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Telegram Games==>Share your experiencesToday, I want to talk about Telegram programs or games that are added to their number daily, and share my experiences from these programs or games with you. I would be happy if you share your opinion or experience with me. First, the purpose of these programs/games is to introduce the project and their tokens to the users, and for this purpose, they give their own tokens to the users in the form of Airdrop. Now, let's see what Airdrop means. What is the Airdrop!? An airdrop in crypto is when a project distributes free tokens or coins to users' wallets, often as a marketing strategy to promote the project or reward existing holders. Users may receive these tokens by holding a specific cryptocurrency or completing simple tasks. First, I must say that what has been proven to me in the cryptocurrency market is that the crypto market has had seasons over the years, such as NFT, Metaverse, Memes, Defi, etc. This means that in these seasons, the tokens of each season have increased and received a good reception, and always the first ones in each season gave a good reception and profit to the users, and with the passage of time, their reception decreased, and then it was the turn of scam projects in It has been every season. I gave these explanations to say that I think we are in the middle or end of Telegram's program/games season. The season began with the BINANCE:NOTUSDT was obtained by tapping to earn and introducing friends. In the Notcoin project, users received good profits. After the BINANCE:NOTUSDT project, the Hamster game , which is supposed to be listed on September 26 in various exchanges (perhaps the price of each $HMSTR token is equal to $0.01 ), was well received by Telegram users. If the Hamster game is listed at a price of $0.01 in various exchanges, it will disappoint many users because there are few users who have more than 10,000 $HMSTR tokens, and it could be a sign of the end of the season of Telegram programs/games. How many $HMSTR tokens did you get in Hamster!? In the coming days, tokens of other games are going to be listed in different exchanges, for example, today the game Rocky Rabbit with GATEIO:RBTCUSDT token was listed in different exchanges, which disappointed all its users. Now I decided to share my personal experiences with you from some of the trending Telegram games. Catizen : Catizen game with BINANCE:CATIUSDT token was listed on 2024 September 20 in various exchanges. Catizen game was the most famous game that was listed in different exchanges after Notcoin, although those who spent money in the game were awarded a good number of tokens, but those who played the game for more than 5 months were awarded a small number of OTC:CATI tokens. which brought the dissatisfaction of the users of this game. In terms of entertainment, the Catizen game seemed to be boring and time-consuming. -------------------------------------------------------------------------- Rocky Rabbit : Rocky Rabbit game with OTC:RBTC token is listed in different exchanges today and according to the number of tokens given to users according to the time they spent in the game, it really disappointed its users. In terms of the game space, the game is very time-consuming, the interesting point of this game was that you had to give 0.5 TON to the game to withdraw your tokens, otherwise 45% of your RBTC tokens would be burned and according to the number of tokens that Users are credited and the price of RBTC token, Rocky Rabbit game is like a scam project in my opinion. -------------------------------------------------------------------------- MemeFi Coin : Memefi Coin game, which is going to be listed in various exchanges on October 9, 2024. The gameplay of Memefi Coin is so boring that you have to go through 15 levels. This game has also recently activated in-game payment and you can spend the work of someone who spent several months to go through different levels by paying 23 dollars in one day. I think this game is only looking for income in the last few days. -------------------------------------------------------------------------- There are many games, and if I try to analyze them all for you, you might get tired; let's go to the conclusion. My analysis of Telegram games is that with the listing of the Hamster game token, we are approaching the end of the season of Telegram games and these games are very weak in terms of entertainment and only take the time of the users and the main winners are the game creators because according to When you play, you will definitely have a low reception, so I advise you to only look at these games as entertainment, although in terms of entertainment, I think these games are of low quality. And if the Telegram game token is listed, it is better to sell it immediately, because with the passage of time, the price of these tokens will decrease at least for a short period of time, because the users received free tokens and were waiting for the sale of these tokens for several months, and for sure, the selling pressure will be high. Also, be careful of SCAM programs/games because surely SCAM games will increase as these games become a trend. In my opinion, the best game that didn't take much time was BINANCE:DOGSUSDT , do you agree with me? I would be happy to share your opinion and experiences about Telegram programs and games with me in the comments!? Is there a Telegram game or program that you think has a good future!? If you can analyze every game below this post like me, this post can be a source for these games. Please do not forget the ✅' like '✅ button 🙏😊 & Share it with your friends; thanks
Education
by pejman_zwin
13
Does the Market Rally When the Fed Begins to Cut Rates?The relationship between rate cuts and the stock market, as illustrated in the provided graph, shows that major market declines often occur after the Federal Reserve pivots to lower interest rates. This pattern is evident in historical instances where the Fed's rate cuts were followed by significant drops in the S&P 500. Several factors contribute to this phenomenon, which are crucial for investors to understand. Economic Weakness: Rate cuts typically respond to economic slowdown or anticipated recession. Each instance of the Fed pivoting to lower rates (1969, 1973, 1981, 2000, 2007, 2019) corresponds to significant market declines soon after. Rate cuts signal concerns about economic health, causing investors to lose confidence, as reflected in the graph. Delayed Impact: Rate cuts do not immediately stimulate the economy; it takes time for their effects to propagate. The graph shows that the majority of the market decline occurs after the Fed's pivot, indicating that initial rate cuts were insufficient to halt the downturn. During this lag period, the market may continue to decline as economic data reflects ongoing weakness. Investor Sentiment: Rate cuts can trigger fear among investors, who interpret the move as an indication of severe economic issues. The graph shows substantial percentage drops in the S&P 500 following each pivot, demonstrating how negative sentiment can exacerbate declines. The fear of a worsening economy leads to a sell-off in stocks, contributing to further market drops. Credit Conditions: During economic stress, banks may tighten lending standards, reducing the effectiveness of rate cuts. Post-rate cut periods in the graph align with times of economic stress, where credit conditions likely tightened. Businesses and consumers may not be able to take advantage of lower borrowing costs, limiting economic recovery and impacting the market negatively. Historical examples such as the crises in 2000 and 2007 highlight substantial market drops after rate cuts, as seen in the graph. In both cases, the rate cuts responded to bursting bubbles (tech bubble in 2000, housing bubble in 2007), and the economic fallout was too severe for rate cuts to provide immediate relief. The graph underscores that while rate cuts aim to stimulate the economy, they often follow significant economic downturns. Investors should be cautious, recognizing that initial market reactions to rate cuts can be negative due to perceived economic weakness, delayed policy impact, and deteriorating sentiment.
