📖 5 Books On Trading That Everyone Should Know 📖📖 5 Books On Trading That Everyone Should Know 📖
📖 1. Reminiscences of a Stock Operator - Edwin Lefèvre.
📖 Reminiscences of a Stock Operator is a fabularized biography of the most famous speculator of all time Jesse Livermoore. Jesse Livermoore operated in the stock and commodity markets in the early 20th century in the 1920s to be exact. He was one of those speculators who made an astronomical fortune almost from scratch. He made and lost fortunes. His wins and losses as of today could be counted in the hundreds of millions of dollars. His speculative concepts and brilliant remarks on the markets, inspired and still inspire speculators around the world today. Despite the passage of 100 years since those events, the strategies and trading approach have not lost their value, I would even say they have gained. The book reads very well, it is written in accessible language, everyone will be able to understand it and take something for themselves. A must-have item on the shelf at every trader's home.
📖 2.The Disciplined Trader - Mark Douglas
📖 The Disciplined Trader. One of the first books that on such a scale spread interest in psychological elements in trading. Mark Douglas, after working with many traders in his career, noticed that mental elements are one of the main barriers to success in trading. He presents in his book the principles and mental attitudes that are necessary for success in this industry, it is worth mentioning that these attitudes are fundamentally different to what we have been taught to live in society. An ideal book for people who feel that the technical aspect has been mastered, but still feel that they have some internal blockages that block them from achieving systematic results in trading.
📖 3. Market Wizards - Jack D. Schwager
📖 Market Wizards. Book-talk. This is the first, and considered by many to be the most important, part of Jack Schwager's conversations with prominent traders. In it we can hear their stories and thoughts on trading of such people as: Jim Rogers, Paul Tudor Jones, Larry Hite, William O'Neil.
In the book we can read a lot of conversations in which each trader brings something from himself and presents his specific view of the market. We will learn a lot about technical analysis, as well as fundamental analysis, risk management and many other aspects related to trading. Everyone can find something for themselves. It is not a book to be read from cover to cover.
📖 4. The Intelligent Investor - Benjamin Graham
📖 A book of investing legends. The most prominent investment advisor of the 20th century. Since its publication, the book has become, so to speak, a holy book of the stock market and the philosophy of "value investing" with which every investor must become familiar. Its philosophy and the principles it recommends to follow teach and inspire investors around the world to this day. It is worth mentioning that Warren Buffett was one of Graham's disciples and repeatedly mentions how great an influence he had on him. A must-have item for any aspiring long-term investor
📖 5. Technical Analysis of the Financial Markets - John J. Murphy
📖 Another holy book this time on technical analysis. This book is a comprehensive expedition presenting the vast majority of technical analysis concepts. John J. Murphy, thanks to his 30 years of experience working in financial institutions, takes the reader through all the topics that are key to understanding technical analysis. It is an excellent primer, which allows for an accessible and understandable introduction to the world of technical analysis. The book lays a solid foundation, thanks to which you will be able to expand your analytical skills. Everything we need to know about charts can be found in this book. It is no wonder that to this day it is a worldwide bestseller and the most popular book on the technical aspects of market analysis.
📖 Have you read any of the books mentioned? share your opinion in the comments.
✨If you liked the post leave a like and follow to stay up to date with upcoming materials.✨
Community ideas
How to create auto trading bots for zero costHello Everyone,
Following are the things we discussed
🎲 Minimal Components of Auto Trading System:
Source where signals are generated
Exchange/Broker where orders are placed
Integration component which bridges both
🎲 In this example
Source - is our tradingview system and a sample script which generate alerts. Do not use this script for trading as it is only created for demonstration.
Exchange - We are going to use BingX exchange for this example as we only have this implementation in our integration system.
Integration System - www.pipedream.com is used for integration. This is cloud based integration product which is very flexible. Platform also allows users to contribute towards the product. Hence, it is very easy for us to develop integration to any broker or exchange which has API support.
🎲 Limitations
BingX APIs are fairly new and hence there are not much features. There is no option to place stop order.
It has option to place only limit/market orders
Stop loss is not possible via API
🎲 Steps:
🎯BingX
- Create account and enable perpetual futures trading
- Setup google authenticator and add valid email and phone.
- Create API - it will ask for Google authenticator code and email and phone OTPs.
- Store api key and secret key in safe place.
🎯Tradingview
- Create a script which can send stop, target, ticker information as signal.
- Study the existing idea about customising alerts for better understanding on how to achieve this.
🎯Pipedream
- Create account and setup BingX as source (needs API Key and Secret Key derived from BingX)
- Create Webhook trigger and capture webhook URL.
- Provide this URL in alerts to generate alert messages which are sent to webhook by default.
- Once alert is sent, load the alert in pipedream source and built rest of the workflow including calculate leveraged position and bracket order trades.
- Once tested, deploy the workflow so that workflow will keep listening to incoming alerts to generate trades.
Please note: the discrepancy in leverage calculation caused due to two things:
Lower timeframe used for generating faster alerts. Since the volatility is small, gaps can be huge.
The workflow did not run at once. Hence the delay caused rest of the issues resulting in miscalculations.
These problems however will not come when orders are placed via alerts and executed automatically.
Jumping S-curvesIn this post, I will explain what jumping S-curves means and how you can identify potential S-curves before they jump .
First, let's begin with the chart above (also copied below).
This is a yearly chart of McKesson Corporation (MCK), a medical supplies company.
As you can see in the chart below, this stock has been soaring over the past year despite most other stocks being significantly lower.
Here is the performance of the S&P 500 over the same time period.
Whenever I see something highly unusual in a chart, such as extreme outperformance, I check the higher timeframes to see what's driving price on a technical level. Below is the yearly chart for MCK.
When I examine price action over a long time period, I always log adjust my chart. Below is the log-adjusted chart.
Upon seeing this chart I immediately knew what was going on: the stock price jumped S-curves. I will try to illustrate below how I reached this conclusion.
To begin, I drew Fibonacci levels from the last reaction low to the last reaction high on the yearly timeframe.
The previous reaction low was the bottom of 2008 because that bottom was a Fibonacci retracement of some earlier reaction high, the reaction high is the top in 2015 because price did not surpass that high without first undergoing a Fibonacci retracement (to the golden ratio).
As you can see above, from 2015 to 2018 the price retraced down to the golden ratio (0.618) on the yearly chart. It is often from this retracement level that the base of the second S-curve is created. (For simplicity, I only included the 0.618 Fibonacci level on the chart).
Some may say that this pattern is merely a bull flag or pennant. (See chart below)
Indeed, bull flags and pennants can be another way to visualize S-curve jumps.
Whereas, on a deeper, more mathematical level, S-curve jumps are logarithmic spirals (approximated as Fibonacci spirals or Golden spirals). If you wish to delve deeper into logarithmic spirals, including the Golden spiral, you can check out this Wikipedia page: en.wikipedia.org
These Fibonacci or Golden spirals are present on mostly every chart and they appear on mostly every timeframe (hence they are fractal ).
One of the best charts you can use to visualize these spirals is the chart of Bitcoin. Below are charts of Bitcoin which attempt to show the endless fractal nature of Fibonacci spirals (or "S-curve jumps").
I've only illustrated a few of the spirals, but indeed there are numerous spirals. (I tried to do my best using the tools on Trading View to draw these spirals, but it can be quite hard to manipulate the curves perfectly to price action.)
One may ask what about when price falls? That is obviously not an S-curve jump since the price is falling.
Actually, when price is crashing it is usually just an S-curve jump, or Fibonacci spiral, on the inverted chart.
Although I have not tested it with scientific rigor, I do hypothesize that Bitcoin's price movement is a series of infinitely fractal and competing Fibonacci spirals on various timeframes, including Fibonacci spirals on inverted scales. Price movement can be thought of as an infinite series of S-curve dilemmas where infinitely fractal S-curves, including those of which are inverse S-curves, compete to govern the next price move.
Each dilemma is resolved when an S-curve reaches its inflection point, such that it governs price movement and price moves rapidly in that direction until it approaches capacity and faces its next dilemma.
Those who know Calculus may recognize this chart. Indeed this is the graph of a logistic function. The mathematical terminology for an "S-curve" is sigmoid function .
Here are some more interesting charts of S-curves (none of which is intended to be investment advice)
Meridian Bioscience (VIVO) jumps S-curves on its yearly chart
The U.S. Dollar Index jumps S-curves on its yearly chart
The entire price action of Chinese EV Company (NIO) is an S-curve that just completed a perfect golden ratio retracement
Japan's faces a population S-curve dilemma
Citigroup underwent S-curve growth up until the Great Recession.
Then it crashed or underwent S-curve growth on the inverted chart.
In summary, price movement involves an endless series of S-curves or Fibonacci spirals. Identifying an S-curve on a high time frame before it reaches its inflection point and breaks out can lead to tremendous gains (among the most lucrative gains one can realistically make in the financial markets).
Elliott Wave Quick Cheat SheetElliott Wave Quick Cheat Sheet
Note that I post a quick guide for beginners. I was struggled as a beginner but thanks to my mentor. (I post a quick guide here as sometimes I need to peek as for my cheat sheet)
By now we all have learned patterns like Head and Shoulders, Wedge, Triangle, Double top, Double bottom, Pennant (literally a triangle or diagonal), bear/bull flag.
