you have a solid overview of the differences between Relative Strength and RSI, it’s time to put your knowledge into action. You can open an FXOpen account to gain access to dozens of tradeable instruments and advanced technical analysis tools, including the RSI indicator. Good luck! This article represents the opinion of the Companies operating under the FXOpen brand only. It is not to be construed as an offer, solicitation, or recommendation with respect to products and services provided by the Companies operating under the FXOpen brand, nor is it to be considered financial advice.
Education
by FXOpen
2
Fib Retracement - better/important than most believeFibonacci. introduced by Italian mathematician "father of the Fibonacci sequence" Leonardo Da Pasa (born around A.D. 1170) in 1202 in his book Liber Abaci "book of calculations" which he handwrote as the printing was not yet invented, which also became the first book to be introduced to the Hindu-Arabic numeral system as it was a new way to write numbers and do calculations. Fibonacci in trading. the most important/popular fib tool in the trading/investing community is the Fibonacci Retracement applied from the Fibonacci sequence which is a set of steadily increasing numbers where each number is the sum of the preceding 2 numbers. Fibonacci retracement, is derived based on high and low price/ valley and peak in supply and demand terms. The most important Fibonacci ratios/percentage of the retracement measure is - 23.6%, 38.2%, 50%, 61.8%, 100%, with the ratio/percentage being represented by horizontal lines on the price chart. calculated by : in bull market, high price - (high price-low price) x percentage in bear market, low price + (high price-low price) x percentage Significance of Fib Retracement. these are very important too traders as the indicate significant price levels/areas like : - support and resistance - liquidity pool - using rectangle drawing tool to connect two fib retracement levels together as a zone not a singular ratio level. based on current market conditions and trading criteria. - price targets, exit price (Take Profit) - Stop Loss - stop and limit orders (set and forget for supply and demand traders) Fibonacci retracement also compliments other trading tool and indicators well and can be used by all sorts of traders, from position traders to scalpers. it works best on trending market conditions to identify reversals, corrections, pullbacks continuation moves. important note : - Leonardo did not invent Fibonacci, it was actually used and known to Indian mathematicians since the 6th century. - the 50% is not really a Fibonacci number instead is taken from Dow theory that assets usually retrace half their prior move. put together by : Pako Phutietsile as @currencynerd
OANDA:XAUUSDEducation
by currencynerd
STOP LOSS more important than you think!Set STOP-LOSS and stop your loss! The Vital Role of Stop-Loss in Forex and Crypto Trading In the fast-paced realms of forex and cryptocurrency trading, where market volatility is the norm, the integration of a stop-loss strategy holds paramount importance. A stop-loss order acts as a critical risk management tool, shielding traders from excessive losses and preventing impulsive decision-making in turbulent market conditions. However, its significance goes beyond risk mitigation; stop-loss orders also play a pivotal role in guiding traders towards selecting optimal entry points. Let's delve into why incorporating stop-loss orders into your trading approach is essential for achieving long-term success. Fostering Discipline and Psychological Resilience One of the primary rationales for the necessity of stop-loss lies in its capacity to nurture discipline and psychological resilience among traders. By establishing predetermined exit points, traders not only manage risk effectively but also cultivate a disciplined mindset crucial for navigating the complexities of financial markets. Adhering to stop-loss levels compels traders to conduct thorough analyses of entry points, thereby refining their decision-making processes. This disciplined approach not only mitigates the influence of emotional trading but also fosters rationality and consistency, pivotal attributes for sustainable trading success. Empowering Effective Risk Management Practices Effective risk management forms the bedrock of successful trading endeavors. Without the implementation of stop-loss mechanisms, traders expose themselves to the peril of unchecked losses, which could potentially erode their entire trading capital. Stop-loss orders serve as a bulwark against such scenarios, capping losses at predetermined levels. By calculating appropriate position sizes relative to stop-loss distances, traders ensure that each trade aligns with their risk tolerance and overarching trading strategy. Moreover, the process of setting stop-loss levels inherently prompts traders to meticulously assess entry points, reinforcing the importance of selecting optimal trade setups. Optimizing Risk-Reward Dynamics An often-overlooked aspect by novice traders is the critical importance of maintaining favorable risk-to-reward ratios. Trading without stop-loss not only compromises risk management but also distorts the risk-reward dynamics of each trade. Well-placed stop-loss orders enable traders to define risk upfront, enabling them to seek out trades with favorable risk-reward profiles. By aligning potential losses with anticipated gains, traders can pursue asymmetric returns, where profit potential outweighs risk undertaken. This strategic alignment not only enhances profitability but also instills confidence in traders, empowering them to execute trades with conviction. Conclusion In conclusion, the integration of stop-loss orders into your forex and crypto trading endeavors is indispensable for cultivating discipline, managing risk effectively, and optimizing profitability. Beyond serving as a risk management tool, stop-loss orders nurture psychological resilience, refine decision-making processes, and uphold the principles of disciplined trading. Moreover, stop-loss implementation inherently encourages traders to scrutinize entry points meticulously, reinforcing the importance of selecting optimal trade setups. Therefore, traders must recognize the pivotal role of stop-loss in safeguarding capital and fostering long-term success in the dynamic world of financial markets.
