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Jesse Livermore: Trading Lessons From an Iconic Trader ● Jesse Livermore, a successful stock trader, built a fortune of $100 million in 1929. He operated independently, using his own capital and strategies. Livermore preferred trending stocks and used price patterns and volume analysis to decide trades. ● Livermore's Trading Principles (1) Trade with the trend A well-known saying is "The Trend Is Your Friend." Livermore preferred to trade stocks that were trending and avoided sideways market. (2) Get confirmation before entering any trade Hold off until the market shows clear signs before making a move. Being patient can lead to significant profits. (3) Trade with a strict stop-loss It is crucial to set a strict stop-loss for every trade, and it's important to know the stop-loss level before starting any trade. This approach can help a trader avoid significant losses. (4) Trade the leading stocks from each sector Livermore liked to trade stocks that were leaders in their industry. He thought this approach could increase his chances of winning. (5) Avoid average down losing trades He chose to exit the position rather than averaging it down. (6) Avoid following too much stocks It's quite challenging to monitor numerous stocks simultaneously. Focusing on a smaller number of stocks could lead to better trading opportunities.

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by NaranjCapital

Trading Effect on a Portfolio Trading Effect on a Portfolio When a person decides to join the financial world and buy stocks, commodities, currency, or perhaps even cryptocurrency*, they have to think about the approach they take to their management. There is the option of holding assets until they decide to sell them in months or years, and there is the option to trade them actively. Trading effect reflects how a trader’s actions influence the value of their portfolio. This FXOpen article explains what the trading effect is and how it serves as a way to quantify a trader’s performance. What Does Trading Effect Mean? Trading decisions exert a substantial influence on the performance of a portfolio. What is an effect in stock, forex, commodity trading? The trading effect reflects the outcomes of the choices made by traders as they buy and sell financial assets. Whether one engages in short-term or long-term trading, the consequences of these decisions are palpable. Short-term traders may experience rapid gains or losses, while long-term traders witness the cumulative effect of their actions over time. Managing trading strategies prudently is imperative to optimising portfolio performance. Don’t confuse the trading effect with the trade effect, which encompasses the various impacts of trade on economies and industries. It involves the allocation of resources, changes in economic welfare, and the movement of capital and labour. This is not the effect we will focus on in this article. Types of Effects Effects can be categorised based on the type of asset or instrument being traded. There could be a stock, forex, commodities, or futures trading effect. The effects are not just positive and negative. To analyse the impact of trading, traders apply various analytical tools and theories. The Epps effect in trading is one of them. It claims that the correlation between the returns of two different stocks decreases as the length of the interval for which the price changes are measured decreases. This effect is caused by asynchronous trading. Short-Term vs Long-Term Trading Effects Trading actions often yield immediate results, reflecting the rapid fluctuations and reactions within the market. The short-term trading effects can be driven by news events, earnings reports, market sentiment, and technical indicators that influence prices over short time frames. For instance, a day trader executing a quick buy or sell based on breaking news experiences immediate gains and losses. In contrast, long-term trading strategies involve a more deliberate and sustained approach, shaping one’s financial future through careful portfolio management. Long-term trading effects manifest over an extended horizon, reflecting the cumulative impact of strategic decisions. Risk and Reward in Trading The risk-reward trade-off is a fundamental concept in trading that involves balancing the potential for profit against the likelihood of loss. Traders often assess the risks and rewards of a trade before executing it. High-Risk Trading Strategies High-risk trading strategies may lead to amplified trading effects. For example, using leverage allows traders to control a larger position with a smaller amount of capital. While this may amplify gains, it also magnifies potential losses and can result in margin calls, forcing traders to either inject more capital or close positions at unfavourable prices. Trading highly volatile and speculative instruments can lead to significant price swings. While this volatility presents opportunities, it also introduces higher levels of risk. In unpredictable markets, sudden and unexpected price movements can also result in rapid losses, especially for traders employing aggressive strategies. Strategies for Managing Risk Diversifying across different asset classes and sectors helps spread risk. A well-diversified portfolio may be less susceptible to the negative impact of a single underperforming asset. Implementing stop-loss orders may limit potential losses. Traders determine these levels based on their risk tolerance and analysis of market conditions. They also control the size of each position relative to the total portfolio value, as it helps manage overall risk exposure. Markets evolve, and different strategies may be more suitable in varying conditions. Traders adapt their approaches based on the prevailing market environment and establish realistic profit targets, ensuring that the potential returns justify the assumed risks. The Impact of Behavioural Biases Behavioural biases can significantly impact trading decisions, leading to unintended trading effects. - Overtrading can lead to a cluttered portfolio and increased risk exposure. Driven by excessive confidence or impulsivity, it may erode gains through transaction costs. - Loss aversion is a psychological and behavioural bias observed in humans, which refers to the tendency of people to strongly prefer avoiding losses over acquiring equivalent gains. - Confirmation bias , favouring information that aligns with existing beliefs, can also lead to suboptimal decision-making. Confirmation bias potentially blinds traders to alternative perspectives and impacts their ability to adapt to changing market conditions. Final Thoughts Understanding and managing the trading effect is paramount for traders. Regular assessment and comparison of the results you get while trading over different time periods are foundational elements in developing the skills needed to navigate the market dynamics. If you want to continue building your portfolio, you may open an FXOpen account. Explore the TickTrader trading platform to choose between the various asset classes and diversify your portfolio properly. *At FXOpen UK and FXOpen AU, Cryptocurrency CFDs are only available for trading by those clients categorised as Professional clients under FCA Rules and Professional clients under ASIC Rules, respectively. They are not available for trading by Retail clients. 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.