Until I discovered Elliott Wave, it answered why we have these patterns but there are 5 core patterns of EW: Impulse, Flat, Diagonal, Zigzag and Triangle. I think Elliott Wave patterns are more advanced because you can see the whole picture even 200 years old chart of SPX.
What is Elliott Wave Theory? Found by Ralph Nelson Elliott in the 1930s.
"is a form of technical analysis that finance traders use to analyze financial market cycles and forecast market trends by identifying extremes in investor psychology and price levels, such as highs and lows, by looking for patterns in prices." - Wikipedia
If the trend is impulsive, it must have 5 waves. We have impulsive patterns like impulse and diagonal.
The counter trend we have 3 waves patterns like flat, zigzag, and except triangle (5 waves) for a correction.
1) Impulse (53535)
Must have 5 waves. Wave 4 never touch wave 1. Invalid if wave 4 touch wave 1.
Inside 5 waves, subwave 1, 3, 5 MUST be an impulse wave; subwave 2 and 4 MUST be corrective.
If you can't see subwave 1, 3, 5 are impulse, chance is invalid.
1, 3, 5 tend to equal size. When an impulse wave has an extension, wave 3 is usually extended
When wave 3 extended, we will have a double RSI divergence to complete a wave 3.
If wave 3 is over extended, typically wave 5 is truncated.
Important note: wave 2 and 4 have usually different pattern. If wave 2 flat, wave 4 must be zigzag and vice versa. Wave 4 sometimes can be a triangle.
Diagonal must have 5 waves.
Can be 53535 or 33333 sub-waves. Hybrid
2 types: Leading and Ending
Leading Diagonal is the beginning of a trend (wave A or 1). Ending Diagonal is the end of a trend (wave C or 5).
2) Leading Diagonal (only wave A or 1)
It can be overlapped but not required.
Has 2 entries points (unspoken rules) right at wave 2 and 4.
Wave 3 cannot be shortest even if expanding diagonal.
3) Ending Diagonal (only wave C or 5)
Usually goes back to starting point. Then it would either direction.
Or the starting point can be wave 4 or wave B.
The reason I say it would either direction because it depends on where the main wave is. For example we have an extented wave 3. It can happen on wave 5 inside of wave 3. That's why it goes either direction.
Leading Diagonal is the beginning of a trend. Ending Diagonal is the end of a trend. Unspoken rule that if wave 1 is a leading diagonal, expect to have an over extended wave structure.
When the end of a trend, we expect to have a new 5 wave move for a trend reversal. If we see a new 3 wave move, we expect the correction continues. It's all 3 and 5 that matters.
Corrective patterns we have zigzag, flat and triangle.
4) Zigzag has 535 sub-waves. (wave 2, 4, and B)
It looks like impulsive but has only 3 waves.
Only label it as (ABC)
5) Flat has 335 subs-waves. (wave 2, 4, and B)
3 type: regular, running, expanding
Only label it as (ABC)
Regular: all size of ABC is equal
Running: size AC is equal but B is biggest.
Expanding: B is 1 or 1.382 max of size A. C is Fib 1.236, 1.618, 2.236 Fib extension of size AB.
For example of an expanding flat, sometimes we call it a double top pattern. Usually C wave can extend to 1.618.
6) Triangle has 33333 sub-waves. (only wave 4 or wave B)
Label is as (ABCDE)
When you see it, prepare for a reversal or short term reversal.
7) Combination (aka complex pattern) (wave 333)
Only label it as (WXY)
It's a combination of zigzag or flat or triangle.
Fibonacci retracement:
When you spot a wave 1 and wave 2 is a pull back wave, look for entry for wave 3 at 0.50, 0.618 or 0.768. Stop loss at starting point at wave 1. In bull market, it only pull back to 0.382.The timing of wave 2 is 1/4 or 1/3 of wave 1.
Entry for wave C, the wave B is usually at 0.5, 0.618, 0.786, 1.0 or 1.236 (below starting point of wave A). The timing of wave B is 1/4 or 1/3 of wave A, or it can be equal or twice size of wave A.
Fibonacci extension:
Wave 1 and 3 and 5 tend to have equal size but when wave 3 extends, it usually extends to 1.618, 2.236 from wave 0,1,2.
Wave C can extend to 1, 1.236, 1.382, 1.618, 2.236 max. If extend beyond 2.236, you may not count wave correctly.
RSI:
Wave 3 and 5 will have bearish divergence. Double divergence if wave 3 is extended.
RSI above 40 in bull market. Below 40 in bearish market.
But wave 4 will below 70 and complete when have continuation hidden divergence between wave 2 and 4.
My observation is between wave 1 and 2, or wave A and B should not have a divergence.
My opinion on EWT and how I think to master it:
Elliot Wave is a double sword tool because not everybody counts waves correctly and it can hurt you financially. You MUST MUST take some mentorships until you understand why each pattern runs like the way it is in real life.
It's a forecast tool so it can be wrong. It hurts. Stop loss is a must. Or better don't trade until you can see a trend.
To master it, all you need is check if it's 3 waves or 5 waves. If wave 4 is overlapped wave 1, so the 5 wave move is invalid unless diagonal.
Must also master Fibonacci because I think Fibonacci and Elliott wave are husband and wife. Understand both so you can count correctly.
Master RSI.
If you are struggled to find a trend of your stock, you need to check the index like SPY or Nasdaq or sector, Bitcoin. Because the stock maybe a follower, it can look ugly. The leader has better details of trend.
A stock can go ahead before the trend of the index or can be a bit lag behind. If it goes before the trend of index, it will wait.
Understand bond yield and dollar index.
If you see waves overlap 2 3 times, maybe you should check if it's a diagonal or triangle. Big opportunity if you found one.
The sizes of wave 2 and 4 are smaller or bigger a bit but can't be too small or too big. Need to be obvious. Don't try to make it wave 2 or wave 4 because chance is a 3 wave move.
I know Elliott Wave is complicated so that's why we MUST memorize the rules and guidance.
I wish you the best on trading.
Traders gaining momentum: Fall edition!Hey everyone! 👋
Grab your beverage of choice: it's time to sit back, relax, and take a look at some of the hottest up and coming authors on TradingView. All of these folks deserve a follow, so be sure to show them some love! ❤️❤️
If you think we’re missing someone, be sure to make it known below in the comments. Also, we’ll be doing these roundups from time to time so be sure follow us so you don’t miss any of them!
Let’s jump in.
We’ve sorted each Author by the asset class they focus on. Click on their profile and see if you like the ideas they're putting out!
Multi-Asset:
Trade_Journal
TrendLINEBoys
NoFomoCharts
ZenMode
Valerus_Forex
Vixtine
SquishTrade
LupaCapital
Stocks & Indices:
dpuleo19
nuggetrouble
rossgivens
MarthaStokesCMT-TechniTrader
Crypto:
decklyndubs
natef1
Currencies:
jamison_fx
DemoDiaryFX_Trading
CarterKyleCapital
Lightwork_
WallStreetIntelligence
And there you have it! Our roundup. As we mentioned before, don’t forget to follow TradingView for regular educational content :)
Think we missed any up-and-coming accounts? Point them out in the comments! Obviously, don’t shill yourself. 😉
Cheers!
-
Please remember Editors' Picks and all the authors we mention are our attempt to show undiscovered traders, unique market insights, and interesting educational material.
Anyone can be featured in Editors' Picks or in posts like this. All it takes is publishing an idea from your account. We try to be as fair as possible, following many of you, and reading all the different ideas published daily.
That's it! High quality content, consistency, clarity, and the will to help others is what we look for.
You can read all of our guidelines below:
www.tradingview.com
www.tradingview.com
www.tradingview.com
📖 Jesse Livermore famouse Quotes 📖Jesse Livermore famous quotes:
“Don’t take action with a trade until the market, itself, confirms your opinion. Being a little late in a trade is insurance that your opinion is correct. In other words, don’t be an impatient trader.”
- Jesse Lauriston Livermore.
“There is nothing new in Wall Street. There can’t be because speculation is as old as the hills. Whatever happens in the stock market today has happened before and will happen again.”
- Jesse Lauriston Livermore.
“He will risk half his fortune in the stock market with less reflection than he devotes to the selection of a medium-priced automobile.”
- Jesse Lauriston Livermore.
“Losing money is the least of my troubles. A loss never troubles me after I take it. I forget it overnight...”
- Jesse Lauriston Livermore.
“Profits always take care of themselves but losses never do.”
- Jesse Lauriston Livermore.
“Go long when stocks reach a new high. Sell short when they reach a new low.”
- Jesse Lauriston Livermore.
“It is not good to be too curious about all the reasons behind price movements.”
- Jesse Lauriston Livermore.
🚀 Follow profile for more! 🚀
Trendline and Channel Tutorial: Part 2In part 2 we discuss how to construct and utilize sloped trendlines (TL) and Channels in order to better understand the ebb and flow of supply and demand. Like most other charting techniques understanding supply and demand and its relationship to trends and channels depends on you staring at hundreds and thousands of bar charts. Unfortunately, there just isn't a shortcut. It's hard work.
Uptrends represent the "stride of demand." They are a graphic representation of the willingness of the composite investor to enter new longs at consistently higher prices. The parallel channel top is the overbought or supply line. A point in the trend where the composite investor might be reliably expected to reduce their long positions. The median line represents (roughly) the center of the channel. At times (as in the commodities example) the median line may have a basis in the chart pattern, but more generally is simply scribed roughly in the center of the channel. The median line is useful in gauging supply and demand relative to the channel boundaries.