OANDA:XAUUSDEducation
by traderstube
Keltner Channels vs Bollinger BandsKeltner Channels vs Bollinger Bands: Which Indicator Should You Use? If you’re a trader, you likely know that indicators are a valuable tool for identifying trends and finding entry and exit points. Two popular indicators are Keltner Channels and Bollinger Bands. Both help you measure volatility, but which one is better? In this article, we’ll dive into the differences between the two, explain their components, and discuss which one is best. Keltner Channels The Keltner Channel is an indicator that helps traders determine trends, momentum, and potential reversal areas in a given market. It’s named after Chester Keltner, who first introduced it in the 1960s. Keltner Channels are composed of three lines, forming an envelope. The middle of these three lines is an exponential moving average (EMA), usually set to 20 periods. The upper and lower lines are multiples of the Average True Range (ATR) added or subtracted from the EMA, often double. The ATR measures the volatility of an asset by taking the average of the true ranges of its price movements over a certain period. We can interpret Keltner Channels in several ways. The upper and lower bounds act as dynamic support and resistance levels, and traders use them to determine entry and exit points. Additionally, when price breaks through one of the bounds, it may signal a potential reversal or a continuation of the current trend, depending on price action and other technical factors. For instance, a market in a strong bullish trend will appear to stick close to the upper line, often retracing to the EMA before continuing higher. Meanwhile, closes far outside of the lines may sometimes signal a reversal, given how far price has moved beyond its expected true range. Following a ranging market, determined when the lines are effectively horizontal, these kinds of extreme moves may signal a breakout. Bollinger Bands The Bollinger Bands is a widely used technical indicator that helps us identify an asset's volatility and potential price movements. It was created by John Bollinger in the 1980s and has since become a popular tool among traders of all levels. Like Keltner Channels, the Bollinger Bands tool comprises three components: the middle line and two outer lines. The middle line is a simple moving average (SMA), typically 20 periods long. The upper and lower bands are calculated by adding and subtracting a multiple of the price’s standard deviation from the SMA, respectively. This multiple is set to two by default, but some will adjust it according to their preferences. Instead of using the true range, Bollinger Bands use standard deviation (STD) – the square root of the variance of a set of price movements over time. Because they utilise standard deviation, Bollinger Bands are slightly more responsive to volatility than Keltner Channels. When the range constricts, volatility is low; and when the range expands, volatility is increasing. Many traders prefer Bollinger Bands to gauge volatility in the market. As with Keltner Channels, the bands show dynamic support and resistance levels. They’re also quite effective when used to detect reversals – explained shortly. Additionally, we can apply Bollinger Bands to detect trends/breakouts when price hugs the bounds, though arguably not as well as Keltner Channels. Keltner Channels vs Bollinger Bands So, we know that using Keltner Channels and Bollinger Bands helps us to measure volatility while trading. But what exactly are their key differences? ATR vs STD The first and most fundamental difference is how each indicator measures volatility. ATR, used in Keltner Channels, takes the average of absolute changes in price, or an average of the true range. The standard deviation used by Bollinger Bands indicates how much price may deviate from its average. While the difference may seem subtle, it can be significant in certain market conditions. Standard deviation gives more weight to larger values over smaller ones, effectively making Bollinger Bands more responsive to volatility. EMA vs SMA The second is the moving average both indicators use. Keltner Channels employ an exponential moving average, which is more responsive to recent price action than other moving averages. Bollinger Bands implement the simple moving average, which reacts slower than the EMA. The impact isn’t as significant as ATR vs standard deviation, but the more responsive nature of the EMA may help traders get into positions more often if they’re trading pullbacks. Trading Trends To determine a trend with Bollinger Bands, we typically look for the bands to start widening, which indicates volatility (usually following a breakout). When the bands become tight, it’s expected that a new trend could be about to form. To identify a trend using Keltner Channels, we can examine whether it slopes up or down. Given that Keltner Channels are often slower moving, multiple closes outside the channel can show us that an asset has momentum and is looking to continue the trend. Trading Reversals Statistically, 95% of price action should be inside Bollinger Bands with two standard deviations. This is significant for identifying potential overbought and oversold areas; moves beyond the bounds indicate that the price action is extreme and has a strong likelihood of reversing. Keltner Channels can be used to find reversals, but it’s often much harder than with Bollinger Bands. A price will regularly breach or close outside of the channel in a strong trend while not crossing Bollinger Bands. It’s best to apply Keltner Channels to trend trading and identifying breakouts. Using Keltner Channels and Bollinger Bands in a Strategy Overall, Bollinger Bands are a more responsive indicator that may help us identify when volatility could be about to pick up (tightening) and when a new trend has likely started (widening). They’re well suited to trading reversals, thanks to the statistics of standard deviations. Keltner Channels tend to be less responsive to volatility, but they may be much better at identifying strong trends, especially when price hugs or continuously closes beyond the lines. When price ranges, Keltner Channels often show a new trend forming much faster than Bollinger Bands, thanks to the telltale sloping of the channel. So which one is best? Ultimately, it comes down to the individual trader and their style. Some may prefer to trade reversals with Bollinger Bands or jump on board breakouts with Keltner Channels. You could play around with both in the free TickTrader platform from us at FXOpen to get an idea of how to apply both indicators while trading. Closing Thoughts You should now have a solid overview of the differences between Keltner Channels and Bollinger Bands. While they may seem similar, taking the time to experiment with them will show you the qualities of each and how they could be applied to various scenarios. Once you settle on your favourite, why not combine it with other indicators, like RSI or Stochastic oscillator, to develop your own strategy? Then, when you’re ready, open an FXOpen account and start using your system for real trading! This article represents the opinion of the Companies operating under the FXOpen brand only. It is not to be construed as an offer, solicitation, or recommendation with respect to products and services provided by the Companies operating under the FXOpen brand, nor is it to be considered financial advice.