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SP:SPXEducation
by MarkitMaven
5
Evolution of JPY:How BOJ Policies & Global Events Influence YENUSD/JPY Dynamics: A Historical and Policy-Driven Analysis of the Bank of Japan's Impact Historical Context and Market Reactions The COVID-19 pandemic led to some of the most extreme market reactions in recent history. During this period, global bond yields spiked in a highly risk-off environment, defying expectations that they would fall as investors sought safe havens. This prompted the Federal Reserve to implement unlimited Quantitative Easing (QE), including daily purchases of $300 billion in bonds. The market chaos highlighted the extent of leverage in supposedly liquid trades. Post-COVID , zero interest rates spurred significant equity market gains until inflation concerns and subsequent rate hikes caused a market correction. It was expected that higher borrowing rates would reduce excessive leverage, but the heavily crowded yen carry trade suggested otherwise. Yen borrowing was extensive and leveraged, flowing into the Japanese market due to minimal currency risk. The Bank of Japan (BOJ) System The Bank of Japan (BOJ), established in 1882, serves as the central bank of Japan. Its primary roles include issuing currency, implementing monetary policy, and maintaining financial stability. The BOJ’s policies and actions significantly impact the yen’s value and the broader Japanese economy. Key Functions of the BOJ: 1. Monetary Policy: The BOJ's primary tool for influencing the economy is its monetary policy. This includes setting interest rates and engaging in open market operations to control the money supply. The BOJ's main policy goals are to achieve price stability and economic growth. 2. Quantitative and Qualitative Monetary Easing (QQE): Introduced in 2013 under Governor Haruhiko Kuroda, QQE aimed to combat deflation and stimulate the economy by purchasing government bonds and other assets, thus increasing the monetary base. 3. Negative Interest Rate Policy (NIRP): Implemented in 2016, the BOJ introduced a negative interest rate on excess reserves held by financial institutions at the bank. This policy aimed to encourage lending and investment by making it costly for banks to hold excess reserves. 4. Yield Curve Control (YCC): In 2016, the BOJ introduced YCC, targeting a zero percent yield on 10-year Japanese government bonds to control the shape of the yield curve and maintain low-interest rates across different maturities. Recent Economic Developments Japanese Yen Strength: - Recently, the yen extended its rally to above 146.50 against the US dollar, its strongest level since March. This was driven by diverging monetary policies between the US Federal Reserve and the BOJ. - Weak US jobs data have increased expectations for further Fed rate cuts, contributing to a weaker dollar. BOJ Rate Hike: - The BOJ raised its interest rate to a 16-year high of 0.25% and signaled the possibility of future increases if economic conditions warrant. This move surprised many economists. Government Intervention: - In July, Japanese authorities spent 5.53 trillion yen to support the currency through intervention. The government expressed concerns that a weaker yen could erode household purchasing power by pushing inflation higher than wage growth. Impact on Financial Markets Japanese Market: - The yen’s strength and BOJ’s policy adjustments have significantly influenced Japanese financial markets. The Nikkei 225 index fell by about 6%, closing the week at 35,909.70. This was one of the worst performances since March 2020 when the index fell below 36,000. Bond yields also dropped, with the benchmark 10-year yield falling below 1%, its lowest level in two months. Global Markets: - Global financial markets, including US markets, have been affected by recession fears and weak economic indicators. The Nasdaq Composite has slid into correction territory, reflecting broader market concerns. Conclusion The interplay between BOJ policies and global economic conditions continues to shape the USD/JPY dynamics. The BOJ’s commitment to maintaining low interest rates and engaging in extensive bond purchases influences the yen's value and the broader Japanese economy. Understanding these dynamics is crucial for investors and traders navigating the complex landscape of forex markets. USD/JPY Historical Movements and Influential Events on JPY Historical Movements of the JPY The Japanese yen (JPY) has experienced significant fluctuations influenced by various historical and economic events. Here are some notable periods and their impacts: 1. Introduction and Early Years (1871 - 1882): - The yen was introduced in 1871 as a modern currency, replacing the diverse local currencies issued by feudal regions. - In 1882, the establishment of the Bank of Japan (BOJ) centralized control over the currency, standardizing and stabilizing the yen. 2. Post-WWII Era (1945 - 1971): - After WWII, the yen was pegged to the US dollar at 360 yen per USD under the Bretton Woods system. This fixed rate helped stabilize the Japanese economy during its post-war recovery. - The peg was abandoned in 1971, and the yen became a free-floating currency. This shift led to significant volatility, with the yen reaching a high of 271 per USD in 1973. 3. 1980s Economic Boom and 1990s Asset Bubble Collapse: - During the 1980s, Japan's economy boomed, and the yen appreciated significantly. - The collapse of the asset bubble in the early 1990s led to a prolonged period of economic stagnation and deflation, with the BOJ adopting low interest rates to stimulate growth. 4. 2008 Financial Crisis: - The global financial crisis in 2008 saw the yen strengthen as investors sought safe-haven assets. The BOJ intervened multiple times to prevent excessive appreciation. 5. COVID-19 Pandemic: - The pandemic caused economic disruptions globally, leading to significant yen volatility. Safe-haven inflows drove the yen's value up, while the BOJ's QE programs aimed to mitigate economic downturns. Key Events Influencing Strong Movements in JPY 1. 1985 Plaza Accord: - An agreement between the G5 nations to depreciate the US dollar relative to the yen and other currencies. This led to a rapid appreciation of the yen, causing significant adjustments in Japan’s economy. 2. 1997 Asian Financial Crisis: - The crisis led to a flight to safety, with the yen initially strengthening before the BOJ intervened to stabilize the currency. 3. 2008 Global Financial Crisis: - The yen appreciated as global investors sought safe-haven assets. The BOJ intervened to prevent excessive yen strength, which could hurt Japan's export-driven economy. 4. 2011 Earthquake and Tsunami: - The natural disaster led to a sharp appreciation of the yen, prompting the BOJ and the Japanese government to intervene in the forex market to stabilize the currency. 5. COVID-19 Pandemic: - Safe-haven demand for the yen increased during the pandemic, but BOJ’s monetary policies, including extensive bond-buying and low interest rates, aimed to support the economy and stabilize the currency. Conclusion The Japanese yen has a rich history of significant fluctuations driven by both domestic policies and global events. The BOJ’s role in stabilizing the yen through various monetary policy tools has been crucial, especially during periods of economic uncertainty. Understanding these historical movements and influential events is key for anyone looking to grasp the dynamics of the JPY in the forex market.
Education
by SroshMayi
Is The US Stock Market Overvalued? Ask Buffet Indicator.The Buffett Indicator, named after renowned investor Warren Buffett, is a popular metric used to assess the valuation of the US stock market by comparing it to the nation's Gross Domestic Product (GDP). This ratio provides a clear picture of how the market's value stacks up against the economy's overall output. Understanding the Buffett Indicator - Buffett Indicator measures the ratio of total US stock market value to GDP. - Current value: 197% as of May 31, 2024. - Historical trend suggests a typical value closer to 100%. - 1.9 standard deviations above the trend line indicates significant overvaluation. Market Growth vs. Economic Growth - High Buffett Indicator value suggests a potential market bubble. - Disparity between market growth and economic output. - Historically, high ratios have led to market corrections. - Overvalued markets increase the risk of significant retracements. Impact of Interest Rates - Low interest rates drive investors towards equities, inflating stock prices. - Bonds offer lower returns, pushing capital into the stock market. - Rising interest rates could shift money back to bonds, pressuring stock prices. - The indicator's high value underscores the risk of a correction if interest rates increase. International Sales and Overvaluation - The indicator does not account for international sales of US companies. - Global revenues can distort the picture of domestic economic health. - High Buffett Indicator may reflect these global sales, adding to overvaluation. - Investors should consider conservative strategies until valuations return to historical norms.
SP:SPXEducation
by MarkitMaven
2
My Latest Open Source Indicator: Stef's Dollar Volume CounterStef's Dollar Volume Counter is my second script that I've worked on and coded. It is free and open source for everyone! Get it here: I am proud of this script because it does something very, very important: it counts the amount of money traded, not just the number of shares or contracts. In this educational post, I want to share why I think it matters and explain some concepts of markets along the way. 1. This is key for understanding where the big and small money is flowing in the market. By focusing on the dollar volume, traders can gain insights into liquidity and significant money movements over time. 2. Watch the money, not the shares. This script is totally different from other volume scripts because it shows the amount of money traded, not just the shares, contracts, or coins. More importantly, it stands out from other volume indicators because it specifically showcases dollar volume amounts either as a table or a label. This focus helps traders track the sheer money movements. 3. Know your perspective! I personally am most pleased with two important features that the indicator offers: it shows the Dollar Volume Counter table that illustrates the highest and lowest and average dollar volumes over a specific period that YOU can customize in the settings menu. Fun little feature: In the spirit of Doge, I added a text lable that says "Wow! Much Money!" which highlights the top three recent highest dollar volumes within the visible chart area, emphasizing significant trading periods. You can toggle this on or off in the settings menu. Thanks for reading! I look forward to hearing your feedback.