TLs need to be constantly adjusted and often are messy. Most of the time these adjustments occur with a significant lag, but even with the delay the channel helps to define and visualize the aggresiveness or lack thereof of the supply or demand. In the markets that I am most interested in, I constantly adjust the channel elements to best reflect the latest pivots and chart elements.
In my analysis I also use volume, Wyckoff principles and other techncial methods to build the viewpoint. TLs and channels are like any other technical pattern in that they are much stronger and more understandable when combined with multiple methods and tactics.
These patterns are fractal. They occur in all time perspectives from 1 minute to decades and are generally analyzed in the same manner.
Generally Speaking:
-The relationship of the market to the demand line and the supply line relate to the aggresiveness of the demand.
-Ideally a reaction higher from a demand line should cover the entire distance to the supply line. A failure to push to the overbought line (the channel top) is often a sign that the trend is weakening.
-A modest overthrow of a supply line is generally a sign of demand, but if the overthrow occurs late in the trend and represents a significant acceleration, there is potential that it is terminal (see the commodities chart).
-A failure to decline completely back to the supply line is a sign of relative strength.
-How markets relieve overbought conditions within the channel is important. A move to the supply line with an overbought RSI (or momentum oscillator of your choice) that subsequently moves laterally is a bullish show of demand or strength.
-A modest violation of an uptrend would suggest a weakening in the underlying trend while an inability to fully decline to the uptrend would suggest a trend gaining strength.
Bloomberg Commodity Index Daily:
The channel in commodities that has defined trading for most of the last two years displays many of the concepts. Note that like most other TLs and channels the process can be messy. Adjusting demand, supply and median lines as the market evolves takes practice.
-From the pandemic low in late March 2020 commodities began an extended daily/weekly perspective bull market. At the end of September (B) the market formed a pivot that allowed the projection of an initial demand line. It also allowed the projection of an initial supply line from point A.
-As the channel progressed, the markets behavior made it clear that demand was strengthening. Highs were overthrowing the initial projected supply line, reactions from the initial supply line were finding support ABOVE the demand line and when momentum (RSI) became overbought, it was being relieved through mostly lateral to higher prices. All represented strong underlying demand.
-While the initial supply line proved inadequate it did provide a median line to the eventual channel. The median line offered important support or resistance on multiple occasions.
-Soon after point C, a new supply line could be projected.
-From March through September 2021 the market held solidly above the midpoint of the channel. This is clearly a sign of strong demand and bodes well for additional gains.
-After testing the demand line in late 2021, the market once again moved back to the supply line. The easy move higher (no notable counter trend reactions) suggested a lack of sellers. Combined with the prior long lateral move above the midline, it was obvious that buyers were in complete control.
-In February 2022 price exploded above the top of the supply line as the demand that had been evident for months completely overwhelmed the available supply.
-Often a significant overthrow of the supply line is terminal. In this case the market produced a three drives pattern before beginning a steep decline. The break below the pattern trendline is a good example of a type 3 trendline.
In Part 3 we will look at another example (Ten year Treasury yields) and explore using demand and supply lines as a trading vehicle.
And finally, many of the topics and techniques discussed in this post are part of the CMT Associations Chartered Market Technician’s curriculum.
Good Trading:
Stewart Taylor, CMT
Chartered Market Technician
Taylor Financial Communications
Shared content and posted charts are intended to be used for informational and educational purposes only. The CMT Association does not offer, and this information shall not be understood or construed as, financial advice or investment recommendations. The information provided is not a substitute for advice from an investment professional. The CMT Association does not accept liability for any financial loss or damage our audience may incur.
QQE M15 Scalping StrategyOne of the best technical strategies I've found for scalping on shorter time frames is the QQE m15 scalping strategy.
You can see a setup here in an uptrend where the QQE signals a short and the chart formation confirms this.
This document here describes the strategy in better detail.
www.fxtradingrevolution.com
You can see the specific QQE signal I use in TV - there are also good videos on youtube that show a few different strategies for this.
I'm going to try to codify it now as well. It's hard without the aid of human analysis but I think with a trend indicator, it should be easy to produce high quality signal for an automated system.
I have to adjust the settings a bit as I'm just using it for confirmation and it's providing too many signals but the document describes some parameters to try.
Trading FlowchartHello, dear TradingView members.
This educational idea is a Trading Flowchart.
It starts with simply explaining the main steps to make before trading and opening positions and how to identify our situation to gain better results.
Before we start to trade, we should identify the trend. What is a trend?
A trend is a direction in which an asset's price changes over time.
Financial market traders identify market trends with the help of technical analysis. Technical analysis is a framework that identifies market trends as predictable price trends within a market (when the price reaches a support or resistance level).
Since future prices are unknown at any given time, a trend can only be determined in hindsight (vs. forward). However, this shortcoming does not stop people from predicting future trends.
The terms "bull market" and "bear market" represent increasing (rising) and decreasing (descending) market trends, respectively.
Peak and bottom:
In the price chart, the bottoms are the points where the demand pressure exceeds the supply, and the prices start to rise after a period of decline. On the contrary, the peaks are the points where the supply pressure exceeds the demand, and the prices start to decrease after an increase.
There are three types of trends in general:
Uptrend (Rising trend)
Sideways trend
Downtrend (Declining trend)
Uptrend (Rising trend):
When the price of a symbol or asset increases generally, the price trend is said to be bullish, bullish, bullish, or bearish. An increasing trend does not mean that the prices always have an upward movement; the price may sometimes go up and sometimes go down, but the result of this fluctuation is the price increase. The rising trend in the price chart can be recognized by looking at rising floors (when the new price floor is higher than the previous floor).
Sideways trend:
A lateral trend line is formed when the market remains stable, i.e., the price does not reach the highest or lowest price point. Many professional traders do not pay much attention to lateral trends. However, lateral trends play an essential role in scalping trades.
Downtrend (Declining trend):
When the price of a symbol or asset declines generally, its price trend is bearish, bearish, bearish, or bearish. A downward trend, like an upward trend, does not mean that the prices will always go down, but it means that the price may sometimes go down and sometimes go up, but the result of this fluctuation is a price reduction. A downward trend in the price chart can be recognized by looking at falling peaks (when the new price peak is lower than the previous peak).
One way an analyst can see a trend line is by plotting trend lines. A trend line is a straight line that connects two or more price points. This line continues on the chart as a support or resistance line.
An uptrend line is a straight line drawn to the right and up, connecting two or more low points. The second low point in drawing the upward trend line must be higher than the starting point. Uptrend lines support and show that even as prices rise, demand is more significant than supply. As long as prices remain above the trendline, the uptrend is considered unchanged. A break below the uptrend line indicates that a change in our trend may occur.
A downtrend line is a straight line drawn to the right and down that connects two or more high points. The height of the second point must be lower than the first point so that the line has a downward slope. Downtrend lines act as resistance and show that supply is greater than demand even as the price declines. As long as prices remain below the trendline, the downtrend is considered intact. A break above the downtrend line indicates that a change in trend may occur.
Familiarity with trend analysis
Trend line analysis is a technique used in technical analysis. Trend analysis seeks to predict the price of a currency in more distant intervals with the help of data obtained by trends. Trend analysis uses historical data like price movement and trading volume to predict long-term trends in market sentiment. Trend analysis tries to predict a trend, such as an uptrend in the market, and follow that trend until the data indicates a trend reversal.
Trend line analysis is essential because trends' movement ultimately leads to investors' profits. Examining a trend with the help of historical data of the desired currency predicts the future price of that currency for traders.
Trading strategies with trend lines
Now that we understand the meaning of trend lines and their types let's look at the strategies many traders use to identify trends and learn when it's the best time to open positions.
To try to make better predictions on how the market will behave, so we can trade safer, we can use indicators.
What are indicators?
In technical analysis, a technical indicator is a mathematical calculator based on price history, volume, or (in the case of a futures contract) options contract information related to the timing of the contracts, which aims to predict financial market trends. Technical indicators are the central part of technical analysis and are usually designed as a chart pattern to predict market trends. Indicators are generally placed on price chart data to show where the price is headed or whether the price is in an oversold or overbought state.
Many technical indicators have been developed, and new types have been invented by traders to obtain better results. New indicators are often simulated on historical price and volume data to see how effective they have been in predicting future events.
Here are a few examples of those indicators:
The Relative Strength Index (RSI):
The Relative Strength Index (RSI) is a strategy that helps identify currency price movements and buy and sell signals. RSI determines the positive and negative trend of the stock price by observing the average profit and loss in a certain period. The RSI is a percentage ranging from zero to 100 on a scale.
Here is a complete educational idea of how RSI works:
Fibonacci Retracement:
Fibonacci Retracement is a method of using the Fibonacci tool in the chart of a financial asset, which is used to determine the amount of price correction and find possible return points (support and resistance) of that asset, starting from the endpoint to the particular initial.
Here is a complete educational idea of how Fibonacci Retracement works:
There are many more indicators we can use to get a better understanding of the market. For example, The Elliot Waves, Ichimuko Clouds, MACD, and The Bollinger Bands:
I hope this flowchart gives you a better perspective on how to trade safer.
