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Educational: Grid Trading, What is it? How it works?Grid trading is often marketed as a way to win every trade. People usually get away with this type of marketing of the trading style due to the fact that grid trading does not care for market execution in the sense of market direction because you will close profitable trades if the market goes up or down. But it's not as simple as that. What is Grid trading? Grid trading is a type of trading strategy that makes use of market price variations by placing buy and sell orders at regular intervals around a base price. The foreign exchange market is where grid trading is most frequently employed, but it can also be used on other markets, like those for futures contracts. How to execute trades on a grid The image above explains exactly how positions that run in the upper direction are executed. Let's break down the process: (1) At the start of your grid trading system, you execute a buy and a sell position with the same lot size. (2) You will only set a take profit and a buy limit/sell limit, but no stop loss. (3) Assuming the price runs in the direction of the buy and you have a 10-pip stop loss, once the price hits your 10-pip stop loss, you will also execute a sell position via the sell limit. This sell position will have a 10-pip take profit in the opposite direction. See demonstration below: There is no restriction on the size of the grid. It does not have to be 10 pips apart. The distance of the grid is explained further in the publication. Here is a video using a trading simulator to show you how these positions would be executed : So, as you can see, with this style of trading, you can potentially make money whether the price goes up or down. However, it can be quite challenging to execute and maintain a large number of trades. Therefore, individuals typically employ automated systems or use trading software to manage and monitor these trades. Trending Market Grid trading can be used to profit from both trending and ranging markets. In a trending market, grid trading involves placing buy orders above the base price and sell orders below the base price. This way, the trader can capitalize on the price movement in a sustained direction. For example, if the base price of Bitcoin futures is $60,000, the trader can place buy orders every $1,000 above the base price. This is also sometimes wrong referred to as dollar cost averaging or compounding your trade which are very different investment strategies. Grid trading's key benefit is that it can be readily automated using trading bots and does not require a lot of forecasting of market direction. Grid trading's main disadvantage is that, if the market goes against the grid and the trader does not apply appropriate risk management strategies like stop-loss limits or position sizing, it may result in significant losses. Grid Size Choosing a grid spacing is one of the most important aspects of grid trading. This depends on a number of elements, including: - The volatility of the market: The more volatile the market is, the wider the grids should be to avoid frequent executions and commissions. - The personal preference of the trader: The trader should choose a grid size that suits their trading style and risk tolerance. Technical indicators like moving averages or Bollinger bands are sometimes used to calculate the spacing between the grids. These indicators can be used to determine the market's volatility and average price over a specific time frame. You can also use basic price action to determine what range the market is likely to tstay within and then calculate the grid in-between Ranging or Trending: Identifying whether the market is trending or range is another important aspect of grid trading. This can be used to determine whether to employ grids that move with the trend or against it. There are a number of approaches to determine if the market is trending or fluctuating, including: - Using trend lines or channels: A trend line or channel is a line that connects higher highs or lower lows in a trending market. A break of a trend line or channel can indicate a change in trend or a range-bound market. - Using trend indicators such as ADX or MACD: The average directional index (ADX) measures the strength of a trend on a scale from 0 to 100. A high ADX value (above 25) indicates a strong trend while a low ADX value (below 20) indicates a weak trend or a range-bound market. The moving average convergence divergence (MACD) measures the difference between two moving averages of different lengths. A positive MACD value indicates an uptrend while a negative MACD value indicates a downtrend. A crossover of MACD lines or zero line can indicate a change in trend or a range-bound market. Link to a publication on MACD : - Using range indicators such as RSI or Stochastic: The relative strength index (RSI) measures how overbought or oversold a market is on a scale from 0 to 100. A high RSI value (above 70) indicates an overbought market while a low RSI value (below 30) indicates an oversold market. A reversal of RSI from extreme levels can indicate a change in trend or a range-bound market. Link to related publication:
COINBASE:ETHUSDEducation
by ChristopherDownie
2
How to work with liquidity grab?Hello everyone👋 Today we will discuss how to effectively work with areas of increased liquidity. Actually, it would be appropriate to make this post after we have examined how order flow is formed in the market in order to understand the technical aspect of working with liquidity. Therefore, first, we will provide some introductory information using a long position as an example. When a trader buys an asset, they usually set a stop loss at a certain level or, if they don't use protective orders, their position will have a liquidation price depending on the chosen leverage. Based on this, when a specific price level is reached (stop loss or liquidation), their asset will be sold with a market order that will match the nearest limit order. Hence the conclusion: any exit from a losing position, as described above, is someone else's entry into a position with a limit order, often at a favorable price. This is how the positions of all major market participants are accumulated. So, we simply need to estimate where the maximum number of active stop losses is located and make a trading decision based on that. Most often, stop orders are located in the following zones: 1️⃣Obvious levels with equal highs/lows. 2️⃣Above/below any high/low in an obvious trend. After identifying such zones using our indicator or independently, you can take trades in the direction of liquidity grab (counter-trend trades with high potential but also high risk) or wait for actual liquidity grab and confirmation to enter a trend trade. In the next post, we will explore the technical aspect of liquidity grab for a deeper understanding of the topic. We look forward to your questions. Happy trading!
