MARKET STRUCTURE explained (THE ULTIMATE SIMPLIFIED GUIDE)(In this guide I will attempt for explain Market Structure in the most simplified and easy to understand terms)
WHAT IS MARKET STRUCTURE?
Market structure is the overall framework of a market that helps traders understand price movements and trends. Think of it as the skeleton of the market, showing how prices move over time and where key levels of support and resistance are located.
COMPONENTS OF MARKET STRUCTURE:
TRENDS:
Trends are the general direction in which the market is moving. There are three main types of trends:
- UPTREND: This is when the market is moving upwards. It is characterized by a series of higher highs (HH) and higher lows (HL). Imagine a staircase going up; each step represents a higher high and a higher low.
- HIGHER HIGH (HH): The highest point reached during a price movement before the price starts to fall again.
- HIGHER LOW (HL): The lowest point reached during a price movement before the price starts to rise again.
- DOWNTREND: This is when the market is moving downwards. It is characterized by a series of lower lows (LL) and lower highs (LH). Think of a staircase going down; each step represents a lower low and a lower high.
- LOWER LOW (LL): The lowest point reached during a price movement before the price starts to rise again.
-LOWER HIGH (LH): The highest point reached during a price movement before the price starts to fall again.
- SIDEWAYS/RANGE-BOUND: This is when the market is moving horizontally, neither up nor down. It is characterized by equal highs (EQH) and equal lows (EQL). Picture a flat road; the price moves back and forth within a certain range.
- EQUAL HIGH (EQH): The highest point reached during a price movement that is roughly the - EQUAL LOW (EQL): The lowest point reached during a price movement that is roughly the same as previous lows.
SUPPORT & RESISTANCE LEVELS:
- SUPPORT: A support level is a price point where the market tends to find buying interest, preventing the price from falling further. Think of it as a floor that supports the price.
- RESISTANCE: A resistance level is a price point where the market tends to find selling interest, preventing the price from rising further. Think of it as a ceiling that resists the price.
SWING POINTS:
Swing points are the peaks and troughs that form the structure of the market. They help in identifying the trend direction.
- SWING HIGH: A peak formed when the price reaches a high point and then starts to decline.
- SWING LOW: A trough formed when the price reaches a low point and then starts to rise.
ANALYZING MARKET STRUCTURE:
IDENTIFY THE TREND:
To identify the trend, look at the sequence of highs and lows on the price chart:
- UPTREND: Look for a series of higher highs and higher lows.
- DOWNTREND: Look for a series of lower lows and lower highs.
- SIDEWAYS: Look for equal highs and equal lows.
MARK KEY LEVELS:
Identify and mark significant support and resistance levels on the chart. These levels are where the price has previously reversed or paused.
OBSERVE PRICE ACTION:
Analyze how the price reacts at these key levels. Look for patterns such as:
- BREAKOUTS: When the price moves above a resistance level or below a support level.
- REVERSALS: When the price changes direction after reaching a support or resistance level.
- CONSOLIDATIONS: When the price moves within a narrow range, indicating indecision in the market.
RISK MANAGEMENT:
Always use stop-loss orders to manage risk. Place stop-loss orders:
- Below support levels in an uptrend.
- Above resistance levels in a downtrend.
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This is the basics of Market Structure, explained in the most simplified manner as possible. I hope this publication was simple and easy to understand and helps you understand Market structure better.
I will be doing more easy to understand publications like this within the upcoming days so stay tune...
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HAPPY TRADING :)
Trends
Volatility in Focus: A Trader's Perspective on S&P 500 Futures1. Introduction
Volatility is a critical concept for traders in any market, and the E-mini S&P 500 Futures are no exception. Traditionally, traders have relied on tools such as the Average True Range (ATR) and Historic Volatility (HV) to measure and understand market volatility. These tools provide a snapshot of how much an asset's price fluctuates over a given period, helping traders to gauge potential risk and reward.
ATR measures market volatility by analyzing the range of price movement, often over a 14-day period. It reflects the degree of price movement but doesn’t differentiate between upward or downward volatility. Historic Volatility looks at past price movements to calculate how much the price has deviated from its average. It’s a statistical measure that gives traders a sense of how volatile the market has been in the past.
While these traditional tools are invaluable, they offer a generalized view of volatility. For traders seeking a more nuanced and actionable understanding, it's essential to distinguish between upside and downside volatility—how much and how fast the market moves up or down.
This article introduces a pragmatic, trader-focused approach to measuring volatility in the E-mini S&P 500 Futures. By analyzing daily, weekly, and monthly volatility from both the upside and downside perspectives, we aim to provide insights that can better prepare traders for the real-world dynamics of the market.
2. Methodology: Volatility Calculation from a Trader’s Perspective
In this analysis, we take a more nuanced approach by separating volatility into two distinct categories: upside volatility and downside volatility. The idea is to focus on how much the market tends to move up versus how much it moves down, providing a clearer picture of potential risks and rewards.
Volatility Calculation Method:
o Daily Volatility:
Daily upside volatility is calculated as the percentage change from the prior day's close to the next day’s high, assuming the next day’s high is higher than the prior day’s close.
Daily downside volatility is the percentage change from the prior day's close to the next day’s low, assuming the next day’s low is lower than the prior day’s close.
o Weekly Volatility:
Weekly upside volatility is determined by comparing the previous Friday’s close to the highest point during the following week, assuming the market went higher than the prior Friday’s close.
Weekly downside volatility is calculated by comparing the previous Friday’s close to the lowest point during the following week, assuming the market went lower than the prior Friday’s close.
o Monthly Volatility:
Monthly upside volatility is measured by taking the percentage change from the prior month’s close to the next month’s high, assuming prices moved higher than the prior monthly close.
Monthly downside volatility is calculated by comparing the prior month’s close to the lowest point of the following month, assuming prices moved lower than the prior monthly close.
3. Volatility Analysis
The E-mini S&P 500 Futures exhibit distinct patterns when analyzed from the perspective of upside and downside volatility. By measuring the daily/weekly/monthly fluctuations using the trader-focused approach discussed earlier, we gain valuable insights into how the market behaves on a day-to-day basis.
