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Automated Trading vs Manual TradingAutomated Trading vs Manual Trading In the modern world of trading, two distinct methodologies exist: manual trading vs algorithmic trading. Both these approaches aim at the same goal - to optimise profit and minimise losses in the financial markets. However, they vary significantly in their operation, the level of involvement required, and the nature of decision-making processes. In this FXOpen article, you will find the key differences between the approaches and their advantages and limitations that may help you to choose the right approach for you. Definition of Manual Trading Manual trading signifies the traditional approach to trading. In this method, a trader is actively involved in all aspects of the process. This includes conducting market research, analysing market trends, making buying or selling decisions, and placing trades. The manual approach relies heavily on the trader's skills, knowledge, and experience. The manual trader uses various tools and methods, including technical and fundamental analyses, to make informed decisions. These methods involve studying past market data, economic indicators, company financials, and market news to predict future market movements. Despite being time-consuming, many traders prefer this approach as it allows them to control their trading activities and make adjustments based on their instincts and experience. You can test manual trading at the free TickTrader platform. Definition of Automated Trading In contrast to human-based investing, automated trading, also known as algorithmic or robo trading, involves the use of computer programs or algorithms to analyse markets and place trades. These algorithms are designed to make trading decisions based on predefined rules and conditions. They can process large volumes of market data, identify market opportunities, and place trades quickly and precisely, something beyond human capability. Robots can be programmed to follow various strategies based on technical analysis, quantitative analysis, and other principles. These algorithms are typically developed using programming languages and require a high degree of technical expertise. However, many platforms now offer user-friendly tools for creating and testing algorithms, making auto-trading more accessible to the average trader. Also, some traders ask program developers to create a robot based on their requirements. Advantages and Disadvantages of Manual Trading Systems Despite being more traditional, manual investments hold their own advantages and disadvantages. Advantages: - The primary advantage of manual trading is the trader’s experience and ability to analyse markets. Unlike robotic systems, human traders can make intuitive decisions based on their experience and understanding of the market. In this case, the results of a duel between robot trading vs manual systems would end up beneficial to humans. - Another advantage of the manual approach is the flexibility it offers. Manual traders can adjust their strategies and risk tolerance levels based on the changing market conditions, economic news, and their personal comfort level. The manual approach also provides a deeper understanding of the markets, as traders are actively involved in trading. Disadvantages: - Self-trading is not without its challenges. It necessitates a substantial commitment of time and focus. Manual traders need to monitor the markets continuously, conduct thorough market analyses, and make decisions. Manual execution of trades may also be emotionally taxing; emotional decisions can often lead to poor trading outcomes. - In addition, human error can impact trading results. Unlike automated systems, manual traders cannot process large amounts of data quickly and accurately. This limitation can lead to missed trading opportunities or inaccurate decision-making. Advantages and Disadvantages of Automated Trading Over Manual Trading Advantages: - Automated trading offers several advantages over the manual variety. Some of the most significant benefits are speed and accuracy. Automated systems can analyse market data and place trades in milliseconds, which is impossible for humans. Also, algo trading allows for 24/7 activity, as human factors like fatigue or emotions do not constrain it. In this case, the algorithms win in a duel of algo trading vs manual trading. - Automated systems can handle multiple markets and securities simultaneously, allowing traders to diversify their portfolios more efficiently. By removing the emotional element from speculation, automated systems can help traders stick to their plans and avoid impulsive decisions. Disadvantages: - However, the automated approach also has its disadvantages. One of them is the need for a high level of technical expertise to set up and maintain the algorithms. Auto systems also have the risk of over-optimisation, where a system is fine-tuned to perform well based on past data but may not perform well in real market conditions. - Another challenge with automated trading is its inability to adapt to sudden market changes that a human trader could intuitively understand and respond to. For instance, traders may adjust their strategies accordingly in case of significant economic news or events, but an algorithm might not be capable of such adaptability. - Lastly, automated systems also carry the risk of technical glitches or system failures, which can lead to significant losses. It is, therefore, essential to regularly monitor and update automated systems. Does Algo Trading Beat Manual Trading? The question of "Does algo trading beat manual trading" is a matter of debate. The effectiveness of each trading method depends on various factors, such as the trader's skills and experience, the nature of the market, and the specific strategy used. Some traders may find success with robotics systems due to their speed and accuracy, while others might prefer the control and adaptability offered by manual solutions. In the world of manual trading vs automated trading in forex, it's essential to consider that FX markets are highly volatile and operate 24/7. This nature of forex markets makes them ideal for automated investing. However, the use of automated systems in FX also requires careful consideration of factors such as market volatility, liquidity, and technical glitches. Conclusion Ultimately, the choice between manual and automated investment boils down to personal preference, goals, risk tolerance, and technical expertise. Both methods have their own merits and challenges, and understanding these may help traders make informed decisions. Whether you are interested in manual or automated trading, platforms like FXOpen provide a robust and user-friendly environment for both. To get started on your investment journey, you can open an FXOpen account. Regardless of your trading method, remember that success requires a well-developed strategy, continuous learning, and effective risk management. So, keep learning, keep improving, and happy trading! This article represents the opinion of the Companies operating under the FXOpen brand only. It is not to be construed as an offer, solicitation, or recommendation with respect to products and services provided by the Companies operating under the FXOpen brand, nor is it to be considered financial advice.