Education
by PhantomFlow
Ichimoku Cloud Demystified: A Comprehensive Deep DiveHello TradingView Community, it’s Ben with LeafAlgo! Today we will discuss one of my favorite indicators, the Ichimoku Cloud. The Ichimoku is a versatile trading tool that has captivated traders with its unique visual representation and powerful insights. We will dive deep into understanding the Ichimoku Cloud, explore its history, discuss its parts, highlight real-life examples, and address potential pitfalls. By the end of this article, we believe you will know how to leverage the Ichimoku Cloud effectively in your trading endeavors. Let’s dive in! Origin of The Ichimoku Cloud The Ichimoku Cloud, also known as Ichimoku Kinko Hyo, was developed by Goichi Hosoda in the late 1930s but was not published until later in the 1960s. Its name translates to "one glance equilibrium chart," reflecting its ability to provide a holistic view of market dynamics with a single glance. Over time the Ichimoku Cloud has become a popular trading tool among new and seasoned traders. Components of The Ichimoku Cloud Some traders believe the Ichimoku cloud is a complex jumble of lines with no rhyme or reason, but this is not necessarily true. The best way to understand the Ichimoku cloud is to break it down into its respective parts. Each element contributes to the overall interpretation of price action, trend direction, support and resistance levels, and potential entry and exit points. The Ichimoku Cloud has five components: Tenkan-sen, Kijun-sen, Senkou Span A and B, and Chikou Span. The Tenkan-sen and Kijun-sen, often called the Conversion Line and Base Line, respectively, are essential in identifying trend direction and momentum. Below we can see a bullish signal happens when the Tenkan-sen crosses above the Kijun-sen. Conversely, a bearish signal occurs when the Tenkan-sen crosses below the Kijun-sen. Typical length inputs for the Tenkan-sen and Kijun-sen are 9 and 26. The Senkou Span A and B form the cloud or "Kumo." These components serve as dynamic support and resistance levels, with Senkou Span A calculated as the average of the Conversion Line and Base Line and Senkou Span B representing the midpoint of the highest high and lowest low over a specified period, typically 52. The cloud's thickness and color provide visual cues for potential market strength and volatility. The Chikou Span, or the Lagging Span, is the current closing price plotted 26 periods back on the chart. It helps traders gauge the relationship between the current price and historical price action, providing insights into potential trend reversals or continuation. Putting the parts together gives us a complete picture of the Ichimoku Cloud. Each aspect contributes to the one-glance equilibrium theory, giving traders a more holistic view of price action. Applying the Ichimoku Cloud in Trading We now better understand all parts of the Ichimoku cloud, but that means little if we don’t understand how it can be utilized in trading. Let's explore examples that demonstrate the practical application of the Ichimoku Cloud: Example 1: Trend Following In an uptrend, we would look for the Tenkan-sen to cross above the Kijun-sen while the price remains above the cloud. When the price retraces to the cloud, a long position opportunity may arise, with the cloud acting as support. The Chikou Span should also be above the historical price action, confirming the bullish sentiment. Example 2: Trend Reversals and Breakout Opportunities A potential trend reversal or continuation can be identified when the Tenkan-sen crosses above the Kijun-sen and the price moves above the cloud. A breakout trade can initiate when the price breaks through the cloud's upper boundary, indicating a shift in momentum. For the Ichimoku cloud to give its strongest confirmation of a reversal, some traders will take a fairly conservative approach and wait for a few things to occur. Traders typically wait for a kumo twist, the Tenkan-sen/Kijun-sen cross, and the Chikou Span to break the cloud and be above the price. The reverse of these signals can be used in the same fashion for a short position. Example 3: The Kumo Twist In a trend, a Kumo Twist can signal a potential trend reversal. Look for the Senkou Span A to cross above or below the Senkou Span B within the cloud. This twist can confirm a shift in market sentiment. Traders can enter a position when the twist is confirmed, placing a stop loss above or below the cloud or the recent swing high/low. I think of the Kumo twists and subsequent clouds as a trend filter. Placing longs on the bullish side or shorts on the bearish side, however, some traders use the Ichimoku Cloud in a contrarian fashion. Contrarian trades can be profitable using this method as price tends to pull back to the clouds A or B span where support or resistance may lie. Pitfalls and Challenges: Avoiding Common Mistakes While the Ichimoku Cloud is a powerful tool, it is paramount to be aware of potential pitfalls. Here are a few challenges to navigate: False Signals and Choppy Market Conditions In ranging or volatile markets, cloud signals may generate false indications. During such periods combine the Ichimoku Cloud with other technical indicators or wait until the market picks a direction. Moving out to higher time frames can help clear the murkiness of consolidation phases and provide a clearer picture of the trend, in turn, weeding out false signals. Overcomplicating Analysis The Ichimoku Cloud provides a wealth of information, but it's crucial to maintain simplicity and focus. Avoid overcrowding the chart with an abundance of indicators, especially other overlays. It is easy to get lost in the sauce or run into redundancies with too much on the chart. Testing and Adapting Each market has its characteristics or volatility, and it's essential to backtest the Ichimoku Cloud strategy, experiment with different parameters, and adapt to market conditions over time. Many traders rely on the standard settings, but in my time developing trading algorithms, I have learned that those settings do not hold from market to market or consistently over time. It is critical to regularly revisit your settings or overall trading strategy to make sure you are drawing on the best available information the Ichimoku Cloud can give. Enhancing the Ichimoku Cloud Strategy To enhance your understanding and utilization of the Ichimoku Cloud, consider the following: Incorporating Other Technical Indicators Combining the Ichimoku Cloud with other indicators, such as oscillators, to confirm signals can be beneficial. I know I said not to over-clutter your chart with other indicators, but that is a rule of thumb more set for overlays. Timeframe Considerations Adapt the Ichimoku Cloud to different timeframes based on your trading style. Higher time frames may provide more reliable signals, while lower timeframes may offer shorter-term opportunities. I don’t believe it ever hurts to back out a few time frames to get a clear picture of market dynamics and avoid tunnel vision. Conclusion The Ichimoku Cloud is a versatile indicator, and today we scratched the surface of how it can be appropriately used. Remember, practice, patience, and continuous learning are critical for refining your skills and adapting the Ichimoku Cloud strategy to ever-evolving market conditions. If there is anything unclear or you have any questions, please don’t hesitate to comment below. Trading education is our passion, and we are happy to help. Happy trading! :)
Editors' picks
Education
by LeafAlgo
49
📊 Volume Profile: IndicatorsThere’s a reason why trading volume has been a standard indicator on every piece of charting software over the last 30 years… it provides a crucial edge. Volume provides you with logical insight into the activity of market participants at varying price levels. Volume analysis helps traders to become more reactionary to price movements rather than trying to predict where price will go next, as is the case with most technical indicators. 📍Key takeaways about volume Key takeaways about the normal volume indicator plotted on the X-axis in trading: 🔹Volume Indicator: The normal volume indicator measures the total number of shares or contracts traded during a given time period. It is commonly displayed as a histogram or line chart, with the X-axis representing time. 🔹Liquidity: Volume is a crucial metric as it provides insights into the liquidity of a security. Higher volume generally indicates greater market participation and liquidity, making it easier to buy or sell the asset without significantly impacting its price. 🔹Confirmation: Volume can confirm the validity of price movements. In an uptrend, increasing volume supports the bullish move, suggesting strength and conviction among buyers. Conversely, declining volume during an uptrend may signal weakness or lack of interest. The same principles apply to downtrends. 🔹 Breakouts and Reversals: Volume analysis is often used to identify breakouts and potential trend reversals. A significant increase in volume during a breakout suggests a higher probability of a sustained move, while decreasing volume near a support or resistance level might indicate a potential reversal. 🔹Divergence: Volume can reveal divergence between price and market sentiment. For example, if prices are rising but volume is decreasing, it could suggest that the rally is losing steam and a reversal may be imminent. Similarly, increasing volume during a price decline might indicate selling pressure and further downside potential. 🔹Confirmation of Patterns: Volume can provide confirmation or invalidation of chart patterns such as triangles, head and shoulders, or double tops/bottoms. Higher volume during pattern formations enhances their reliability, while low volume can cast doubt on the pattern's significance. 🔹Watch for Extreme Volume: Abnormal spikes in volume can indicate significant market events, such as earnings releases, news announcements, or institutional buying/selling. Unusual volume can lead to increased volatility and potentially offer trading opportunities. 🔹Relative Volume: Comparing current volume to historical average volume helps gauge the significance of the current trading activity. Higher volume relative to the average may imply increased interest, while lower volume might suggest a lack of conviction or reduced market participation. 👤 @AlgoBuddy 📅 Daily Ideas about market update, psychology & indicators ❤️ If you appreciate our work, please like, comment and follow ❤️
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Education
by QuantVue
35
Introducing the Volatility Adjusted ADX (VADX)In this video, Stock Justice introduces you to the Volatility Adjusted ADX (VADX), a powerful tool that combines trend strength and market volatility. Learn how to customize your settings for optimal analysis and how this indicator, with its proprietary mathematical formulation, offers a nuanced perspective on market dynamics. Discover the benefits of normalized data and how to read and interpret the VADX line in conjunction with other indicators. All of this, delivered in Stock Justice's engaging style, will empower your technical analysis toolkit. Be ready to trade safe, trade smart!