Have you ever used this flowchart accurately? What do you think the pros and cons are?
Do you think I missed something?
Let us know your ideas.
Good luck.
Inflation & Interest Rate Series / Dollar and Gold I have started this inflation and interest rate series, in our last video, we discussed "Inverted Yield". Today will be discussing the relationship between:
. Inflation
. Interest rate
. Dollar and
. Gold
Today's Content:
• Why with higher interest rates, it strengthens the USD
• Is USD the strongest currency? If not, then who?
• Strategy to counter inflation
• Interest rate higher, but a lower USD?
Dollar Index:
. Measure the value of the dollar against a basket of six foreign currencies.
. These are: the Euro, Swiss franc, Japanese yen, Canadian dollar, British pound, and Swedish krona.
. With the increase of money supply over the decades, it causes currencies dilution. When currencies weaken, inflation follows.
COMEX Gold
0.1 = US$10
1.0 = US$100
10 points = US$1,000
Disclaimer:
• What presented here is not a recommendation, please consult your licensed broker.
• Our mission is to create lateral thinking skills for every investor and trader, knowing when to take a calculated risk with market uncertainty and a bolder risk when opportunity arises.
Stay tuned for our next episode in this series, we will discuss more on the insight of inflation and rising interest rates. More importantly, how to use this knowledge, turning it to our advantage in these challenging times for all of us.
Trendlines & Channels Tutorial: Part 1This will be a multi part series on trendlines and channels, what they represent, how to draw and use them, and how I design trades around them.
For the sake of simplicity this series will focus on uptrends. Importantly, the principles are roughly the same for both uptrends and downtrends except that downtrends often develop more quickly.
I see many TL tutorials, but I don't see much attention paid to what a TL or a channel top represents. Whether a long-term pattern or a shorter-term pattern like a key reversal or a gap, being thoughtful and understanding the supply/demand dynamic that forms each pattern will make you a better analyst/trader.
Trendlines represent the willingness of the composite investor to follow price higher/lower. In other words, uptrends represent the stride of demand and downtrends represent the stride of supply. As long as the composite investor is willing to buy/sell at consistently higher/lower levels, demand/supply remains consistent and the existing uptrend/downtrend is intact.
Channel tops are known as supply lines and represent areas where supply, generally profit taking, should be expected to develop.
The relationship between price and the TL and the channel top can offer important insight into the strength or weakness of the underlying trend. Failures to push to either the trendline or the chanell top potentially warn of a change in the underlying trend. We will cover this in part 2.
What trendlines don't offer, at least in my approach, are standalone trading opportunities. Automatically buying trendline touches or selling trend line breaks must be combined with tactical entry techniques in order to build a safe trade. Most specifically, TLs don’t offer reliable sell signals when they are broken. Tests, both of TLs and channels are simply "get ready" warnings.
A break of an uptrend does not change the underlying trend from up to down but to neutral. More work is typically needed to turn the trend.
A TL is two or more points connecting support or resistance pivots of roughly the same magnitude. A trend channel is formed by building a parallel trendline connecting an intervening pivot on the opposite side of the pattern. The channel top in an uptrend is the overbought or supply line.
It bears repeating, proper trendlines are drawn between intervening lows of roughly equal magnitudes and should never be forced. A TL is not tradable or informative if it does not conform to the natural path of the market. “Trendlines should be pretty.”
Trendlines evolve. Initial projected trendlines are consistently inconsistent. More often than not they will have to be adjusted as price action evolves.
In my estimation there are three primary types of trendlines:
Type (1) These trendlines are shallow and take a significant number of bars to resolve themselves. They are more useful for defining the trend than for trading.
Type (2) These trendlines are typically very steep and run along intraday or daily price lows or highs. These trendlines are very useful as entry triggers and become important as existing type 1 trendlines and channels are tested.
Type (3) These trendlines define the bottom/top portion of a tradable pattern or formation including rectangles. A pattern TL is more apt to provide tradable support or resistance, particularly if the market is overbought or oversold during a testing phase. The horizontal lines along the top of lateral congestion fall into this classification.
In part 2 I will cover how to utilize these sloped TLs and Channels to help understand the ebb and flow of supply and demand.
And finally, many of the topics and techniques discussed in this post are part of the CMT Associations Chartered Market Technician’s curriculum.
Good Trading:
Stewart Taylor, CMT
Chartered Market Technician
Taylor Financial Communications
Shared content and posted charts are intended to be used for informational and educational purposes only. The CMT Association does not offer, and this information shall not be understood or construed as, financial advice or investment recommendations. The information provided is not a substitute for advice from an investment professional. The CMT Association does not accept liability for any financial loss or damage our audience may incur.
The 7 Laws of Stock Market SuccessDoing something new because I am bored. Enjoy the article 🤣
The 7 Laws of Stock Market Success
When it comes to investing, everyone has their own strategy. Some people believe in the high-risk, high-reward approach and put all of their money into small, volatile stocks. Others prefer a more cautious strategy that focuses on steady blue-chip companies and avoids risk whenever possible. Investors who have chosen the cautious route have been rewarded over time by not risking their capital unnecessarily. The people who have adopted the riskier approach have also generally been rewarded for their daring with above-average returns. But what about these two groups of investors has led them to adopt such different strategies? The answer lies in understanding the principles that drive success in the stock market - both long-term and short-term - wherever you invest your capital. These principles are the seven laws of stock market success.
Recognize the Importance of Timing
Successful investing is, at the most basic level, about buying low and selling high. If you buy stocks when they are priced at a low level, and then sell them when they are high, you will make a profit - and the more you will profit by doing so, the more successful you will be as an investor. But timing is everything. If you buy a stock at a low price and then sell it at a high price, but you do so too early, you will miss out on the full potential profit from your investment. If you sell it too late, however, you will miss out on a profit that you could have made if you had acted sooner.
Invest with a Long-Term Focus
When you are investing with a long-term focus, you are trying to buy stocks that will profit from long-term trends in the economy. Industries such as healthcare and technology are likely to be profitable for a long time, as long as new technologies keep developing and people stay in need of healthcare. These investments may see huge ups and downs in the short term - but if you keep focused on the long term, you will be rewarded for taking the extra risk. In order to invest with a long-term focus, you have to ignore the short-term noise in the market. If you focus only on the short term, you will be unable to ignore the fluctuations in stock prices that will cause you to sell too early and miss out on the full potential of your investments.
Be Selective When Choosing Investments
If you are a buy-and-hold investor who is investing with a long-term focus, you need to be selective about the companies in which you invest your capital. If you choose a company that has a great long-term outlook but also has a poor management team, you are unlikely to earn a profit from your investment. Take a company that is doing well, but has a management team that will likely face challenges in the future. You can expect that the stock price of the company will fall as the market reacts to bad news from the company. Over time, however, the stock will likely recover as the management team overcomes the problem and regains investor confidence.
Determine the Reasons for Investment
Before you invest your capital in a stock, you need to ask yourself why you are choosing that particular investment. If you don’t have a good reason for that investment, you need to be prepared to either lose your money or miss out on the full profit potential of that investment. If you invest your money in a company with a good long-term outlook, but you do not have a good reason for doing so, you may be unable to hold onto the investment when it falls in price. You need to be able to explain why you are choosing a particular investment. If you can’t explain it to yourself, you are likely to have trouble holding onto the investment when the price falls.
Stick to Your Plan Regardless of Markets
The stock market is a volatile place, and investment prices will rise and fall throughout the year. Some investments will go up in price, while others will fall in price. Investors trying to make a profit by buying low and selling high will take advantage of these short-term fluctuations in the market by buying stocks when they are low and selling them when they are high. You can’t take advantage of short-term fluctuations in the market if you don’t have a plan. If you don’t have a plan for how you are going to invest your capital, then you are likely to make impulsive decisions based on whatever is happening in the market at the moment.
Don’t Expect Short-Term Rewards
If you are investing with a long-term focus, you can’t expect to reap the rewards in the short term. If you invest in a particular company, you are hoping that the company will grow in value over time as it becomes more profitable. If you sell that investment before it has time to grow, you will miss out on the full potential of your profit. You have to be willing to hold onto your investments for the long term - even when they are going through slumps in the short term - if you want to maximize your profit.
Conclusion
Investing in the stock market can be a very profitable endeavor, as long as you understand the principles that drive success in this industry. Once you understand how successful investors are driven, you will be able to make smarter decisions about where to invest your own capital and profit from your investment strategy. The sooner you start thinking like a successful investor, the sooner you can start profiting from your investments.
My best wining trading strategyBefore giving you false hope, this strategy, like any other, will not have a 100% wining ratio. But, with a RR of about 1:2, and a wining rate of 40%, it will make money long term. A tested wining percentage is around 60% depending on market conditions.
Time frame : 4h
Indicators used:
- Renko chart
- Cumulative Delta
- RSI
- OBV
- Moving average 9
Candlestick patterns: If is the case, there is an advantage.
Entries signals: Only with Pending orders on retracement, after signal 1 triggered.
1. Reversal brick on Renko
2. Divergence/Convergence on Cumulative Delta. If you do not know about this, you can check on my website at the course section.
3. Divergence on RSI indicator
4. OBV must follow the Renko brick. AS in the given example, if green Brick, than OBV must increase in volume.
5. Moving average is used like standard, or normal settings. Entry on cross, or touch.
Exits
TP : Renko brick reversal or standard RR according with SL.
