Get started

Biases

Market Psychology and Your Trading Decisions✨ Unlocking the secrets of market psychology is vital for successful trading. Here's why: 🔹 Emotions at Play: Fear, greed, and herd mentality significantly influence your trading choices. 🔹 Rational Thinking: Being aware of market psychology helps you maintain a calm and logical approach to decision-making. 🔹 Trend Spotting: Recognizing market psychology enables you to identify potential market trends and reversals. 🔹 Tackling Biases: Self-assessment must consider three biases: 1️⃣ Confirmation Bias: Avoid favoring information that confirms pre-existing beliefs. 2️⃣ Overconfidence Bias (Dunning-Kruger Effect): Beware of overestimating your abilities as a novice trader. 3️⃣ Loss Aversion Bias: Recognize the inclination to avoid losses more than seeking gains. 🔹 Prospect Theory: Understand how prospect theory shapes decision-making, where individuals take risks to evade losses rather than pursue equivalent gains. 🔹 Stay Informed: Stay updated with market news to avoid impulsive reactions to short-term fluctuations. 🔹 Empower Your Trades: An understanding of market psychology empowers you to make informed and rational trading decisions. ✨ Harness the power of market psychology for long-term trading success! 📈💪
TVC:DXYEducation
by Moon_SmartMoney
The Value of PriceA basic concept in price action trading is that when it comes to the analysis process of price, some candles are more valuable than others. By "more valuable" I mean, some candlesticks have more weight in the analysis process of price than others. Before I explain which candles have more inherent value, let me explain a bit of price action philosophy. When it comes to an asset's price, or even the market in general the price action trader believes that it is a living breathing entity. Just the same as you and I, the market's movements differ from day to day and past behavior does not predict future behavior. That said, just like you and I, the future behavior of an living breathing entity is much easier to predict if based on the analysis of recent behavior. So in other words, if I were to predict your next move, it is much easier and practical to base that analysis on your recent behavior, rather than your behavior 2 years in the past. So this core philosophy pretty much dictates how you can set values to price. Simply put," Current price is more valuable than past price in terms of the analysis process". So if you were to predict the future direction of the price of an asset, it is wise to analyze current price rather than past price; simply due to the fact that past price has less weight in terms of the analysis process than current price.So for example, if your analysis of price for the last 3 months was stating that price will rise in the future; however this week's price is stating that price will fall, the price action trader will not hesitate to sell as dictated by their analysis of current price. So the next time you find yourself confused about the future direction of price due to conflicting signals. Ask yourself, " what is current price telling me about the future direction of price?" and let past price stay where it belong, "in the past." That's it! Have a great day! Ken
Education
by TradingForexPriceAction
1
BTCUSD 15MIN How to buy the dipContinuing with the retracement levels, here are a few examples on the faster 15 minute time frame. (each candle represents 15 minutes of trading) I have used a 55 candle Moving Average (55MA) to easily find the starting point of the measurement. Pick the lowest point below the 55MA line as the starting point of the wave up. Simply connect it with the highest point reached in the wave above the 55MA and voila. If the highest point gets breached without the price going lower, simply redraw the fibonacci tool to connect to the new (higher) highest point. And then wait for the dip. MOST IMPORTANT: You must always have a set of defined rules for your trading strategy. These rules must generate the very same setups and results for every person following it, without room for interpretation or bias. Cognitive bias is unimaginably strong and might be one if not the toughest enemy on your path to becoming a successful professional trader. The only way to really defeat it is to not fight it at all. Making strict rules expressed in math will make sure you avoid the fight. I recommend learning more about it by reading Daniel Kahneman: Thinking, fast and slow.
BYBIT:BTCUSD.P
by Coinstreet
04/04-2020: short EUA parallel channel highlights the angle of the trend present in the current market on a 30 minute timeframe. The channel is DESCENDING. A descending channel is a bear trend. A break of the channel indicates bullish momentum. With momentum increasing we can expect a pullback against the trend. We may now begin to look for an entry in the direction of the trend. Most of the time such a chance is provided near a fibonacci retracement level. The 38,2%, 50% and 61,8% are all widely used. The 5 point fibonacci tool (XABCD) shows confluence with 38.2%, 61.8% and 161.8% fibonacci ratios within the pattern. A resistance level is found just above the completion point of the pattern. By using the 3 point fibonacci tool, the 1.414 level plotted on the chart shows a 141.40% extension of AB projected from C. The 1.414 level is used for alternate ab=cd patterns. The 1.414 AB=CD is converging with a 61.8% retracement, confluenced by a 161.8% extension. A diagonal red line is used to highlight and illustrates hidden bearish divergence (RSI indicator is showing higher highs, while price is forming lower highs!) A break below the blue trendline indicates a shift in the momentum. If the resistance level is broken (cluster), another opportunity to sell short this market may occur around these levels: Please like the chart if you find the analysis valuable! Good luck to all trading EUR/USD!
Short
by MikulovicFOREX