NASDAQ:AAPLEducation
by scheplick
Blum Project Analysis!!!Today, I want to introduce you to another Tap-To-Earn project and see if it is worth your time. In the previous articles, I explained Notcoin and the Hamster Kombat project. If you have time, take a look at these articles. The name of this project is Blum . Please stay with me. ----------------------------------------------------------------------- What is Blum? The Blum Token is a cryptocurrency associated with the Blum Crypto Project on Telegram . While specific details about the creators and core team might be limited, the project focuses on community engagement, utility, and promoting blockchain adoption. The token serves various purposes within the project’s ecosystem, from facilitating transactions to enabling governance and rewarding community participation ----------------------------------------------------------------------- Now, let's check the Blum project with the help of SWOT ( Strengths-Weaknesses-Opportunities-Threats ). What is the SWOT !? SWOT (Strengths-Weaknesses-Opportunities-Threats) analysis is a framework used to evaluate a company's competitive position and to develop strategic planning. SWOT analysis assesses internal and external factors, as well as current and future potential. 🔸 Strengths : The game's style makes it difficult for the bot to jam every token_The active Telegram community currently has 11 million followers Blum selected by Binance labs team as featured airdrop 🔸 Weaknesses : No whitepaper _ Poor website _ Boring game _ The total number of tokens is not clear - the distribution method may not be fair _ the development team is unclear_The goal of the project is very general_ Low number of followers compared to other competitors on X platform _ Currently, you can become a member by invitation only_ It only has roadmap until the end of 2024_ The game environment is very simple. 🔸 Opportunities : Hard Forks to improve the Blum project_ Willingness of big investors to invest _ Improving the website and white paper_ Improve the game environment 🔸 Threats : High number of miners _ Emergence of Whales _Unspecified fee_ Hackers _ Competitors_Laws and regulations of countries Can you add other parameters to the options above or not!? ----------------------------------------------------------------------- Conclusion : Due to the fact that there are more Tap-to-Earn games these days, we should be a little careful in choosing the game, because no matter what you like, you will eventually have an income for the time you spend. According to the description above, if you want to enter the BLUM project, you should only consider it a hobby and not spend a lot of time on it because it has many ambiguities and weaknesses. Please do not forget the ✅' like '✅ button 🙏😊 & Share it with your friends; thanks, and Trade safe.
Education
by pejman_zwin
14
Can Hamster Kombat become another Notcoin(NOT)!?Today, I want to examine a new Telegram game that has become very trending and see if the Hamster Kombat project can be another Notcoin(NOT) . You have probably heard about the Hamster Komba game in the past few weeks at work, school , university , and in the family (maybe even the notification of people joining your contact in Telegram is a lot for you😂). I suggest you read this article to find out if Hamster Kombat is worth your time or not. Please stay with me. ----------------------------------------------------------------------- What is Hamster Kombat? Hamster Kombat is a Tap-to-earn type of game that is activated on the Telegram platform . This game was officially launched on March 25, 2024 on the TON network. Hamster Combat currently has more than 60 million users , with more than 24 million active users The game allows players to manage a virtual cryptocurrency exchange and earn in-game coins, which can subsequently be converted into real tokens to withdraw the earned funds. The gameplay is similar to the popular game Notcoin. ----------------------------------------------------------------------- Now, let's check the Hamster Kombat project with the help of SWOT ( Strengths - Weaknesses - Opportunities - Threats ). What is the SWOT!? SWOT ( Strengths-Weaknesses-Opportunities-Threats ) analysis is a framework used to evaluate a company's competitive position and to develop strategic planning. SWOT analysis assesses internal and external factors, as well as current and future potential. 🔸 Strengths : More interesting game than Notcoin _ High number of active users (Notcoin less than 40 million users) _ Good marketing _ Very good conditions on social media _ Having a road map. 🔸 Weaknesses : No whitepaper _ Poor website _ Not having a clear future for the Hamster Kombat project _ The total number of tokens is not clear - the distribution method may not be fair _ the development team is unclear _ wastes a lot of energy and time. 🔸 Opportunities : Hard Forks to improve the Hamster Kombat project_ Willingness of big investors to invest _ Improving the website and white paper. 🔸 Threats : High number of miners _ Emergence of Whales _Unspecified fee_ Hackers _ Competitors. Can you add other parameters to the options above or not!? ----------------------------------------------------------------------- Conclusion : Due to the fact that there are more Tap-to-Earn games these days, we should be a little careful in choosing the game, because no matter what you like, you will eventually have an income for the time you spend. According to the above description and the information so far about the Hamster Kombat project, it seems that considering the high number of active users, the token of this project will be listed at least because of its attractiveness for exchanges (volume trading). The point here is whether you can earn for the time you spend or not? Because this game seems to take more time than the similar Notcoin project, so in conclusion, I recommend you look at the Hamster Kombat game as a side hobby and not spend all your time on a project that is uncertain. Please do not forget the ✅' like '✅ button 🙏😊 & Share it with your friends; thanks, and Trade safe.
Education
by pejman_zwin
13
Post-trade psychology! In the trading market, being anxious cannot solve the problem. But be prepared for a long time, don't rush for success, and don't be afraid of being a late bloomer. Take your time and master the process, don’t rush the results. Whether it is the trading market or other industries, it all requires a process, and it requires step by step and continuous efforts to achieve it. Give the process time, and please give yourself time. I think time will definitely give you a better answer. Accumulation over time will make you gain more and more. Don't be anxious, just take it step by step. Although the process is slow, if you keep going, slow and perseverant, you will eventually reach the goal you want. Usually the more anxious you are in trading, the easier it is to deviate from your original intention, and most of the results are counterproductive. In nature, you will find that a lot of life is slow. The sun rises little by little and sets little by little, the flowers bloom one by one and wither petals. The flowers will not bloom before the season, and the fruits cannot be picked if they are not ripe. The journey of life is very long, you don’t have to seize the day, persistence is the only way to win in the end.