SL : According with structure, or Renko brick size. IF Renko brick is forming every 1000 points, than it is recommended for SL to have the same size.
Don't Stumble Trading. Trade Safe!
🟩TRADING HACKS: You're doing ENOUGH 🟩 This video is about the importance of thinking in RR and %. The main point is when you think you haven't earned enough is $ amount - and so you want to trade more and more, which leads to poor trade quality - remind yourself that trading is highly scalable, and so it's ok to imagine you have a 20x more capital at the moment. So x20 your profit in the trade and ask yourself how I feel now, is this enough for the day? Remember, if you're consistent, you'll be able to scale the account relatively easy.
How to build a top-tier trading planHey everyone! 👋
Today, we will be looking at how to build an unstoppable trading plan in a few short steps.
While many successful traders often use different ‘variables’ when it comes to identifying trades, the core decision making process of all good trading plans remains mostly the same. Therefore, we’re going to go over a few key things that you shouldn’t be missing out on in your very own trading plan. Let’s get started 👇
Asset Selection 🏦🏦
All good trading plans need to define how they will select what assets they will be trading. For Futures and FX traders, this is a relatively straightforward process, as the universe of tradable symbols is small. However, for Equities and Crypto traders, the universe of tradable symbols is massive. How will you figure out which symbols present the most opportunity and the best risk/reward? Having a defined set of criteria for finding opportunities you’d like to trade is absolutely essential for maximizing your strategy’s expected value.
For example, a stock day trader might search for stocks gapping overnight more than 4%, on more than X amount of volume/shares traded. Or, a crypto swing trader might search for liquid cryptocurrencies with oversold or overbought conditions that could present a mean reversion opportunity.
No matter what the asset though, for traders, generally there are two key things to ensure you’re looking for:
Volatility ✅
Liquidity ✅
If an asset doesn’t have enough liquidity, then it will be hard to scale in and out of bigger positions over time.
If an asset doesn’t have enough volatility, then it will be hard to generate absolute returns from the small trading range. This isn’t always the case, as a few options strategies look to profit off of low volatility, but for spot traders, it is absolutely essential.
Execution Logic 🧠🧠
Once you know what asset you’re looking to trade, the next step is to define what actually counts as a trading opportunity. Almost all assets move every day - what “setups” can you define for yourself that offer the best risk/reward?
The best trading plans have logic that reads like a decision tree, so the trader doesn’t have to think too hard in the moment about the process - all of the hard decisions have been made prior to the in-the-moment situation.
These decision trees can become infinitely complex, but as long as you create and are comfortable with your own execution logic, then you can follow it and improve it over time.
There are two important elements to account for when creating decision logic:
Direction ✅
Execution ✅
While some traders are comfortable taking trades in either direction, many traders are only comfortable with taking trades in one direction, because it can be easier to simplify what you’re looking for in a trade. Because of this, most funds and traders will look to come up with a “view” first.
For example: “I will only look for long trades when the asset is above its 20d moving average.”
OR
“If the ISM PMI is greater than 50, then I will only look to buy stocks.”
Then, once you know what direction you’re trading in (it can be both!), actually figuring out PRECISELY what gets you into and out of a trade becomes necessary.
For example: “If I am looking for a long entry in a trending asset, I will only buy at a 30d high, while setting my stop at a 30d low.”
Having both direction and execution helps to clarify exactly what counts as a trading opportunity, and what is simply a pattern that only exists in your head. It's also key to controlling your risk and getting you out of bad situations should they arise.
Cash Management 💵💵
Finding assets to trade and trading them according to a high-quality plan matters little if you lose everything in a single trade you were sized too large in. Because of this, the best trading plans account for risk and drawdown by planning for the worst-case scenario.
Common strategies to control risk center around sizing trades (to risk no more than 1-5% of your capital at any one time, for example) using theme limits, sector limits, and more. Risk is a decision you make on the way in, not on the way out.
When placing a trade, know ~exactly what you are risking, and how that fits into your overarching position management strategy. See this article for more details.
So, there you have it! 3 quick steps to building an unassailable trading plan ready for the punches the markets will throw your way.
Well, what are you waiting for? Get to work 😉
-Team TradingView ❤️
WHAT IS DRAWDOWN | 3 Types Of Drawdown Explained 📚
Hey traders,
In my videos, I frequently use the term "drawdown".
Many of you asked me to explain the meaning of that term and share some examples.
The account drawdown is the highest observed loss from the highest
value of the deposit to the lowest value of the deposit at
a certain period of time.
Imagine you started to trade with 10,000$ account.
At the end of the year, your account size reached 15,000$.
However, at some point through the year the deposit value dropped to 6,000$. It was the absolute minimum for the one-year period.
At some point, your net loss was -4,000$ or 40% of your account balance.
The account drawdown is 40%.
❗️Knowing the account drawdown is very important for the risk assessment of the trading strategy. Usually, 50% and bigger drawdown signifies an extremely high risk.
There are 3 types of drawdown to know.
Current drawdown - a temporary drawdown associated
with the negative total value of opened trading position(s)
at present.
Once you start trading with 10,000$ deposit, you open several trading positions. Being opened, with the constant price movements, your potential gains fluctuates from positive to negative.
For examples, with 3 active trades: EURUSD (-500$ at present); GBPUSD (+200$ at present); GOLD (-100$ at present) your current account drawdown is -400$ or 4% of your deposit.
Fixed drawdown - the negative value of the closed trading
position(s) at present for a certain period of time.
While some of your trades remain active, some are already closed.
Imagine the same deposit - 10,000$.
On Monday you opened 6 trades, 2 still remain active and 4 are already closed. Your total loss from your closed trades is -500$. Your fixed Monday's drawdown is 5%.
Maximum Drawdown - the maximum observed loss from
the highest value of the deposit before a new maximum
is reached.
Starting to trade with 10,000$ you are already trading for 5 years.
Your account were growing rapidly and at some moment it reached 25,000$. Then the recession started. You faced a dramatic loss of 12,500$ before you started to recover.
That was the maximum observed loss for the period.
Your maximum account drawdown was 50%.
❗️Different types of drawdown give a lot of insights about a trading strategy. Its proper assessment will help to spot a high risk strategy and to find a conservative one.
Constantly monitor your account drawdown and always check the numbers.
What is your highest account drawdown?
❤️If you have any questions, please, ask me in the comment section.
Please, support my work with like, thank you!❤️
How to calculate which lot size to useAs mentioned several times before, we risk 1% of our total trading capital per transaction. In simple terms, we risk 1 egg out of the 100 that we have in the basket in an attempt to get more eggs.
However, even though the average price mark where we place our Stop Loss is 30-60 pips away from the entry price, SL levels set differ from one trade to another, and different currency pairs have various differences in pricing (major pairs have small differences for the most part, while minor and cross-pairs have big gaps in pricing).
This article will demonstrate 3 random scenarios and illustrate which lot sizing is needed to be used based on the Stop Loss set and the percentage of the total capital risked while taking into account the size of the trading account. All numbers are imaginary in order to diversify the visualisation of the portrayed examples and give a better understanding of the case.
Enjoy the idea and don't forget to drop your questions in the comment box below!
PRICE CHANNELS: A simple but very important trading tool1. WHAT IS A PRICE CHANNEL?
On any chart, you can see that the price is moving in a trading range bounded from above and below, and this range is a price channel. They can be ascending, descending or sideways (ranges). Ascending channels are formed with an uptrend, Descending channels are formed with a downtrend, Lateral channels are formed at intervals when the price moves in a horizontal range.
2. WHICH CHANNELS ARE MORE RELIABLE AND EFFICIENT?
If the price has touched the channel boundaries more than two or three times, it is considered confirmed. If he touched it up to two or three times, the channel is unconfirmed and weak.
In fact, the channel is a derivative of the trend line. The channel boundaries are drawn based on the upper and lower maximum price values (extremes).
To create a connecting price channel, both lines must be parallel, and the number of points must not be less than indicated above. The more often the price touches the channel boundaries, the stronger and more effective the channel will be.
3. WHAT TO DO WITH THE PRICE CHANNEL? HOW TO TRADE IN IT?
Use the bottom line of the uptrend channel to open long positions (to buy) - these are the most profitable signals. The resistance of the ascending channel in this case is the most important point of reference for short-term trades against the trend - from the upper limit of the ascending channel, you can open short positions (sales).
In a falling market, the channel is descending, so a deal against the trend from its lower border will be a long position (buy), and from the upper border in the direction of a downward trend - short positions (sell).
Crossing the channel boundaries may be a signal that the trend continues. This happens when the price breaks through and settles outside the channel boundaries, under or above the channel resistance. When it breaks through the upper limit of the ascending channel, it indicates that the trend is accelerating, and it may make sense for traders to activate purchases or open long positions. If it breaks through the lower boundary of the uptrend channel, it is a signal of a trend reversal, and it is better to open short positions.
The approximate size of the falling price most often corresponds to the width of the range. The situation will be the opposite for a falling market with a descending corridor.
4. HOW TO BUILD A PRICE CHANNEL?
To do this, you need at least three points on the chart.
Two of them define a line of resistance or support, the third should be opposite to the first two.
To build an uptrend channel, we need to understand where the trend movement begins.