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Ultimate Winrate KDJ Strategy by reset parameter!(best tutorial)You've ever had this happen? Bought a stock at rock bottom, and it starts to rise a bit, and then the J line turns down on the KDJ indicator, telling you to sell. So, you sell, but then it quickly shoots up, leaving you pretty blue. like you missed out on a fortune. Was the KDJ indicator down? Nope Hold tight, cause we're about to see a miracle. By just tweaking a bit the KDJ indicator's parameters, you can nail those short-term highs and be on your way to the success. So, how do you find the right KDJ indicator parameters? Stick around, and I'll spill the beans! First off, why do we need to optimize this lil' parameter? Well, every stock moves differently cause the folks trading it are different. So, a one-size-fits-all KDJ indicator won’t always work well on every stock at every stage. To up our chances, we gotta tweak those parameters to find the best fit for our stock. Now, onto the second question: how do you find the right ones? Let’s go back to the Tesla stock chart. After changing the KDJ indicator parameters to 74, the sell point lines up perfectly with the peak. Why 74? Well, from point A to point B, there’s exactly 74 candles. Why use the number of candles between those two points as the KDJ parameter? Here’s the crux of it. The KDJ indicator is a momentum oscillator, calculating the close price at latest candle with the highest and lowest prices of the previous nine candles since the default KDJ parameter is 9. so If the price breaks above the highest price of those nine candles, it will be constantly giving false sell signals. So, we need to set the KDJ parameter to the number of candles from the previous high to the low. This way, the highest price and lowest price are not broken. Then, the KDJ works accurately. Still lost? Let’s look at another example. Here’s an Apple stock chart. With the default parameter of 9, we bought after the golden cross, but few days later, it prompt to sell signal, and then the price soared. Feeling furious yet? But if we set the KDJ parameter to 95, we’d have sold right near the top, securing a nice profit! Why 95? Same method: from the highest point A to the lowest point B, there’s 95 candles. Got it? Ain’t it something? Check your stocks with this method. Got questions? Leave a comment, and I’ll get back to ya ASAP! Today we focused on using KDJ to find sell points. It’s just as magical for buy points, which I’ll cover in future videos. So, please follow me and hit that boost bell so you don’t miss out!

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BTC Short using ICT Market Maker Sell Model (Explained)ICT Market Maker Sell Model (MMSM) for Bitcoin (BTC/USD) Key Components: 1. Original Consolidation: - This is the initial phase where the price consolidates within a range, indicating accumulation by smart money. 2. Smart Money Reversal: - This area marks the point where smart money starts to take profit or reverse their positions, leading to a reversal in the market trend. 3. Market Structure Shift: - This indicates a significant change in market direction with a displacement 4. Fair Value Gaps (FVG): - They are marked as potential areas of interest where price might return to fill these gaps. 5. Sellside Liquidity: - This is the area where liquidity is collected, often below the market structure where stop-losses and other sell orders are triggered. 6. Re-Distribution: - After the initial move down, the market redistributes, often retesting previous support areas or fair value gaps before continuing the trend. Chart Analysis: 1. Consolidation Phase: - The price starts with an original consolidation phase where accumulation occurs. 2. Upward Move: - After consolidation, there's an upward move indicating bullish market conditions. 3. Smart Money Reversal and Low Risk Sell: - The price reaches a peak where smart money starts to reverse their positions. The chart highlights a 'Low Risk Sell Inside FVG' which is an optimal selling point within a fair value gap, suggesting a high probability sell zone. 4. Market Structure Shift: - After the peak, the market experiences a shift in structure, breaking previous support levels and signaling a bearish trend. 5. Downtrend and Redistribution: - The price moves down sharply, redistributing within fair value gaps. The chart highlights these gaps (fvg) where price might retrace to fill before continuing downward. 6. Sellsides Liquidity Targeted: - The market targets sellside liquidity, triggering sell orders and stop-losses, leading to further downward pressure. Practical Use: - Identifying Entry and Exit Points: - Traders use this model to identify optimal entry (sell) points within fair value gaps and exit points where liquidity might be targeted. - Understanding Market Phases: - Recognizing different market phases (accumulation, distribution, and redistribution) helps in anticipating market moves. By understanding these components and their interplay, traders can better anticipate market movements and make informed trading decisions. 🙏 Support Me! If you enjoy my analyses and content, please consider following me and leaving a like/boost and a follow . Your support motivates me to keep creating high-quality content and sharing it with the community. Thank you for your support! 🚀