Education
by FXOpen
2
+ 214% ! Ai Trading with Alpha Ai Reversal Strategy [GOOG]🚀 Unlock the Power of AI Trading with Alpha AI Reversal! 🚀 ⭐ Net Profit: $62,422.65 📈 ⭐ Total Trades: 147 successful moves 🔄 ⭐ Win Rate: 81.63% success! 🏆 ⭐ Profit Factor: 3.961 — Exceptional strategy! ⭐ Max Drawdown: $7,540.66 USD — Managed risk! 🔍 Visualizing smooth, upward growth 📊 with powerful insights and precision tools. Alpha AI Reversal delivers consistent results with an average trade of $487.30 over just 15 bars. 🔥 Exciting News: The strategy will be released soon! Stay tuned for the launch and be among the first to gain access!
NASDAQ:GOOG
by Alpha-Capital
4
Bots vs Brains; The hidden edge of Human touch in tradingBots vs Brains; The hidden edge of Human touch in trading A random Google search on the internet about forex trading robots reveals thousands of forex robots exist. With all these trading robots promising handsome returns in the shortest time, the forex trading industry should be minting new millionaires daily. However, statistics from forex brokers paint a sad picture—a failure rate as high as 90%. In 2024, you can’t go a day without reading or watching a reel about Artificial Intelligence (AI). The high failure rate, especially in the world of finance, is baffling given all these technological advancements. This led me to take a deeper look into the world of automated forex trading, also known as bots or Expert Advisors (EA). Overview of Automated Trading A trading bot is software developed to analyze financial markets and execute trades on your behalf. Semi-automatic trading bots analyze the markets but do not execute trades. Large financial institutions, such as banks and hedge funds, use specialized algorithmic trading bots. These institutions bring together mathematicians, programmers, and economists to develop sophisticated algorithms. Needless to say, it requires significant financial resources and time to develop these bots. Development can take at least six months, followed by an additional six months of testing. The high cost makes these bots inaccessible to retail traders. Retail traders, however, are not left out. There are individuals and software platforms where you can develop your own trading bot. These bots are often marketed as being developed by experts with deep market knowledge—or so I thought. Trading bots follow specific rules based on the developer’s strategy, which ideally should mirror the success of an experienced trader. Therefore, if a trader is profitable, the bot should at least mimic their results, if not surpass them—more on this later. Before launching these bots, developers conduct extensive backtesting and refinement to optimize them for ideal market conditions. Advantages of Automated Trading Developers of trading bots often market them as superior to manual trading. They emphasize the need to eliminate human error and emotions, highlight faster execution speeds, and promote the ability to trade 24 hours a day as long as markets are open. Additionally, bots can save traders significant time that would otherwise be spent analyzing markets and executing trades. On the surface, purchasing trading robots seems like a smart decision. Limitations of Automated Trading Bots rely on historical data, assuming the future will mirror the past. However, global events are unpredictable. Take, for example, the 2008 financial crisis or the sudden shock of COVID-19—events like these can completely throw off a bot’s programming. Robots struggle to adjust to such volatility unless they’re frequently updated with new data, which many are not. This is a major limitation, especially when you consider how quickly the forex market moves with trillions of dollars in circulation. Earlier, I mentioned that robots are supposedly developed by profitable traders. But to my surprise, I found that with little trading experience, anyone can create a robot on platforms like EA Trading Academy. All it takes is registering, selecting a few parameters, running a back test, and then selling it. It’s really that simple. The ease with which these bots can be built raises questions about their reliability, especially when they aren’t crafted by experts. I even plan to build one myself, and I’ll give you feedback in a year’s time. Why I Think Robots Don’t Work The main issue is that there’s a shortage of consistently profitable traders. A trader who dedicates the time and effort to developing a reliable robot is likely to charge a hefty fee. The likelihood that they would focus solely on developing robots instead of trading themselves is very slim. This makes me wonder—who is actually building all these robots? If most profitable traders are busy trading, it raises concerns about the experience level and expertise of those creating the majority of these products. Secondly, trading styles vary significantly from trader to trader. Purchasing a robot based solely on profitability or low cost is unwise. In addition to checking a developer’s track record, you should assess whether their risk tolerance and trading approach align with yours. For instance, buying a scalping robot when you prefer swing trading could be a costly mismatch. Finally, purchasing robots without a solid understanding of the markets is irresponsible, and the disasters that follow are often justified. Many experienced traders who have tested and reviewed bots on YouTube agree that 99% of them are either scams or simply don’t work. I encourage you to watch some of these reviews to see for yourself. The Future: Automation vs. Human Touch Mastery in trading comes from a combination of skill, time, and experience. While bots claim to save you the time spent