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❌NO RISK OF LOSS=NO CHANCE OF GAIN✅ *️⃣There are several reasons why losses are part of the game: 1️⃣Emotion: Traders, just like all human being, are prone to emotional bias, which can lead to impulsive decision making and ultimately to losses. 2️⃣Probability: Even with the best trading strategy, there will be losing trades. It's important to remember that not all trades will be successful, and losses are a normal part of the process. A successful trader should aim to have more winning trades than losing ones. 3️⃣Markets are unpredictable: Even the most experienced traders can't predict market movements with 100% accuracy. Unforeseen events, such as natural disasters or major political announcements can cause sudden changes in market conditions, leading to losses. 4️⃣Risk is inherent in trading: All forms of investing involve some level of risk. In trading, the risk is even greater due to the fast-paced nature of the markets and the fact that positions are often held for shorter periods of time. 5️⃣There is no Holy grail strategy: There is no one strategy that will work in every market condition and for every trader. Different strategies work better in different market conditions, and a trader should be flexible and adaptable to changing market conditions. ▶️It's important to remember that losses are a normal part of trading, and traders should not be discouraged by them. Instead, traders should focus on managing risk, learning from losses, and continuing to develop and refine their trading strategies over time. I Hope you guys learned something new today✅ Wish you all Best Of Luck👍 😇And may the odds be always in your favor😇 Do you like this post? Do you want more articles like that
Education
by ProSignalsFx
10
📌Prospect theory; what is it? Humans are not psychologically good traders by nature ! Have you ever wondered, why trading with real money is overwhelming for you?! The reason should be sought in the psychological aspect of the case. If you lose amount money in the market, you must gain several times ,so the feeling of happiness overcomes the pain of your initial loss! although all traders, even successful traders, have tasted loss and it is an inevitable part of the trading journey !But the successful traders have learned how to control the psychologically of it and not be limited by the feelings of a loss! Prospect theory : also called loss-aversion theory is a theory of behavioral economics and behavioral finance that was developed by Daniel Kahneman and Amos Tversky in 1979. .Daniel Kahneman the author of ' Thinking, Fast and Slow ' book is a Nobel Laureate in Economics who is a psychologist by training. He won the prize mostly for his work in decision making, specifically Prospect Theory. This book distills a lifetime of work on the engine of human thinking, highlighting our cognitive biases and showing both the brilliance and limitations of the human mind. This summary attempts to capture some of the more interesting findings. Based on results from controlled studies ,he describes how individuals assess their loss and gain perspectives in an asymmetric manner (see loss aversion). For example, for some individuals, the pain from losing $1,000 could only be compensated by the pleasure of earning $2,000 or even more. Thus, contrary to the expected utility theory (which models the decision that perfectly rational agents would make), prospect theory aims to describe the actual behavior of people. In the original formulation of the theory, the term prospect referred to the predictable results of a lottery. However, prospect theory can also be applied to the prediction of other forms of behaviors and decisions. Prospect theory: stems from Loss aversion, where the observation is that agents asymmetrically feel losses greater than that of an equivalent gain. It centralises around the idea that people conclude their utility from "gains" and "losses" relative to a certain reference point. This "reference point" is different for each person and relative to their individual situation. Thus, rather than making decisions like a rational agent (i.e using expected utility theory and choosing the maximum value), decisions are made in relativity not in absolutes. Consider two scenarios; 100% chance to gain $450 or 50% chance to gain $1000 100% chance to lose $500 or 50% chance to lose $1100 Prospect theory suggests that; When faced with a risky choice leading to gains agents are risk averse, preferring the certain outcome with a lower expected utility (concave value function). Agents will choose the certain $450 even though the expected utility of the risky gain is higher When faced with a risky choice leading to losses agents are risk seeking, preferring the outcome that has a lower expected utility but the potential to avoid losses (convex value function). Agents will choose the 50% chance to lose $1100 even though the expected utility is lower, due to the chance that they lose nothing at all These two examples are thus in contradiction with the expected utility theory, which only considers choices with the maximum utility. Also, the concavity for gains and convexity for losses implies diminishing marginal utility with increasing gains/losses. In other words, someone who has more money has a lower desire for a fixed amount of gain (and lower aversion to a fixed amount of loss) than someone who has less money. source: wikipedia Well, with these concepts , we conclude that Losses loom larger than gains! the Psychological value of a loss equal or even less than previous profit, can really affect our mindset , and feeling for trade, actually trading bots are better than us in this aspect, or better to say ;humans should have a proper trading system , also should cultivate our discipline and diligence to be a good trader(psychologically ) ! this article is For informational purposes only!