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by SerenityEquity

What Is the Gold/Silver Ratio, and How Do Traders Use It?What Is the Gold/Silver Ratio, and How Do Traders Use It? The gold/silver ratio, which measures the relative value of these two precious metals, is a vital tool for commodity traders. Understanding this relationship helps identify market trends and trading opportunities. This article explores how to calculate, analyse, and trade the gold/silver ratio effectively, providing insights to enhance your trading strategies. Understanding the Gold/Silver Ratio The gold-to-silver ratio represents the number of silver (XAG) ounces needed to purchase one ounce of gold (XAU). For instance, a value of 70 means buying one ounce of gold takes 70 ounces of the white metal. It’s a valuable indicator of the comparative value between the two precious metals. Historically, the relationship has seen significant fluctuations. During the Roman Empire, it was around 12:1. In the 20th century, the ratio averaged around 47:1, reflecting changing market dynamics. Recently, it has ranged from above 60:1 to over 90:1, influenced by various economic and geopolitical factors. A high figure suggests that silver is undervalued relative to gold, indicating a potential buying opportunity for XAG or a selling opportunity for XAU. Conversely, a low figure implies that silver is overvalued compared to gold. Traders often use this metric to make strategic decisions, such as going long on XAG and short on XAU when the ratio is high, expecting it to revert to historical averages. It’s also a reflection of market sentiment. When economic uncertainty is high, gold, as a so-called safe-haven asset, may increase in value relative to silver, widening the proportion. Conversely, silver may outperform the yellow metal during economic stability due to its industrial uses, narrowing the differential. Recent History of the Gold/Silver Ratio The historical gold/silver ratio has experienced significant fluctuations driven by global economic events. During the 2008 financial crisis, it spiked to over 80:1 as investors flocked to gold as a so-called refuge asset. It then fell sharply, reaching a low of 32:1 as central banks rolled out stimulus measures to support growth. In 2020, amid the COVID-19 pandemic, the ratio reached an all-time high of 126:1 due to heightened economic uncertainty and gold's appeal as a so-called safe-haven asset. However, as economies began recovering and industrial demand for the white metal increased, the relationship narrowed, dropping to around 65:1 at the beginning of 2021. Key drivers included expansionary policies and the recovery of industrial activities linked to silver demand. Interested readers can use FXOpen’s free TickTrader platform to explore the historical performance of these two precious metals. Calculating the Gold/Silver Ratio Calculating the ratio is straightforward. Simply divide the current price of gold by the current price of silver. For example, if XAU is priced at $1,800 per ounce and XAG at $25 per ounce, the calculation is: $1800/$25 = 72 This means it takes 72 ounces of silver to buy one ounce of gold. However, traders don’t need to calculate this themselves; TradingView users can enter ‘FXOpen:XAUUSD/FXOpen:XAGUSD’ into the ticker search to display the gold-to-silver ratio chart. Factors Influencing the Gold/Silver Ratio The gold/silver ratio is influenced by various factors that affect the value of these two precious metals. Key factors include economic indicators, market sentiment, and geopolitical events. Economic Indicators Inflation rates, interest rates, and economic growth directly impact the relationship. High inflation typically increases demand for gold as a hedge, widening the relationship. Conversely, low inflation can favour the white metal due to its industrial uses, narrowing the proportion. Interest rate changes also play a crucial role. When interest rates rise, gold often becomes less attractive compared to interest-bearing assets. Economic growth similarly boosts industrial demand for silver. Market Sentiment Investor sentiment towards risk significantly affects the measurement. During periods of economic uncertainty or market volatility, investors flock to gold for its so-called refuge properties, increasing the ratio. For instance, during the COVID-19 pandemic, heightened uncertainty led to a surge in XAU, pushing the ratio to record highs. Conversely, in stable economic conditions, silver's industrial demand can outpace the yellow metal. Geopolitical Events Political instability, trade wars, and other geopolitical events can cause fluctuations in the proportion. For example, tensions between major economies or unexpected geopolitical crises often drive investors towards the yellow metal. On the other hand, the resolution of such conflicts or stable geopolitical environments can boost industrial production and demand for silver and narrow the relationship. Supply and Demand Dynamics Silver's dual role as both a precious metal and an industrial commodity makes it more susceptible to supply chain disruptions and changes in industrial demand. Gold, primarily seen as a store of value, is less affected by industrial demand but highly influenced by investment demand and central bank policies. Trading the Gold/Silver Ratio Trading this relationship involves leveraging the relative price movements of each asset to make strategic trading decisions. Various strategies can be employed to capitalise on this ratio, each offering unique opportunities depending on market conditions. Strategies Based on Trends Traders often monitor the trend of this metric and the individual trends of each metal to determine potential trading signals: Gold-Silver Ratio Uptrend - General Uptrend: In this scenario, both assets are rising, but the ratio is also increasing, indicating gold is outperforming silver. Traders may buy XAU, expecting it to continue its relative strength. - General Downtrend: When both metals are falling, but the ratio is rising, silver is underperforming. Traders may sell XAG, anticipating further weakness compared to XAU. Gold-Silver Ratio Downtrend - General Uptrend: If both metals are rising and the ratio is falling, silver is outperforming gold. Traders might buy XAG to capitalise on its relative strength. - General Downtrend: When both metals are declining and the ratio is falling, gold is underperforming. Traders may sell XAU, expecting continued relative weakness. Trading Extreme Highs and Lows The gold/silver relationship is generally deemed ‘fair’ when the figure is around 50, implying that neither metal is overvalued/undervalued relative to the other. However, it can reach historical extremes, providing additional trading opportunities: Historical Highs (80-100) - Uptrend in Both: When the ratio is historically high, gold is considered expensive compared to silver. If both metals are in an uptrend, traders might long XAG, expecting a correction in the metric as it catches up. - Downtrend in Both: If both metals are declining, traders might short XAU, anticipating a relative decrease in its value compared to XAG. Historical Lows (40-60) - Uptrend in Both: When the ratio is historically low, gold is viewed as cheaper relative to silver. In an uptrend, traders might long XAU, expecting it to rise. - Downtrend in Both: If both metals are falling, traders might short XAG, anticipating it will continue to lose more value compared to XAU. The Bottom Line Trading the gold/silver ratio can unlock unique opportunities in the market. By understanding its dynamics and employing strategic approaches, traders can potentially enhance their trading strategies. To start trading this unique relationship via CFDs, consider opening an FXOpen account to access a wide range of advanced trading tools and resources to support your strategies. FAQs What Is the Gold-to-Silver Ratio? The gold-to-silver ratio measures how many ounces of silver are needed to purchase one ounce of gold. It provides insights into the relative value of these precious metals. A high figure suggests silver is undervalued relative to gold, while a low number suggests the opposite. How to Calculate the Gold-to-Silver Ratio? To calculate the ratio, divide the current price of gold by the current price of silver. For example, if gold is priced at $2,000 per ounce and silver at $20 per ounce, the proportion is $2000/$20, or 100:1. This means one ounce of gold costs 100 ounces of silver. Why Is the Gold/Silver Ratio So High? The ratio can be high due to factors like economic uncertainty, increased demand for gold as a so-called safe-haven asset, and reduced industrial demand for silver. Since 2021, it has remained elevated above 75:1 due to ongoing market uncertainties. How to Trade the Gold/Silver Ratio? Trading the relationship involves examining the trends of both assets and comparing their performance to the metric. Traders often buy silver and sell gold when the number is high, expecting it to decrease. Conversely, they sell silver and buy gold when the figure is low, anticipating an increase. 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.