Key Insights:
Trend Observation: The data reveals that during periods of market distress, such as financial crises or sudden economic downturns, downside volatility tends to spike significantly. This indicates a greater propensity for the market to fall rapidly compared to its upward movements.
Implication for Traders: Understanding these patterns allows traders to anticipate the potential risks and adjust their strategies accordingly. For instance, in highly volatile environments, traders might consider tightening their stop losses or hedging their positions to protect against sudden downturns.
4. Comparative Analysis: Rolling Volatility Differences
To gain deeper insights into the behavior of the E-mini S&P 500 Futures, it’s useful to compare the rolling differences between upside and downside volatility over time.
Rolling Volatility Differences Explained:
Rolling Analysis: A rolling analysis calculates the difference between upside and downside volatility over a set period, such as 252 days for daily data (approximately one trading year), 52 weeks for weekly data, or 12 months for monthly data. This method smooths out short-term fluctuations, allowing us to see more persistent trends in how the market behaves.
Volatility Difference: The volatility difference is simply the upside volatility minus the downside volatility. A positive value suggests that upside movements were more significant during the period, while a negative value indicates stronger downside movements.
Key Insights:
Trend Observation: The rolling difference analysis reveals that downside volatility generally dominates, particularly during periods of economic uncertainty or financial crises. This confirms the common belief that markets tend to fall faster than they rise.
Implication for Traders: Traders could use rolling volatility differences to anticipate changes in market conditions. A widening gap in favor of downside volatility may signal increasing risk and the potential for further declines. Conversely, a narrowing or positive rolling difference could suggest improving market sentiment and potential opportunities for long positions.
5. Volatility Trends Over Time
Understanding the frequency and conditions under which upside or downside volatility dominates can provide traders with valuable insights into market behavior. By analyzing the percentage of days, weeks, and months where upside volatility exceeds downside volatility, we can better grasp the nature of market trends over time.
Volatility Trends Explained:
Percentage of Days with Greater Upside Volatility: This metric shows the percentage of trading days within a given year where the upside volatility was higher than the downside volatility. It highlights the frequency with which the market experienced more significant upward movements compared to downward ones on a daily basis.
Percentage of Weeks with Greater Upside Volatility: Similarly, this metric calculates the percentage of weeks in a year where the upside volatility was greater than the downside. It provides a broader perspective on market trends, capturing sustained movements within weekly timeframes.
Percentage of Months with Greater Upside Volatility: This metric reflects the percentage of months in a year where upside volatility exceeded downside volatility. It is particularly useful for identifying longer-term trends and understanding the market’s behavior over extended periods.
Key Insights:
Trend Observation: Historically, again, we can see the data shows that downside volatility tends to dominate, especially during periods of market stress. However, there are years where upside volatility has been more frequent.
Implication for Traders: Traders can use these insights to adjust their strategies based on the prevailing market conditions. In years where downside volatility is more frequent, defensive strategies or hedging might be more appropriate. Conversely, in years where upside volatility dominates, traders might consider more aggressive or trend-following strategies.
6. Key Takeaways for Traders
The analysis of the E-mini S&P 500 Futures’ volatility, broken down by daily, weekly, and monthly intervals, provides crucial insights for traders. Understanding the distinct patterns of upside and downside volatility is essential for making informed trading decisions, particularly in a market that often behaves asymmetrically.
Practical Conclusions for Traders:
Risk Management: Given the dominance of downside volatility, traders should prioritize risk management strategies. This includes using stop-loss orders, protective options, and other hedging techniques to mitigate potential losses during volatile periods.
Strategic Positioning: Traders might consider adjusting their position sizes or employing defensive strategies during periods of heightened downside volatility. Conversely, when upside volatility shows signs of strengthening, more aggressive positioning or trend-following strategies could be beneficial.
Timing Entries and Exits: Understanding the patterns of volatility can help traders better time their entries and exits. For instance, entering the market during periods of lower downside volatility or after a significant downside spike can offer better risk-reward opportunities.
Adaptability: The key to successful trading in volatile markets is adaptability. Traders should remain flexible and adjust their strategies based on the prevailing market conditions, as indicated by the volatility analysis.
By incorporating these insights into their trading approach, traders can better navigate the E-mini S&P 500 Futures market, enhancing their ability to capitalize on opportunities while managing risks effectively.
When charting futures, the data provided could be delayed. Traders working with the ticker symbols discussed in this idea may prefer to use CME Group real-time data plan on TradingView: www.tradingview.com This consideration is particularly important for shorter-term traders, whereas it may be less critical for those focused on longer-term trading strategies.
General Disclaimer:
The trade ideas presented herein are solely for illustrative purposes forming a part of a case study intended to demonstrate key principles in risk management within the context of the specific market scenarios discussed. These ideas are not to be interpreted as investment recommendations or financial advice. They do not endorse or promote any specific trading strategies, financial products, or services. The information provided is based on data believed to be reliable; however, its accuracy or completeness cannot be guaranteed. Trading in financial markets involves risks, including the potential loss of principal. Each individual should conduct their own research and consult with professional financial advisors before making any investment decisions. The author or publisher of this content bears no responsibility for any actions taken based on the information provided or for any resultant financial or other losses.
TrendsThe trend represents the directional movement of prices and plays an essential role in most technical trading systems. Technical analysis differentiates between trending and non-trending markets, also called flat trending markets. Trending markets can be either moving upwards or downwards. The upward-moving market is called the bull market, while the downward-moving market is called the bear market. Normally, a market is considered to be in an uptrend when the price reaches higher peaks and higher troughs. On the contrary, the market is regarded to be in a downtrend when the price reaches lower troughs and lower peaks. The non-trending market occurs when there is no significant uptrend or downtrend, and the price moves within a certain range. Thus, the flat trending market is notorious for its sideways-moving price action.
Key takeaways:
Trends can vary in length and are classified into four main categories: primary, secondary, minor, and intraday.