Education
by FXOpen
8
Trade Entry and Management Techniques Using Swing High PivotsIn today's video idea, we will delve into a comprehensive strategy for trade entry and management, centered around utilizing swing high pivots as crucial reference points. We will also explore the effective integration of technical tools such as Outer Bands, ribbons, and Target View Trades (TV-Trades) to enhance precision in trading decisions. By the end of this tutorial, you will gain valuable insights into determining trade viability and optimizing trade execution. Understanding Swing High Pivots: Swing high pivots serve as pivotal landmarks in market analysis, offering valuable insights into potential trade setups. When identifying swing high pivots, focus on significant price peaks that indicate potential trend reversals or continuation points. These points will serve as key references for evaluating trade opportunities and managing risk effectively. Trade Entry Strategies: Utilizing swing high pivots as reference points, assess the market conditions to determine the viability of trade entry. Look for confluence with other technical indicators such as Outer Bands and ribbons to validate trade setups. Prioritize trades that align with the prevailing market trend and exhibit strong momentum, increasing the probability of success. Managing Trades: Once you enter a trade, it is essential to implement effective management techniques to optimize profitability and mitigate risks. Continuously monitor price action relative to swing high pivots and technical indicators to gauge trade performance. Implement trailing stop-loss orders to protect profits and minimize potential losses as the trade progresses. Integration of Technical Tools: Explore the functionalities of technical tools such as Outer Bands, ribbons, and Target View Trades (TV-Trades) to refine trade entry and exit points further. Outer Bands provide larger trend information, aiding in direction, trade confirmation and risk management. Ribbons offer visual cues for trend direction and momentum, enhancing trade precision. Target View Trades (TV-Trades) provide a systematic approach to identify optimal entry and exit points, facilitating disciplined trading execution. Conclusion: Mastering trade entry and management techniques is essential for navigating the dynamic landscape of financial markets successfully. By incorporating swing high pivots and leveraging technical tools effectively, traders can make informed decisions, capitalize on lucrative opportunities, and achieve consistent profitability in their trading endeavors. Continuously refine your skills through practice and experimentation, adapting to evolving market conditions for sustained success.
CME_MINI:NQM2024Education
by CFRN
3
Options Blueprint Series: Calendar Spreads - Timing the MarketIntroduction to Calendar Spreads Calendar spreads, also known as time spreads or horizontal spreads, are advanced options strategies that involve buying and selling two options contracts on the same underlying asset, such as the S&P 500 Futures, but with different expiration dates. The strategy aims to profit from the differing time decay rates of the short-term and long-term options. Traders often deploy calendar spreads to capitalize on expected stable or sideways market conditions. Why S&P 500 Futures Options for Calendar Spreads? The S&P 500 index, encapsulating the performance of 500 of the largest companies listed on stock exchanges in the United States, serves as a premier gauge of U.S. equities. Its derivative products, notably the S&P 500 Futures Options, present traders with a fertile ground for executing calendar spread strategies. These options inherit the index's broad market exposure and liquidity, making them an ideal candidate for such strategies. Let's delve into the contract specifications and characteristics that make S&P 500 Futures Options and Micro Options particularly suited for calendar spreads. Contract Specifications: S&P 500 Futures Options (Standard): These contracts are based on the E-mini S&P 500 futures. Each contract represents an agreement to buy or sell the futures contract at a set price before the option expires. The standard option contract size typically mirrors the underlying futures contract, which is valued at $50 x S&P 500 Index. Micro S&P 500 Futures Options: Introduced as a more accessible variant, Micro S&P 500 Futures Options are 1/10th the size of their standard counterparts. This smaller contract size reduces the capital requirement, making it more appealing for individual traders and those looking to fine-tune their market exposure. The contract size for Micro Options is $5 x S&P 500 Index, maintaining the leverage and flexibility of the standard options but at a scale more manageable for a wider range of investors. Characteristics Beneficial for Calendar Spreads: Liquidity: Both standard and micro contracts benefit from high liquidity, ensuring tight bid-ask spreads. This liquidity facilitates easier entry and exit from positions, a critical factor when managing calendar spreads that require precision in timing and the ability to adjust positions quickly in response to market movements. Volatility Patterns: Understanding and anticipating volatility patterns is crucial for the success of calendar spreads. The S&P 500's inherent volatility, influenced by economic indicators, corporate earnings, and geopolitical events, can affect options pricing and the optimal structuring of calendar spreads. Strategic Flexibility: The availability of both standard and micro contract sizes provides traders with flexibility in managing their market exposure and tailoring their strategies to match their risk appetite and investment goals. Incorporating S&P 500 Futures Options into calendar spread strategies not only leverages these inherent characteristics but also taps into the dynamic interplay of time decay and market movements. Traders must, however, remain vigilant of the underlying market conditions and adapt their strategies to align with evolving market dynamics. Constructing a Calendar Spread To construct a calendar spread with S&P 500 Futures Options, a trader needs to undertake a series of thoughtful steps. Initially, one must select an appropriate strike price that aligns with their market outlook. Typically, at-the-money (ATM) or slightly out-of-the-money (OTM) options are preferred due to their sensitivity to time decay, which is a pivotal component of this strategy. Example Setup: Buying a Long-term Option: Consider purchasing a long-term put option on the S&P 500 Futures