Education
by PRO_SMART_Trader
9
Commodities In 2021 and a View for 2022It is official- Inflation is no longer “transitory,” according to the US central bank. After blaming rising prices on pandemic-inspired supply chain bottlenecks throughout 2021, the Federal Reserve swallowed its pride, admitting inflationary pressures are far more structural than “transitory.” Economist Mohamed El Erian called “transitory” the worst call in the Fed’s history. What the Fed, US Treasury, and most mainstream economists have not said is that the blame lies at their feet. The liquidity tidal wave and stimulus tsunami lit the inflationary fuse in 2020 that continues to burn in early 2022. The dollar index may have rallied by 6.34% in 2021, but its appreciation is little more than a mirage. The foreign exchange market conveniently measures one currency’s value against another. The dollar’s ascent may make the greenback the strongest fiat currency, but it is the best horse in the glue factor when it comes to value. All fiats have lost purchasing power since 2020, and the dollar is no exception. The stock market, real estate prices, cryptocurrencies, and commodities have all experienced substantial price appreciation, which is also a mirage. Fiat currency’s purchasing power continues to decline, and that trend remains firmly intact as we head into 2022. Commodity prices began rallying after reaching bottoms in early 2020 as the pandemic swept across the world. The rally continued in 2021 and looks set to take prices to higher lows and higher highs in 2022. 2021 was a very bullish year in the commodities asset class A composite of 29 of the leading and most liquid commodities futures and forwards that trade on the US and UK futures and forwards exchange moved 4.73% higher in Q4 2021 and 26.79% higher in 2021. In Q4, the leading sectors posted the following results: Base metals moved 9.65% higher Grains gained 9.31% Animal proteins moved 4.73% higher Soft commodities appreciated by 4.25% Precious metals posted a 2.80% gain Energy commodities fell 3.02% In 2021, four of the five sectors posted double-digit percentage gains while only precious metals moved lower: Energy was 54.13% higher Base metals gained 38.09% Soft commodities rallied 31.57% Grains moved 29.71% to the upside Animal proteins appreciated by 19.16% Precious metals fell 11.91% The overall performance was highly bullish as inflationary pressure, pandemic-inspired supply chain bottlenecks, and other factors pushed prices to multi-year, or in some cases, new all-time highs. An interesting observation between a commodity composite and the S&P 500 In a sign that inflation pushed all asset prices higher, the performance of the leading stock market index and commodities asset class was virtually the same. The long-term chart of the S&P 500, the most representative stock market index, reflects a 26.89% rise in 2021. The commodity composite that includes the leading precious and base metals, energy, soft, gains, and animal protein markets was 26.79% higher. The results are uncanny but reflect inflation’s impact on prices. Thirty-three winners and eight losers for the year Winners outnumbered losers by better than four-to-one in the commodities asset class that includes 41 different markets. Metals, foods, and energy commodities posted the most significant gains. Thirty-two of thirty-three markets that moved higher posted double-digit percentage gains, and thirteen markets were up over 50%. Of the eight markets that moved lower in 2021, five were precious metals. The sector may have lost 11.91% in 2021, but it moved 27.85% higher in 2020. Gold reached a new all-time high in 2020 and palladium in 2021, before the shiny metals corrected. Iron ore, the worst-performing commodity in 2021, was nearly 73% higher in 2020. Soybean meal rose by over 43% in 2020. Cocoa posted a marginal gain in 2020 and a market loss in 2021. Three reasons the bullish relay race will continue The ascent of commodity prices since the 2020 lows has been nothing short of a bullish relay race, with one market handing the bullish baton to the next. Three factors favor a continuation of bullish price action in 2022: Inflation : The Fed may be talking a hawkish game in early 2022, but action speaks a lot louder than words. At the December FOMC meeting, the committee forecast a 0.60% Fed Funds rate in 2022 and a 1.90% short-term rate in 2023. Even if inflationary pressures recede, real interest rates will remain in negative territory, which is fuel for higher inflation. As fiat currencies’ purchasing power declines, commodity prices are likely to continue to make higher lows and higher highs. The supply chain : Geopolitical issues and the pandemic’s legacy continue to create bottlenecks