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Stock Markets Uncovered Charles Dow the Co-Founder of DOWJONES Index. Introduced technical analysis to the public in the late 1800's, You really think his gonna show you how to beat his own market ??? I don't... That's why I see masses of people trade and fail. We are Thought How to trade the markets their way , Not giving us the chance to innovate our own strategy to beat the system with a much Higher edge than what they are trying to give us... Before the stock market crash, Brokers and Merchants were under an agreement under the Button Wood Agreement in 1972. A private Club were the insiders had to follow Common rules and boundaries. This closed the system against outside agents and auctioneers. But Margin buying during the 1920's was not controlled by the government. It was controlled by brokers interested in their own well-being. The Securities Exchange Act was signed on June 6, 1934, After the Stock Market Crash of 1929. The SEC used their power to change how Wall Street operated. Meaning they control the markets and Manipulate it how ever they want. See the markets with a new perspective, Study the markets itself, Not the material others try to give you. #SMU#WakeUp#Freedom>Security

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Developing Success With PineScript : Building Trigger Mechanisms In my ongoing quest to build better tools for traders, I continue to develop new quantitative trigger logic to improve the working versions I have already created. Trigger logic is complicated for most people because they fail to take the time to "focus on failure." Everyone builds trading systems focused on where the triggers work perfectly (trust me - I've seen/built a few hundred of them). But the most important thing to focus on is where it fails to generate a decent trigger and how you are going to filter it out or protect capital when that failed trigger hits. In this example, I highlight my new "Gun-Slinger" triggers and how my continued development is creating more advanced trading tools for skilled traders. I hope you enjoy it. #trading #research #investing #tradingalgos #tradingsignals #cycles #fibonacci #elliotwave #modelingsystems #stocks #bitcoin #btcusd #cryptos #spy #es #nq #gold

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19:56

TRENDSTAR INDICATOR (Best on 5Min chart)Hi Everyone! I have created a new TradingView indicator for DAY TRADERS! The most important indication of trend in day trading is price action, all other indicators are lagging indicators! (BHAAV BHAGWAN CHE) However, price action and candlestick patterns can become misleading if seen on a blank chart. A day trader needs to identify levels where price action actually matters! INTRODUCING TRENDSTAR INDICATOR - A powerful tool for day traders to enhance their trading strategies and make more informed decisions at the right time during the day: - Works on Index and Large Caps. (only NSE) - Auto plots key levels daily at open. - Refined Buy/Sell signals. - The ZONE is used to identify trend and plots dynamic S/R area. (When the zone is blue - trend is bullish and bearish when its orange) ZONE can also act as a S/R area and can be used for short term (1-2 days) trades. - Works best in 5M time frame for that spot on DAY TRADE everyone is looking for BUT you have to be patient for the levels to be breached. - 1M/3M scalping works as well. - Can set alerts for breach of any of the levels. UNDERSTANDING THE LEVELS: Blue dotted line - Pivot for the day Green line - S/R level on the higher side (breakout can trigger fresh buys) Red line - S/R level on the lower side (breakdown can trigger fresh shorts) Purple line - the joker level of the day (on certain days it acts as an iron clad S/R level) Black dotted lines - Extreme S/R zones for the day. I am currently sharing this indicator on invite-only basis. DM me on twitter @techtrademusic for access. Best wishes, FIVSTA.

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by djsahiljoshi

False Or Real? How To Determine If A Move Is Real or False!Bitcoin recently produced a major bearish move, the continuation of a bearish trend that started to develop earlier this year. As we arrived at the current market situation, many people are wondering, is this a real or false breakdown? 👉 How to determine if a move is false or real? There are many ways to do so... Let's have a look. 1) Levels of importance. We can determine if a move is false or real, if it cuts through major support or resistance levels. Here we can see Bitcoin moving below the 0.382 and 0.5 Fib. retracement levels after almost five months of bearish consolidation. This would indicate this move being real. 2) Moving averages. If a major move wicks in one direction but ends up closing without conquering/breaking a major moving average, then the move is false. If the major move ends up by closing above (bullish) or below (bearish) a major moving average after the event, it is then considered a real move. Here we can see Bitcoin closing below several major moving averages after a strong bearish move. Indicating that this is a real breakdown. 3) Volume. If a major move is supported by high volume, it indicates the move is real. Really high volume leaves no doubt as to the validity of the move in question. Here we are using TradingView's index and it shows the highest volume since 5-March. 4) Continuation. If the move in question is the continuation of an already developing situation, the move can be considered real. Here we can see a lower highs and lower lows pattern (downtrend) developing, making the last drop a continuation of this pattern. This indicates that this is a real move. These are just some of the ways to determine if a market move is real or false. Thank you for reading. Namaste.