The primary trend is the most significant trend, lasting for months or years. It's characterized by the overall direction of the market.
The secondary trend opposes the primary trend and usually lasts for weeks or months.
Identifying trends is crucial for technical traders. Methods range from simple tracking of recent lows and highs to more complex mathematical formulas.
Trend classification
Trends tend to be of different lengths. According to these lengths, trends fall into four main categories: primary trend, secondary trend, minor trend, and intraday trend. The primary trend is the only inviolable trend and lasts for a long period, usually months or years. The secondary trend runs counter to the primary trend and is often measured in weeks or months. Further, the minor trend is measured in days, and the intraday trend is represented merely by daily fluctuations in price.
The primary trend
The primary trend can be subdivided into three distinctive phases. The first phase of the primary uptrend begins with the revival of investors' confidence from the prior primary downtrend. That is followed by the second phase, in which asset prices increase in response to growing corporate earnings. In the third stage, speculation becomes the dominant force driving markets higher. This environment, when asset prices are rising on the hopes, dreams, and expectations of individual investors, tends to foreshadow the beginning of the primary downtrend. Its first phase commences with the abandonment of hopes and dreams upon which investments were made. That is followed by selling pressure due to falling corporate earnings in the second phase, which later escalates into panic selling in the third stage.
Illustration 1.01
The illustration displays the weekly chart of Nasdaq continuous futures (NQ1!) for the period between late 2001 and 2008. The primary bull market began after the bottom of the “dotcom” bubble and lasted until the peak of the real estate and credit crisis in 2007.
Illustration 1.02
The image above presents the daily chart of gold (XAUUSD) during the 2008 bear market when it dropped 34%.
The secondary trend
The secondary trend is the intermediate-term trend. Its direction is opposite to the primary trend, and it represents any significant price drop in the primary bull market or price rise in the primary bear market. The secondary trend usually lasts for weeks or months. Its measure in percentage terms tends to range between 33% and 66% of the range of the primary trend. This trend is considered to be prone to market manipulation as opposed to the primary trend.
Illustration 1.03
The picture shows Bayerische Motoren Werke's (BMW) daily chart throughout 2020 and 2021. The white dashed-line box indicates the primary uptrend, and the grey dashed-line boxes indicate the secondary trends, counter to the primary one.
The minor and intraday trend
The minor trend lasts for a few days or weeks, yet always less than the secondary trend. It is more difficult to identify than previous types of trends since its amplitude in percentage terms is significantly less when compared to the primary and secondary trends. The same applies to the intraday trend that lasts for a few seconds up to several hours; it represents daily changes in the price and is regarded to have little predictive value.
Trend identification
Identifying a trend is crucial for a trend-based technical trader, and there are plenty of methods how to identify it correctly. These methods can be simple or very complex. The simplest method of identifying trends can be done by tracking recent lows and recent highs in the price of an asset. Other simple methods involve using lines, trendlines, and curves; more complex methods usually involve the use of mathematical formulas in order to generate a set of valuable data.
Please feel free to express your ideas and thoughts in the comment section.
DISCLAIMER: This article is not intended to encourage any buying or selling of any particular securities. Furthermore, it should not be a basis for taking any trade action by an individual investor or any other entity. Therefore, your own due diligence is highly advised before entering a trade.
Stop Loss Placement: Let Your Trade Cook!Intro
I tried to talk through stop-loss placement in 3 minutes here. I do not think justice was done. So let's take a look at exactly what I mean when I say "Let Your Trade Cook". Proper stop-loss placement is critical to a successful trading plan.
Don't Place Your Stop Like Everyone Else
You are guilty of this, if you have been stopped out many times just to see the price move immediately back in your favor. The picture below represents a bunch of pullbacks some long and some short and it has been color-coded to define entries combined with stop losses.
Blue = Entry
Black = Typical Stop
Orange = A Good Stop To Let Your Trade Cook
Red = An Aggressive Stop To Let The Trade Cook
Conclusion
Hopefully, the video along with this image provides you with a better system for discretionary stop losses. I tend to favor the idea that just above or below a momentum bar in the previous swing as my stop loss.
Understanding Market Structure In 5 MinutesThis video goes into depth on the types of market structures and how they happen. Ranging -> Breakout (Spike) -> Channel (trend or a ranging trend) -> Climax. The market moves in these repeatable patterns over and over and over again. If you can diagnose where we are in these cycles then you can harness this skill to improve your trading.
The Spectrum of Price Action: Extreme Trends to Extreme Trading Whenever anyone looks at a chart, she will see areas where the market is moving diagonally and other areas where the market is moving sideways and not covering many points. The market can exhibit a spectrum of price behavior from an extreme trend where almost every tick is higher or lower than the last to an extreme trading range where every one- or two-tick up move is followed by a one- or two-tick down move and vice versa. Only rarely will the market exist in either of these extreme states, and when it does, it does so only briefly, but the market often trends for a protracted time with only small pullbacks and it often moves up and down in a narrow range for hours. Trends create a sense of certainty and urgency, and trading ranges leave traders feeling confused about where the market will go next. All trends contain smaller trading ranges, and all trading ranges contain smaller trends. Also, most trends are just parts of trading ranges on higher time frame (HTF) charts, and most trading ranges are parts of trends on HTF charts. Even the stock market crashes of 1987 and 2009 were just pullbacks to the monthly bull trend line. The following chapters are largely arranged along the spectrum from the strongest trends to the tightest trading ranges, and then deal with pullbacks, which are transitions from trends to trading ranges, and breakouts, which are transitions from trading ranges to trends.
An important point to remember is that the market constantly exhibits inertia and tends to continue to do what is has just been doing. If it is in a trend, most attempts to reverse it will fail. If it is in a trading range, most attempts to break out into a trend will fail.
PLATINUM, WHAT IS IT AND WHY THE HECK WOULD I WANT THIS METALWhat is Platinum?
Platinum is a chemical element with the symbol Pt and atomic number 78. It belongs to the noble metals group, which also includes palladium, rhodium, iridium, osmium, and ruthenium. Platinum is characterized by its high density, malleability, ductility, and resistance to corrosion. These unique properties make it an invaluable material for various industrial applications.