on analysis, it's precisely that time—the deep learning and constant market study—that ultimately leads to true mastery. There are no shortcuts. Bots may be designed to minimize human error, and in theory, they do. But the reality is that even the most sophisticated bots are not infallible. They can and often do fail, sometimes catastrophically. When accounts are blown—whether by a human or a bot—it’s still the trader who bears the loss and the disappointment. So, while bots may reduce human error, they can never eliminate the human responsibility for those errors. Trading the financial markets is a craft like any other. Automation, AI, and machine learning can be valuable tools in your journey to becoming a skilled trader. They cannot replace the critical thinking and adaptability that come with human experience. AI can assist by analyzing large sets of data, flagging trends, or executing trades faster than a human could—but the nuanced understanding of market sentiment, global events, and individual risk tolerance is something only a human can develop through dedication and practice. Automation might help you refine your craft, but it's the time spent learning, making mistakes, and adapting that leads to true mastery. As promising as they are, AI and bots are tools—not substitutes—for the expertise that comes from being deeply engaged in the markets. Others before you have achieved mastery, and with enough commitment, you can too.
CAPITALCOM:DXYEducation
by morrisgitau
3
+252.44 % ! The Power of Ai Trading [German DAX] XETR:DAX The Alpha AI Reversal Strategy continues to impress with its outstanding performance metrics, making it a powerful tool for traders seeking consistent returns with high accuracy. Let’s explore the key highlights of this strategy: Net Profit: A solid gain of €50,487.72, representing an impressive 252.44% profit margin. This speaks volumes about the strategy’s ability to compound returns over time. Total Closed Trades: With 104 trades completed, the strategy demonstrates both activity and control in its approach. Percent Profitable: A stunning 88.46% of trades ended in profit, showing a very high hit rate and remarkable precision. Profit Factor: The profit factor stands at 9.123, meaning that for every euro risked, traders earned over 9 euros in return—a clear sign of how lucrative this strategy is. Max Drawdown: A drawdown of €6,650.87 (17.85%) indicates moderate risk relative to profits, ensuring stability in times of market fluctuations. Average Trade: Each trade yields an average of €485.46 (0.74%), proving that even the smaller trades contribute significantly to overall gains. Average Bars in Trades: Trades are typically held for 12 bars, striking a balance between quick profits and holding positions for optimal returns. This strategy shows an excellent mix of high profitability, controlled risk, and a strong win rate. Whether you're an experienced trader or a beginner, the Alpha AI Reversal is a tool to keep an eye on for consistent, high-quality results. Alpha AI Reversal is optimized for +50 instruments (crypto, stocks, indexes and commodities)
OANDA:DE30EUR
by Alpha-Capital
Alpha Ai Reversal: A High-Performance Strategy with +674% +674% ! impressive performance of the Alpha AI Reversal trading strategy. Here’s a breakdown of the key statistics: OTC:LVMHF Net Profit: A whopping $129,416.17 USD, demonstrating the strategy’s profitability. Total Closed Trades: 78 trades, with an impressive 81.71% being profitable. Profit Factor: 9.558, indicating a high return on investment. Max Drawdown: $20,593.12 USD, showing the maximum observed loss during the backtest. This strategy’s consistent upward trend in net profit and high percentage of profitable trades make it a standout in the realm of algorithmic trading. 📈💰
OTC:LVMHF
by Alpha-Capital
Alpha Ai Reversal: A High-Performance Strategy with 412% ReturnsKey Highlights: NASDAQ:NDAQ Net Profit: A solid $82,516.99 USD profit , reflecting a gain of 412.58%. This showcases the strategy's ability to multiply capital impressively over time. Total Closed Trades: 157 trades have been completed, indicating a good amount of market engagement, providing ample data to gauge the strategy's reliability. Percent Profitable: A high success rate, with 79.62% of trades closing in profit . This means nearly 8 out of 10 trades are winners, a confidence booster for any trader! Profit Factor: A profit factor of 3.296 indicates that for every dollar lost, the strategy earned over three dollars. This is a strong indicator of risk/reward management. Max Drawdown: The maximum observed drawdown was $13,564.86 USD, or 50.61%. While this is on the higher side, suggesting periods of significant losses, the overall profitability more than compensates for this. Average Trade: The average trade brought in $525.59 USD, representing a 1.14% gain per trade. This consistent performance adds up over time, as seen in the cumulative profits. Average Number of Bars in Trades: Each trade lasted an average of 17 bars. Given the 8-hour timeframe, this means trades were typically held for about 5-6 days, balancing between quick profits and sustained positions. The strategy seems well-calibrated for traders looking for high probability setups with significant profit potential. The strong profit factor and percentage profitability are particularly appealing, suggesting a strategy that can consistently outperform the market, even if the drawdowns require a strong stomach. For those willing to ride out the occasional rough patch, the Alpha Ai Reversal strategy offers a compelling balance of risk and reward, promising attractive returns in the long haul. This strategy could be a game-changer !