with an expiration date 30 days from now. The selection of a long-term option is strategic, as it retains its time value better compared to shorter-term options. Selling a Short-term Option: Simultaneously, sell a short-term put option on the S&P 500 Futures with the same strike price as the long-term call but with an expiration date 5 days away. This option is expected to lose time value rapidly, which is beneficial for the seller. As seen on the below screenshot, we are using the CME Options Calculator in order to generate fair value prices and Greeks for any options on futures contracts. Underlying Asset: S&P 500 Futures (Symbol: ES1! or MES1!) Strategy Setup: o Buy 1 OTM put option with a strike price of 5260 (Cost: 44.97) o Sell 1 OTM put options with a strike price of 5260 (Credit: 7.78) Net Debit: 37.19 (44.97 – 7.78) Maximum Profit: Achieved if prices are at 5260 at expiration. Maximum Risk: Limited to the net debit of 37.19. The essence of this setup lies in capitalizing on the accelerated time decay of the short-term sold option relative to the slower decay of the long-term bought option. Ideally, the underlying asset's price will be close to the strike price at the short option's expiration, maximizing the profit from its time decay while still benefiting from the long-term option's retained value. Adjustments for Market Movements: f the market moves significantly, the spread can be adjusted by rolling the short-term option forward to the next month, potentially locking in gains or reducing losses. A successful calendar spread hinges on precise timing and a keen understanding of volatility. The trader must monitor the implied volatility of the options, as an increase in volatility can enhance the spread's value, while a decrease can diminish it. Potential Market Scenarios and Responses Optimal Market Condition : The calendar spread thrives in a market exhibiting minimal price movement, particularly around the strike price of the options involved in the spread. This stability allows the trader to exploit the differential time decay effectively. Market Moves Against the Position : In the event of adverse market movements, the trader might need to adjust the strategy. This could involve rolling the short option to a different strike or expiration date, or possibly closing the position early to mitigate losses. Flexibility and proactive risk management are paramount, as market conditions can change rapidly. The construction and management of a calendar spread with S&P 500 Futures Options involve a delicate balance of market prediction, timing, and risk management. By judiciously selecting strike prices, expiration dates, and adjusting in response to market movements, traders can navigate the complexities of calendar spreads to seek profit from the nuances of time decay and implied volatility in the options market. Risk Management Effective risk management is crucial when trading calendar spreads, particularly with S&P 500 Futures Options, due to the potential for rapid changes in market conditions. Identifying and mitigating potential losses involve several strategies: Position Sizing: Keeping each trade to a reasonable proportion of the total portfolio reduces the impact of any single trade's loss. Diversification across different strategies and assets can also help manage systemic risks. Stop-Loss Orders: Implementing stop-loss orders for the position can help limit losses. This is especially important if the market moves sharply in an unexpected direction, affecting the spread unfavorably. Continuous Monitoring and Adjustments: The calendar spread requires regular monitoring and potential adjustments to respond to changes in the underlying asset's price or volatility. This may involve rolling out the short position to a further expiration date or adjusting strike prices to better align with the market conditions. Hedging: In some scenarios, traders might consider using additional options strategies or the underlying futures contracts themselves to hedge against significant market moves. This approach can help protect the portfolio from large, unexpected shifts in the market. Conclusion Calendar spreads offer a sophisticated strategy for traders looking to profit from the nuances of time decay and volatility in the options market, particularly with S&P 500 Futures Options. This strategy suits those with a nuanced understanding of market movements and the patience to monitor and adjust their positions over time. While calendar spreads can offer attractive opportunities for profit, especially in sideways markets, they also require diligent risk management and an active trading approach. Encouraging further education and risk-aware trading practices is essential for success in options trading. Traders should continually seek to expand their knowledge of market conditions, options strategies, and risk management techniques to refine their trading approach and better navigate the complexities of the financial markets. By embracing a disciplined approach to trading calendar spreads, investors can explore the potential of this strategy to enhance their trading arsenal, leveraging the dynamic nature of S&P 500 Futures Options to tap into market opportunities while managing the inherent risks of options trading.   When charting futures, the data provided could be delayed. Traders working with the ticker symbols discussed in this idea may prefer to use CME Group real-time data plan on TradingView: www.tradingview.com This consideration is particularly important for shorter-term traders, whereas it may be less critical for those focused on longer-term trading strategies. General Disclaimer: The trade ideas presented herein are solely for illustrative purposes forming a part of a case study intended to demonstrate key principles in risk management within the context of the specific market scenarios discussed. These ideas are not to be interpreted as investment recommendations or financial advice. They do not endorse or promote any specific trading strategies, financial products, or services. The information provided is based on data believed to be reliable; however, its accuracy or completeness cannot be guaranteed. Trading in financial markets involves risks, including the potential loss of principal. Each individual should conduct their own research and consult with professional financial advisors before making any investment decisions. The author or publisher of this content bears no responsibility for any actions taken based on the information provided or for any resultant financial or other losses.