Where is Platinum Found?
While platinum is relatively scarce, it is not as rare as some other precious metals. The majority of the world's platinum supply comes from two main sources: primary production and recycling. South Africa is the leading producer of platinum, contributing significantly to the global supply. Russia, Zimbabwe, and Canada also have substantial platinum deposits.
Platinum is often found alongside other minerals, such as nickel and copper, in ore deposits known as platinum group elements (PGE). Extracting platinum from these ores involves complex processes that require advanced mining and refining technologies.
Why Would You Want Platinum?
Jewelry and Luxury Goods:
Platinum's brilliant white sheen and resistance to tarnish make it a popular choice for crafting high-end jewelry. Platinum jewelry is not only exquisite but also durable, making it an ideal choice for engagement rings, wedding bands, and other fine accessories.
Catalytic Converters:
The automotive industry extensively uses platinum in catalytic converters, where it plays a crucial role in reducing harmful emissions from vehicles. Its catalytic properties make it an essential component in promoting cleaner air and environmental sustainability.
Electronics and Industry:
Platinum is a key player in various industrial applications, including electronics, due to its excellent conductivity and resistance to corrosion. It is used in the production of electrical contacts, laboratory equipment, and in the manufacturing of glass.
Investment and Financial Markets:
Platinum, like gold and silver, is considered a precious metal and is actively traded in financial markets. Some investors choose to include platinum in their portfolios as a hedge against inflation and economic uncertainties.
Platinum mining is a challenging and complex process. Extracting platinum from the Earth involves several intricate steps, and the scarcity of platinum deposits adds to the difficulty of mining this precious metal. Here is an overview of the key challenges associated with platinum mining:
Ore Extraction:
Platinum is often found in combination with other metals, forming platinum group elements (PGE) deposits. Extracting platinum from these ores requires advanced mining techniques. The ores are typically low in concentration, making the extraction process more intricate than that of more abundant metals.
Depth of Deposits:
Many platinum deposits are located deep underground, which adds to the complexity and cost of mining. Deep-level mining requires specialized equipment and poses safety challenges for miners. In some cases, mines may extend kilometers below the Earth's surface.
Energy Intensity:
The extraction and refining of platinum involve energy-intensive processes. The high temperatures required for smelting and refining contribute to the overall energy consumption of platinum mining operations.
Environmental Impact:
Mining operations, especially in ecologically sensitive areas, can have significant environmental impacts. Platinum mining may result in habitat disruption, soil erosion, and water pollution. Sustainable mining practices and environmental regulations are essential to mitigate these effects.
Labor Intensity:
Mining platinum is a labor-intensive process that requires skilled workers. The complexity of the operations, coupled with safety considerations in deep-level mining, makes it essential to have trained personnel.
Market Volatility:
The platinum market is subject to price fluctuations, influenced by factors such as supply and demand dynamics, economic conditions, and geopolitical events. This volatility can impact the profitability of mining operations and investment decisions in the platinum industry.
Technological Challenges:
The extraction and processing of platinum ores require advanced technologies. Developing and implementing efficient and environmentally responsible mining technologies is an ongoing challenge for the industry.
Despite these challenges, the demand for platinum in various industries, such as jewelry, automotive, and electronics, continues to drive the exploration and extraction of new platinum sources. Innovations in mining technologies and sustainable practices are being explored to address the difficulties associated with platinum mining and ensure its responsible and ethical extraction.
THE TECHNICALS
Sharp downtrend, weak, although down, it is a support trend.
Two strong (one stronger than the other) support trends, IF UNDER, THEN BUY is probably the rule for those.
It looks like there is some downside to come, which has been showing.
The ideal price targets are thicker, and basically mean, under perfect conditions, I'd exit and enter at these levels, however, nothing is ever perfect.
AS far as what the technicals say for price, I'd say there is a good chance it can maintain $800, however, there is a possible dip showing, which takes price down to $700. Again, these are both under or at major trends, and we can say that if price gets to these levels, I have a better than average chance at profit. AND if I'm wrong, I'm backed up by multiple support lines, which means less time in the red.
Other scenario is where the bullish momentum keeps moving up at we head up to 1200 or so before hitting that huge dip. However, I tend to see this as the less likely option.
RSI is showing the dip, along with various other indicators as coming in the short term and being backed up with support and buying in the longer term, this doesn't include a black swan event, which would theoretically take the price way down, and rocket to all time highs, as platinum will likely hold value.
Good luck!!
Personal opinion, I'm bullish long term from a fundamental side and technical side.
How to Analyse Forex Market Trends and Make Informed Trading DecThe Forex market (FX), or foreign exchange market, represents a vast and dynamic space in which currencies are traded daily. Serving as the largest financial market in the world—trading in the Forex market reached US$7.5 trillion per day in April 2022, according to the Bank for International Settlements (BLS)—the Forex market delivers clear and actionable trends for seasoned traders and investors, though for the uninitiated these trends can appear confusing and unpredictable. Consequently, possessing accurate knowledge and analysis tools to analyse market trends and make informed trading decisions is key.
FX Market Movers
Everything begins with the central banks and their guidance in the FX space. Well-known central banks include the US Federal Reserve (Fed), the European Central Bank (ECB) and the Bank of England (BoE); major central banks play a crucial role in shaping market sentiment.
Monetary policy—altering the money supply—can significantly influence exchange rates and help establish long-term trends; when a central bank refers to monetary policy, it tends to be in the direction of increasing/decreasing the overnight target rate, which can make it more expensive (or less expensive depending on the rate move) for commercial banks to borrow reserves from one another in the overnight market.
For the US, the target range for the Fed funds rate is set eight times a year, reflecting the FOMC's (the Federal Open Market Committee is the policy-making arm for the Fed) assessment of the economic conditions and their desired monetary policy stance. Ultimately, commercial banks decide whether to borrow at the Fed funds rate based on their own needs and the prevailing market conditions. If banks have sufficient reserves at the central bank, they may not need to borrow, even if the Fed funds rate is low. The Fed conducts open market operations (OMOs) to influence the supply of reserves in the banking system. By buying or selling Treasury securities, the Fed can increase or decrease the amount of reserves banks have, thereby affecting the availability of funds for lending.