OANDA:NAS100USD
by Alpha-Capital
2
Create No Code Auto Trading Bot with Tradingview and OKXHello Everyone, In this tutorial, we learn about how to create simple auto trading bot using tradingview alerts and OKX exchange built in integration mechanism. Few exchanges have come up with this kind of direct integration from tradingview alerts to exchanges and as part of this tutorial, we are exploring the interface provided by OKX. In this session, we have discussed 🎲 Preparation Steps Preparing tradingview account Webhooks are only available for essential plans and plus. Enable 2FA in your tradingview account. Preparing your OKX account Create OKX account, and we prefer you do the initial tests under demo account before moving to active trading account. Bots created in demo account will not appear in the active trading account. Hence, when switching to active account, you need to create all the setup again. 🎲 OKX Tradingview Interface Features What is supported Auto trading based on strategy signal Custom signals - Enter Long, Exit Long, Enter Short, Exit Short What is not supported: Stop/Limit orders Bracket orders/ Complex execution templates 🎲 Weighing Pros and Cons of Using Direct Interface rather than Third party integration tools Pros Latency is minimal as per our observation Easy Integration with Tradingview and Pinescript Strategy Framework and no coding required You save cost on third parties and also avoid one hop. More secure as your data is shared between less number of parties. Cons No native support for Stop/Limit orders
Editors' picks
Education
by Trendoscope
15
XLM Stellar Lumen - Potential for a bright future Remember to pay attention to Support Resistance Zones, Don't get greedy and follow a strategy. We are committed to safe and efficient investing, we have target zones for that reason! Thank you for reading along! XLM Potential price points Entry zone: $.1305-$.1310 Major support: $.122 Target 1: $.13745 Major resistance: $.176 Target 2: $.1955 Second major resistance zone: $.290-$.304 Precious top resistance level: $.545 Stellar (XLM) is a peer-to-peer (P2P) decentralized network created in 2014 by The Stellar Development Foundation or Stellar.org. The network officially launched in 2015 with the purpose of connecting the world's financial systems and ensuring a protocol for payment providers and financial institutions. The platform is designed to move financial resources swiftly and reliably at minimal cost. Stellar links people, banks, payment processors and allows users to create, send and trade multiple types of crypto. The basis of the network is its native digital currency - XLM or Lumens. XLM acts as an intermediate currency for operations and is also used to pay transaction fees. How it works: the protocol converts money in a few seconds, first into XLM, and then into the requested currency. The Stellar payment protocol is based on distributed ledger technology -- an open-source development, community-owned and distributed by community. The crypto asset of the Stellar platform helps with cross-border transactions, overcoming the problems of high fees and slow procedures. XLM is more focused on assisting individuals transfer money than they are with institutions. Thus, Stellar offers access to financial systems, and people can send money at low cost and promptly around the world.