Determine from two local gradually ascending minimum points where the trend line should be drawn. These two local points will be the reference points, and the constructed line will be the base support line for the channel.
Then draw another line parallel to the obtained line, which should pass through the highest point of the maximum - the very point opposite to the first two, which is located between the polls.
We do the same for descending price channels - only in this case we draw resistance instead of support, the main line should pass through the highs, and the second trend line should pass through the minimum.
The way to determine if you are dealing with a range is to allow the price to touch both levels, resistance and support, at least twice, and the levels should be horizontal.
5. HOW TO TRADE IN THE PRICE CHANNEL
Trading in a price channel reveals a variety of strategies - trade either inside the channel, buy or sell from resistance or support. Or a breakout of the price channel.
Intra-Channel Trading:
Traders are pushed away from the channel boundaries. There is too high a probability that the price will move inside the channel and push off from its borders. Therefore, it makes sense to sell when the price reaches the upper limit, and buy when it reaches the lower limit.
Trading on breakouts
You need to understand that any channel, depending on the time, will be broken - and at this time there will be a strong price movement, on which the trader can make a big profit.
It is convenient to use pending orders placed above the channel border for trading on a breakout. As soon as the price breaks through the channel boundary and reaches the pending order, it is triggered automatically.
Let's summarize:
Price channels are an excellent basis for trading strategies, as they are based on support and resistance lines.
All channels end with a breakdown depending on the time, so you should not trade without a stop loss when trading inside the channel.
You should not perceive the boundaries of the channel as something indestructible.
The price can easily skip the channel boundary or, conversely, make a false breakthrough.
You can trade inside or outside the channel, and both strategies can be combined.
And most importantly : technical analysis will allow you to always stay on the right side of the market!
Regards! R.Linda!
Reminescence of a Scam Operator (ANTI SCAMMER GUIDE)Reminiscent of the roaring 1920s, the 2020 epidemic and the inability to work for many people brought an influx of new retail investors to the public market. Furthermore, the FED's decision to prop up the market by dropping interest rates combined with stimulus checks handed out by the U.S. government lured in even more investors who were hungry for profits. Although the market sensation also brought a rise of omnipresent scams across all trading platforms.
Lack of workforce, sophisticated methods, and automated bots often play into the hands of perpetrators who try to get ahead of the platform and its users. Therefore, we decided to write this concise article with the purpose of helping new investors to recognize good apples from bad ones.
The most common means of communication for criminals is to use private chat, public chat, comments, ideas, and headline references. Several examples of red flags are shown below.
RED FLAGS AND OTHER POINTS:
Asking for personal information and TradingView account information
One common tactic criminals use to exploit their victims is to ask for personal information or account information (login and password). This information should not be disclosed to anyone, including someone claiming to be a platform's employee/support (as these people tend to have access to this information).
Asking for trading account information
Another standard method bad actors use is asking for trading account information. On such occasions, a perpetrator asks for existing account information or requests a victim to create a new account; then, a perpetrator usually asks the victim to invest money into the account and let them use it in return for shared profits.
False promises
The third point probably accompanies every other point on our list. This point relates mainly to false promises about trading achievements, which often include statements about having a high win rate, high net worth, and an unbeatable trading system.
Financial gurus and lavish lifestyles
A high follower count and strong social media presence do not equal reliability. Perpetrators often portray lavish lifestyles across social media platforms to entice more people and trick them into buying a trading signal service or trading course (or any other service). The public image does not necessarily have to match a person's authentic lifestyle. Indeed, trading as a career is highly time-consuming and does not come with trading from a vicinity of a pool or ski resort; that is just public perception.
Trading signals and trading courses
Unfortunately, most of the time, trading signal services (for buy) lack performance and do not consider subscribers' risk tolerance and account sizes. In regard to trading courses, we hold a similarly low opinion of them as we think learning a skill to trade goes far beyond a few hours of any trading course.
Unrealistic win-rate claims
Most brokerages report that their retail clients lose about 50-90% of the initial capital, especially when trading CFDs. Therefore, we would like to put in perspective how realistic claims about a high win rate really are. Professional traders tend to peak at approximately a 50% win-rate over a consistent period. Thus, claims about a 90% or higher win rate are likely to be false.
Guaranteed moves and risk-free investments
Another tactic of scamming utilizes guaranteeing moves in the market. However, there is nothing like a guaranteed move since the market constantly changes and is influenced by complex factors.
These are just few points we included, however, we ask a public to share their own points in the comment section.
DISCLAIMER: This content serves solely educational purposes.
Trading needs to be treated like a business 🧑💼This is spoken about a lot but what does it mean?
In starting a business you would need funding and a business plan, right?
You would have realistic goals mapped out and be focused on your cashflow.
You wouldn't blow your 'cash' in recruiting too fast, or buying too much stock or spending too much on marketing.
Yet, in trading most don't have a plan. Or focus on protecting their cash.
They also don't think long term in line with their plan.
They over estimate their expectations short term and in doing so mess up what they could achieve long term.
You just wouldn't do this in business right?
No one would open or run a business you knew nothing about.
Most come in to trading thinking this will be easy! It's not and we all come in knowing nothing.
So again would you start any other business with no training or idea?
Most can keep the trading cash flow topped up as we all start out on this journey having another job to fund trading.
There is no such thing as a sure-fire way to make money online. However, if you seriously want to make money out of forex trading it needs treating like a business.
In a lot of ways, being a trader is like being an entrepreneur. It takes more than just knowledge and a killer idea.
It also takes hard work, discipline and mental preparation.
The reason it’s a good idea to treat forex trading like a business is because as a trader, your account is your own business.
Trading isn't about the quick money it's about being consistent.
That consistency comes from having a plan and sticking to it much like you would a business plan.
Treat losses as a cost of business and factor them into the plan.
The business plan for you the trader will be the strategy and risk management you opt to run.
Set realistic targets and goals this will ensure suitability, Much how good businesses set up there own goals and aims for coming year with out being to risky.
If you lack on the knowledge front in certain areas invest in education and training, No successful business neglects training and learning.
Invest in resources that will help your business grow. Yes TradingView is free but having a higher package and more data help me just as an example.
There is no other business in the world like trading where the over heads and start up cost are low, So if paid resources can kick you on to next level factor them in as a cost of business.
Keep treating trading as a hobby and it becomes an expensive one.
Start treating trading as a business with the ethos and cultures applied the same as those of successful businesses and that profit starts to come naturally.
Thanks for taking the time to read my idea.
Hope you all have a good weekend
Darren 👍
The News Just Serves To ConfuseI have been a trader for a very long time, so listen as I spit some facts.
News is worse than a distraction, it ACTIVELY inhibits you from making good decisions.
You have TradingView at your fingertips and it contains all the information you need, in a package so advanced it's frightening. STICK TO PRICE ACTION! I will say this again at the end.
I am 100% certain that I only started to be successful after I stopped DIRECTIONAL trading based on news. Of course, I know the broad mass of what's going on in the markets and which news events may have an effect. I haven't stopped listening to and reading the news, but I HAVE started to see it all differently.
You can see from the chart that all the recent "Shock News" has no real impact unless you are a day trader. rate decision, statements, unemployment, blah blah....
I am not saying that news is not important, I'm saying that you need to translate it and to be aware of why it is written. This probably sounds like a weird thing to say, but hear me out.
Do a memory check with me.
When was the last time that the news was all positive about bitcoin?
Answer: At the top and on the way down, when the big boys were selling it to naïve retail (like you, probably).
Now we are at the bottom, all the news is negative on BTC. I wonder why? (HINT: They want you to panic out so they can buy.)
There are three possible reasons for this.
1. The writers are dumb. They are part of the retail crowd themselves and are therefore subject to the same impulses, fears and hopes. They get carried away when things are pumping, and drop into despair when the markets plunge.
2. The whole industry is driven by the big firms, who obviously want to make as much money as they can. Retail traders are, on average, so bad at trading that brokers don't even put their trades into the market, preferring to risk taking the other side themselves. 75% of retail traders lose money. 90% of retail traders will lose 90% of their first trading account in the first 90 days. If I were a broker I would take the other side of those odds, thanks. All I have to do now is make people trade as much as possible. I get commission, and I probably get their stake as well. How to make people trade as much as possible? PUMP OUT NEWS THAT TRIGGERS TRADING.
3. A combination of 1 and 2. The financial industry, from megabanks through to news services, gurus and brokers, is set up to excite people about trading as much as possible. There is constant pressure to provide reasons why oil rose 5% or SP500 dropped 8% etc etc, and even on slow weeks the sheer amount of stories that are published is mind-blowing. The writers are unlikely to be traders themselves, and they just pump out stories based on what happened yesterday and what MIGHT happen today. It is all designed as a massive call to action that is constant, and traders just like you open (and close) positions based on "market analyst" pieces written by economists and professional analysts employed by the brokers.
Are you beginning to see how it all fits together?
The industry LOVES a day trader most of all, because they lose their stake the fastest, so day trading is promoted as exciting. After all, it IS exciting. Trading gives you a buzz. It's addictive, possibly more so than gambling. It is gambling after all, only slightly different, and if you trade like a gambler, you lose in the end.
So, how do I look at news?
1. If trading short-timeframe, I am aware of figures that are due this week, and avoid holding a position coming up to an announcement, and for a while afterwards.