NASDAQ:TSLAEducation
by StockJustice
Choosing Your Channel: Bollinger, Donchian, or Keltner?When it comes to trading financial instruments, traders have a plethora of technical indicators to choose from. Among these, Bollinger Bands, Donchian Channels, and Keltner Channels stand out as popular tools for analyzing price movements and identifying potential trading opportunities. Each of these channels has its advantages and unique methods of application. This blog will compare these three channels and provide examples of how each can be used, helping you decide which one is right for you. I. Bollinger Bands Understanding Bollinger Bands Bollinger Bands, developed by John Bollinger in the 1980s, is a volatility-based indicator that measures the standard deviation of price movements. It consists of three lines: a simple moving average (SMA) and two bands that are typically set at two standard deviations above and below the SMA. The distance between the bands adjusts as volatility increases or decreases. Using Bollinger Bands Bollinger Bands are useful for identifying price movements and potential reversals. When the bands contract, it indicates low volatility, and when they expand, it signals high volatility. A common strategy is to look for a breakout or breakdown when the bands contract. Example: If a stock's price has been trading within a narrow range, and the Bollinger Bands contract, a trader might anticipate a breakout or breakdown. If the price breaks above the upper band, it could signal a bullish trend, while a break below the lower band suggests a bearish trend. This breakout should be confirmed with other indicators such as the MACD or RSI. II. Donchian Channels Understanding Donchian Channels Donchian Channels, developed by Richard Donchian in the 1960s, is a trend-following indicator that measures the highest high and lowest low over a set number of periods, typically 20 periods. It consists of three lines: the upper channel line, the lower channel line, and the middle line, which is the average of the upper and lower lines. Using Donchian Channels Donchian Channels are primarily used to identify potential breakouts and breakdowns. Traders often use the channels to assess the strength of a trend and determine entry and exit points. The Donchian cloud can be a great tool for establishing lines of support and resistance as the price makes higher highs and lower lows and conversely lower highs or lower lows. Example: If a stock's price is consistently hitting highs, a trader might use the Donchian Channels to identify a possible breakout. If the price breaks above the upper channel line, it could signal a continuation of the bullish trend. Conversely, if the price breaks below the lower channel line, it may indicate a potential trend reversal. I typically look for a secondary lower high or higher lower to confirm a reversal and then confirm the breakout with an oscillator as seen in the example below. III. Keltner Channels Understanding Keltner Channels Keltner Channels, developed by Chester Keltner in the 1960s and later modified by Linda Raschke, is a volatility-based indicator that uses the average true range (ATR) to measure price movements. It consists of three lines: an exponential moving average (EMA) and two bands set at a multiple of the ATR above and below the EMA. Using Keltner Channels Keltner Channels are effective for identifying potential trading opportunities during trending markets and can be used in conjunction with other indicators to confirm price movements. The Keltner Channel is a great tool for identifying overbought/ oversold conditions in a trend. This can help traders find better points of entry for a trade. Example: A trader might use Keltner Channels to identify potential pullbacks in a trending market. If the price moves above the upper channel line during an uptrend, it could signal an overbought condition, and the trader might wait for the price to pull back toward the EMA before entering a long position. Similarly, if the price falls below the lower channel line during a downtrend, it might indicate an oversold condition, and the trader could wait for a bounce back toward the EMA before entering a short position. The trader should also verify the bounce with other indicators as shown below. IV. BONUS: Keltner/Bollinger Bands Squeeze Strategy Channels do not have to be exclusively used on their own. The Keltner/Bollinger Bands Squeeze Strategy is a powerful technique that combines the strengths of both Keltner Channels and Bollinger Bands to identify potential trading opportunities. By understanding the nuances of this strategy, traders can significantly enhance their trading arsenal and make more informed decisions in the market. The Squeeze: A Sign of Consolidation and Potential Breakout s The Keltner/Bollinger Bands Squeeze occurs when the Bollinger Bands contract within the Keltner Channels, indicating a period of low volatility or consolidation in the market. This "squeeze" can serve as a precursor to significant price breakouts, either on the upside or downside. By closely monitoring this pattern, traders can identify periods of market consolidation and prepare to capitalize on potential breakouts. How to Implement the Keltner/Bollinger Bands Squeeze Strategy To implement this strategy, traders should follow these steps: Overlay the Keltner Channels and Bollinger Bands on your chart: Start by adding both Keltner Channels and Bollinger Bands to your preferred trading platform's chart. Ensure that the settings of both indicators are adjusted to your desired values. Identify the Squeeze: Look for periods when the Bollinger Bands contract within the Keltner Channels. This signifies a "squeeze" and acts as a sign that the market is experiencing low volatility or consolidation. Monitor for Breakouts: Keep a close eye on the price action during the squeeze. When the Bollinger Bands expand outside of the Keltner Channels, this indicates a potential breakout from the consolidation period. The direction of the breakout (upwards or downwards) will depend on the overall market trend and price action. Enter the Trade: The Keltner/Bollinger Bands Squeeze Strategy can be further enhanced by combining it with other technical indicators, such as the Relative Strength Index, or Moving Average Convergence Divergence. These complementary indicators can provide additional confirmation of potential breakouts and help traders better gauge market conditions. Once a breakout is confirmed, traders can enter a trade in the direction of the breakout. It's essential to use stop-loss orders and manage risk appropriately since false breakouts can also occur. Exit the Trade: Traders should establish a price target and exit strategy based on their analysis and risk tolerance. This can include setting a specific profit target, using trailing stops, or leveraging other technical indicators to determine when to exit the trade. Conclusion Bollinger Bands, Donchian Channels, and Keltner Channels are all valuable technical indicators for analyzing price movements and identifying potential trading opportunities. When deciding which one is right for you, consider your trading style, preferred timeframes, and the specific characteristics of the markets you trade. It's essential to familiarize yourself with each indicator and practice using them in combination with other tools to enhance your trading strategy. We have even shown that these channels can complement each other to form a more comprehensive strategy. Remember, no single indicator is perfect, and incorporating multiple tools can help you gain a more comprehensive understanding of market dynamics. Good luck and happy trading! If you enjoyed our content don’t forget to give this post a boost, and follow our page for more trading education!