COMEX:GC1!Education
by cdfxcdfx
HOW-TO use Bitcoin 5A Strategy@LilibtcIn our long-term strategy, we have deeply explored the key factors influencing the price of Bitcoin. By precisely calculating the correlation between these factors and the price of Bitcoin, we found that they are closely linked to the value of Bitcoin. To more effectively predict the fair price of Bitcoin, we have built a predictive model and adjusted our investment strategy accordingly based on this model. In practice, the prediction results of this model correspond quite high with actual values, fully demonstrating its reliability in predicting price fluctuations. When the future is uncertain and the outlook is unclear, people often choose to hold back and avoid risks, or even abandon their original plans. However, the prediction of Bitcoin is full of challenges, but we have taken the first step in exploring. Table of contents: Guide Step 1: Identify the factors that have the greatest impact on Bitcoin price Step 2: Build a Bitcoin price prediction model Step 3: Find indicators for warning of bear market bottoms and bull market tops Step 4: Develop a Bitcoin 5A strategy Step 5: Verify the performance of the Bitcoin 5A strategy Opportunities Usage Restrictions Guide: 1. On the main interface, modify the code, find the BTCUSD trading pair, and select the BITSTAMP exchange for trading. 2. Set the time period to the daily chart. 3. Select a logarithmic chart in the chart type to better identify price trends. 4. In the strategy settings, adjust the options according to personal needs, including language, display indicators, display strategies, display performance, display optimizations, sell alerts, buy prompts, opening days, backtesting start year, backtesting start month, and backtesting start date. Step 1: Identify the factors that have the greatest impact on Bitcoin price Correlation Coefficient: A mathematical concept for measuring influence In order to predict the price trend of Bitcoin, we need to delve into the factors that have the greatest impact on its price. These factors or variables can be expressed in mathematical or statistical correlation coefficients. The correlation coefficient is an indicator of the degree of association between two variables, ranging from -1 to 1. A value of 1 indicates a perfect positive correlation, while a value of -1 indicates a perfect negative correlation. For example, if the price of corn rises, the price of live pigs usually rises accordingly, because corn is the main feed source for pig breeding. In this case, the correlation coefficient between corn and live pig prices is approximately 0.3. This means that corn is a factor affecting the price of live pigs. On the other hand, if a shooter's performance improves while another shooter's performance deteriorates due to increased psychological pressure, we can say that the former is a factor affecting the latter's performance. Therefore, in order to identify the factors that have the greatest impact on the price of Bitcoin, we need to find the factors with the highest correlation coefficients with the price of Bitcoin. If, through the analysis of the correlation between the price of Bitcoin and the data on the chain, we find that a certain data factor on the chain has the highest correlation coefficient with the price of Bitcoin, then this data factor on the chain can be identified as the factor that has the greatest impact on the price of Bitcoin. Through calculation, we found that the 🔵number of Bitcoin blocks is one of the factors that has the greatest impact on the price of Bitcoin. From historical data, it can be clearly seen that the growth rate of the 🔵number of Bitcoin blocks is basically consistent with the movement direction of the price of Bitcoin. By analyzing the past ten years of data, we obtained a daily correlation coefficient of 0.93 between the number of Bitcoin blocks and the price of Bitcoin. Step 2: Build a Bitcoin price prediction model Predictive Model: What formula is used to predict the price of Bitcoin? Among various prediction models, the linear function is the preferred model due to its high accuracy. Take the standard weight as an example, its linear function graph is a straight line, which is why we choose the linear function model. However, the growth rate of the price of Bitcoin and the number of blocks is extremely fast, which does not conform to the characteristics of the linear function. Therefore, in order to make them more in line with the characteristics of the linear function, we first take the logarithm of both. By observing the logarithmic graph of the price of Bitcoin and the number of blocks, we can find that after the logarithm transformation, the two are more in line with the characteristics of the linear function. Based on this feature, we choose the linear regression model to establish the prediction model. From the graph below, we can see that the actual red and green K-line fluctuates around the predicted blue and 🟢green line. These predicted values are based on fundamental factors of Bitcoin, which support its value and reflect its reasonable value. This picture is consistent with the theory proposed by Marx in "Das Kapital" that "prices fluctuate around values." The predicted logarithm of the market cap of Bitcoin is calculated through the model. The specific calculation formula of the Bitcoin price prediction value is as follows: btc_predicted_marketcap = math.exp(btc_predicted_marketcap_log) btc_predicted_price = btc_predicted_marketcap / btc_supply Step 3: Find indicators for early warning of bear market bottoms and bull market tops Warning Indicator: How to Determine Whether the Bitcoin Price has Reached the Bear Market Bottom or the Bull Market Top? By observing the Bitcoin price logarithmic prediction chart mentioned above, we notice that the actual price often falls below the predicted value at the bottom of a bear market; during the peak of a bull market, the actual price exceeds the predicted price. This pattern indicates that the deviation between the actual price and the predicted price can serve as an early warning signal. When the 🟠Bitcoin price deviation is very low, as shown by the chart with 🟩green background, it usually means that we are at the bottom of the bear market; Conversely, when the 🟠Bitcoin price deviation is very high, the chart with a 🟥red background indicates that we are at the peak of the bull market. This pattern has been validated through six bull and bear markets, and the deviation value indeed serves as an early warning signal, which can be used as an important reference for us to judge market trends. Step 4: Bitcoin 5A Strategy Formulation Strategy: When to buy or sell, and how many to choose? We introduce the Bitcoin 5A strategy. This strategy requires us to generate trading signals based on the critical values of the warning indicators, simulate the trades, and collect performance data for evaluation. In the Bitcoin 5A strategy, there are three key parameters: buying warning indicator, batch trading days, and selling warning indicator. Batch trading days are set to ensure that we can make purchases in batches after the trading signal is sent, thus buying at a lower price, selling at a higher price, and reducing the trading impact cost. In order to find the optimal warning indicator critical value and batch trading days, we need to adjust these parameters repeatedly and perform backtesting. Backtesting is a method established by observing historical data, which can help us better understand market trends and trading opportunities. Specifically, we can find the key trading points by watching the Bitcoin price log and the Bitcoin price deviation chart. For example, on August 25, 2015, the 🟠Bitcoin price deviation was at its lowest value of -1.11; on December 17, 2017, the 🟠Bitcoin price deviation was at its highest value at the time, 1.69; on March 16, 2020, the 🟠Bitcoin price deviation was at its lowest value at the time, -0.91; on March 13, 2021, the 🟠Bitcoin price deviation was at its highest value at the time, 1.1; on December 31, 2022, the 🟠Bitcoin price deviation was at its lowest value at the time, -1. To ensure that all five key trading points generate trading signals, we set the warning indicator Bitcoin price deviation to the larger of the three lowest values, -0.9, and the smallest of the two highest values, 1. Then, we buy when the warning indicator Bitcoin price deviation is below -0.9, and sell when it is above 1. In addition, we set the batch trading days as 25 days to implement a strategy that averages purchases and sales. Within these 25 days, we will invest all funds into the market evenly, buying once a day. At the same time, we also sell positions at the same pace, selling once a day. Adjusting the threshold: a key step to optimizing trading strategy Adjusting the threshold is an indispensable step for better performance. Here are some suggestions for adjusting the batch trading days and critical values of warning indicators: • Batch trading days: Try different days like 25 to see how it affects overall performance. • Buy and sell critical values for warning indicators: iteratively fine-tune the buy threshold value of -0.9 and the sell threshold value of 1 exhaustively to find the best combination of threshold values. Through such careful adjustments, we may find an optimized approach with a lower maximum drawdown rate (e.g., 11%) and a higher cumulative return rate for closed trades (e.g., 474 times). The chart below is a backtest optimization chart for the Bitcoin 5A strategy, providing an intuitive display of strategy adjustments and optimizations. In this way, we can better grasp market trends and trading opportunities, thereby achieving a more robust and efficient trading strategy. Step 5: Validating the performance of the Bitcoin 5A Strategy Model accuracy validation: How to judge the accuracy of the Bitcoin price model? The accuracy of the model is represented by the coefficient of determination R square, which reflects the degree of match between the predicted value and the actual value. I divided all the historical data from August 18, 2015 into two groups, and used the data from August 18, 2011 to August 18, 2015 as training data to generate the model. The calculation result shows that the coefficient of determination R squared during the 2011-2015 training period is as high as 0.81, which shows that the accuracy of this model is quite high. From the Bitcoin price logarithmic prediction chart in the figure below, we can see that the deviation between the predicted value and the actual value is not far, which means that most of the predicted values can explain the actual value well. The calculation formula for the coefficient of determination R square is as follows: residual = btc_close_log - btc_predicted_price_log residual_square = residual * residual train_residual_square_sum = math.sum(residual_square, train_days) train_mse = train_residual_square_sum / train_days train_r2 = 1 - train_mse / ta.variance(btc_close_log, train_days) Model reliability verification: How to affirm the reliability of the Bitcoin price model when new data is available? Model reliability is achieved through model verification. I set the last day of the training period to February 2, 2024 as the "verification group" and used it as verification data to verify the reliability of the model. This means that after generating the model if there is new data, I will use these new data together with the model for prediction, and then evaluate the accuracy of the model. If the coefficient of determination when using verification data is close to the previous training one and both remain at a high level, then we can consider this model as reliable. The coefficient of determination calculated from the validation period data and model prediction results is as high as 0.83, which is close to the previous 0.81, further proving the reliability of this model. Performance evaluation: How to accurately evaluate historical backtesting results? After detailed strategy testing, to ensure the accuracy and reliability of the results, we need to carry out a detailed performance evaluation on the backtest results. The key evaluation indices include: • Net value curve: As shown in the rose line, it intuitively reflects the growth of the account net value. By observing the net value curve, we can understand the overall performance and profitability of the strategy. The basic attributes of this strategy are as follows: Trading range: 2015-8-19—2024-2-18, backtest range: 2011-8-18—2024-2-18 Initial capital: 1000USD, order size: 1 contract, pyramid: 50 orders, commission rate: 0.2%, slippage: 20 markers. In the strategy tester overview chart, we also obtained the following key data: • Net profit rate of closed trades: as high as 474 times, far exceeding the benchmark, as shown in the strategy tester performance summary chart, Bitcoin buys and holds 210 times. • Number of closed trades and winning percentage: 100 trades were all profitable, showing the stability and reliability of the strategy. • Drawdown rate & win-loose ratio: The maximum drawdown rate is only 11%, far lower than Bitcoin's 78%. Profit factor, or win-loose ratio, reached 500, further proving the advantage of the strategy. Through these detailed evaluations, we can see clearly the excellent balance between risk and return of the Bitcoin 5A strategy. Opportunity: Capturing factor changes Changes in factors provide us with valuable trading opportunities. The 🟠orange line in the chart below represents the factor indicator when its value on February 20, 2024 is -0.32, which is greater than the threshold of -0.9. This could be a signal worth paying attention to. Opportunities like this do not come up often, so we need to stay alert and act fast. Usage Restrictions: Strategy Application in Specific Situations Please note that this strategy is designed specifically for Bitcoin and should not be applied to other assets or markets without authorization. In actual operations, we should make careful decisions according to our risk tolerance and investment goals.