Recognising central bank projections and their guidance helps highlight possible trend reversals or can help indicate a resumption in current trends. For example, a central bank echoing a hawkish vibe (expected to raise rates) could see increased demand for its currency, and vice versa for a dovish setting.
Economic data such as inflation (CPI and PPI, for example), growth (Gross Domestic Product ) and unemployment are pivotal to understand and often move FX markets in the short term; this is what the central bank policymakers follow to help decide monetary policy. Central banks determine the longer-term trend, while economic indicators influence shorter-term price movement (this action can either be in line with the longer-term trend or against the trend ). Out-of-consensus economic data tend to move markets most, particularly those that reach/exceed the upper and lower range estimate limits.
Geopolitics, of course, is another noteworthy market mover and one that can be difficult to trade. Wars, political unrest and pandemics create uncertainty for traders: geopolitical risk. When all three are aligned, that is, central bank guidance/expectations, economic indicators, and the geopolitical situation, this is where solid trending markets can occur.
How to Make Informed Trading Decisions?
How one elects to assess the trending structure in the Forex market will be unique to each trader. Some choose to focus their efforts solely on technical analysis; others prefer the comfort of merging both technical analysis and fundamental analysis (macroeconomics – as above) to create trading ideas.
Many professional traders use macroeconomic market analysis to help answer the question of what to trade: what market is likely to see a trend reversal over the next few months or a trend continuation? Technical analysis is used to help answer the question of when to trade, representing the study of historical price action, technical indicators and volume.
As a basic (hypothetical) example, assume that the Fed is closely monitoring inflationary pressures, which, according to the latest data, hit 5.0% in the twelve months to December 2025. With markets and economists indicating inflation could continue to rise in 2026, the Fed is widely expected to keep raising the Fed funds target range. Fast forward to January’s inflation number, which was expected to rise by 5.2% but instead surpassed median estimates and rose by 5.8%. A release such as this, knowing that the Fed is watching for further inflationary pressures, increases the chances of the Fed raising the Fed funds target range at its next meeting. By extension, this will affect rate-pricing forecasts and could bolster the US dollar (USD) following the inflation release, adding to the (hypothetical) current uptrend that has been in play since the beginning of 2025, when inflation began to rise. So, in this particular example, the macro backdrop could have been an opportunity to join an uptrend or add to an existing long (buy) position. The trigger to indicate when to enter long, however, may have been from something as basic as a technical resistance breach, thus providing a trigger point to enter the market. Therefore, not only would this trade have been backed by having a macro rationale, but also technical evidence.
Another example is the current situation as we head into 2024. The markets are gradually switching from a central bank tightening theme that was seen in 2023 to a central bank easing theme. This means that any negative data for the US economy could see the dollar sold off, and this is where traders would then shift to their technical strategy to seek a bearish setup.
BUT WHICH DIRECTION IS THE TREND HEADED?It's not a simple question and REALLY matters ALL of the time, so, finding a simple answer is a neat tool to have in the snuff-toolbox..
Here's the quickest, easiest down-n-dirry method for getting closer to an answer.
If you look at the ranging areas of the chart. The in-between, sideways, messy, wish-it-didn't-exist areas and draw a rough shape tracing the progression, then you'll likely notice either a "U" shape or an "n" shape (not everywhere, but at least one prominent one per section/timescale). You'll know if when you see it. Keep practicing and don't force it.
The U Shape can be reliably trusted to identify a Bullish trend, whilst the n Shape does the same when there's blood about.
Sound silly, right..
But it works.
And now you know..
How I trade the candles. $XOM exampleHow I trade the candles. There is more not mentioned in the video but for the most part these are the basic steps I take 1st before diving into look for more confluences to help me decide during a trade.
Trendlines Explained Trendlines are graphical representations of the price movement of an asset in a financial market. They are formed by connecting a series of highs or lows of an asset's price over a specific period. The resulting line can be used to identify the direction of the trend and to help traders make decisions about buying or selling.
In other words, A trendline is like a line that you draw to show which way the price of something is going. If the price is going up, you draw a line that goes up. If the price is going down, you draw a line that goes down. If the price is staying the same, you draw a line that stays straight. So, a trendline is like a picture that helps you see if something is getting more or less expensive, and helps you make good choices about what to do with your money.
How to draw a trendline.
1:Look at the price chart of the asset you are interested in and identify the direction of the trend. You can do this by looking for a series of higher highs and higher lows for an uptrend, or a series of lower highs and lower lows for a downtrend.
2:Choose the two most significant points on the trend that you have identified. These points should be the highest high and the lowest low for an uptrend, and the lowest low and the highest high for a downtrend.
3:Draw a straight line connecting these two points. This line represents the trendline.
If the trendline has been successfully drawn, it should touch or come close to touching at least three other price points on the chart. This provides confirmation that the trendline is accurate and significant.
4:Adjust the trendline as necessary to make sure it accurately captures the trend direction.
When a trendline is drawn, it can act as a support or resistance level for the price of an asset. A trendline break occurs when the price of an asset moves through the trendline, either to the upside or the downside. This break is significant because it indicates that the previous trend may be changing.
A trendline break can be a signal to traders to buy or sell the asset depending on the direction of the break. For example, if an uptrend line is broken to the downside, it could be a signal to sell the asset because the trend may be reversing.
After a trendline break, the price may also retest the trendline. This means that the price may move back to the trendline to test its new level as either a support or resistance level. If the price is able to hold above the trendline after retesting it, this could confirm the trendline break and signal a new trend direction.
A retest of a trendline can be an opportunity for traders to enter or exit a position depending on the direction of the trendline break and the price action during the retest. If the price fails to hold above a broken uptrend line after a retest, this could be a signal to sell the asset as the trend may be reversing. Conversely, if the price successfully holds above a broken downtrend line after a retest, this could be a signal to buy the asset as the trend may be reversing to an uptrend.