Editors' picks
Education
by LeafAlgo
27
2nd Pine Script Lesson: Coding the Entry Logic - Bollinger BandWelcome back to our Trading View tutorial series! In this second lesson, be learning how to code the entry logic for a Bollinger Band indicator using Pine Script. If you're new here and missed the first lesson, we highly recommend starting there as it provides a solid foundation for understanding the concepts we'll be covering today: In this hands-on lesson, we'll guide you through every step of coding the entry logic for your own Bollinger Band indicator using Pine Script. By the end of this lesson, you'll have a functional indicator that you can use to inform your trading decisions. So, sit back, grab a cup of coffee, and let's get started! Code the entry logic a) This is where we are calling the Mikilap function with two arguments: - the coinpair and - the timeframe we want to use. // Calling the Mikilap function to start the calculation int indi_value = Function_Mikilap(symbol_full, time_frame) b) In the function initiation we convert the strings into simple strings. // Definition of a Pine Script individual function to handle the Request and avoid Repainting Errors Function_Mikilap(simple string coinpair, simple string tf_to_use) => c) As we are calling the function to get an integer value, we have to define an output variable as an integer and place this variable as the last line in the local scope of the function code to return the integer value. int function_result = 0 // placeholder for indicator calculations function_result Step 1: Using the lower bandwidth of the Bollinger Band based on SMA (close, 21) and a standard deviation of 2.0 and try to highlight bars, where close is next to the lower band a) Requesting the values for the coinpair with request.security() = request.security(coinpair, tf_to_use, ) We recommend using repainting functions like request or barstate only in a local scope (inside a function) and not to request complex calculated values. For saving calculation capacity it is useful to only request the classic four OHLCs and do any calculation with these four after the r equest.security() . b) Calculation of the lower Bollinger Bands values as we need the global info, which type of source, length, and deviation value to use for the calculation, let‘s cut & paste the input for the Bollinger Band in the general starting section of the code and as we want to look for close values „next“ to the lower bandwidth, we need to define what „next“ means; let‘s do it in another input variable, perhaps we want to play with the definition later. string symbol_full = input.symbol(defval = "BINANCE:BTCUSDT", title = "Select Pair:", group = "General") string time_frame = input.string(defval = "60", title = "Timeframe:", tooltip = "Value in minutes, so 1 hour = 60", group = "General") int length = input.int(defval = 21, title = "BB Length:", group = "Bollinger Band Setting") src = input(defval = close, title="BB Source", group = "Bollinger Band Setting") float mult = input.float(defval = 2.0, title="BB Standard-Deviation", group = "Bollinger Band Setting") float lower_dev = input.float(defval = 0.1, title="BB Lower Deviation in %", group = "Bollinger Band Setting")/100 First, let‘s make it visible on the chart by re-writing the Bollinger Bandplot, which is not needed anymore. // Calling the Mikilap function to start the calculation int indi_value = Function_Mikilap(symbol_full, time_frame) // Output on the chart // Part 2 - plotting a Band around the lower bandwidth of a Bollinger Band for the active CoinPair on the chart lower_bb = ta.sma(src, length) - (mult*ta.stdev(src, length)) lower_bb_devup = lower_bb + lower_bb * lower_dev lower_bb_devdown = lower_bb - lower_bb * lower_dev upper = plot(lower_bb_devup, "BB Dev UP", color=#faffaf) lower = plot(lower_bb_devdown, "BB Dev DOWN", color=#faffaf) fill(upper, lower, title = "BB Dev Background", color=color.rgb(245, 245, 80, 80)) c) Now we use the same calculation for the coinpair inside the function and start with the selection of the source (OHLC) to use, which is activein the respective input variable. // Defintion of a Pine Script individual function to handle the Request and avoid Repainting Errors Function_Mikilap(simple string coinpair, simple string tf_to_use) => int function_result = 0 bool barstate_info = barstate.isconfirmed = request.security(coinpair, tf_to_use, ) src_cp = switch src open => open_R high => high_R low => low_R => close_R lower_band_cp = ta.sma(src_cp,length) - (mult*ta.stdev(src_cp, length)) lower_band_cp_devup = lower_band_cp + lower_band_cp * lower_dev lower_band_cp_devdown = lower_band_cp - lower_band_cp * lower_dev // placeholder for indicator calculations d) As the bandwidth for the interesting close values is defined by our band, the only thing missing for the part of the Bollinger Band in our Mikilap indicator is to check if the close value of a bar is inside our band. As we are talking about closed bars, let‘s be sure that it is really closed by using barstate.isconfirmed (repainting built-in function!) and save it in a variable in the head of the function to avoid requesting this info too often. bool barstate_info = barstate.isconfirmed Now let‘s check if the close value of a bar is inside our band. bool bb_entry = close_R < lower_band_cp_devup and close_R > lower_band_cp_devdown and barstate_info And increase the output variable by 1 in case the close value is inside. if bb_entry function_result += 1 By using bb_entry , we are referring to the last bar next to the actual bar, because we want to enter on the opening of the bar after the criteria has been met. e) And to make these possible entries visible, we want to place a label below the bar and show the entry price (=open value of the bar) as mouseover (tooltip). This should only happen if the active coinpair on the chart is the same coinpair, which is in the calculation of the function. if function_result == 1 and ticker.standard(syminfo.tickerid) == coinpair label LE_arrow = label.new(x = bar_index, y = low_R, text = " ↑ LE", yloc = yloc.belowbar, color = color.rgb(255,255,255,25),style = label.style_none, textcolor = color.white, tooltip = str.tostring(open_R)) Note: You will love labels (!) and in case you are looking for text symbols that can be used as labels, look here: www.messletters.com If you need help use the Pine Script Reference Manual, which explains 99% of everything in Pine Script, here: www.tradingview.com f) As our function now returns different integer values (0 or 1), we can use this info to color the background on the actual chart in case it is 1. // Calling the Mikilap function to start the calculation int indi_value = Function_Mikilap(symbol_full, time_frame) color bg_color = indi_value ? color.rgb(180,180,180,75) : color.rgb(25,25,25,100) bgcolor(bg_color) g) To finish this little Pine Script lesson and to achieve our initial targets, we just need to integrate the second indicator (RSI) into the function. We want to use the RSI for 0,5 days (12 hours) and use it to ensure to not go into a long entry in an oversold (< 25) or overbought (> 70) market. We will use RSI (low, 12) within 25 to 45 as the range to go for. Your tasks: define new input variables for RSI: src_rsi and length_rsi define new input variables for the RSI range we want to use: rsi_minand rsi_max(please use the „inline“ format of an input type) calculate the RSI (src_rsi, length_rsi) inside our Mikilap-function define a boolean variable (rsi_entry) to check if the calculated RSI value is inside the range (please add as last check the barstate_info) add the RSI entry check to the Bollinger Band entry check to combine them Congratulations on finishing the second lesson on Trading View - we hope you found it informative and engaging! We're committed to providing you with valuable insights and practical knowledge throughout this tutorial series. So, we'd love to hear from you! Please leave a comment below with your suggestions on what you'd like us to focus on in the next lesson. Thanks for joining us on this learning journey, and we're excited to continue exploring Trading View with you!