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5 Strategies for Traders in 2024 5 Strategies for Traders in 2024 Trading strategies are essential tools for navigating financial markets. They provide a structured approach to trading decisions, leveraging technical indicators and patterns to identify opportunities. This article explores various potentially effective trading strategies, offering insights into how traders can apply them to improve their performance and achieve their trading goals. Understanding Different Types of Trading Strategies Trading strategies are essential for traders aiming to navigate the financial markets with precision and discipline. These strategies provide a structured approach for varying trading styles, helping traders make informed decisions based on specific criteria and market conditions. Here are some key types of trading strategies: - Trend Following: Traders aim to identify and get involved in trends, exploiting the trending nature of markets. Common indicators include moving averages and trendlines. - Mean Reversion: Based on the idea that prices will revert to their mean or average level over time. Traders use indicators like Bollinger Bands and RSI to identify overbought or oversold conditions. - Momentum: Focuses on assets that are moving strongly in one direction with high volume. Momentum traders use indicators such as the Moving Average Convergence Divergence (MACD) and Relative Strength Index (RSI). - Breakout: Involves entering positions when the price breaks through a predefined level of support or resistance. Breakouts can be confirmed using volume data. - Scalping: Aims to take advantage of small price changes over short periods. Scalpers typically rely on technical indicators like order flow data. Types of Indicators and Patterns Used in Traders’ Strategies In trading, various indicators and patterns are utilised to analyse market conditions and identify potential trading opportunities. These tools can be broadly categorised into several groups, each serving a specific purpose across different trading strategies. 1. Trend Indicators Trend indicators offer a way for traders to identify a trend’s direction and strength. Some popular trend indicators include: - Moving Averages (Simple, Exponential) - Moving Average Convergence Divergence (MACD) - Average Directional Index (ADX) - Parabolic SAR 2. Momentum Indicators Momentum indicators measure the speed or strength of price movements. They are crucial for identifying overbought or oversold conditions. Common momentum indicators include: - Relative Strength Index (RSI) - Stochastic Oscillator - Rate of Change (ROC) - Commodity Channel Index (CCI) 3. Volatility Indicators Volatility indicators gauge the degree of price variation over time, providing insights into market turbulence. Key volatility indicators are: - Bollinger Bands - Average True Range (ATR) - Keltner Channels - Standard Deviation 4. Volume Indicators Volume indicators analyse the trading volume to confirm the strength of a price movement or trend. Notable volume indicators include: - On-Balance Volume (OBV) - Chaikin Money Flow (CMF) - Volume Weighted Average Price (VWAP) - Accumulation/Distribution Line 5. Reversal Patterns Reversal patterns signal potential changes in market direction, allowing traders to anticipate trend reversals. Some reversal patterns are: - Sushi Roll Reversal - Megaphone - Diamond - Three Drives 6. Continuation Patterns Continuation patterns help traders understand whether a current trend is likely to continue. Popular continuation patterns include: - Flags and Pennants - Cup and Handle/Inverted Cup and Handle - Rectangles - Wedges 7. Candlestick Patterns Candlestick patterns are formed by one or more candlesticks on a chart and provide insights into market sentiment. Some candlestick patterns are: - Hook Reversal - Kicker - Belt Hold - Island Reversal These indicators and patterns form the foundation of many top trading strategies, enabling traders to analyse market behaviour and make entry decisions. Below, we’ll use some of these indicators and patterns in several different trading strategies. Five Strategies for Traders Now, let’s examine five trading strategies that may work if you modify them in accordance with your trading plan and common trading rules. While we’ve used the EUR/USD pair to demonstrate the examples, they can also be applied as commodity, crypto*, and stock market trading strategies. Head over to FXOpen’s free TickTrader platform to access the indicators discussed in these strategies and more than 1,200 trading tools. VWAP and RSI - Volume Weighted Average Price (VWAP): An indicator that shows the average price a security has traded at throughout the day, based on both volume and price. - Relative Strength Index (RSI): A well-known momentum indicator that gauges the magnitude and change of market movements. It also indicates overbought and oversold market conditions. The VWAP and RSI trading method leverages mean reversion, which assumes that prices will revert to their mean value over time. This strategy may be potentially effective because it combines VWAP’s price-volume insight with RSI’s momentum analysis, providing a clear picture of potential price reversals. According to theory, it’s best used on intraday charts, typically the 5m or 15m, given the VWAP resets between trading days. Entry - Traders often look for RSI values above 70 (overbought) or below 30 (oversold) to indicate potential reversals. - A short entry is typically considered when RSI crosses back below 70 and the price is above the VWAP. - Conversely, a long entry is common when RSI crosses back above 30 and the price is below the VWAP. - A divergence between RSI and the price can add confluence to the trade. Stop Loss - Stop losses are usually set beyond the recent swing high for short positions or swing low for long positions. Take Profit - This approach capitalises on the mean reversion principle, aiming for prices to return to their average level. Therefore, it is common for traders to take profits at the VWAP. - However, take profits might also be placed at a suitable support or resistance level. Breakout and Retest The Breakout and Retest trading technique focuses on identifying horizontal ranges or consolidation phases in the market. This strategy aims to capitalise on price movements that occur after the breakout of these ranges, leveraging the potential for substantial trend formation. Entry - Traders observe a horizontal range or consolidation period with a directional bias in mind. - A strong movement or candle closing beyond the range signals a breakout. - Traders typically set a limit order at the range's high (for a bullish breakout) or low (for a bearish breakout) after the breakout occurs. Stop Loss - Stop losses are generally placed below the range's low for bullish breakouts or above the range's high for bearish breakouts. This risk management approach potentially helps protect against false breakouts and reversals. - However, a trader can also place a stop loss above or below the nearest swing point, which may provide a more favourable risk/reward ratio. Take Profit Given that breakouts from consolidation ranges often lead to prolonged price moves, traders commonly set take-profit levels at key support or resistance levels. Fibonacci and Stochastic - Fibonacci Retracement: A tool used to identify potential support and resistance levels by measuring the distance between a significant high and low. - Stochastic Oscillator: A momentum indicator comparing a security’s closing price to its price range over a specified period, typically used to identify overbought or oversold conditions. The Fibonacci and Stochastic strategy combines Fibonacci retracement levels with the Stochastic Oscillator to identify potential price reversals in trending markets. This approach leverages key retracement levels and momentum signals, offering traders a precise method for timing entries and exits. Entry - Traders typically observe a new low in a bear trend or a new high in a bull trend. - A Fibonacci retracement is then applied between the prior high and low, focusing on the 0.382, 0.5, or 0.618 levels. - As the price approaches these levels, traders look for signs of rejection, such as candlestick patterns like a shooting star or hammer. - Additionally, traders watch for the Stochastic Oscillator to cross back below 80 (in a bear trend) or above 20 (in a bull trend). - When the Stochastic moves beyond these levels, an entry is sought. Stop Loss - Stop losses may be set just beyond the entry swing point or the next Fibonacci level. Take Profit - Profits might be taken at a valid support or resistance level. Bollinger Band Squeeze and MACD - Bollinger Bands: A volatility indicator consisting of a middle band (usually a simple moving average) and two outer bands set at standard deviations from the middle band. - Moving Average Convergence Divergence (MACD): A momentum indicator valuable in trending markets, designed to measure the relationship between two moving averages. The Bollinger Band Squeeze and MACD strategy combines Bollinger Bands' volatility analysis with MACD's momentum confirmation. This approach identifies potential breakouts above/below the Bollinger band following periods of low volatility, providing a robust framework for trading such events. The strategy is used in a solid trend and in the direction of the trend. Entry - Traders look for Bollinger Bands to constrict, indicating reduced volatility. - The MACD is used to confirm the breakout direction. Traders typically watch for the MACD signal line to cross above the MACD line for a bullish breakout or below for a bearish breakout. - The breakout is generally confirmed by a strong price movement in the direction of the MACD crossover. Stop Loss - Stop losses may be set beyond the opposite edge of the Bollinger Bands. Take Profit - Profits might be taken when the price closes near or beyond the opposite edge of the Bollinger Bands. This method allows traders to capitalise on the full extent of the breakout move. Keltner Channel and RSI Momentum - Keltner Channels (KC): A volatility-based indicator consisting of bands set around an exponential moving average, typically using a multiplier of 1.5 times the Average True Range (ATR). The Keltner Channel and RSI Momentum strategy leverages volatility and momentum to identify potential trade opportunities. This approach focuses on price movements outside the Keltner Channel, confirmed by RSI, to signal entry points. The strategy is applied within the strong trend. Entry - Traders observe RSI to be above 50 but below 80 for bullish setups, indicating upward momentum without being severely overbought. For bearish setups, RSI should be below 50 but above 20. - A decisive close outside the Keltner Channel signals a potential trade. For a bullish entry, the price should close above the upper channel, with RSI confirming by staying within the bullish range. Conversely, for a bearish entry, the price should close below the lower channel, with RSI confirming by staying within the bearish range. Stop Loss - Stop losses may be set beyond the midpoint of the Keltner Channel. - Alternatively, stop losses may be placed on the other side of the channel, depending on the trader's risk tolerance. Take Profit - Profits may be taken at key support or resistance levels, providing logical exit points based on market structure. - Additionally, traders might exit when the price closes beyond the opposite side of the Keltner Channel. - Another potential exit strategy is to take profits when RSI reaches overbought (above 80) or oversold (below 20) levels, indicating potential exhaustion of the current move. The Bottom Line Understanding and applying different trading strategies can potentially enhance your trading performance and help you achieve your financial goals. By leveraging tools like VWAP, RSI, and Fibonacci retracements, traders can make more informed decisions. Open an FXOpen account today to access these strategies and more with a broker that supports your trading journey. FAQs What Is the Most Basic Trading Strategy? The most basic trading strategy is the moving average golden and death cross strategy. This approach involves using two moving averages, typically 50-day and 200-day, to identify potential buy and sell signals. A golden cross occurs when the short-term 50-day moving average crosses above the long-term 200-day moving average, signalling a bullish market trend and a potential buying opportunity. Conversely, a death cross happens when the 50-day moving average crosses below the 200-day moving average, indicating a bearish trend and reflecting a potential selling opportunity. What Strategy Do Most Day Traders Use? Most day traders use momentum trading. This strategy involves identifying assets that are moving significantly in one direction on high volume. In a stock trading strategy, for instance, a day trader might buy a stock climbing strongly backed by higher-than-average volume. They might rely on technical indicators like Moving Average Convergence Divergence (MACD) and Relative Strength Index (RSI) to make decisions. How to Backtest a Trading Strategy? To backtest a trading strategy, traders use historical data to simulate the performance of a strategy over a specified period. This involves applying the strategy's rules to past data to see how it would have performed. Traders typically use backtesting software or platforms that allow for detailed analysis and visualisation of results. How to Create My Own Trading Strategy? Creating a potentially successful trading strategy involves several steps. First, identify your trading goals and risk tolerance. Then, choose the market and timeframe you want to trade. Develop specific entry and exit rules using technical indicators and patterns. Finally, test your strategy using historical data to ensure its effectiveness before applying it to live trading. Also, ChatGPT provides numerous opportunities, including the creation of a trading strategy. Read our article ‘How to Use ChatGPT to Make Trading Strategies.’ *At FXOpen UK and FXOpen AU, Cryptocurrency CFDs are only available for trading by those clients categorised as Professional clients under FCA Rules and Professional clients under ASIC Rules, respectively. They are not available for trading by Retail clients. 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.