Let's say you drew a trendline to represent the direction of an asset's price movement, and the trendline is indicating an uptrend. However, at some point, the price breaks through the trendline and starts to move in the opposite direction. This can happen for many reasons, such as a change in market sentiment or the introduction of new information that affects the asset's value.
When a trendline is broken and the price starts moving in the opposite direction, it may eventually reach another longer-term trendline. This trendline represents a broader trend that the asset has been following over a longer period of time. For example, if the original trendline indicated an uptrend for a few weeks, the longer-term trendline could indicate a downtrend for the past few months or years.
When the price reaches the longer-term trendline, it may bounce off of it and continue in the direction of the broader trend. This can happen because the longer-term trendline represents a stronger level of support or resistance compared to the original trendline. Traders often use longer-term trendlines as a guide for making trading decisions, as they can provide a more accurate view of the overall trend direction.
Remember that trendlines are not perfect and can be subjective. It's important to use other technical indicators and analysis to confirm the trend direction before making any trading decisions.
📈 9 Ways To Identify an Uptrend📍 What Is an Uptrend?
An uptrend describes the price movement of a financial asset when the overall direction is upward. In an uptrend, each successive peak and trough is higher than the ones found earlier in the trend. The uptrend is therefore composed of higher swing lows and higher swing highs. As long as the price is making these higher swing lows and higher swing highs, the uptrend is considered intact.
Some market participants only choose to trade during uptrends. These "long" trend traders utilize various strategies to take advantage of the tendency for the price to make higher highs and higher lows.
💥Important thinks to note
🔹Uptrends are characterized by higher peaks and troughs over time and imply bullish sentiment among investors.
🔹A change in trend is fueled by a change in the supply of stocks investors want to buy compared with the supply of available shares in the market.
🔹Uptrends are often coincidental with positive changes in the factors that surround the security, whether macroeconomic or specifically associated with a company's business model.
👤 @AlgoBuddy
📅 Daily Ideas about market update, psychology & indicators
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A focus on the importance of support and resistance levelsSupport and resistance levels are the lost art of trading any market. In using support and resistance zones, I also use various MA's (Moving Averages) to assist me in finding the perfect entry. Now no trading strategy is completely waterproof. The market will act and react however it wants to, and a multitude of factors can drastically alter price action so take this advice at your own risk. I'm looking to provide a series of videos to assist me in providing this information in a more clear and more concise manner. Support is a zone at the bottom of a trend or series of trends that acts as a trampoline, or (support) to the upside. Resistance acts as a ceiling, or (resistance) that favors movements to the downside. Draw these zones using either a rectangle on higher timeframes or two horizontal lines. There's not a single price that can act as either support or resistance. To create a larger margin of error, we use these zones. These zones usually make up anywhere from 20-30 pips, depending on the symbol in question. Use the MA's to show you where the trend is heading. Bring in other factors such as market sentiment, geopolitics, economic statistics, news breaks, and anything else that can act as confluence in determining where the market may go next. I use anywhere from 3 to 5 levels of confluence before I even think about entering the market. NEVER impulse trade. I also suggest never trading pre-news. When a red folder news event occurs, the market can shake, or "whipsaw" causing price action to rubberband in either direction. These moves are aimed to close retail traders' accounts, and the market wants nothing more than to take your money.
More to come in a future idea - stay tuned.
Happy trading, and as always, use responsible risk management when trading any financial market.
Swindle
MEGATRENDS Shaping the future (part 2)This is part two of what is changing the world for the future...
Last time we spoke about the first 4 Megatrends.
Electric Vehicles & Autonomous Driving
1. E-shopping & Drop Shipping
2. 3. AI & Machine learning
3. Online businesses
The next four MEGATRENDS are...
Metaverse
NFTS
Blockchain and Cryptos
Web 3.0
Mark Zuckerberg is beyond his years as he sees the future with the Metaverse to come (VR, AR and a combination of both)
IN the near future, many industries will apply the Metaverse to everyday including medical, education, entertainment, socialising, trading, meetings and even e-games and e-sports.
NFTs took off and flew in the first few months as artists, musicians and celebrities took advantage of buying and selling digital products for a purpose... I know NFTs have had a bad sour taste as the prices have crashed and there is less confidence but they'll be back and stronger than ever after the bubble. WHY? Because we have the infrastructure to do so.
Blockchain and Cryptos - Yes I know we are currently in a long winter with traders getting destroyed and investors losing all hope and confidence.
But this is all because of fear, greed, BAD management, over confidence in sh$$t coins and low regulations. Yes we need regulations unfortunately. It will take time, but they will come back and will shape the future.
Not just the coins but the technology and smart contracts to present opportunities for finance, commerce and investments.
Web 3.0 the internet has evolved from not being able to post or add onto the net to being able to do so. And now with Web 3.0 where people will create their own social platforms, banking systems, games, programmes without making the fat cats rich. There'll be less intermediaries where YOU will have the true power too run and profit from.
Timon
MATI Trader
Understanding the Story of a Currency Pair
When trading price action, it's crucial that you understand the story of the currency pair you are trading.For what current price is doing is only valuable in the overall context of what a currency pair has been doing.Just like reading a book or watching a movie, watching it from the half-way point won't allow you to understand what's happening; for current dialogue only has meaning with a context.So here's 2 things you can do to know the story of a currency pair:
1.) Analyze new price everyday to build the story. Ask yourself, " is current price confirming your perspective of the direction of a currency pair?Or is current price showing signs of a changing story? 2.) Use multiple time frames.The higher and lower time frame's stories should compliment eachother.Ask yourself " is current price on the lower time frames confirming the story on the higher time frames?"