BITSTAMP:BTCUSDEducation
by lilibtc
3
Unveiling the Golden Opportunity: Why XAUUSD/Gold is My FavoriteJoin me on an immersive journey as I delve into the unparalleled allure of trading XAUUSD/Gold. In this comprehensive exploration, I'll unravel the intricacies of trading gold, from its status as a timeless safe-haven asset to its remarkable resilience in the face of market volatility. Delve deeper into the historical significance of gold, its correlation with global economic trends, and the unique opportunities it presents to traders. Through expert analysis and insightful commentary, I'll showcase why XAUUSD/Gold remains my preferred pair for unlocking consistent profits and navigating the ever-evolving landscape of financial markets. Buckle up and discover the golden secrets to trading success with me.
PEPPERSTONE:XAUUSDEducation
by ControllaFX
Fair Value Gap Trading StrategyFair Value Gap Trading Strategy To implementing a fair value gap as a trading strategy you need to understand these three basic components of this trading strategy. Time Liquidity Hunt Market Structure Shift Fair Value Gap Let’s begin by discussing the importance of time in trading. According to ICT Trader, time is considered to be fractal, meaning that what happens on higher time frames is reflected in lower time frames if studied in the proper context. In this context, fractal refers to the idea that patterns and behaviors observed on longer time frames, such as daily or weekly charts, can be seen in shorter time frames, like hourly or minute charts. By studying price action and market behavior across different time frames, traders can gain a deeper understanding of market dynamics and potentially identify profitable trading opportunities. Time indeed holds significant importance in the fair value gap trading strategy, particularly when it comes to identifying favorable trading setups. Despite the forex market being open 24 hours a day, not all times present ideal conditions for executing fair value gap trades. That’s where the concept of ICT Kill Zones comes into play. ICT Kill Zones ICT Kill Zones refer to specific time periods during the day that have been observed to offer higher probability trading opportunities. These zones are associated with the entry of smart money, which are institutional or banks who have the ability to influence market direction. In short, ICT Kill Zones correspond to specific time periods during the day that are particularly relevant for trading activities. These zones include the London Open, London Close, New York Open, and New York Close. Traders using the fair value gap trading strategy often focus on these times as they tend to offer higher probability trading setups. The ICT Kill Zones are associated with the entry of smart money and can provide enhanced opportunities for traders to capitalize on market movements. By aligning their trading activities with these specific time periods, traders aim to improve their chances of success. Liquidity in FVG Trading Strategy Liquidity in the market often takes the form of buy stops and sell stops.market makers or smart money intentionally trap retail traders by manipulating prices to trigger their stop losses. The idea is that they move the market in one direction to hunt for stop losses, causing retail traders to place orders in the false direction and set their stop losses at key levels. After the stop loss hunt, the market reverses in the opposite direction, benefiting the smart money. Let’s analyze the above chart from a retail trader’s perspective. When we observe the chart, we notice that the price levels between 44240 and 44280 have proven to be strong resistance in the past. Based on this observation, many retail traders might place their selling pending orders to anticipate of a price reversal at these levels. To manage their risk, they would likely set their stop loss orders just above this resistance area. What is done by market makers or smart money,they could manipulate the market by initially pushing the price upward, deliberately triggering the stop loss orders placed by retail traders. This action would cause some retail traders to think that a breakout is occurring and prompt them to place buying orders while setting their stop losses at levels below the resistance area. Once the stop loss orders have been hunted and triggered, the market makers or smart money may then reverse the price direction. Enhancing Trading Success with the Fair Value Gap Entry Strategy After a liquidity hunt on a higher time frame, you suggest switching to lower time frames such as 15 minutes, 5 minutes, 3 minutes, or even 1 minute to identify certain patterns that may emerge following the stop loss hunt. These patterns include: 1.Sudden or sharp price movements: Following the liquidity hunt, you may observe rapid and significant price fluctuations on the lower time frames. This sharp movement causing market structure shift and provide an extra confluence. 2. Fair value gap (FVG): Look for gaps between the current price and the fair value of the asset. The fair value represents the equilibrium price based on various factors. Identify instances where the market price deviates significantly from this fair value. 3. Entry position based on the Fair Value Gap strategy: Once you spot a fair value gap pattern after the liquidity hunt, you can consider taking a position in anticipation of the market filling that gap. The expectation is that the market will eventually return to the fair value price. It’s important to carefully train your eyes to recognize these patterns after a liquidity hunt and patiently wait for the market to come back and fill the identified gap. Once you have identified a suitable entry position, you can place your stop loss order above the first candle to manage your risk. Please note that implementing such strategies requires careful analysis, experience, and a deep understanding of the specific market you are trading. It’s crucial to conduct thorough research, backtest your strategy, and consider other factors that may influence price movements before making any trading decisions.