CME_MINI:ES1!Education
by traddictiv
FULL LIST OF OANDA-AVAILABLE INSTRUMENTS ON TRADINGVIEWIt is nearly impossible to find, online, what the TRADINGVIEW symbols are, for all the instruments offered by OANDA (a broker). After finally finding that list on TRADINGVIEW (by writing "OANDA:" in the TRADINGVIEW search box, without the quotation marks), I decided to compile the results and create my own list in a document. Here are the results. We don't see all 3 images in full size (some areas were cropped)... Look at the COMMENT section at the bottom of this TRADINGVIEW IDEA, for the full list. Wishing you a great trading week. @ADX-BRIEFING _____________
OANDA:SPX500USDEducation
by Pine_Academy
1
Exploring Renko Charts: Simple Trading Strategies for Success Today, I'm excited to introduce you to two effective trading strategies designed for Renko charts. Renko charts, unlike traditional Japanese candlestick charts, focus solely on price movements, offering traders a unique perspective on market trends and opportunities. Before diving into the strategies, let's first understand the basics of Renko charts and how they differ from Japanese candlestick charts. Renko charts are renowned for their: Absence of time: Renko charts disregard time intervals, concentrating solely on price movements. This feature helps filter out market noise, allowing traders to identify clear trends. Uniformity: Each brick on a Renko chart represents a fixed price movement, ensuring uniformity across the chart. This consistency aids in trend identification and reversal spotting. Trend identification: Renko charts excel at identifying trends due to their focus on price movements. Traders can swiftly discern trend reversals or continuations by analyzing brick patterns. Reduced noise: By filtering out minor price fluctuations, Renko charts offer cleaner data, making it easier for traders to identify significant price movements and trends. In contrast, Japanese candlestick charts focus on time intervals and include all price movements within the selected period. Both chart types have their advantages, but for our strategies, we'll be using Renko charts. Now, let's delve into the strategies: 1. Buy Green, Sell Red (with and without 13 EMA): This straightforward strategy involves buying when a green candle appears and selling when a red candle emerges. Option 1: Implement this strategy with a 13 EMA (Exponential Moving Average). Buy when a green candle closes above the 13 EMA line and sell when a red candle touches the 13 EMA line. Option 2: Execute the strategy without the 13 EMA. Simply buy on green and sell on red. While Option 1 may yield slightly delayed entries and exits, it provides additional confirmation, especially during volatile market conditions. Consider automating this strategy with an algorithmic trading bot for seamless execution. 2. Strategy that forecasts the market?: This strategy tells you if the market will go up or down after a important for example economic meeting! So, if you are interested in this strategy than write down in the comment and like (boost) this educational idea, if we get 100 likes (boosts) than I will make Part 2. Please note: When you have a basic plan, than you can just open Renko chart above 1 day time frame, you can also work good on 1 day, but if you want to see Renko chart on Intraday time frame than you need to have Premium plan. Upgrade now for intraday best experience using RENKO chart: Upgrade now
Education
by smarttrader012
4
10 EMA strategy ^BEST TREND-FOLLOWING STRATEGY^Welcome! Today, I'm excited to share with you one of the most effective trend-following strategies that is adaptable to any timeframe and asset class ( OANDA:XAUUSD , NSE:NIFTY , FX:USDCHF ), boasting a remarkable risk/reward ratio of up to 1:10. Let's dive right in. As mentioned, this strategy revolves around the Exponential Moving Average (EMA), specifically the 10-period EMA. For those unfamiliar, the EMA places greater emphasis on recent price data compared to a Simple Moving Average (SMA), providing a dynamic view of market trends. When the price on your chart is above the 10 EMA, it signifies a bullish trend; conversely, when the 10 EMA is above the price, it indicates a bearish trend. Let's illustrate with an example: Imagine a bullish trend with four consecutive green candles followed by a red candle. Our entry point occurs when this red candle, the trigger candle, fails to touch the 10 EMA. Subsequently, when a green candle crosses above the high of the trigger candle, we enter the trade. Setting our stop loss (SL) just below the EMA line beneath the trigger candle, we establish our take profit (TP) based on a risk/reward ratio, starting at 1:2 and potentially reaching an impressive 1:10. Trailing the 10 EMA line allows us to stay in the trade longer, albeit experiencing initial stop-loss hits. However, perseverance reveals the strategy's efficacy over time. Now, for short positions, such as during a downtrend characterized by three red candles followed by a green candle, our entry occurs when the low of the green candle is breached by the subsequent red candle. Setting the SL just above the EMA line above the trigger candle and TP based on the risk/reward ratio, we execute the trade. For those interested in trailing stops, there are two options: firstly, trailing along the 10 EMA line; secondly, utilizing the Average True Range (ATR) for algorithmic trading enthusiasts. With this strategy's flexibility and potential for significant returns, it offers traders a robust approach to navigating diverse market conditions. ***Here are 2 examples of Long & Short: Long position in BINANCE:SOLUSDT www.tradingview.com Short in FOREXCOM:EURCAD It's crucial not only to grasp the concept of this strategy but also to put it into practice. 💼 Start by implementing it with small capital or utilize paper trading, which platforms like TradingView offer. 📝 Additionally, don't hesitate to experiment. For instance, try using an 11-period EMA and assess its effectiveness. You might find that it better suits your trading style and objectives. 🧪💡 Remember, trading is a journey of discovery! 🚀 Don't be afraid to explore new strategies and techniques along the way. 🌟 Like (boost), follow, comment, and share this strategy to spread the knowledge and empower fellow traders! 📈🚀👍 For the optimal TradingView experience, upgrade now to unlock the platform's full potential: www.tradingview.com
NASDAQ:TSLAEducation
by smarttrader012
Understanding Trends: Indicators, Trendlines, and PivotsIn this video I describe trends, what the are, what a proper trend should look like and ways of indentifying a trend. I cover the following tools to identify trends: Trendlines (with consistency) Internal Trendlines Indicators: Linear regression, EMA, Channels/Bands Pivot swings I think no matter how YOU define a trend, it should be the following things: Consistent Measurable - so you can analyze it later Fit your trading style I hope you learned something new in this video. Please drop a comment if you like the content.