Moreover, understanding the story of a currency pair gives the trader an understanding of the tendancies of that pair.Each pair has very different characteristics.Just like how a music composer has tendancies when composing music.Each pair has identifiable, or rather, "trademark" tendancies.For example, the Eur/Usd pair tends to be very accurate in terms of price levels.So if there's a well repected trendline and you expect price to bounce off of it, it will do so with accuracy right down to the last decimal.Moreover the Gbp/Usd tends to have many pullbacks before an extended move in a direction takes off.Having this knowledge allows for great position building as well as the understanding that there are further opportunities to enter a trade even if you missed the initial entry.
In this way, understanding the story of a currency pair and keeping this story up to date, gives a trader a general sense of "unison" with that pair.Allowing them to notice slight changes in the over-arching trend and therefore have the ability to be one step ahead of the market at all times.
That's it! I hope this helps!
Have a great day guys!
Ken
Confirming Trends with the Lower Time Frames NZD/USD ExampleHey Guys!
As you guys know, for the past 2 weeks I've been taking multiple trades on the Nzd/usd, both short and long.
First I was taking short trades with the daily short bias, then long trades along with the bias change into long on the daily chart.
In this video, I explain how I knew the daily bias has changed into long thus aborted my initial short entry and began entering long trades.
These lower confirmation tactics play a huge role in my trading, and even if you don't trade with price action, it can be a great addition to your current strategy.
I hope it helps!
Have a great day guys!
Ken
Simple BUT Not EasyReading charts and understanding the "Language" of the market is very simple but at times due to high involvement of our emotions we make it very hard.
Any market or chart that you see will be in a phase all you have to do is identify it on a higher time frame.
Lower Lows & Lowers Highs is a definition of a down trend.
Higher Highs & Higher Lows is a definition of a up trend.
If you can see the above both happening then market is ranging.
If you are having a short bias on a particular instrument always look for a shorting opportunities in a lower time frame after confirming the phase of the market in a higher time frame.
Always wait for a confirmed trend don't try and jump in too early.
Let market decide the direction, don't force your self.
Risk Management is very important, Plan your trade with a proper risk that you can manage.
Trading is a marathon, if you try to sprint you will fall down and injure yourself.
Slow & steady wins the game :)
Thanks
RSI: A simple method to trade trends and rangesI write this tiny article to share the basics or my use of ths RSI indicator, coupled to supports and resistances levels, as well as trend lines (or any indicator you want to use as SUP/RES (moving averages, vwap ...))
This use implies a bit of practice in spotting divergences, but let's be honest, many of them appear on previous supports or resistances, just look at these levels and you can be sure you'll find them if a reversal is about to occur.)
The second specificity is the use of a moving average applied to the RSI (in my exmaple, a 50 periods EMA)
I developped my own RSI+MovingAverage script, but I'm sure you can find similar scripts that have already been shared within the community, thats why I don't publish it for now.
Anyway, feel free to ask if you're interested in my script, it's obviously free.
Lets consider two different contexts:
Trends (Bullish/Bearish)
Ranges
In trends , there are two things to take into consideration.
Let's explain what we need to work on a bullish trend:
- If the price is on an interesting level (moving average, trend line, support), you can try to long upon the RSI crosses its moving average,
indicating the potential end of the current retracement (even better if a bullish divergence appears close to this price)
- If the price gets close to a resistance, and moreover if a bearish divergence appears on the RSI, you can consider it as a good exit price,
or wait for the next retracement in order to pyramide your trade (depending on your approach).
In a bearish trend, you obviously need to do the exact opposite, wait for retracements (flags or other), and find bearish divergences OR sell when the RSI is clearly crossing down its moving average.
Of course you can wait for the RSI crossing above/under its moving average to get another confirmation that the movement is starting.
You can see a few examples on the following screen
In ranges , it's even simpler. Once you found your support and resistance levels (it can be old levels that have already generated good reactions)
all you need is to spot bearish divergences on the resistance, and bullish divergence on the support.
I personally like to cut at least a part of my position when we reach 50% of the range, which can be often considered as a support/resistance.
It's totally up to you to exit on this point or not, depending on your preferences (simple scalping, anticipations of a range breakout to make a new trend, lower timeframe trend following, etc...)
Range example:
Additional notes
When you trade a divergence, try to always open your position when the RSI rebounds on the divergence line, and not after, remember that opportunities are everywhere, don't mind if you missed the last one, don't enter too late in a movement.
Even if a range is a global horizontal movement, it's still composed of alternations of bullish and bearish movements between the same supports and resistances, therefore, you're of course able to trade it as trends on lower timeframes
Don't forget to look at candles, which can also give you strong signals on important levels, on current or lower/higher timeframes. The price is always the key
Of course, think about the DOW theory.
How Do You Build A Position With Pyramiding?As a trader, it’s a general rule of thumb that we should always be looking to maximise potential returns (per unit of risk) with each transaction. We should always be looking to squeeze as much out of the market as we can.
There are times when this can occur by simply letting the trade run its course. However, sometimes market conditions align perfectly for savvy traders to “press the trade” or Pyramiding into the trade.
Don’t press your luck; press the trade instead!
Attempting multiple entries in the direction of a trend is one strategy savvy traders use in an attempt to maximise return (otherwise known as Pyramiding). The problem with this tactic is that while it may increase the potential reward, having a larger position in the market also opens you up to more risk. As a trader, you need to find the perfect balance of pressing the trade while not pressing your luck.
There are a few ways to achieve this:
If the market is moving at a snail’s pace, and not much movement has been made from the initial entry, any additional entry should be minor. If, however, a decent distance has been travelled, a trailing stop will secure more profit, and any additional entry can be larger. In essence, any additional position sizes are partly dependent on the distance between the initial entry position to stop loss.
Ensure you have a strong driver that pushes prices along. Simply pressing trades at random is not good risk management.
Reduce risk on entry by only adding additional positions when the stop loss on the first position can be trailed.
Pick your battles carefully when Pyramiding
You may find that as time wears on, you’re left with a large portion (>2% of total equity) in a single trade. The tactic of adding exposure will generally make for a “short” pyramid, which typically won’t grow over 2.5% of overall equity. This Pyramiding tactic ensures you’re exposed to additional upside while minimising downside to a level with which you’re comfortable.