COINBASE:XLMUSDLong
by Helios_Capital_Investment
How to automate Trading View indicator alerts with 3Commas In this guide we will explain how to connect and automate a Buy&Sell strategy with 3Commas using a Trading View indicator. This guide will enable you to create long strategies on all spot pairs available on 3Commas. In this example we will set up a Buy&Sell bot that will open the long position when the Tweezer Bottom - Bullish indicator signals the pattern. Then we will illustrate all the steps necessary to open the long position. The position will be closed using 3Commas take profit and stop loss. 1) Choice of the technical indicator to be used. Trading View offers an extensive library with technical indicators developed by the in-house team. To access all available indicators, open the indicators dashboard (A) and click on the Technicals section (B). In this example we will choose an indicator in the Patterns section (C) called Tweezer Bottom - Bullish (D). Remember that the choice of this indicator is purely random and is for educational purposes only, be sure to backtest and research before building any trading strategy. 2) Creating a bot on 3Commas. Now go to 3Commas and create a new DCA bot. This bot will allow you to connect the indicator signal. Set up the Main Settings section. Name your bot (A), select your exchange (B), and bot type (C). Select the ticker (A), set the type of strategy (B) and the capital to be used (C). In the Deal Start Condition section, open the drop-down menu and select 'Trading View custom signal'. Set the take profit. Set the stop loss. Configure the Safety Orders section for a Buy&Sell strategy. Set the value to zero within this section as shown in the screenshot. Set Max safety orders count and Max active safety orders count to zero. Now that you have properly created and configured your bot, go inside your new bot's 3Commas dashboard, scroll down, and copy the 'Initial Start Deal Condition' message. 3) Trading View Connection - 3Commas. Come back to Trading View and create a new alert (A), select the indicator from the drop-down menu (B), then choose Once Per Bar Close (C), and finally create a name for your alert and enter the message you copied previously within the Message field (D). As a last step, go into Notifications , enable the web-hook url and enter 3Commas' web-hook: 'https://3commas.io/trade_signal/trading_view'. Create your alert as a final step. You have now correctly created a new 3Commas Buy&Sell bot that will automatically open new orders when a new pattern is generated.
Education
by thequantscience
The S-Pattern - Where or Why Does This Happen?Hey folks - been a while since I made one of these (not too much interesting movements in the crypto markets lately, honestly), but after a long period of inactivity in XTZ, *something* seems to have triggered a move. There's a few people wondering where this spike in Tezos came from - unless the transaction was triggered by literally one wallet (unlikely since that would have been identified by now), we can only really speculate as to who or what "bought the dip". But generally speaking, the extreme verticality of the "pump" suggests that this was an automated trade or possibly someone with access to a button to make large hyper-coordinated trades. (If a bunch of people get together and buy-in together the price usually rises as a slope over time, not a spike.) Since we are in a bear market right now, the rules of the game for investors changes a bit. But it's important to remind yourself of the fundamentals of supply/demand and incentives in markets themselves doesn't change. So based on that, we can make a few educated guesses: 1. Bear markets don't necessarily mean that there is no money to invest - lots of people exited the market at the beginning of this bear market, converting their assets into cash. (These are the folks who quietly sold at the top and can be considered "smart money".) They are waiting for the market to bottom out as the hype fades away. So the money to invest itself is there (it is always there, really) - it's just unsure where or when to get back in right now. Someone or something made the guess that *this* is the bottom now, in other words. 2. The vertical part of the S-pattern suggests (automated or not) large-volume investors getting in, while the gradual slope downwards back to its original state is likely smaller investors exiting out of the ecosystem. (Many have expressed frustrations with the coin not having moved in a while and have been waiting for moments like these as an excuse to exit.) This is primarily the way markets "cleans" itself of short-term players and the reason why institutional investors often beat retail ones in the long - they have the means and patience to wait until the very bottom of the "valley". (Another reason why it's important to only invest what you can afford to lose.) 3. You have to be careful of getting your news from the media or social media because during down markets most talks and discussions will be about how bad the markets are - which is the obvious thing to complain about during those times. The negative sentiment eventually becomes a self-fulling prophecy and the price will continue to dip until the "losers" have left the scene. If you think about it, the only people who have a reason to complain are the ones that bought at the top and looking to recoup their losses. The ones that were in early, holding for long-term, or sold at the right time (lucky them!) don't really have much of a reason to engage with doom-spiral content. 