preventing commodities from moving from producers to consumers. Moreover, tensions between the US and Russia and the US and China develop roadblocks for commodities and distort prices, creating gluts in some regions and shortages in other areas. Policy : The shift in US energy policy to address climate change changed the fundamental equation for fossil fuels. OPEC and Russia now control world petroleum pricing. Increased regulations on US drilling and fracking will weigh on supplies. Moreover, addressing climate change dramatically increases the demand for battery metals and other commodities that are critical inputs for greener energy via alternative and renewable sources. Energy is an essential input for all commodity production. As energy prices rise, it puts upside pressure on all commodities, including grains, animal proteins, and metals. Inflation is a vicious cycle that is challenging to address once it gains speed. The US Fed and other world central banks are far behind the inflationary curve in early 2022. Bull markets rarely move in straight lines Bull markets can experience brutal corrections. In 2021, we saw copper drop from a new record high at nearly $4.90 per pound in May to below $4 in August. Lumber dropped from over $1700 per 1,000 board feet in May, a record high, to under $500 in August. Crude oil fell from its highest price since 2014 at $85.41 in October to below $63 in early December. Natural gas tanked from $6.466 per MMBtu in early October to below $4 in December and January. Many other commodities suffered equally ugly corrections. However, most found bottoms and have rallied from the higher lows than in 2020. I expect a continuation of higher lows and higher highs in the commodities asset class in 2022. The trend is always your best friend, and it remains higher in the raw materials asset class since 2020. 2021 was a bullish year in commodities, and I expect that trend to continue in 2022, but the road to higher prices is likely to be very bumpy. -- Trading advice given in this communication, if any, is based on information taken from trades and statistical services and other sources that we believe are reliable. The author does not guarantee that such information is accurate or complete and it should not be relied upon as such. Trading advice reflects the author’s good faith judgment at a specific time and is subject to change without notice. There is no guarantee that the advice the author provides will result in profitable trades. There is risk of loss in all futures and options trading. Any investment involves substantial risks, including, but not limited to, pricing volatility, inadequate liquidity, and the potential complete loss of principal. This article does not in any way constitute an offer or solicitation of an offer to buy or sell any investment, security, or commodity discussed herein, or any security in any jurisdiction in which such an offer would be unlawful under the securities laws of such jurisdiction.
SP:SPXEducation
by Andy_Hecht
1
SPX [TECHNICALS & FUNDAMENTALS] rally to Feb 15 at $2800TECHNICALS - Gann fans and Fib retracements show us going on one more run. On an Eliot count, we can still be working on the 5th wave up. And take a closer look at the top 10 largest stocks... they all have room to go on one more run. Also, we didn't get a sharp dip from the 618 ($2720), suggesting we have room to keep going. Stoch is overbought, RSI is overbought (almost...), but if we stay flat on Tuesday Feb 5 we can work some of this off, and gap higher Wednesday at open. When we finally hit the 2800-28200 fib level, expect to see an impulse touch and sharp fall - similar to how Amazon touched the 618 at $1730 before consolidating. FUNDAMENTALS - Trump state of the union will be boring... why would he declare a national emergency? That's his last card. He will wait until Feb 15 to do that. Dems have no rush to make a deal bc they want to secure the 2020 election by driving Trumps into defeat. Feb 15 checks all the boxes on the technical projections. I think the Mueller subpoena is supposed to be around Feb 15 too. The jobs report was good, J Powell's dovishness was good. The general public still believes we will keep on rallying in this bull market. Sucker in the last few on this rally to $2800, and drop it hard. Side note- I also look at crypto as a leading indicator to market drops since it is a high-risk sector. BTC looks primed to jump to the top of the ascending triangle before falling as well. We are on thin ice right now though, and the stock market is starting to look (technicals) and feel overstretched. Consider or simply disregard my collection of thoughts here... but definitely proceed with caution.
SP:SPXEducation
by warrenbudget
2