Education
by Mizar_trading
8
Understanding the Parabolic Stop and Reverse (SAR) IndicatorThe Parabolic Stop and Reverse (PSAR) indicator is a technical analysis tool that helps traders identify potential reversals in price movements. It is represented by a series of dots that appear above or below the price chart. When the dots are below the price, it indicates a bullish trend potential, and when the dots are above the price, it signals a bearish trend potential. The indicator is calculated based on the price and time, and it adjusts its position as the price moves. When the price crosses the SAR, it signals a potential reversal. The indicator should be used in combination with other technical indicators to confirm trading signals. One strategy for entries using the PSAR indicator is using it with another technical indicator, such as the Relative Strength Index (RSI). When using this strategy, traders can look for oversold conditions on the RSI and then wait for a buy signal from the PSAR indicator. This can help identify potential entry points for long positions. On the other hand, traders can look for overbought conditions on the RSI and then wait for a sell signal from the PSAR to identify potential entry points for short positions. However, it's important to keep in mind that no trading strategy is foolproof, and risk management should always be a top priority. The PSAR indicator can also be used as a stop loss by traders. One way is to use it as a trailing stop loss, whereby the stop loss price is adjusted upwards as the price of the asset increases. Price crossing over the PSAR against the trade direction would signal the trader to close their position. This helps to lock in profits or limit potential losses. This can help to minimize losses and protect capital. Overall, the SAR indicator can be a useful tool for traders when used in combination with other technical indicators and risk management strategies.
Education
by LeafAlgo
Hunting Breakouts with Bollinger Bands and OBVThanks to zAngus for the idea, here is a simple trading strategy that uses two tools: Bollinger Bands and OBV to find moments when an asset's prices can increase or decrease. First and foremost, please note that this explanation is simplified and only covers the basics. Each individual can develop their own settings and adjustments according to their own preferences. Imagine that you are looking at a price chart of an asset. This chart shows how prices have changed over time. Sometimes prices go up and sometimes they go down. The trading strategy we are going to show you can help you find moments when prices are about to change direction. - Bollinger Bands are lines that show a zone where prices of an asset are likely to stay. These lines have two parts: a middle line that shows an average of prices and two other lines that show the zone where prices should be. The lines widen and narrow based on the volatility of prices. - OBV (On-Balance Volume) is another tool that measures whether more people are buying or selling an asset. If more people are buying an asset, OBV increases, and if more people are selling an asset, OBV decreases. Now, here is how we use these two tools to find moments when an asset's prices can increase or decrease: 1. First, we wait for prices to stabilize for a certain amount of time. This means that prices don't go up or down much during a given period. 2. Next, we look at the Bollinger Bands to see if prices have reached the upper or lower limit. If prices exceed the upper limit, it may mean that prices will increase. If prices fall below the lower limit, it may mean that prices will decrease. 3. To confirm what we have seen in the Bollinger Bands, we look at the OBV. If OBV increases or decreases at the same time as prices exceed the upper or lower limit of the Bollinger Bands, it means that more people are buying or selling the asset, and this reinforces our idea that prices will increase or decrease. 4. We enter the market by buying or selling the asset based on whether we think prices will increase or decrease. 5. We exit the market when prices reach the opposite upper or lower limit of the Bollinger Bands or an important resistance zone. This is a simple strategy, but it can help find moments when an asset's prices can increase or decrease. Remember that you must always use good risk management to avoid losing too much money if the market doesn't follow your forecast. Please note that this Bollinger Bands and OBV breakout trading strategy involves risk and is intended for educational purposes only. Any investments made using this strategy are done at your own risk, and you should always do your own research and seek professional advice before making any investment decisions.