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The Influence of Global Economic Indicators on Commodity Prices Global economic indicators play a pivotal role in shaping commodity prices. Understanding these indicators can provide invaluable insights into the commodities market. 1️⃣ Gross Domestic Product (GDP) Growth GDP growth is a fundamental indicator that reflects the overall health of an economy. When GDP growth is robust, it generally signals increased industrial activity, which in turn drives up demand for commodities such as oil, metals, and agricultural products. For instance, China's rapid GDP growth over the past few decades has significantly boosted demand for industrial metals like copper and iron ore. As China developed its infrastructure, the demand for these commodities soared, leading to higher prices. Conversely, during economic slowdowns, like the 2008 financial crisis, GDP contraction resulted in plummeting commodity prices due to reduced industrial activity. 2️⃣ Inflation Rates Inflation affects commodity prices by influencing the purchasing power of money. High inflation typically leads to higher commodity prices as the value of money decreases, making commodities more expensive in nominal terms. Take gold, for example. During periods of high inflation, investors often flock to gold as a hedge against inflation. This was evident during the 1970s when the US experienced stagflation—high inflation combined with stagnant economic growth. Gold prices skyrocketed as investors sought a stable store of value. 3️⃣ Interest Rates Interest rates, set by central banks, have a profound impact on commodity prices. Lower interest rates reduce the cost of borrowing, stimulating economic activity and increasing demand for commodities. Conversely, higher interest rates can suppress demand and lower commodity prices. The Federal Reserve's policies significantly influence global commodity markets. For example, the Fed's decision to cut interest rates in response to the 2008 financial crisis led to increased liquidity in the markets, boosting demand for commodities like oil and copper. On the other hand, when the Fed signals rate hikes, it often leads to a strengthening dollar, which can put downward pressure on commodity prices. 4️⃣ Exchange Rates Exchange rates impact commodity prices since most commodities are traded globally in US dollars. A stronger dollar makes commodities more expensive for foreign buyers, potentially reducing demand and lowering prices. A clear example is the inverse relationship between the US dollar and oil prices. When the dollar strengthens, oil prices often fall, barring geopolitical pressures. 5️⃣ Employment Data Employment data, such as non-farm payrolls in the US, provides insights into economic health and consumer spending power. High employment rates indicate a strong economy, which can boost demand for commodities. For instance, strong employment data in the US often leads to increased consumer confidence and spending, driving up demand for gasoline, metals, and agricultural products. Conversely, during times of rising unemployment, such as the COVID-19 pandemic, reduced consumer spending power can lead to lower commodity prices. 6️⃣ Geopolitical Events Geopolitical events can cause significant disruptions in commodity supply chains, leading to volatile price movements. Events such as wars, trade disputes, and sanctions can affect the availability and cost of commodities. A notable example is the impact of the 2011 Libyan Civil War on oil prices. Libya, a major oil producer, saw its oil production plummet during the conflict, leading to a sharp spike in global oil prices. Similarly, US sanctions on Iran have historically caused fluctuations in oil prices due to concerns over supply disruptions. 7️⃣ Weather Patterns and Natural Disasters Weather patterns and natural disasters can significantly impact agricultural commodities. Droughts, floods, and hurricanes can disrupt crop production, leading to supply shortages and higher prices. The El Niño phenomenon, characterized by the warming of the Pacific Ocean, has historically led to extreme weather conditions affecting global agricultural production. For example, the 1997-1998 El Niño caused severe droughts in Southeast Asia, affecting palm oil and rice production, while also causing heavy rains in South America, impacting coffee and sugar output. By monitoring GDP growth, inflation rates, interest rates, exchange rates, employment data, geopolitical events, and weather patterns, you can better anticipate market movements in commodities markets and adjust your strategies accordingly. Effective commodity trading requires staying informed and adaptable, leveraging economic indicators to navigate the complex and often volatile market landscape.