AMEX:SPYEducation
by JoeRodTrades
Education chart - SIMPLE ZIGZAGS in WXY DOUBLE ZIGZAGI started to assemble own ibrary of ElliottWave patterns and rules. Here simple zigzags occured in: wave W and wave Y of WXY double zigzag Zigzag 1 - wave W Wave A - leading diagonal Wave B - double zigzag Wave C - ending expanding diagonal ending at the top line of the parrallel channel Zigzag 2 - wave Y Wave A - impulse Wave B - double zigzag Wave C - ending expanding diagonal ending at the middle of the parrallel channel ----------------------------------------- ## Rules for Simple ZigZag - Subdivide into three waves. - Wave A is always an impulse or leading diagonal (expanding or contracting) - Wave C is always an impulse or ending diagonal (expanding or contracting). - Wave B is any corrective pattern. - Wave B never moves beyond Wave A start - Wave B always ends in Wave A territory - Wave A and C cannot be both diagonals of the same type (contracting/contracting or expanding/expanding), other combinations are possible ## Norms - Waves A and C are frequently impulse waves but even more often they alternate between impulse and diagonal modes. Waves A and C may occasionally alternate between contracting and expanding diagonals - Waves A and C cannot be diagonals of the same type - Wave C must travel past Wave A's top. In Elliott Wave Theory, failure to do so is referred to as truncation - Wave C should not go below 90% of Wave A ## Guidelines - Wave C is typically equal to 0.618 (occasionally 1.618 or 2.618) of wave A - Wave B typically retraces 38-79% of Wave A - in case B is a triangle it retraces **38-50%** of Wave A - in case B is a running triangle, the retracement can be **10-40%** - in case B is zigzag, the expected retracement is **50-79%** - The parallel channel that connects Wave A's start and Wave B's finish may provide a hint of where Wave C might conclude by extrapolating the other line from Wave A's end - If waves A and C are both strong, wave C will reverse at the channel's top line - If wave C appears weaker than wave A, it may reverse at the channel's middle - If Wave C performs stronger than A, a double channel will be used as a target of the reversal point. ## Occurs in Wave 2 Wave 4 (unless happened in wave 2) Wave W, Y of WXY double zigzag Wave W or Y of a combination Wave B of ABC flat Waves 1, 2, 3, 4, 5 in contracting diagonal Wave B of ABC zigzag Wave X of WXY double zigzag
TVC:USOILEducation
by Energeia_Charta
3
A Renko Trading Strategy with Multiple Indicators (Update 3)An update from the last summary: Stating the obvious but the recurring pattern did not play out. This was a painful past couple of days but some realizations that I will walk through here for anyone who may be on a similar journey or realizations. “Buy high and sell low” or “buy support and sell resistance” are simple words to speak, to walk through in back testing, but, in the heat of the moment with live data and markets unfolding in ways you weren’t expecting make these phrases an near impossible accomplishment. As for the chart setup, I’ve with the following for the Renko WTI/CL chart: 25 tick block size and a 15-minute timeframe (more on this later) DEMA at 12 and 20 MA at 20 with a 9 period (or block in case of Renko) WMA Stoch of 5,3,3 and 25,3,3 DMI of 5,5 Bull Bear Power at 25 (this is new and seems to provide good insights) Wednesday and Thursday had me watching the Renko charts waiting for an opportunity to go short (remember, my trading style is to buy either Calls or Puts as near to the money as possible and at least 3 to 4 months out). From the patterns I saw on the Renko, I firmly believed that the market was ready to sell off and I wanted to be in. As an aside, I cap my losses at 10% of the price I pay for the option. In my losses this week, I realized that my strategies for every period of time that I’ve tried to trade had basically been a breakout trader. It wasn’t that I made a definitive statement of “Hey, my methodology is that of a breakout trader” but more like “Hey, I need to see confirmation of the price movement before I enter”. The problem is that the confirmation I was looking for was well after price had started moving and, as I looked at it, it was what could be classified as a breakout. And it was in my 3rd loss for the week, that I realized what I was doing wasn’t working. Sure, I could find points in time where it would have seemed to work but not this week. As closed out my 3rd loss, I read back through some items I had highlighted in the “Pivot Boss” book referenced earlier and in it found the pages were I had marked up the callout that you have to buy at support and sell into resistance if your going to succeed. It seem intuitive but in reality, it goes completely against my nature while trying to find an entry point with live data flying by. By now, if you’ve read this far, you may have picked out some items that resonate with you or you may be finding this as a serious source of entertainment :D For the discussion that continues, you’ll need to reference the previous article I wrote to see the specific charts before the price action on Thursday. The following link will give you view of how price played out. The red rectangle outline on the chart is where I was looking for price to repeat a similar pattern noted in the related article. How simple (and unrealistic) could this be. What played out was a price movement that I didn’t know how to handle and took me some time to figure out where to get in. As price continued to go up, I realized this was where I would usually just try to get in and then, I would get in at a intra-day high, have price pull back and 10-20% of my option value hit and I’d be out just to watch the market reverse. So, on this day, I resolved myself not to make a trade unless I could figure out this “buy support and sell resistance” thing. In my resolve, I agreed to some points: I will only buy at support and will sell into resistance: (the hardest concept known to man, not in understanding but execution) The key must be in the Camarilla Pivots so use them and the system that is outlined in the book. Or, as close as you can with how you want to trade. Renko chart setting will stay at 25 ticks for a block size and 15 minutes for a timeframe. What does this mean for Renko in TV? It means that price of a 25 tick increment must be held for 15 minutes before the block is committed or printed. Because volume profile and camarilla pivots are not a natural fit on the Renko charts, I’ll create a candle chart side-by-side to the Renko chart and then place all of these indicators on it. Additionally, all of the mark-ups I do for projecting the volume area on the chart and the opening range will be done on the candle chart The Renko chart will continue to have the indicators I track on it but they will be for confirmation and helping to form an opinion of the market and nothing to do with entry