Education
by Julien_Eche
📊Bollinger Bands In A Trending MarketBollinger Bands are a widely used chart indicator for technical analysis created by John Bollinger in the 1980s. They offer insights into price and volatility and are used in many markets, including stocks, futures, and currencies. Bollinger Bands have multiple uses, such as determining overbought and oversold levels, as a trend following tool, and for monitoring for breakouts. 📍 Strategy Bollinger Bands measure deviation and can be helpful in diagnosing trends. By generating two sets of bands using different standard deviation parameters, traders can gauge trends and define buy and sell zones. The bands adapt dynamically to price action, widening and narrowing with volatility to create an accurate trending envelope. A touch of the upper or lower band is not a signal in and of itself, and attempting to "sell the top" or "buy the bottom" can lead to losses. Standard deviation is a statistical measure of the amount of variation or dispersion of a set of prices or returns from its average value. The higher the standard deviation, the wider the Bollinger Bands, indicating greater price volatility, and vice versa. Traders may use standard deviation to set stop-loss and take-profit levels or to help determine the risk-to-reward ratio of a trade. 📍 Calculation First, calculate a simple moving average. Next, calculate the standard deviation over the same number of periods as the simple moving average. For the upper band, add the standard deviation to the moving average. For the lower band, subtract the standard deviation from the moving average. Typical values used: Short term: 10 day moving average, bands at 1.5 standard deviations. (1.5 times the standard dev. +/- the SMA) Medium term: 20 day moving average, bands at 2 standard deviations. Long term: 50 day moving average, bands at 2.5 standard deviations. 👤 @AlgoBuddy 📅 Daily Ideas about market update, psychology & indicators ❤️ If you appreciate our work, please like, comment and follow ❤️
Education
by QuantVue
2
MACD 1D: X, XD, XDD, and P=M(XD)Andrew M. Kempi 7 January 2023 MACD 1D Methodology: X, XD (X•), XDD (X••), and P=M(XD) Determine Volume psychology and volume mass. P=Mass(Velocity), p=volume(XD), including pascal averaging. The Volume, and price value, is dependent on Velocity (XD). Velocity is dependent on Acceleration. Confirm undeviated direction and trend. Establish location: above or below directional price average. Trend symmetrically around price average. Confirm XDD (X••) acceleration. Identify the Vector utilizing XD (X•).
SP:SPXEducation
by privatepizza111
Bitcoin Historical Volatility new low Here we have the BTC historical Volatility Index in blue. Orange is the price of BTC. The teal line is the 50sma for volatility. At the bottom, I have the correlation coefficient (CC) for the volatility index with BTC. I have marked in green when the CC reaches above 0.50, and red when it crosses below -0.50. The fibonacci retracement is fairly arbitrary, but fits nicely between 0.25 and 1.00. In this article, I would like to discuss a little bit about volatility. It is often associated as going up when price goes down, but is a bit more specific in what it is telling us than simply being an inverse price indicator. Next, I’ll talk about the correlation coefficient. It is an excellent tool that every trader, and investor, should learn to use. Finally, I would like to examine some of the similarities between our recent all time low in this index, breaking the low 2018, which proceeded the infamous 2018 capitulation event. Volatility is always an interesting indicator, and is often used to indicate position risk for the asset it is being calculated for. Simply stated, it is a measure of how much the price of an asset moves in a particular period of time. However, it can be calculated a number of different ways. The most common is standard deviation, or how far price is from an average of the price over a recent period of time. The amount of time the data is taken from can also change how the volatility measure acts and how useful it is. More so, because it measures movement, and not so much direction, it can be difficult to use it in an accurate way, as correlation appears to be inconstant at face value. Historical volatility is calculated a little differently. And honestly, before reading a few papers on it for this essay, I had not realized that ‘historical’ referenced the calculation method as opposed to it being the history of the volatility. Historical, or realized, volatility is an estimation of the standard deviation of the price of returns over a particular period of time, in this case, 24 hours. It can also be calculated with a weighting for the trading volume over the calculation period. I have placed a 50ma (150 day moving average) to show a general range for average volatility, and we can see that MA tends to oscillate between 2.5 and 5.0. The correlation coefficient is an excellent indicator that allows you to see, and quantify, the correlation of your current chart with any other chart ticker. Here I have it set to the BLX all time price index for BTC. The higher it goes, the more correlated the movement of the 2 charts are, and below zero indicates an inverse correlation. When CC is near zero, the movements of the two charts are NOT correlated. One of the issues with volatility indexes is their accuracy can vary, and is sometime disputed. My goal in using the correlation coefficient with this index is to parse out when volatility is most useful to pay attention to, and in which direction. On this chart, we can see that when volatility spikes above 10, it is often correlated with big, sudden moves to the downside. However, not all of them are. By using the correlation coefficient, we can parse out the direction of volatility. When CC is in the green, and volatility increases, we see the price of bitcoin moving up, usually in an explosive manner. Likewise, inverse correlation is often showing us downwards movements. I find this a useful way to pull a little bit of the noise out of the volatility index. The previous all time low in volatility of 0.35 occurred on October 28th of 2018, and about sixteen days before the 2018 capitulation event began. About a week ago on Christmas day, we broke that low, going down to 0.34. Very low volatility tells us that price isn’t just moving sideways, but is pretty flat for the most part. And if you have been following bitcoin lately (bless your soul) you know flat and boring is kind of an understatement. The good news is that it’s likely going to get exciting soon. Volatility doesn’t seem to stay at or below 1.0 for very long, and seems to be either correlated, or inversely correlated with price within a few weeks to a month after reaching 1.0. An exception would be from August of 2019 to the pandemic crash in 2020. We can see some similarities in both volatility and the correlation coefficient between the time leading up to the 2018 capitulation event and our recent data in 2022. Price action is also fairly similar (flat and boring) with the exception that in 2018, the line chart had a small move down and back up during the flatness, while we had a small move up and then down earlier in December. Although, I doubt this really means anything. In 2018, we saw a 50% drop after price had already fallen around 70%. From top to bottom, the draw-down was just under 85%. Another 50% draw-down from where we are at the time of writing would take the price of bitcoin to just over $8,000. So what does this mean? Well, I can tell you, for sure, 100%, that I can not tell the future. I will be, however, watching my new chart very closely. But I would say it is likely we’ll be seeing something exciting, and it will probably be in January. Unfortunately, it looks like CC moves down just as fast as price, and as fast as volatility moves up during sudden, capitulation like events. However, Bitcoin always has a way of surprising everyone. If CC moves down to 0, and then puts in another local high in the next week, I would be a little spooked. If it keeps moving up to 0.50, it may be an interesting and unexpected move to the upside. Regardless of what happens, I would encourage everyone to try to understand volatility a little better than you already do, and use the correlation coefficient indicator. It is a simple, yet versatile tool that can be used to quantify data in a way that makes a trading strategy precise. Here’s to 2023, I wish you well, and thanks for reading.
BITMEX:BVOL24HEducation
by MaliceM13
ADX: How to use this under-the-radar tool.Hey everyone! 👋👋 In this video, we're taking a look at the ADX Indicator. We break down how it works, how to interpret its output, common uses for it, and ways that it can help you find and screen for opportunities you like. Feel free to drop some questions below in the comments! Remember - nothing in this video constitutes advice, our only goal is to educate you about the markets and how to use our platform more broadly. Cheers! -Team TradingView ❤️❤️ Check out more information about the ADX in our help center here .