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8-5-24 Developing Pinescript Tools For Traders Part of my learning process with TradingView has been to delve a bit into Pinescript. I've been programming for a while now - more than 20 years. But I focus on developing modeling systems, adaptive AI types of solutions, and fully automated trading systems for clients. Pinescript has been fun. Overall, I believe there are many advanced capabilities achievable in Pinescript as long as one sticks to simple principles. _ a focus on core elements as separate script components _ remember to clean/document up your processes/arrays as you go _ develop core logic functions first, then go back and address display features _ remember to organize your code in a way you can clearly address version changes In this example, I started with the idea of building a tool based on Fibonacci Price Theory, then came up with an idea to measure price pressure differently than others had done. Once I started playing with the display features (plot) I was able to see how my initial scripts worked and how the calculated data represents price trends/changes. For me, seeing is the biggest part of the process. If I can't see how the data looks - then it is almost unusable for me to build more advanced logical features. That's why I suggest building each component of your system out as unique indicators. I want to see the data/indicator work before I try to build some additional trading logic with it. Overall, I'm very happy with what I've built. It has taken me about 2 weeks to build all of this (only really applying a few hours every other day or so). One last thing, use the newbar feature to control persistent variable features. Otherwise, you may end up creating something that processes every tick. More soon. #toolsfortraders #trading #spy #qqq #btcusd #strategy #systems #coding

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BULLISH STRUCTURE SMC How to identify a bullish market structure according to SMC In a bullish structure, identify the top, the high after the bos is only confirmed as a top when the price scans idm (RECENT PULLBACK) When there are 2 confirmed highs, the lowest level between the 2 highs will be the bottom (the bottom does not need to be confirmed with an uptrend) Thanks