or exit. Remember, I want to buy support and sell resistance and not breakouts. I wanted to have multiple periods of levels on my candle chart so I included 3 sets of camarilla, a daily, weekly, and monthly set of levels. The next big decision I had to make was the timeframe for the candle chart itself. After much experimentation and debate with myself, I landed with the following: Start with an hourly chart. The first general notion of entry and if at support or resistance will come from the hourly chart. I will continue with my volume area and opening range markup but it will be for a weekly timeframe. Meaning that the volume profile indicator is set to weekly and I use the first 5 hours of the week to set the opening range. From these markups I’ll create an opinion of the coming week and a trading plan based on what I see. Then, I’ll let price movement between the camarilla pivots prove out my opinion or lead me to adjust it. Once I find a potential trigger, I will switch the 1hr candle chart to a 5 minute candle chart and look for candle setups to trigger the actual trade. What do I use for triggers and how to I decide where to look? The following chart is a bit of an eye chart but you get the idea. With the 3 camarilla pivots plus a year pivot, you can see the various levels. While it may seem like a confused mess, there is some method to the madness. The Camarilla pivots in TV allow you to color code the levels plus set the size or pixel width of the lines of the levels. For all periods, I set the pivot to black, R1/S1 and R2/S2 to purple and then based on the book’s recommendation, R3/S4 to red, R4/S3 to green, and R5/S5 to blue. For the daily, week, monthly, and yearly pivots, I set their pixel width to 1px, 2px, 3px, and 4px respectively. This is how I get a visual clue on what timeframe price is approaching (by the width) and the type of triggers or market behavior I should be looking for based on the color. I will use the weekly, monthly, and hourly pivots to look for price levels of support or resistance. It will be at these levels that I’ll look for price action to provide insight as to what the market wants to do with the level (there is a good discussion in the “Pivot Boss” book on identifying candle patterns that distills a lot of complexities of endless chapters of concepts into a few simple ones in one chapter). Once I see some type of candle pattern on the 1 hour chart that could indicate a trigger to enter, I change it to a 5 minute chart to find a pattern in the price movement of the next candle to make the entry. In theory, this should provide me with an entry at support; don’t wait for a confirmation via a breakout. So, why mess with the Renko charts then? Fair enough of a question; I believe that the Renko chart setup will filter noise out of the view and provide a cleaner view of support and resistance lines due to the nature of its makeup. If you follow along with any of this in your own charts, you will begin to see that the pivots begin to form identifiable lines of support and resistance in the Renko chart. And, back to the point that the Renko setup I have with the specific indicators and their settings seem to provide a good path toward confirmation of trends and positions. Another key issue I was struggling with was how to correlate the Renko chart with the candle chart. This is where I came up with the 5-minute chart which, after thinking about it, I realized that the 5-minute chart would reconcile nicely with the 15-minute Renko chart. If you look at how Renko charts are printed, they will print on the time frame that you set so, if a brick prints, it should do so on a :15-minute boundary. And, the 5-minute candle will correlate to it. The next chart shows the Renko with the 1hr candle side-by-side with the same rectangle. The rectangle on the 1hr is a reasonable estimate but squarely in the middle is an interesting candle formation that happens to be near the daily S5 and the weekly R1. I looked at this for awhile in real-time and thought, how do you really decide to make this trade? It seems like price has moved further from the trigger before you have the nerve to pull the trigger on the trade. Plus, if you look at the DEMA on the Renko at this time, it’s still set bearish with 20 above the 12 and the -DI was still swapped above the +DI. All things I’ve used in the past and now causing paralysis in pulling the trigger in a “buy at support” trade. The next is the same chart setup but I’ve switched to the 5 minute view and have adjusted the red rectangle in the candle chart a little. The candle chart shows the boundary of the lowest red brick, the one red brick to the left and the two green bricks to the right. In this price action, candle on the one hour chart (engulfing is corroborated by the extended wick of the green brick that is the first reversed color in the down move. However, with the DEMA swapped bearish, what would lead you to look to buy on this. There are valid cases where price continues down from the one green brick. This is where the importance of the camarilla pivots along with the 5 minute chart come in. With the engulfing candle on the 1-hour chart and the green brick on the Renko, what I should have done is use the 5-minute chart with the various pivots to find support and candle patterns to enter the market long. This would have been fulfilling the mantra of “Buy Support; Sell Resistance”. The following chart zooms in to both the Renko and the 5-minute candle in hopes to show details of how to get from potential triggers to confirmations and physical entries with tighter reins on the stops to guard more on the ‘Hope this will work’ strategy. By using the 15-minute Renko and the 5-minute chart, I can now see exactly what’s going on in the Renko bricks to get a better feel of what the market is doing. The blue double arrow on the Renko correlates with the 5-minute candle. With the first green brick being a trigger, then the key is to look at what is going on once that brick prints to see how price behaves around the Camarilla pivots. The green dashed line is the time that the first green brick printed (committed, good to go). So, what is important is to now watch the price to find a setup to enter. Or we see the market push through the support of the camarilla pivots that are in close proximity and begin the search for an entry short. The chart below is zoomed in even more on the candle chart with the daily Camarilla S4 which, from a daily context, is the last level of support before more sellers hop in and drive price lower. I’ve outlined this pivot in a green rectangle and here you can see price action and find some interesting setups. I’ve put some black arrows at some of the more interesting candles and those which are probably some type of reversal patters of 2 or 3 in nature. I’ll end this here but have more in my notes that I’ll include in a future update.