2. If trading medium- to long-term, I remember that the non-farm payrolls may move the market a few percent sometimes, but when you zoom out you can barely see the effect. As a result most of my trading is swing trading.
3. I regard it as a reverse indicator if anything. It never ceases to amaze me when I am thinking about taking a long in, say, Gold, and then an email hits my inbox containing a bearish Gold story. I don't think I am becoming QAnon but I do think these stories can easily be planted by the big players. What journalist doesn't want to write a story after they interview some "master of the universe" trader from GS or JPM or wherever. Or maybe the boss says "write a Gold story today", so they call up their contact who trades it for a bank. Same effect. The banks are in buy mode, and they need retail to sell it to them.
If this sounds like I think the whole thing is a colossal rigged casino, then I am getting my point across. News is just a part of the effort to separate you from your cash, but it's doing a great job.
So, what to do?
1. Trade on Price Action only.
2. Be aware of news in case it affects a trade you may place or one that you have on,
3. Understand that nearly all news is designed to make you panic in or out of a trade, and regard it VERY cynically. It can be hard to remain calm in the face of a negative headline, but that's what a good pro trader will do. Currently I am long BTC, despite huge negative headlines.
Once again, repeat after me:
You have TradingView at your fingertips and it contains all the information you need, in a package so advanced it's frightening. STICK TO PRICE ACTION!
How to improve your trading by looking at interest rates: Part 4Hey everyone! 👋
This month, we wanted to explore the topic of interest rates; what they are, why they are important, and how you can use interest rate information in your trading. This is a topic that new traders typically gloss over when starting out, so we hope this is a helpful and actionable series for new people looking to learn more about macroeconomics and fundamental analysis!
You can think of rates markets in three dimensions.
1.) Absolute
2.) Relative
3.) Through Time
In other words;
1.) How are rates traded on an absolute basis? AKA, do they offer an attractive risk/reward for investors?
2.) How are rates traded on a relative basis? AKA, what separates bond prices between different countries?
3.) How are rates traded through time? AKA, what is the "Yield Curve"?
In our first post , we took a look at how to find interest rate information on TradingView, and how rates fluctuate in the open market. In our second post , we took a look at some of the decision making that investors have to make when it comes to investing in bonds (rates) vs. other assets. In our third post , we took a look at rates on a relative basis between countries.
In today's final post, we'll be looking at how rates are traded through time - in other words, the Yield Curve. What information can you glean from looking at the Yield Curve? How can it help your trading plan? Let's jump in and find out!
For reference, let's first get a look at the Yield Curve:
This chart contains a couple different assets, so let's break them down quickly.
The white/blue area is the rate of interest you receive for 2 year bonds when you buy them
The orange line is the rate of interest you receive for 5 year government bonds when you buy them
The teal line is the rate of interest you receive for 7 year government bonds when you buy them
The yellow line is the rate of interest you receive for 10 year government bonds when you buy them
The purple line is the rate of interest you receive for 30 year government bonds when you buy them
As you can see, differing maturities for bonds pay different yields over time.
If you purchased a 2 year bond in early 2021, you'd be earning 0.15% yield PER YEAR.
At the same time, if you purchased a 30 year bond in early 2021, you'd be earning 1.85% yield PER YEAR.
The situation has changed since then. Currently:
If you purchase a 2 year bond, you're earning 3.56% yield PER YEAR.
if you purchase a 30 year bond, you're earning 3.45% yield PER YEAR.
In other words, the situation has completely flipped.
Why did this happen?
There are a few reasons, linked to many of the topics we discussed in the last few posts. Let's break them down.
1.) Central Bank Funds Rate risk
2.) Inflation Risk
3.) Credit Risk
4.) Market Risk
To start, from early 2021 to now, the central bank has raised the funds rate materially. This means that government bonds must see their yield increase. Why lend money to the government if you get more sticking your cash in a savings account?
Secondly, inflation has picked up. This has been a result of supply shocks across the globe for commodities & services. As shortages have cropped up and demand has been steady or increasing, increases in the price of everyday goods has led short term bonds to "Catch up" to the yields of longer maturity bonds.
Thirdly, as GDP has shrunk over the last two quarters, the risk that the U.S. government will be unable to pay back its debt through tax receipts and bond issuance rises.
Finally, as we said in the second post:
When stocks are outperforming bonds, institutional demand for stocks is higher, indicating that people are feeling good and want to take risk. When bonds are outperforming stocks, it can be indicative that people would prefer to hold 'risk free' interest payment vehicles as opposed to equity in companies with worsening economic prospects.
This demand for bonds plays out across the Yield Curve. Demand for 'risk free' assets increases as the economic outlook worsens, meaning that the Yield Curve is indicative of how market participants think the market situation will play out over a given period of time. If the yield for 2 year bonds is higher than 10 year bonds, then market participants through their purchases and sales are articulating that they expect the next two years to have more economic risk than the next ten. In other words, they expect some sort of economic slowdown.
This is extremely useful for multiple types of traders:
Equities are tied to the economy - if rates are saying something about economic prospects, then it's smart to pay attention, as it may inform your asset selection process / trading style
FX is intimately tied with rates - if rates are moving, FX is sure to be impacted.
Crypto has shown a high inverse correlation historically with the "ease of money" index. If rates are going up, then non-interest paying crypto becomes less attractive.
Anyway, that's all for our series on Interest Rates!
Thanks so much for reading and have a great rest of your weekend.
- Team TradingView ❤️
Wyckoffian logicWhen you understand the Wyckoffian phases of the market, you can determine when to be in or out of the market. You begin to understand how the large accounts determining market the trend, change of trend and price action.
Wyckoff Phases of Accumulation
Phase A: In phase A, supply has been dominant and it appears that finally the exhaustion of supply is becoming evident. The approaching exhaustion of supply or selling is evidenced in preliminary support (PS) and the selling climax (SC) where a widening spread often climaxed and where heavy volume or panicky selling by the public is being absorbed by larger professional interests. Once these intense selling pressures have been expressed, and automatic rally (AR) follows the selling climax. A successful secondary test on the downside shows less selling that on the SC and with a narrowing of spread and decreased volume. A successful secondary test (ST) should stop around the same price level as the selling climax. The lows of the SC and the ST and the high of the AR set the boundaries of the trading range (TR). Horizontal lines may be drawn to help focus attention on market behavior.
It is possible that phase A will not include a dramatic expansion in spread and volume. However, it is better if it does, because the more dramatic selling will clear out more of the sellers and pave the way for a more pronounced and sustained markup.
Where a TR represents a reaccumulation (a TR within a continuing up-move), you will not have evidence of PS, SC, and ST. Instead, phase A will look more like phase A of the basic Wyckoff distribution schematic. Nonetheless, phase A still represents the area where the stopping of the previous trend occurs. Trading range phases B through E generally unfold in the same manner as within an initial base area of accumulation.
Phase B: The function of phase B is to build a cause in preparation for the next effect. In phase B, supply and demand are for the most part in equilibrium and there is no decisive trend. Although clues to the future course of the market are usually more mixed and elusive, some useful generalizations can be made.
In the early stages of phase B, the price swings tend to be rather wide, and volume is usually greater and more erratic. As the TR unfolds, supply becomes weaker and demand stronger as professionals are absorbing supply. The closer you get to the end or to leaving the TR, the more volume tends to diminish. Support and resistance lines usually contain the price action in phase B and will help define the testing process that is to come in phase C. The penetrations or lack of penetrations of the TR enable us to judge the quantity and quality of supply and demand.
Phase C:In phase C, the stock goes through testing. It is during this testing phase that the smart money operators ascertain whether the stock is ready to enter the markup phase. The stock may begin to come out of the TR on the upside with higher tops and bottoms or it may go through a downside spring or shakeout by first breaking previous supports before the upward climb begins. This latter test is preferred by traders because it does a better job of cleaning out the remaining supply of weak holders and creates a false impression as to the direction of the ultimate move.
A spring is a price move below the support level of a trading range that quickly reverses and moves back into the range. It is an example of a bear trap because the drop below support appears to signal resumption of the downtrend. In reality, though, the drop marks the end of the downtrend, thus trapping the late sellers, or bears. The extent of supply, or the strength of the sellers, can be judged by the depth of the price move to new lows and the relative level of volume in that penetration.
Until this testing process, you cannot be sure the TR is accumulation and hence you must wait to take a position until there is sufficient evidence that markup is about to begin. If we have waited and followed the unfolding TR closely, we have arrived at the point where we can be quite confident of the probable upward move. With supply apparently exhausted and our danger point pinpointed, our likelihood of success is good and our reward/risk ratio favorable.
Phase D:If we are correct in our analysis and our timing, what should follow now is the consistent dominance of demand over supply as evidenced by a pattern of advances (SOSs) on widening price spreads and increasing volume, and reactions (LPSs) on smaller spreads and diminishing volumes. If this pattern does not occur, then we are advised not to add to our position but to look to close out our original position and remain on the sidelines until we have more conclusive evidence that the markup is beginning. If the markup of your stock progresses as described to this point, then you’ll have additional opportunities to add to your position.
Your aim here must be to initiate a position or add to your position as the stock or commodity is about to leave the TR. At this point, the force of accumulation has built a good potential as measured by the Wyckoff point-and-figure method.
In phase D, the markup phase blossoms as professionals begin to move into the stock. It is here that our best opportunities to add to our position exist, just as the stock leaves the TR.