Education
by Golden_Star1994
and How to Fix ThemTechnical analysis (TA) stands out as one of the most widely utilized methods for scrutinizing financial markets, finding applications across diverse sectors like stocks, forex, gold, and cryptocurrencies. While the fundamental tenets of technical analysis may seem straightforward, mastering this craft poses its own set of challenges. Navigating through a plethora of errors is a natural part of the learning curve, much like acquiring any skill. This becomes particularly crucial in the realm of trading and investing, where the absence of vigilance and failure to glean insights from mistakes can potentially result in substantial capital losses. While acknowledging the value of learning from errors, it is imperative to prioritize the avoidance of these pitfalls wherever possible. So, what missteps tend to be common among beginners when delving into technical analysis and trading? Neglecting Risk Management: ‣Failing to establish appropriate risk-reward ratios and neglecting risk management strategies can lead to significant losses. ‣Traders must define their risk tolerance , set stop-loss orders, and diversify their portfolios to protect against adverse market movements. ‣Understanding position sizing and employing risk management tools, such as trailing stops, is crucial for preserving capital. Chasing the Trend: ‣While trend-following is a popular strategy, blindly chasing trends without thorough analysis can result in poorly timed entries. ‣Traders should wait for confirmations, utilize technical indicators to identify trend strength, and avoid entering trades impulsively. ‣Recognizing trend reversals and adjusting strategies accordingly is essential for sustainable trading success. Lack of Continual Learning: ‣The dynamic nature of financial markets requires traders to stay informed about market trends, economic developments, and emerging trading strategies. ‣Continuous learning through reading market analyses, attending webinars, and participating in trading communities enhances traders' decision-making capabilities. ‣Stagnation in learning may lead to outdated strategies and missed opportunities for profitable trades. Impatience with Strategies: ‣Successful trading strategies require time to prove their effectiveness, and impatience can lead to premature abandonment. ‣Traders should maintain discipline, rigorously follow their strategies, and resist the urge to switch strategies too quickly. ‣Consistency and a long-term perspective are critical for evaluating the true efficacy of a trading strategy. Focusing Solely on Technicals: ‣While technical analysis is valuable, ignoring fundamental factors can result in a narrow perspective. ‣Traders benefit from integrating both technical and fundamental analyses for a comprehensive understanding of market conditions. ‣Economic indicators, news events, and geopolitical factors can significantly impact asset prices, complementing technical analysis. Emotional Trading: ‣Emotional decision-making, driven by FOMO , greed, or excitement, can lead to irrational actions and losses. ‣Traders must cultivate emotional discipline, adhere to their trading plans, and avoid making impulsive decisions based on transient emotions. ‣Utilizing mindfulness techniques and taking breaks during periods of high stress can help manage emotional responses. Lack of Record-Keeping: ‣Maintaining a detailed trading journal is essential for tracking trades, analyzing strategies, and identifying areas for improvement. ‣Traders often overlook the importance of record-keeping, missing valuable insights that could enhance their trading performance. ‣Regularly reviewing past trades enables traders to learn from both successes and mistakes, refining their approach over time. Ignoring Market Sentiment: ‣Market sentiment influences price movements, and overlooking it can lead to missed opportunities or unexpected losses. ‣Traders should pay attention to sentiment indicators, news sentiment analysis, and social media trends to gauge market sentiment. ‣Understanding how sentiment aligns with technical analysis provides a more holistic view of market conditions. Overconfidence: ‣Overestimating one's abilities and becoming excessively confident can lead to risky decisions and substantial losses. ‣Traders should remain humble, acknowledge market uncertainties, and avoid overconfidence biases. ‣Regular self-assessment and seeking constructive feedback from peers can help prevent overconfidence. Neglecting Diversification: ‣Concentrating all investments in a single asset class or market exposes traders to higher risks during market downturns. ‣Diversification involves spreading investments across different assets to mitigate risk and enhance portfolio stability. ‣Neglecting diversification may result in significant losses if a specific market experiences adverse movements. Failure to Adapt to Market Conditions: ‣Unwillingness to adapt strategies to changing market conditions can lead to ineffective approaches. ‣Traders must stay flexible, recognize shifts in market dynamics, and adjust their strategies accordingly. ‣Failure to adapt may result in missed opportunities or losses during evolving market landscapes. We've covered several fundamental mistakes that you'd do well to steer clear of when employing technical analysis. Keep in mind that trading is a challenging endeavor, and adopting a longer-term perspective often proves more practical. Remember, achieving consistent proficiency in trading is a gradual journey that demands time and effort. It involves extensive practice to fine-tune your trading strategies and acquire the skills to craft your unique trade concepts. This approach enables you to pinpoint your strengths, recognize your weaknesses, and maintain command over your investment and trading choices.
Education
by Vestinda
Simple Investing Strategy, Affordable for all!Hey! Everybody wants to get rich. But not many from us know what it takes. In this article let's discuss Investing income from annual percentage yield (APY) . Key point is the percentage of income can be different from your location, but lets make our calculations from 8.0% APY. Why this strategy is Affordable for ALL? Well, for calculation I've used only $161 of monthly investing. I understand for some person this is nothing, and for another it is a lot. But you can calculate your own affordable investing amount per month and use it. Consistency is the key! Another point why its affordable, its because you don't need to have a lot of money at the beginning. You can start from minimal deposit allowed by service/fund/bank (APY provider) where you allocating your funds. Please, note, this is simple and affordable investing strategy. But still THIS IS NOT 100% SAFE STRATEGY... There are several risks of losing your money after all. Mostly this risks depends on APY provider, so I recommend to change your APY provider over a time, and to secure your funds use multiple providers. Let's see how we get this numbers and first of all it is important to keep consistency during all your investment journey. Remember, this way can make you millionaire and can create a fortune for your kids. To understand how this works, let's see what is Compound Interest: Compound interest is the concept of adding accumulated interest back to the principal sum, so that interest is earned on top of interest from that moment on. The act of declaring interest to be principal is called compounding. Financials institutions vary in terms of their compounding rate frequency - daily, monthly, yearly, etc. Your savings account may vary on this, so you may wish to check with your bank or financial institution to find out which frequency they compound your interest at. I used monthly compounding to calculate final value. With savings accounts, interest can be compounded at either the start or the end of the compounding period (month or year). Compound interest formula Compound interest, or 'interest on interest', is calculated with the compound interest formula. Multiply the principal amount by one plus the annual interest rate to the power of the number of compound periods to get a combined figure for principal and compound interest. This formula is base of all interest calculations. To get easier process of calculation, I have used online Compound Interest Calculator. Best numbers we can get if we start investing early, but it happens we see right information too late, and we ask ourselves "Is it good time to start?" — I can say for sure, YES! Always good idea to start investing in your savings account. Trading is trading, but investing is a little different. You can invest in markets, or in savings accounts. Now let's see "worst case" — you starting your investing journey at 40 years old. How much you can earn on savings account until 60? I have calculated it with calculator, and used only $161 investments/savings per month with APY of 8%. You can see after 20 years of savings this amount of money (pretty much affordable for many people out there) you will get about $95,464 Final Value. Very impressive. Imagine if you can save more from your income each month... For example if you can save $1000 monthly, you will get $592,947 Final value after 20 years on your Savings Account. Middle scenario — investing for 30 years on your savings account. Until 60 you can earn solid $241,547 Final value, investing only $161 per month! Now if you can invest about $500 per month from your income you will get amazing $750,147 Final value. And of course best scenario — start investing on savings account early from 20y.o. This way you can get $565,799 Final value by 60 y.o. And if its possible to save more, let's say $250 monthly, you can get $878,570.30 Final value by 60 y.o. So in order to get rich, you don't need to invest a lot of money. Just make you investments consistent, and improve your financial education. Hope this article can inspire you to create your savings account and plan your future. Best regards, Artem Crypto
Editors' picks
BITFINEX:BTCUSDEducation
by ArShevelev
126
WORLD VOLATILE SITUATION Economy VS War🔴Be Aware Of Today... 🔹The Violent Movements Will Begins With These News 🔹(ADP) Nonfarm Employment Change 🔹Ism Manufacturing PMI 🔹Ism Manufacturing Prices 🔹Jolts Job Openings 🔹Most Importantly Fed Interest Rate Decision Also And U.S. Federal Open Market Committee (FOMC) Press Conference 🔴Federal Reserve Meeting Investors Will Turn Their Attention To The Federal Reserve's Policy Meeting Tomorrow, Eager To Hear Policymakers' Views On The State Of The Economy And The Future Outlook For Interest Rates. 🔴 Most Investors Are Betting That The Federal Reserve Has Finished Tightening Monetary Policy After Chairman Jerome Powell Said That Rising Long-term Yields Reduce The Need For Further Increases In Interest Rates. On the Other Hand, The War situation: 🟥Israel-Hamas war live updates: Foreign passport holders seen entering Rafah crossing; Gaza communications cut again 🟥Bolivia cuts diplomatic ties with Israel; Chile and Colombia recall ambassadors 🟥Still, the situation of War is so bad Good Luck Everyone 👋
TVC:DXYEducation
by SroshMayi
Warren Buffett's Margin of SafetyIn the world of investing, few names carry as much weight as Warren Buffett. Often hailed as the Oracle of Omaha, Buffett's wisdom has guided countless investors to financial success. At the core of his investment philosophy lies a concept he considers paramount: the Margin of Safety. Buffett once famously said that the three most important words in investing are "Margin of Safety." To delve deeper into this principle, he pointed to Chapter 20 of "The Intelligent Investor," a seminal work by Benjamin Graham, which he deemed the best chapter ever written on the subject. Chapter 20: The Concept of a Margin of Safety At its essence, the Margin of Safety revolves around the idea that every stock has a fair (intrinsic) value based on the underlying company. However, this fair value often deviates significantly from the stock's current market price. No Margin of Safety: When the stock price exceeds its fair value, there is no margin of safety. Margin of Safety: When the stock price falls below its fair value, a margin of safety exists. Benefits of the Margin of Safety Investing in any asset for less than its intrinsic value is a sound financial decision. However, in the world of investing, where determining precise fair values can be elusive, this principle holds even greater significance. One can never pinpoint an exact fair value; they can only estimate a range. The Margin of Safety serves as a shield against potential errors in estimating fair value. The Mathematical Advantage A Margin of Safety provides two critical mathematical advantages: Downside Protection: Avoiding losses is paramount in investing. It takes a 100% gain to recover from a 50% loss. Therefore, preventing losses should be a top priority. Exponential Returns: Imagine a stock with a fair value of $10 but currently trading at $8, offering a 25% upside. Now, if that same stock were available for $5, the upside potential would skyrocket to 100%. A Margin of Safety can turn a good investment into an exceptional one. Why Do Margins of Safety Exist? The concept of Mr. Market, introduced by Benjamin Graham, plays a pivotal role in understanding the existence of Margins of Safety. Mr. Market is depicted as an impulsive individual, prone to bouts of depression (selling stocks at a discount) and exuberance (selling at a premium). Stock markets exhibit such fluctuations due to the psychological biases and errors of market participants. Understanding this human element is crucial in grasping the significance of Margins of Safety. In the words of Warren Buffett himself, "If you understand chapters 8 and 20 of 'The Intelligent Investor' and chapter 12 of 'The General Theory,' you don't need to read anything else." These chapters provide a foundation for investors to navigate the complexities of the market with the wisdom of a Margin of Safety. In conclusion, the Margin of Safety isn't just a concept; it's a guiding principle that can safeguard your investments and unlock their full potential. Buffett's reverence for this idea underscores its importance in achieving success in the world of finance.