NYMEX:CL1!Education
by mxb1961
Learning Post : Risk to Reward Ratio IndicatorThe Risk to Reward Position tool allows Traders to set the Entry/Exit points and Caclculate a long position from the Specific Point. Adjusting above and below the price level will be two boxes; Green box is for the profit zone and Red Box is for the Loss zone. The zones are manually adjusted as the Traders to change the Risk/Reward Ratio. This is an Important Tool to Practice your Risk / Reward Ratio for the Particular Strategy 👍
NSE:MARUTIEducation
by Himanu_HATradeTalk1
Swing Mapping Part 1: Key Principles Welcome to the first instalment of our 3-part series on swing mapping – a highly underestimated technique that can be applied to any market on any timeframe. In Swing Mapping Part 1: Key Principles you will learn: Why it’s the bedrock of all market structure analysis How to swing map in four simple steps Why it’s so important to do it yourself rather than use an automated tool Other key benefits of swing mapping What is Swing Mapping? As the name suggests, swing mapping involves identifying swings within market structure to understand the dynamics of price movement. This may seem too simple to be of much real-world value, but as is often the case in trade, seemingly simple and robust tools can be highly effective and highly nuanced. When done correctly on a real-time forward-looking basis, swing mapping has the potential to be integrated into many different trading strategies. Defining a Swing A swing is simply an uninterrupted high or low. At its core a swing is a three-bar sequence in which the middle bar represents a turning point in the market. Past performance is not a reliable indicator of future results Not all swings are equal. The more bars either side of the swing high or low, the larger the peak or trough in the market – the more significant the turning point. Swings are the bedrock of all market structure analysis. Swings define support and resistance, they define if a market is trending higher or lower, they define if a market is in a range, and they help to define if volatility is contracting or expanding. Swing Mapping in Action Swing mapping is at its most useful when it’s conducted in real-time on a bar-by-bar basis. For the purposes of outlining the method, we will use the 1min candle chart and map every potential swing. Swing mapping is a 4-step forward looking process: Identify Swing: Identify a swing using the definition provided above (a three-bar sequence in which the middle bar represents a turning point in the market). Past performance is not a reliable indicator of future results Draw Market Structure Line: Once a swing is identified draw a solid horizontal line on your chart. The line remains solid until the market has broken and closed above it. Past performance is not a reliable indicator of future results Monitor Response: Should the market break through the solid line you have drawn, change the style of line from solid to dotted. If the market fails to break through your line, keep it on you chart as a solid line for as long as you deem to be valid. Past performance is not a reliable indicator of future results Past performance is not a reliable indicator of future results Draw conclusions: Once you’ve repeated steps 1-3 on your chosen trading timeframe, you can then draw important conclusions regarding the market’s current structure. In our example (below), we followed the S&P 500 as it failed to break to new highs for the day then briefly started to trend lower before moving higher to retest the swing highs which has clustered to form a clear resistance level. Past performance is not a reliable indicator of future results Here are just some of the other insights we can gather from mapping swings: Market Bias: Swing mapping allows you to quickly see where the balance of power lies. A sequence of dotted swing high lines indicates that the market is consistently breaking to new highs on the day – signalling a bullish bias. Conversely, if a sequence of dotted swing low lines form, then the market has been consistently breaking to new lows – signalling a bearish bias. And finally, if we start to see full lines for both swing highs and swing lows, this signals that a range is developing. Failure Tests: Failure to break through a swing high or low is the first sign that the market’s current momentum is changing and a new turning point is potentially in place. In our prior examples we saw a small failure test which led to a pullback, here’s the same chart again: Past performance is not a reliable indicator of future results Trend Health: As an uptrend starts to wane, the distance from swing high to swing high tends to shorten. The opposite is true of downtrends. Swing mapping is a great way to identify the health of a trend. As you become better at swing mapping, you will become more adept at recognising the subtle changes in market structure. Past performance is not a reliable indicator of future results DIY - Do it Yourself There are many tools on the Trading View platform that can do swing mapping for you in real time set to your parameters. However, to maximise the benefits of swing mapping it is highly recommended that you do this process manually yourself as it will quickly build intuition and rapidly improve your knowledge of market structure. Drawing the swing lines, waiting for the market to break them and turning them dotted if broken, drawing conclusions as you build a map of broken and unbroken swings, deciding how long to keep unbroken turning point lines solid and valid on your chart. These are all hugely powerful active learning tasks that have the potential to make you a much better trader. Other Benefits of Swing Mapping Any Market Any Timeframe: Versatile across diverse markets and timeframes, enabling rapid skill acquisition. Real-Time Analysis Without Lag: Provides immediate insights into market structure and price action, facilitating timely decision-making. Enhanced Trade Timing: Identifying responses to market swings in real-time optimises trade entries and exits, maximizing profit potential. Effective Risk Management: Precisely identifies support and resistance levels, aiding in strategic placement of stop-loss orders and risk assessment. Adaptability Across Market Conditions: Versatility to adapt to various market conditions ensures consistent performance. Development of Trading Discipline: Fosters discipline and patience, promoting adherence to predefined rules and strategies. In Swing Mapping Part 2, we delve into precise trade entry techniques leveraging swing mapping without additional indicators. Disclaimer: This is for information and learning purposes only. The information provided does not constitute investment advice nor take into account the individual financial circumstances or objectives of any investor. Any information that may be provided relating to past performance is not a reliable indicator of future results or performance. Social media channels are not relevant for UK residents. Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 84.01% of retail investor accounts lose money when trading spread bets and CFDs with this provider. You should consider whether you understand how spread bets and CFDs work and whether you can afford to take the high risk of losing your money.
CAPITALCOM:US500Education
by Capitalcom
2