4. And finally - smart-money investors look for primarily two things: A reason to get back in (will not happen with ponzi or vaporware projects, which is a good thing), and the right time to get back in. Even if they have done their research and believe in a project strongly, when half the people in the ecosystem are in a panicked state, it doesn't give them much confidence to get back in. At least not yet. So they wait until the price flatlines and things get quiet - are the folks threatening to exit gone yet? This is the reason why big rallies often happen unexpectedly after long periods of no movements, rather than a "rebound" after a massive dip. It is the waiting game smart investors play to get the best spread between buying low and selling high. -- A lot of this will feel weird and unfamiliar because I don't think crypto really has really gone through a "real" bear market - it was a product of the post-2008 0-interest rate era and a lot of the rallies were sustained by VC and hype money, which fueled a lot of irrational behavior during the last few cycles as a whole. (Including FTX.) But now that that era has come to an end, what comes next? A bit of spring cleaning in the markets is in order - I think. A lot of people have been waiting for this moment to come for a very long time, so it could possibly be one of the biggest rebounds in history...but only time will tell. Good luck, folks. 🤞
Long
by RyanTanaka
Successful Automated Trading : Alpha Scalping Bot (XAUSUSD)Alpha Scalping Bot ( FX:XAUUSD ) From 2019 until now Percent Profitable : 73.8% Profit Factor : 4.4 Max Drawdown : Very Low 2.5% We all know how it can be challenging, frustrating, struggling to make money especially in bear market. Save your energy, your emotions, your nerves! Alpha Scalping will allow you to sleep better and make money while you sleep! We tested hundreds of indicators, strategies, bots since 2010, today we will start to release a series of successful bots and automatic strategies for you, some of them will be free, some of them will be paid (monthly subscriptions) We will also indicate how to connect the Alpha Scalping to your Binance or FTX account so you can trade automatically. Alpha Scalping is suitable for Crypto, Forex, Commodities, indexes ... Enjoy, subscribe and stay tuned! DM me if you want to access to Alpha Scalping Bots
FX:XAUUSD
by Alpha-Capital
PancakeSwap Bull Market Can Return if it Breaks This LogarithmicPancakeSwap (CAKE) may not see a new bull market until it clears its weekly logarithmic trendline. At the same time, cycle-wise, the cryptocurrency seems to have completed an Elliott Wave flat structure that suggests that we're about to bottom. CAKE Logarithmic Trendline The downward sloping logarithmic trendline connects all the major swing highs, starting with the 2021 all-time high of $44.27. The logarithmic trendline also aligns with the 200-day simple moving average, which gives it more weight. In this regard, a breakout can lead to a shift in the trend direction. CAKE Elliott Wave Cycle CAKE’s price is currently trading near its historically lowest level, but based on the Elliott Wave analysis, CAKE's long-term price structure mimics a flat pattern. Flats are corrective patterns in nature with an internal 3-3-5 wave structure. The first wave ended at the $44.27 all-time high, followed by another 3 wave price structure in wave B, which ended at the $9.44 low. The cryptocurrency then resumed lower in wave C, subdividing into another 5 wave price structure. In the short term, the current low of $2.48 remains intact; the correction can be called completed. Following this EW cycle, the cryptocurrency may be in the process of bottoming out. However, the next bull run will be confirmed once the CAKE price clears the logarithmic trendline. Another sign of a shift in the market can be signaled by a breakout above the 50 mid-level of the weekly RSI oscillator. Once the logarithmic trendline is cleared, there is not much resistance underway until the $10 psychological level.
by cryptohopper
Between BlackRock and a TornadoThe connection between traditional finance and crypto is more closely linked than ever before as institutional demand for our treasured asset class rises rapidly. Last week we saw BlackRock, the world’s largest asset manager with approximately $8.5 billion under management, endorse bitcoin by offering a spot bitcoin private trust to their U.S-based investors. Being the largest asset manager in the world, it could be likely that all of their competitors will quickly follow suit to ensure they also offer the capability to their clients. To provide additional access, BlackRock also partnered with Coinbase to provide infrastructure for their institutional clients to invest in crypto assets. BlackRock’s industry leading portfolio management software, Aladdin, is used by over 200 of the world’s largest institutional investors and manages over $21 trillion in assets. Aladdin and Coinbase will combine forces to offer a seamless portfolio management system for crypto, with Coinbase handling the execution and custody of the assets whilst Aladdin will handle the portfolio management aspects all through the Aladdin interface. It could be argued this is a major step in proving the legitimacy of bitcoin, especially with BlackRock being the main influencer on ESG investing. It additionally showcases the demand for exposure to the asset from BlackRock’s institutional clients. Tornado Cash – the popular mixing service that enables on-chain privacy – came under heavy fire last week from governments globally. The US Treasury Department’s Office of Foreign Asset Control (OFAC) sanctioned the protocol – leading to any American using the site breaking sanction laws. The sanction was argued due to the allegedly high number of illicit funds being laundered through the protocol and to prevent hacker groups, such as the Lazarus Group, from laundering stolen crypto funds. Dutch authorities arrested one of the protocol’s developers and have stated they will take further action against DAOs that may enable money laundering. Could this be the start of the war on Decentralised Finance (DeFi)? The implications of being linked to, or seen facilitating on-chain activity, with a wallet in connection with Tornado Cash have also prompted “decentralised” protocols to ban addresses