Here are a few things to be wary of:
Keep an eye out for drivers that influence market psychology: This is when momentum and volatility will be high, allowing you to pyramid into a move more easily. For the technical traders, you may prefer to avoid day-to-day shifts by taking in a broader market view.
Diversify: as with any investment, don’t place all your eggs in one basket. Diversification is key to keeping overall risk low.
Have strict risk limits in place: With 2.5% in one pyramid, another 2.5% in another – next thing you know, your overall portfolio heat is close to 10%. That’s a high amount of risk to carry around with you. Consider minimising position sizes of certain trades to reduce overall risk.
Consistency is key with position sizes: If your initial entry is $100k and your second is $300k, you’re off to a lousy start in building your pyramid.
Final Thoughts on Pyramiding
Remember always to start small and slowly. There’s no need to rush in. Experiment with pyramiding until you’re comfortable with your approach. Always remember the two key elements to consider:
Resist the temptation to take profit early when the opportunity arises. Sometimes it’s best to sit on an existing trade.
Be wary of adding to your trade at “worse” levels. Trends will always end at a certain point, so you don’t want to be pyramiding into an extended, ongoing trend. Look for new trends to pyramid in, which will reduce your overall risk.
Tutorial | Tarot & Trends From THE KING OF FUTURES!No April Fools joke here , the first card I pulled off the top of my Trader Tarot Deck (thanks @TradingView) was the KING OF FUTURES. Maybe there is something to this Tarot thing?
How I Find Trends In Markets Finding Trends in the market is a tool needed to stay on the right side of the trade.
Here I attempt to help you out by giving some tips that I have found through my 7 years of looking at the charts.
I have noticed that while the focus is on the avg close of the markets that isn't where trends take place in fact aiming for the avg is a good way to continuously lose on trades. In the video I show how to place trades based on the extremes Highs and Lows to aim for better returns while providing my insights on why looking at the market in these terms is better than standard way of looking at markets
TRENDING MARKET FOR A PATTERN TRADER Hello traders,
Today i am highlighting how i identify a strong trending market, and at the same time applying strong supply and demand areas.
I hope you guys enjoy my content, if so please like, comment and follow my channel.
Safe Trading.
Irrational behavior: Fleeing winnersI do not know if one is born a trader but I know one can be born NEVER a trader. Those that have these bugs in their programming that make them do things that make absolutely no sense, there is no point even trying, they are set to fail from the start.
I think learning about your own tender feelings is totally useless, if you have these tender feelings I am pretty sure you'll never make it no matter how many excuses how throw at reality, which is yet another irrational thing to do and so silly to expect it to make a difference 🤷♂️.
But learning about other people tender feelings is certainly interesting.
Running winners is variable the ultimate objective is not to be a robot. And the variable might be increasing right now which is a reason for me to write this little piece.
First of all I think this period of the year is more lively than the winter, but also notice the pattern americans are following:
"In the first round of economic impact payments, households set aside 29% of their checks for consumption. In the second round, that fell to 26%, and in the most recent round fell to 25%."
The S&P 500 broke out of the Donald Trump trade war broadening wedge. It remained above, kept going up, now even broke 4000 and bears are getting slaughtered, skeptics are slowly being convinced it won't crash like 2008. You know the saying "1 by 1".
Americans fear is diminishing, unless it's just they have no choice, I think their fear is reducing, and they are spending more willingly, gambling some of it on meme stocks.
We saw the Yen do this thing it sometimes does. Lots of money is being printed, activity around the world is growing.
I think we can expect big trends, Forex was creating depressions with how bad and tight it had gotten. Finally!
Trying to run winners for kilometers in a calm market is stupid, but not as stupid and running away from winners like they are Michael Myers.
Nobody makes money being a (redacted: kitty-cat). The whole idea is to catch big winners. It's the whole point of the markets. They trend.
The idea is that when the market has a big move in a direction you sometimes catch it, and when it has a big move against you you NEVER catch it.
Why would markets even exist? Why would anyone ever need to hedge? It's so stupid I can't believe it.
Hedgers = avoid market exposure, avoid all moves. Speculators = take the risk from hedgers, want market exposure. Noobs = Only want market exposure when they lose?????
Imagine this, get in the mind of losing traders:
You sell, the price goes down, and down, and then there is a pullback with a perfect double top or whatever you like and would normally sell every day of the week.
But BECAUSE YOU ARE WINNING YOU DON'T? Lol?
And then to "go faster" they go take huge positions that destroy them, and get into day gambling and so on.
These lose-loving bagholders are the reason why Bitcoin only bottomed AFTER they capitulated in March 2020 when (and weeks after) the price collapsed 60% in a few hours.
Gamblers addicting to losing were constantly selling the instant Bitcoin went up and buying heavy bags as it went down which leads to more selling pressure (after a buyer buys, he becomes a potential seller).
Once all the - most of them - quick quick gambling bagholders got wiped out, there was no more run-away-from-winner losers preventing Bitcoin from going up.
I have been buying US indices since October and I have no intention to stop. If I have urges to "play" like day gamblers do, I'd much rather buy a bit more of S&P.
Does not have to be much. 10 bucks turbos with a 2-10% KO (so 100-500 bucks worth of S&P) every day is objectively smarter than day gambling every day on it with a few hundred bucks.
If it keeps going you can turn a small account into a small fortune. At some point just have to be careful the risk is limited and the exposure does not become insane. Can always sell and then buy back. Say you had a call, close it and buy a new larger one. Just to make sure if it goes 1987 or 6 may 2010 all these gains are not lost but this is not the same as just exiting and that's it, you're still under exposure to that winner, just making sure risk is limited, and profit is not.
As it keeps going these profits can snowball into something so monstruous not even kidding. Start with an initial 50 bucks risk end up with a 150,000 euros win dead serious.
Meanwhile some ****** idiot made 30 bucks as soon as it went up. And felt good about it. Good job man!
On Bitcoin the noobiest of them all, you can see bagholders breakeven at areas where they previously bought.
No one gets greedy and just wants to keep piling in into winners and bulldoze their way up?