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NASDAQ:AAPLEducation
by TradingView
24
Educational Series: Trading with Bollinger Bands (Part 2)The Bollinger Reversal is my absolute favorite and most valuable perspective of the Bollinger Bands. Have you ever - seen the price move strongly in a direction, but the moment you get into a trade, the price reverses almost immediately? or - held on to a profitable trade, hoping to hit a take-profit level, only to see your profits whittle away as the price reverses. The Bollinger Band can help prevent 1) FOMO leading to Late Entry and 2) Greed leading to Late Exit Look at the yellow spots on the charts - The spots indicate when the price had traded outside of the 2std deviation of the Bollinger Band (either the lower or the upper bound). - When the price trades outside of the Bollinger Band, two things are highly likely to happen : 1) the price reverses back before the current candle loses , leading to possibly the development of a pin bar (which usually signals a strong reversal candlestick pattern). 2) the price closes outside of the Bollinger Band and the subsequent candle is a strong retracement , back toward the Moving Average and possibly a stronger reversal. The Bollinger Reversal can be applied to ANY timeframe (M1 through to D1) When the price is outside of the Bollinger Band, you should choose to avoid entering a trade , as the price is likely to reverse. And if you are currently in a trade, and the price has broken out of the Bollinger Band, you might want to consider securing the profit . However, some more aggressive traders could even choose to trade the short-term reversal. Remember.... - This is a technical indicator. You shouldn't use technical indicators solely. - Combine it with other forms of analysis, Price Action, Fundamental Analysis, Sentiment, and Other types of indicators. The more confluences you can have, the more confidence you will have
Education
by JinDao_Tai
Volatility Contraction PatternJS-Masterclass #4: The Volatility Contraction Pattern The Volatility Contraction Pattern (VCP) is a vital concept for successful traders and a key element in our JS-TechTrading strategy. In this tutorial, we will cover the following: 1. Why is it important? 2. The ‘Overhead Supply’ Concept 3. How to identify a VCP? 4. The Perfect Entry Point 1. Why is it important? The Volatility Contraction Pattern (VCP) allows us to find stocks which are getting ready to form a very specific low risk entry point at which the potential reward of our trades outweigh the risk. The main role that VCP plays is establishing a precise entry point at the line of least resistance. If a stock is under accumulation (large institutions putting their money into the stock), a price consolidation represents a period when strong investors ultimately absorb weak traders. Once the “weak hands” have been eliminated, the lack of ‘overhead supply’ (explanation see below) allows the stock to quickly move higher because even a small amount of demand will overwhelm the negligible inventory. This is referred to as the line of least resistance. Tightness in price from absolute highs to lows and tight closes with little change in price from one day to the next and also from one week to the next can generally found in constructive Volatility Contraction Patterns. These tight areas should be accompanied by a significant decrease in trading volume. 2. The ‘Overhead Supply’ Concept Any price action in the stock market is the simple result of supply and demand, just like in any other business. If demand is bigger than the supply, the price goes up. If supply outweighs demand, prices are falling, it is as simple as that! What happens to supply and demand in a Volatility Contraction Pattern? Point 1: Traders buying at point 1 in the graphic are called ‘Trapped Buyers (TBs)’. Point 2: the price has fallen and many people think the stock is ‘cheap’ at this price and buy the stock – the so called ‘Bottom Fishers (BFs)’ provide the relevant demand needed to trigger a price increase. Point 3: the price has come back up to the level at point 1. Now two things happen a) The Trapped Buyers who bought a price level 1 are very happy to get out of the trade at breakeven after having had paper losses at point 2. The cut their losses (LC) and provide the relevant supply to the market needed to trigger a declining price. b) The Bottom Fishers take nice quick profits and sell their stocks, providing additional supply to the market which adds to the decline in price. Points 4, 5, 6: The same concept applies here but as time goes by, the volatility contracts from left to right as fewer and fewer traders provide their demand and supply to the market, the price action dries out like a towel: 3. How to identify a VCP? A common characteristic of virtually all constructive price structures (those under accumulation) is a contraction of volatility, from greater volatility on the left side of the price base to lesser volatility on the right side in the chart. This pattern needs to be accompanied by specific areas in the base structure where volume contracts significantly: Let’s look at an example: In this example, we are seeing a total of 5 contractions from left to right, starting from 1 (ca. 25% decline) to 5 (< 5% decline) under significantly reduced trading volume. This is exactly what we want to see. At the final base 5, supply has stopped coming to market which is the reason for the low trading volume in this time-period. Due to the lack of supply, only very few demand is needed to push the price significantly higher. We therefore have a high probability of an explosive price increase. Also, we can set our SL just below the final base at 5 which means that our max. risk for this trade is < 5% - our potential reward significantly outweighs our risk. 4. The Perfect Entry Point When the price breaks out of the right side of the final base under higher volume, we have a perfect entry point. As the supply has stopped coming to market, only little demand is needed to cause an explosive price move upwards. Furthermore, the volatility contraction results in a tight base at the right end of the pattern resulting in a low risk entry point – the Stop-Loss can be set under the low of the latest base structure on the right side of the pattern which is normally in the range of about 5% risk. This is a vital concept for successfully timing the continuation of an existing trend.
Education
by JS_TechTrading
2
Indicator: Bad Ass Bollinger Bands by wyckoffmode InstructionsHello, At this time you may buy Bitcoin below the lower indigo band of Bad Ass Bollinger Bands and sell above the white upper band. In the future you can come up with your own trading strategy by looking at the BBB indicator and finding the points on the indicator where buying is optimal. For instance like I said now is the time to buy below the lower indigo or "blue" band and sell above the white upper band. Please, I'm interested to know your thoughts and would appreciate if you write me some information in the comments about this. Please, pair Bad Ass Bollinger Bands with "Phoenix Ascending" also by username wyckoffmode aka David. He's a great man. You may also ask him for access to "Phoenix ARI" and combine stochastic RSI with Phoenix ARI because Phoenix ARI is less susceptible to price action. By merging the two you get a good glimpe of volitility mixed with price action. By using Phoenix Ascending a general rule of thumb is to buy Bitcoin when the blue LSMA is below the 20 line. However as you can see that doesn't happen a lot. So try to buy when all three green,red and blue are as close to the 20 as possible with green even being below the 20. The best timeframe to use this on in my opinion is the three hour. If you are using this on the 15 minute or 30 minute chart please make sure you load a copy of the 3 hour and 6 hour charts in another tab and monitor to them to accurately make a good trading decision. Always remember what it generally boils down to in this market is to buy below the the lower indigo and sell above the upper white. Good day and best wishes.