from using their services to remain compliant with regulatory bodies. Due to the transparency and accessibility of crypto, any individual can send anything to any wallet address, with the owner unable to stop their wallet from receiving transactions. The banning of Tornado Cash sparked an onslaught of withdrawals from the protocol to famous personas’ wallets, such as Jimmy Fallon and Dave Chappelle, leading to them having broken sanctions laws and being punishable for up to 30 years in prison… technically speaking. Aave, the popular lending and borrowing protocol, banned the wallet of the founder of Tron, Justin Sun, as he was sent funds from Tornado Cash by the same unknown entity. The act of Aave banning wallet addresses has created a stir in the crypto community, with many individuals doubting how decentralised these protocols actually are with their ability to intervene and ban wallet addresses. Some commentators have argued the act of government submission completely contradicts the ethos of crypto and DeFi. Coin Centre, the crypto privacy advocacy group, has stated they will challenge the sanction as it “exceeds statutory authority”. Ever since crypto began, nation-states using crypto for their own benefit was seen as the final boss before global adoption. Last week Iran funded an import worth $10 million using crypto. Their usage has been instigated due to them being the second most sanctioned country in the world behind Russia – limiting their ability to trade with other nations using the existing banking systems. One of the country’s ministers also stated that “By the end of September, the use of cryptocurrencies and smart contracts will be widely used in foreign trade with target countries.” The increased usage of crypto from states like Iran could be seen as a double-edged sword. It demonstrates the key tenets of sovereignty and impartiality where every individual should have the right to transfer value. However, depending on your geopolitical preference it could be deemed only useful by those not accepted into the system and arguably the wrong people. This use case increasing in prevalence could also give further credence to governments to ban and regulate crypto with the argument and trump card of national security. Conversely, Ukraine has used crypto to raise well in excess of $100 million in donations to aid their fight against Russia – which would likely be viewed as a positive by the same people who condemn its usage by Iran. As with any technology, the usage and the users define its morality, despite the technology always remaining impartial. When analysing price action, these developments have not had a major impact on the price of bitcoin. From a technical perspective, bitcoin is positioned between a rock and a hard place in an ascending channel, with the $24,500 level proving hard to crack. The 100-Day moving average is also hovering at this level. A higher timeframe close above this level could be a strong indicator that the rally could continue with the next target likely being the $28,000 level where 2021 yearly candle opened and where we consolidated over summer 2021. Rejection from here could see us retest lower levels and the 200-week moving average that is situated around $23,000. However, with fear and greed reaching the highest levels seen in the past 4 months and Dogecoin and Shiba Inu pumping hard, these are telltale signs that an interim market top may be forming. The S&P 500 is also touching some strong resistance around the $4,300 level and with even further institutional involvement and intertwined portfolio management systems, rejection from this level could be the catalyst for a return to lower levels – with crypto potentially taking the hardest hit.
by Coinrule
Resistance to ChangeJuly was a reassuring month for crypto, and financial markets in general, stimulated by the Federal Reserve deciding a 0.75% rate hike was sufficient to slow inflation. They also stated the 2.25-2.50% federal fund rate is now neutral – no longer contributing to growth or contraction within the economy. This caused markets to rally on the expectation there may not be many further rate hikes and the possibility the worst may be behind us. Last year, July marked the bottom of the summer correction and the start of the rally that resulted in new all-time highs. This year, July saw a 16.6% monthly gain for bitcoin – the highest monthly gain since October 2021. This was outshone by ether’s monumental monthly gain of approximately 57% – the largest since January’s 2021’s 78% gain and the fifth best month over the past 5 years. The ETH/BTC chart conveys this spectacle well. Ether appreciated by 28% against BTC since the start of June – demonstrating the increased upside Ethereum has compared to its larger counterpart. However, last week it was Ethereum Classic (ETC), that saw the greatest gains. ETC saw a 94% surge within 4 days, with price still trading within 20% of the high. It is suspected this was caused by The Ethereum Merge that will result in Ethereum moving from proof-of-stake to proof-of-work (POW). This will render the Ethereum miners’ expensive equipment, used to solve the mathematical puzzles used in POW, obsolete and the miners’ $18 billion annual revenue disappearing. On the other hand, Ethereum Classic will remain proof-of-work, driving Ethereum miners to potentially put their equipment to use securing the Ethereum Classic chain. However, Ethereum Classic’s mining revenue amounts to only 3% of Ethereum’s. AntPool, one of the largest mining pools and an affiliate of Bitmain, a large mining equipment manufacturer, announced it would invest $10 million to develop and create new applications on the Ethereum Classic ecosystem in an attempt to increase the adoption of the blockchain, and the sales of their rigs. Bitmain also stated they will accept payments for their machinery in ETC. Will Ethereum’s fundamentalists win? On August 2nd, ETC total value locked (TVL) sat at $230,000 and transaction volume was $162 million compared to ETH’s $57 billion TVL and $3.8 billion transaction volume. The loyalists will require some serious network effects to capture any market share. Fidelity has stated that bitcoin will be the only 401(k) crypto product they will offer with a 20% allocation limit per portfolio. It could be argued that this is a huge step in the right direction with a behemoth asset manager, such as Fidelity, believing bitcoin is a suitable product for retirement plans. On the other hand, it also demonstrates the rest of the space is generally regarded as unproven and untrusted. This opinion was echoed by three anti-crypto American senators this week who deemed Fidelity’s move to include bitcoin as “immensely troubling”. Institutional hesitancy towards altcoins can be understood when considering institution’s risk aversion. The nature of the nascent crypto space where the “build fast and break things” approach, which can sometimes be taken advantage of, is also a hinderance. Incidents such as the $190 million exploit on popular token bridge Nomad that occurred this week is case in point. Solana also experienced issues this week with popular Solana wallets, Phantom, Slope and Trust Wallet, being exploited with their users’ funds being drained from over 8,000 wallets. After the collapse of CeFi and now these breaches on hot wallets, crypto asset security has become an even bigger priority for all crypto users. Ledger, the popular hardware wallet provider, has perfectly timed its rumoured discussions of seeking to raise an additional $100 million in funding. It is rumoured the round will be at a higher valuation than their previous $380 million raise at a $1.5 billion valuation last June – showcasing the growing demand for protecting crypto wealth even during this market downturn. Thankfully, resistance to change can provide profitable opportunities as the herd stays away from “risky” assets. Howard Marks details in his investment bible, “The Most Important Thing”, that the highest risk-adjusted returns are obtained when buying assets that are considered “not fully understood, fundamentally questionable on the surface, controversial, unseemly or scary, deemed inappropriate for “respectable” portfolios or recently the subject of disinvestment”. We wonder what asset class meets these criteria…
by Coinrule
53 pip profit + Horizon wins yet again! + New Horizon tradeIf these ranges lasted forever, I wouldn't mind at all. I took 53 pips this morning long, this was something I posted 2 times about last night and this morning, so check those out for a more in depth look at the signals that lead to that move. It's really important in this market to be in before the move happens, you miss out on a lot of money, and your exposure almost triples when you chase the market. Remember that. Horizon took 76 pip profit today from last Friday. That's nearly 50 pips net, since the beginning of this range. It took a 60 pip loss after being up almost 80 pips on Thursday. It couldn't find a valid exit, which is annoying considering that this strategy could have produced over 140 pips in profit last week. Trust me I've played with trailing stops and static profit targets with this strategy and they just don't work nearly as well as just letting trades run and waiting for a strong exit signal. Trade number 3 was the worst loss Horizon has taken to date, I mentioned earlier that Horizon assesses stop losses on bar close and not in real time, so the strategy is exposed adversely to large break out candles like the one in the picture below. This is a risk that I'm willing to accept though because A. Horizon mitigates that risk using multiple confirmation protocols and B. the RR is 3-4 times the losses. This strategy is designed to take 30-50 pips on average, with occasional 100-200 pip trend. As things stand, Horizon's average loss is only about 20-30 pips. Plus Horizon's wining 6-7/10 at this point so it's all good! Plus I'm adding some logic this week that I'm hoping will boost performance even further. So far it's 2/3 and currently 30 pips up on it's 4th live trade. That said if I DID find a better alternative to this stop loss strategy, I would more than likely cut my max draw down in half. It's sitting at about 8-9 right now, which I would love to get down to about 5% using the same risk. Horizon's current exposure is 1.7% per trade because of the draw down rules that FTMO and other prop firms put in place. With my own capital, I could easily raise that to 2-3%, I don't really want to though (yes I do) Horizon , like I mentioned has pyramided a short trade which has been as high as 35 pips profit, so far, so this one's looking like a winner as well. Overall that's 150 pips taken between me and the machine in the last 4-5 days, so very happy, and I'm praying for even further success in the coming weeks. I'll link each post so you can audit my trades. I post these trades well before the moves actually happen.
Education
by NeoDaNomad
2
Forward Testing: 'Horizon" trading strategy! Short This strategy is hard to post because it's market specific and relies on high resolution charts like the 5 and 10-minute. That said, Horizon has been able to turn well over a 150% profit in just 3 months trading EUR/USD . Risk is just 2% of account balance and the max draw down is just under 9%! Growth is very consistent! This strategy is currently in short @ 1.024. Stop loss is set at 23 pips , but this strategy only evaluates stops after the close of the candle. This method actually allows Horizon to run tighter stops, but exposes the strategy to disproportionate losses. On average though this strategy still maintains a solid 3:1 RR and a win rate just shy of 60% . I'll be really pleased if this continues into the next few months of forward testing. I included a screenshot of the strategy tester data and uploaded it below. The numbers look promising. ibb.co
Short
by NeoDaNomad
2