Education
by Vestinda
Kelly Criterion and other common position-sizing methodsWhat is position sizing & why is it important? Position size refers to the amount of risk - money, contracts, equity, etc. - that a trader uses when entering a position on the financial market. We assume, for ease, that traders expect a 100% profit or loss as a result of the profit lost. Common ways to size positions are: Using a set amount of capital per trade . A trader enters with $100 for example, every time. This means that no matter what the position is, the maximum risk of it will be that set capital. It is the most straight-forward way to size positions, and it aims at producing linear growth in their portfolio. Using a set amount of contracts per trade . A trader enters with 1 contract of the given asset per trade. When trading Bitcoin, for example, this would mean 1 contract is equal to 1 Bitcoin. This approach can be tricky to backtest and analyse, since the contract’s dollar value changes over time. A trade that has been placed at a given time when the dollar price is high may show as a bigger win or loss, and a trade at a time when the dollar price of the contract is less, can be shown as a smaller win or loss. Percentage of total equity - this method is used by traders who decide to enter with a given percentage of their total equity on each position. It is commonly used in an attempt to achieve ‘exponential growth’ of the portfolio size. However, the following fictional scenario will show how luck plays a major role in the outcome of such a sizing method. Let’s assume that the trader has chosen to enter with 50% of their total capital per position. This would mean that with an equity of $1000, a trader would enter with $500 the first time. This could lead to two situations for the first trade: - The position is profitable, and the total equity now is $1500 - The position is losing, and the total equity now is $500. When we look at these two cases, we can then go deeper into the trading process, looking at the second and third positions they enter. If the first trade is losing, and we assume that the second two are winning: a) 500 * 0.5 = 250 entry, total capital when profitable is 750 b) 750 * 0.5 = 375 entry, total capital when profitable is $1125 On the other hand, If the first trade is winning, and we assume that the second two are winning too: a) 1500 * 0.5 = 750 entry, total capital when profitable is $2250 b) 2250 * 0.5 = 1125 entry, total capital when profitable is $3375 Let’s recap: The trader enters with 50% of the capital and, based on the outcome of the first trade, even if the following two trades are profitable, the difference between the final equity is: a) First trade lost: $1125 b) First trade won: $3375 This extreme difference of $2250 comes from the single first trade, and whether it’s profitable or not. This goes to show that luck is extremely important when trading with percentage of equity, since that first trade can go any way. Traders often do not take into account the luck factor that they need to have to reach exponential growth . This leads to very unrealistic expectations of performance of their trading strategy. What is the Kelly Criterion? The percentage of equity strategy, as we saw, is dependent on luck and is very tricky. The Kelly Criterion builds on top of that method, however it takes into account factors of the trader’s strategy and historical performance to create a new way of sizing positions. This mathematical formula is employed by investors seeking to enhance their capital growth objectives. It presupposes that investors are willing to reinvest their profits and expose them to potential risks in subsequent trades. The primary aim of this formula is to ascertain the optimal allocation of capital for each individual trade. The Kelly criterion encompasses two pivotal components: Winning Probability Factor (W) : This factor represents the likelihood of a trade yielding a positive return. In the context of TradingView strategies, this refers to the Percent Profitable. Win/Loss Ratio (R) : This ratio is calculated by the maximum winning potential divided by the maximum loss potential. It could be taken as the Take Profit / Stop-Loss ratio. It can also be taken as the Largest Winning Trade / Largest Losing Trade ratio from the backtesting tab. The outcome of this formula furnishes investors with guidance on the proportion of their total capital to allocate to each investment endeavour. Commonly referred to as the Kelly strategy, Kelly formula, or Kelly bet, the formula can be expressed as follows: Kelly % = W - (1 - W) / R Where: Kelly % = Percent of equity that the trader should put in a single trade W = Winning Probability Factor R = Win/Loss Ratio This Kelly % is the suggested percentage of equity a trader should put into their position, based on this sizing formula. With the change of Winning Probability and Win/Loss ratio, traders are able to re-apply the formula to adjust their position size. Let’s see an example of this formula. Let’s assume our Win/Loss Ration (R) is the Ratio Avg Win / Avg Loss from the TradingView backtesting statistics. Let’s say the Win/Loss ratio is 0.965. Also, let’s assume that the Winning Probability Factor is the Percent Profitable statistics from TradingView’s backtesting window. Let’s assume that it is 70%. With this data, our Kelly % would be: Kelly % = 0.7 - (1 - 0.7) / 0.965 = 0.38912 = 38.9% Therefore, based on this fictional example, the trader should allocate around 38.9% of their equity and not more, in order to have an optimal position size according to the Kelly Criterion. The Kelly formula, in essence, aims to answer the question of “What percent of my equity should I use in a trade, so that it will be optimal”. While any method it is not perfect, it is widely used in the industry as a way to more accurately size positions that use percent of equity for entries. Caution disclaimer Although adherents of the Kelly Criterion may choose to apply the formula in its conventional manner, it is essential to acknowledge the potential downsides associated with allocating an excessively substantial portion of one's portfolio into a solitary asset. In the pursuit of diversification, investors would be prudent to exercise caution when considering investments that surpass 20% of their overall equity, even if the Kelly Criterion advocates a more substantial allocation. Source about information on Kelly Criterion www.investopedia.com
Editors' picks
Education
by sofex
2
Navigating Volatile Markets Navigating Volatile Markets: Strategies for Turbulent Times Introduction Financial markets are no stranger to volatility, with unpredictable twists and turns that can test even the most seasoned investors. However, turbulent times need not be daunting. In this blog post, we will explore strategies to help you navigate volatile markets with confidence, turn uncertainty into opportunity, and make informed investment decisions during challenging times. 1. Stay Informed, Not Overwhelmed During periods of market volatility, it's essential to stay informed about market developments and economic indicators. However, avoid becoming overwhelmed by constant news updates and opinions. Focus on reliable sources and maintain a balanced perspective. 2. Diversify Your Portfolio Diversification is a time-tested risk management technique. Spread your investments across different asset classes, industries, and geographic regions. A well-diversified portfolio can cushion the impact of volatility on your overall holdings. 3. Set Clear Goals and Stick to Your Plan Define clear financial goals and create an investment plan tailored to your objectives and risk tolerance. During turbulent times, emotions may tempt you to deviate from your plan. Stay disciplined and trust in the strategy you have set forth. 4. Consider Defensive Investments Explore defensive investments, such as bonds, dividend-paying stocks, and precious metals. These assets may provide stability during market downturns and act as a hedge against heightened volatility. 5. Focus on Quality In uncertain times, prioritize quality over speculative bets. Look for companies with solid fundamentals, stable cash flows, and strong balance sheets. Quality assets are better equipped to weather economic storms. 6. Assess Long-Term Value Volatility can create buying opportunities. Look for high-quality assets that have been oversold due to market sentiment rather than inherent flaws. Assess their long-term value and potential for recovery. 