Education
by Henrywaters
GUIDE TO TRADING EUR/JPY (highest traded non USD pair in forex)Why is EUR/JPY important to traders? One of the popular pairings across the worldwide foreign exchange market is EUR/JPY. It represents around 4% of all daily transactions. Investors and traders alike look to the euro/Japanese yen currency pair because high levels of volatility can provide plenty of trading opportunities. There are major factors that can influence their rates, and how and why people choose to trade EUR/JPY using CFDs (contracts for difference) on forex. Fundamental Aspects of EUR/JPY pair: Major factors throughout both Europe and Japan affect the euro yen exchange rate. As with most regions, factors that can have knock-on effects are usually fairly broad and similar in nature. Japan, however, has some interesting key points that differ from the norm, which we'll explain in more detail. Like most modern currencies, the major factors which influence the movement of euro prices are mainly economic, political, and financial. Many of the ways in which the euro is affected will already be familiar to people who have a basic knowledge of how traders try to determine which way prices of currencies like the euro will move. Monthly reports which are released by the European Central Bank (ECB) form the backbone of many traders' decisions regarding the euro. Investors and traders are quick to scour these details as soon as they are released in an effort to find out more about what direction the euro could be heading. Economically, news releases surrounding employment can play a huge part in the oscillation of euro rates. These figures are freely available and provide a valuable insight into the health of Europe's economy and direction in which euro prices could go. The economy of Japan has a few more factors in play that can affect the rate of their currency. General health of the economy will play a massive part, with the high rate of import and export trading in Japan helping to boost or weigh on prices, depending on the state of the industry. One of the influencing factors that you're less likely to find in other countries is, surprisingly, the rate of natural disasters which occur in the region. Due to the small size of the country, events like natural disasters can affect the currency’s value immensely. The government of Japan often utilizes economic initiatives in an effort to bolster the economy. As a result, many traders and investors pay extremely close attention to interest rates and government interventions from financial institutions such as the Bank of Japan (BOJ). Another regular factor that traders watch out for is the details within data reports such as the Tankan Report, the Tokyo Area CPI and the aforementioned interest rate decisions of the BOJ. These help to determine various financial paths that yen may follow. How & When To Trade EUR/JPY: Best is when currency is most volatile. The EUR/JPY is generally busy between 07:30 and 15:30 (GMT). Convert To Your Time. Tokyo and London overlap two -three hours is great when there our two major sessions trading at one time. Yen is currency of Japan, and third most widely traded currency in world after US Dollar and the Euro. It is possible to make a significant profit within just a short time when trading EUR/JPY.
Education
by Anbat
4
Guide To Trading USDCADIf you are an investor interested in any currency pair during NYSE trading hours, the USDCAD should be among your priorities. Ranked among the top 5 most traded currency pairs on the platforms, the USDCAD represents a significant volume in Forex trading. Such a pair offers excellent profitability possibilities because the daily trading volume is considerably high. Learning about the technical and fundamental aspects that make this currency pair move price is a must for successful trading. Essential information related to the USDCAD. Once you acquire the knowledge, you will put it into practice and profit from it as soon as possible. Fundamental aspects Like other pairs in the FOREX market, the USDCAD is firmly anchored to international commodity prices, especially oil. Canada and the United States are among the countries with the highest oil production levels in the world. In addition, Canada’s leading oil export destination is the United States. Therefore, a rise in oil prices will hurt the US dollar and positively affect Canadian dollar. Conversely, if oil prices fall, the pair will tend to rise. Canada is also a significant exporter of materials and commodities, such as wood, grain, and minerals. Being so close to the US has strengthened the import/export industry in Canada. In addition, it helps the currency maintain a stronghold in the foreign exchange market. Changes in interest rates and policies to help increase the employment rate are other aspects to take into account. The announcements are made by the Central Bank of Canada and the Federal Reserve of the United States. Changes in interest rates and policies targeting the increase in the employment rate are other aspects to consider. These announcements are made by the Central Bank of Canada and the Federal Reserve of the United States. The essential thing in this aspect is to be attentive to the dates when they will meet because, during those days, the volatility of the USDCAD pair increases considerably. Because they are firmly related economies, data on economic growth (GDP), industrial production (PMI index), and consumer demand for goods are highly relevant. As a result, it can cause significant volatility spikes in the pair. Profiting from the wrong policy decisions of some countries is possible. One of the examples is the fall of the US stock market and real estate market in 2008. In addition, the banks’ recklessness in lending non-stop throughout the 2000s resulted in a crash. However, Canadian banks were spared because they did not follow the same policies as American banks. Different strategies can be applied based on technical analysis since it is a very liquid pair, especially during the hours of higher volume. Typically, during the opening hours of the NYSE, a more significant number of transactions takes place, thus increasing the volume in the pair. Canada and the United States have different economic structures. While Canada leans toward more liberal economic policies and strict immigration regulations, the US depends on the economic boost of educated and talented immigrants to enhance the workforce. The USD benefits from a much larger volume of trading activity, as well as the presence in virtually every primary global industry. It may seem that the US and Canada are very different. Still, their geographic proximity helps traders, making trading USDCAD easy. Performing back testing and analyzing all the aspects we have mentioned will give you a better view of the market and increase the probability of success in your trading.
Education
by Anbat
8
Pairs You Trade? What Sessions Are Open When You Are Trading?What Pairs Should You Trade? What Sessions Are Trading When You Are Up? * Use Your Commonsense!!! The best forex pairs for you to trade will depend on many factors: What time of day you will trade Whether you are interested in making a long-term investment to achieve larger profits or are happy to scalp smaller profits many times each day Your knowledge of currency, the forex markets and global economies Should you trade (example) USD/JPY pair when Tokyo is in session? Yes, because half of the pair is in session and both volume and liquidity is moving markets during this time. AUD/USD pair when Tokyo and/or London sessions are open only? No, because Sydney session has closed and New York has not opened yet. EUR/JPY pair when London and/or New York Session are open only? Yes, for overlapping London/New York session, but no once London session closes. USD/CAD pair when Sydney, Tokyo or London is open only? No, because both sides of these pair are open during New York only- so trade only during NY. In my opinion and one of my rules is: at least half of the pair needs to have current session open and trading, if both parts of the pair are in session (say: Tokyo and London overlap (EUR/JPY pair) or London and New York overlap (EUR/USD)- that will give you the most volume and liquidity in these pairs, thus movement in the pairs is much easier. In Forex: Commonsense is a must, Patience is a must, Risk Management is a must and knowing what sessions are open and giving liquidity & volume is a must.
Education
by Anbat
6