Phase E: Depicts the unfolding of the uptrend; the stock or commodity leaves the trading range and demand is in control. Sell offs are usually feeble.
Wyckoff Accumulation Events
PS: Preliminary support, where substantial buying begins to provide pronounced support after a prolonged down-move. Volume increases and price spread widens, signaling that the down-move may be approaching its end.
SC: Selling climax, the point at which widening spread and selling pressure usually climaxes, as heavy or panicky selling by the public is being absorbed by larger professional interests at or near a bottom. Often price will close well off the low in a SC, reflecting the buying by these large interests.
AR: Automatic rally, which occurs because intense selling pressure has greatly diminished. A wave of buying easily pushes prices up; this is further fueled by short covering. The high of this rally will help define the upper boundary of an accumulation TR.
ST: Secondary test, in which price revisits the area of the SC to test the supply/demand balance at these levels. If a bottom is to be confirmed, volume and price spread should be significantly diminished as the market approaches support in the area of the SC. It is common to have multiple STs after a SC.
Shakeouts: (and or Springs) usually occur late within a TR and allow the stock’s dominant players to make a definitive test of available supply before a markup campaign unfolds. A “spring” takes price below the low of the TR and then reverses to close within the TR; this action allows large interests to mislead the public about the future trend direction and to acquire additional shares at bargain prices. A terminal shakeout at the end of an accumulation TR is like a spring on steroids. Shakeouts may also occur once a price advance has started, with rapid downward movement intended to induce retail traders and investors in long positions to sell their shares to large operators. However, springs and terminal shakeouts are not required elements..
Test: Large operators always test the market for supply throughout a TR (e.g., STs and springs) and at key points during a price advance. If considerable supply emerges on a test, the market is often not ready to be marked up. A spring is often followed by one or more tests; a successful test (indicating that further price increases will follow) typically makes a higher low on diminished volume.
SOS: Sign of strength, a price advance on increasing spread and relatively higher volume. Often a SOS takes place after a spring, validating the analyst’s interpretation of the prior price action.
LPS: Last point of support, the low point of a reaction or pullback after a SOS. Backing up to an LPS means a pullback to support that was formerly resistance, on diminished spread and volume. On some charts, there may be more than one LPS, despite the ostensibly singular precision of this term.
BU: Back-up. This term is short-hand for a colorful metaphor coined by Robert Evans, one of the leading teachers of the Wyckoff method from the 1930s to the 1960s. Evans analogized the SOS to a “jump across the creek” of price resistance, and the “back up to the creek” represented both short-term profit-taking and a test for additional supply around the area of resistance. A back-up is a common structural element preceding a more substantial price mark-up, and can take on a variety of forms, including a simple pullback or a new TR at a higher level.
Wyckoff Phases of Distribution
Phase A: In Phase A, demand has been dominant and the first significant evidence of demand becoming exhausted comes at preliminary supply (PSY) and at the buying climax (BC). It often occurs in wide price spread and at climactic volume. This is usually followed by an automatic reaction (AR) and then a secondary test (ST) of the BC, usually upon diminished volume. This is essentially the inverse of phase A in accumulation.
As with accumulation, phase A in distribution price may also end without climactic action; the only evidence of exhaustion of demand is diminishing spread and volume.
Where redistribution is concerned (a trading range within a larger continuing down-move), you will see the stopping of a down-move with or without climactic action in phase A. However, in the remainder of the trading range (TR) for redistribution, the guiding principles and analysis within phases B through E will be the same as within a TR of a distribution market top.
Phase B: The building of the cause takes place during phase B. The points to be made here about phase B are the same as those made for phase B within accumulation, except clues may begin to surface here of the supply/demand balance moving toward supply instead of demand.
Phase C: One of the ways phase C reveals itself after the standoff in phase B is by the sign of weakness (SOW). The SOW is usually accompanied by significantly increased spread and volume to the downside that seem to break the standoff in phase B the SOW may or may not “fall through the ice,” but the subsequent rally back to a “last point of supply” (LPSY), is usually unconvincing for the bullish case and likely to be accompanied by less spread and/or volume.
Last point of supply gives you your last opportunity to exit any remaining longs and your first inviting opportunity to exit any remaining longs and your first inviting opportunity to take a short position. An even better place would be on the rally that tests LPSY, because it may give more evidence (diminished spread and volume) and/or a more tightly defined danger point.
An upthrust is the opposite of a spring. It is a price move above the resistance level of a trading range that quickly reverses itself and moves back into the trading range. An upthrust is a bull trap — it appears to signal a start of an uptrend but in reality marks the end of the up-move. The magnitude of the upthrust can be determined by the extent of the price move to new highs and the relative level of volume in that movement.
Phase C may also reveal itself by a pronounced move upward, breaking through the highs of the trading range. This is shown as an upthrust after distribution (UTAD). Like the terminal shakeout in the accumulation schematic, this gives a false impression of the direction of the market and allows further distribution at high prices to new buyers. It also results in weak holders of short positions surrendering their positions to stronger players just before the down-move begins. Should the move to new high ground be on increasing volume and relative narrowing spread, and price returns to the average level of closes of the TR, this would indicate lack of solid demand and confirm that the breakout to the upside did not indicate a TR of accumulation, but rather a formation of distribution.
Successful understanding and analysis of a trading range enables traders to identify special trading opportunities with potentially very favorable reward/risk parameters. When analyzing a trading range, we are first seeking to uncover what the law of supply and demand is revealing to us. However, when individual movements, rallies, or reactions are not revealing with respect to supply and demand, it is important to remember the law of effort versus result. By comparing rallies and reactions within the trading range to each other in terms of price spread, volume, and time, additional clues may be discovered as to the stock’s strength, position, and probable future course.
It will also be useful to employ the law of cause and effect. Within the dynamics of a trading range, the force of accumulation or distribution gives us the cause and the potential opportunity for substantial trading profits. The trading range will also give us the ability, with the use of point-and-figure charts, to project the extent of the eventual move out of the trading range and will help us determine if those trading opportunities favorably meet or exceed our reward/risk parameters.
Phase D: Phase D arrives and reveals itself after the tests in phase C show us the last gasps or the last hurrah of demand. In phase D, the evidence of supply becoming dominant increases either with a break through the ice or with a further SOW into the trading range after an upthrust.
In phase D, you are also given more evidence of the probable direction of the market and the opportunity to take your first or additional short positions. Your best opportunities are at rallies representing LPSYs before a markdown cycle begins. Your legging in of the set of positions taken within phases C and D represents a calculated approach to protect capital and maximize profit. It is important that additional short positions be added or pyramided only if your initial positions are in profit.
Phase E: Depicts the unfolding of the downtrend; the stock or commodity leaves the trading range and supply is in control. Rallies are usually feeble.
Wyckoff Distribution Events
PSY: Preliminary supply, where large interests begin to unload shares in quantity after a pronounced up-move. Volume expands and price spread widens, signaling that a change in trend may be approaching.
BC: Buying climax, during which there are often marked increases in volume and price spread. The force of buying reaches a climax, and heavy or urgent buying by the public is being filled by professional interests at prices near a top. A BC often occurs coincident with a great earnings report or other good news, since the large operators require huge demand from the public to sell their shares without depressing the stock price.
AR: Automatic reaction. With demand substantially diminished after the BC and heavy supply continuing, an AR takes place. The low of this selloff helps define the lower boundary of a distribution TR.
ST: Secondary test, in which price revisits the area of the BC to test the demand/supply balance at these price levels. If a top is to be confirmed, supply will outweigh demand, and volume and spread should decrease as price approaches the resistance area of the BC. A ST may take the form of an upthrust (UT), in which price moves above the resistance represented by the BC and possibly other STs, then quickly reverses to close below resistance. After a UT, price often tests the lower boundary of the TR.
SOW: Sign of weakness, observable as a down-move to (or slightly past) the lower boundary of the TR, usually occurring on increased spread and volume. The AR and the initial SOW(s) indicate a change of character in the price action of the stock: supply is now dominant.
LPSY: Last point of supply. After testing support on a SOW, a feeble rally on narrow spread shows that the market is having difficulty advancing. This inability to rally may be due to weak demand, substantial supply or both. LPSYs represent exhaustion of demand and the last waves of large operators’ distribution before markdown begins in earnest.
UTAD: Upthrust after distribution. A UTAD is the distributional counterpart to the spring and terminal shakeout in the accumulation TR. It occurs in the latter stages of the TR and provides a definitive test of new demand after a breakout above TR resistance. Analogous to springs and shakeouts, a UTAD is not a required structural element: the TR in Distribution.
AR - Automatic rally or reaction
BC - Buying Climax
BOI - Backing upto ice
BTI - Breaking the ice
BUEC - Backup to edge of creek
CREEK - Critical support
FTI - First time over ice
ICE - Critical resistance
JAC - Jumping across the creek (or JOC)
LPS - Last point of Support (Demand)
LPSY - Last point of Supply
MD - Mark down
MU - Mark up
PS - Preliminary support (Demand)
PSY - Preliminary supply
SOS - Sign of strength
SOW - sign of weakness
ST - Secondary test
TSO - Terminal shake out (Spring)
TUT - Terminal thrust
UTAD - Up thrust after distribution
SC - Selling Climax
TR - Trading Range
UT - Up thrust
Best regards
EXCAVO