7. Implement Stop-Loss Orders Use stop-loss orders to protect your capital from significant losses. Set stop-loss levels that align with your risk tolerance and allow you to exit positions if the market moves against you. 8. Avoid Panic Selling Resist the urge to panic sell during market downturns. Selling low locks in losses and may hinder your ability to benefit from potential market rebounds. 9. Focus on Risk Management Adopt prudent risk management practices. Only allocate a portion of your portfolio to higher-risk assets and avoid overexposing yourself to individual positions. 10. Seek Professional Advice If navigating volatile markets feels overwhelming, consider seeking advice from a financial advisor. A professional can help you assess your financial goals, devise a tailored strategy, and stay on track during turbulent times. Conclusion Volatility is an inherent part of financial markets, but with the right strategies and a disciplined approach, you can navigate turbulent times with confidence. Stay informed, diversify your portfolio, and focus on long-term value rather than short-term fluctuations. Remember, every market cycle presents opportunities. Embrace volatility as a chance to refine your investment approach, grow your wealth, and turn uncertain times into prosperous outcomes. Happy investing, and may your journey through volatile markets lead you to a more secure financial future!
NASDAQ:TSLAEducation
by MindOverMarket
The ABCs of Risk Management in Stock TradingThe ABCs of Risk Management in Stock Trading Introduction In the exhilarating world of stock trading, mastering the art of risk management is a crucial skill that separates successful traders from the rest. Effective risk management is all about safeguarding your capital and minimizing potential losses while maximizing opportunities for profit. In this blog post, we will explore the ABCs of risk management in stock trading and how it can lead to more sustainable and rewarding trading experiences. A - Assessing Risk Tolerance Before delving into the markets, it's essential to evaluate your risk tolerance. Be honest with yourself about how much capital you can afford to put at risk without causing emotional distress. Your risk tolerance will determine your position sizing and the percentage of your portfolio allocated to each trade. B - Balancing Diversification Diversification is a key risk management strategy. Avoid putting all your funds into a single stock or sector. By diversifying your portfolio across different assets, industries, and geographic regions, you reduce the impact of any individual investment's adverse performance on your overall portfolio. C - Cutting Losses with Stop-Loss Orders Stop-loss orders are a trader's best friend. Implementing stop-loss levels before entering a trade ensures that you automatically exit a position if it goes against you beyond a predetermined point. This helps protect your capital and prevent significant losses. D - Doing Your Due Diligence Knowledge is power in the stock market. Thoroughly research and analyze potential trades before executing them. Understand the company's fundamentals, technical indicators, and market trends to make informed decisions and reduce the element of surprise. E - Emotion Management Emotions can cloud judgment and lead to impulsive decisions. Successful traders maintain emotional discipline and stick to their trading plans, regardless of market fluctuations. Embrace a rational approach to trading and avoid letting emotions dictate your actions. F - Focusing on Risk-Reward Ratio A positive risk-reward ratio is a fundamental aspect of risk management. Aim to take trades with higher potential rewards than the associated risks. This means that even if some trades result in losses, profitable trades should outweigh them over time. G - Gradual Position Sizing Avoid going all-in on a single trade. Gradually scale into positions, especially in volatile markets. This way, you can manage risk and adjust your exposure as market conditions change. Conclusion As you venture into the exciting world of stock trading, remember that managing risk is paramount to long-term success. By following the ABCs of risk management - assessing risk tolerance, balancing diversification, cutting losses with stop-loss orders, doing due diligence, managing emotions, focusing on risk-reward ratio, and employing gradual position sizing - you can navigate the markets with confidence and achieve your trading goals. Stay disciplined, stay informed, and let effective risk management be the cornerstone of your stock trading journey. Happy trading and may your endeavors be both rewarding and fulfilling!
NASDAQ:TSLAEducation
by MindOverMarket
Value InvestingValue Investing - Unearthing Hidden Gems in the Market Introduction In the world of investing, where trends and market sentiments often drive decision-making, value investing stands out as a timeless strategy embraced by legendary investors. Value investing involves searching for undervalued assets that have the potential to deliver substantial returns in the long run. In this blog post, we will delve into the art of value investing and how it allows investors to uncover hidden gems in the market. Understanding Value Investing Value investing is a strategy that seeks to identify assets trading at prices below their intrinsic value. These assets may be temporarily undervalued due to market fluctuations, unfavorable sentiment, or lack of attention from investors. Value investors believe that the market will eventually recognize the true worth of these assets, leading to price appreciation and potential capital gains. The Principles of Value Investing Intrinsic Value Assessment: Value investors analyze the fundamental strengths and weaknesses of a company or asset to estimate its intrinsic value. Fundamental analysis involves evaluating financial statements, earnings, cash flows, and competitive advantages. Margin of Safety: A key principle of value investing is the concept of a margin of safety. Investors aim to buy assets at prices significantly below their calculated intrinsic value to provide a cushion against potential errors in estimation. Patience and Long-Term Perspective: Value investing requires patience and a long-term perspective. It may take time for the market to recognize the undervalued asset's true potential and drive its price higher. Benefits of Value Investing Potential for High Returns: If the market eventually recognizes the true value of an undervalued asset, value investors can reap substantial returns on their investments. Less Susceptible to Market Fluctuations: Value investing tends to be less affected by short-term market trends and sentiments. Investors focus on the underlying fundamentals, which remain relatively stable over time. Contrarian Approach: Value investors often take a contrarian approach, going against prevailing market sentiments. This allows them to find opportunities that others might overlook. Key Strategies for Value Investing Stock Screening: Use stock screening tools to identify companies with low price-to-earnings (P/E) ratios, low price-to-book (P/B) ratios, and strong financials that indicate potential undervaluation. Focus on Dividends: Seek out companies with a history of paying dividends, as this may be a sign of financial stability and value. Avoiding "Value Traps": Be cautious of companies facing structural challenges that may not recover their intrinsic value over time. Conclusion Value investing is a time-tested strategy that has proven successful for legendary investors like Warren Buffett and Benjamin Graham. By focusing on the underlying fundamentals of undervalued assets and exercising patience, value investors can unearth hidden gems in the market and build a portfolio with the potential for significant long-term returns. Embrace the principles of value investing, conduct thorough research, and let your discerning eye lead you to those overlooked opportunities. As you refine your value investing skills, remember that great investment opportunities may sometimes be hidden in plain sight. Happy hunting for hidden gems in the market, and may the strategy of value investing guide you to prosperous investment decisions!
NASDAQ:TSLAEducation
by MindOverMarket
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