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Zero Spread Milestone: Strategic Trade in Micro Yield Futures Introduction The current market scenario presents a unique potential opportunity in the yield spread between Micro 10-Year Yield Futures (10Y1!) and Micro 2-Year Yield Futures (2YY1!). This spread is reaching a critical price point of zero, likely acting as a strong resistance. Such a rare situation opens the door for a strategic trading opportunity where traders can consider shorting the Micro 10-Year Yield Futures and buying the Micro 2-Year Yield Futures. In TradingView, this spread is visualized using the symbol 10Y1!-CBOT_MINI:2YY1!. The combination of technical indicators suggests a mean reversion trade setup, making this a compelling moment for traders to act on such a potential opportunity. The alignment of overbought signals from Bollinger Bands® and the RSI indicator further strengthens the case for a reversal, presenting an intriguing setup for informed traders. All of this is following last Wednesday, July 31, 2024, when the FED reported their decision related to interest rates where they left them unchanged, adding further context to the current market dynamics. Yield Futures Contract Specifications Micro 10-Year Yield Futures (10Y1!): Price Quotation: Quoted in yield with a minimum fluctuation of 0.001 Index points (1/10th basis point per annum). Tick Value: Each tick is worth $1. Margin Requirements: Approximately $320 per contract (subject to change based on market conditions). Micro 2-Year Yield Futures (2YY1!): Price Quotation: Quoted in yield with a minimum fluctuation of 0.001 Index points (1/10th basis point per annum). Tick Value: Each tick is worth $1. Margin Requirements: Approximately $330 per contract (subject to change based on market conditions). Margin Requirements: The margin requirements for these contracts are relatively low, making them accessible for retail traders. However, traders must ensure they maintain sufficient margin in their accounts to cover potential market movements and avoid margin calls. Understanding Futures Spreads What is a Futures Spread? A futures spread is a trading strategy that involves simultaneously buying and selling two different futures contracts with the aim of profiting from the difference in their prices. This difference, known as the spread, can fluctuate based on various market factors, including interest rates, economic data, and investor sentiment. Futures spreads are often used to hedge risks, speculate on price movements, or take advantage of relative value differences between related instruments. Advantages of Futures Spreads: Reduced Risk: Spreads generally have lower risk compared to outright futures positions because the two legs of the spread can offset each other. Lower Margin Requirements: Exchanges often set lower margin requirements for spread trades compared to single futures contracts because the risk is typically lower. Leverage Relative Value: Traders can take advantage of price discrepancies between related contracts, potentially profiting from their convergence or divergence. Yield Spread Example: In the context of Micro 10-Year Yield Futures and Micro 2-Year Yield Futures, a yield spread trade involves buying (or shorting) one contract (10Y1! Or 2YY1!) while shorting (or buying) the other. This trade is based on the expectation that the spread between these two yields will move in a specific direction, such as narrowing or widening. The current scenario (detailed below), where the spread is reaching zero, suggests a significant resistance level, providing a unique trading opportunity for mean reversion. Analysis Method Technical Indicators: Bollinger Bands® and RSI 1. Bollinger Bands®: The spread between the Micro 10-Year Yield Futures (10Y1!) and Micro 2-Year Yield Futures (2YY1!) is currently above the upper Bollinger Band on both the daily and weekly timeframes. This indicates potential overbought conditions, suggesting that a price reversal might be imminent. 2. RSI (Relative Strength Index): The RSI is clearly overbought on the daily timeframe, signaling a possible mean reversion trade. When the RSI reaches such elevated levels, it often indicates that the current trend may be losing momentum, opening the door for a reversal. Chart Analysis Daily Spread Chart of 10Y1! - 2YY1! The main article daily chart above displays the spread between 10Y1! and 2YY1!, highlighting the current position above the upper Bollinger Band. The RSI indicator also shows overbought conditions, reinforcing the potential for a mean reversion. Weekly Spread Chart of 10Y1! - 2YY1! The above weekly chart further confirms the spread's position above the upper Bollinger Band. This longer-term view provides additional context and supports the likelihood of a reversal. Conclusion: Combining the insights from both Bollinger Bands® and RSI provides a compelling rationale for the trading opportunity. The spread reaching the upper Bollinger Band on multiple timeframes, along with an overbought RSI, strongly suggests that the current overextended condition is potentially unsustainable. Additionally, all of this is occurring around the key price level of zero, which can act as a significant psychological and technical resistance. This convergence of technical indicators and the critical price level points to a high probability for a potential mean reversion, making it an opportune moment to analyze shorting the Micro 10-Year Yield Futures (10Y1!) and buying the Micro 2-Year Yield Futures (2YY1!) as the spread is expected to revert towards its mean. Trade Setup Entry: The strategic trade involves shorting the Micro 10-Year Yield Futures (10Y1!) and buying the Micro 2-Year Yield Futures (2YY1!) around the price point of 0. This is based on the analysis that the spread reaching zero can act as a strong resistance level. Target: As we expect the 20 SMA to move with each daily update, instead of targeting -0.188, we aim for a mean reversion to approximately -0.15. Stop Loss: Place a stop loss slightly above the recent highs of the spread. The daily ATR (Average True Range) value is 0.046, so adding this to the entry price could be a way to implement a volatility stop. This accounts for potential volatility and limits the downside risk of the trade. Reward-to-Risk Ratio: Calculate the reward-to-risk ratio based on the entry, target, and stop loss levels. For example, if the entry is at 0.04, the target is -0.15, and the stop loss is at 0.09, the reward-to-risk ratio can be calculated as follows: Reward: 0.19 points = $190 Risk: 0.05 = $50 Reward-to-Risk Ratio: 0.19 / 0.05 = 3.8 : 1 Importance of Risk Management Defining Risk Management: Risk management is crucial to limit potential losses and ensure long-term trading success. It involves identifying, analyzing, and taking proactive steps to mitigate risks associated with trading. Using Stop Loss Orders: Always use stop loss orders to prevent significant losses and protect capital. A stop loss order automatically exits a trade when the price reaches a predetermined level, limiting the trader's loss. Avoiding Undefined Risk Exposure: Clearly define your risk exposure to avoid unexpected large losses. This involves defining the right position size based on the trader’s risk management rules by setting maximum loss limits per trade and overall portfolio. Precise Entries and Exits: Accurate entry and exit points are essential for successful trading. Well-timed entries and exits can maximize profits and minimize losses. Other Important Considerations: Diversify your trades to spread risk across different assets. Regularly review and adjust your trading strategy based on market conditions. Stay informed about macroeconomic events and news that could impact the markets. When charting futures, the data provided could be delayed. Traders working with the ticker symbols discussed in this idea may prefer to use CME Group real-time data plan on TradingView: www.tradingview.com This consideration is particularly important for shorter-term traders, whereas it may be less critical for those focused on longer-term trading strategies. General Disclaimer: The trade ideas presented herein are solely for illustrative purposes forming a part of a case study intended to demonstrate key principles in risk management within the context of the specific market scenarios discussed. These ideas are not to be interpreted as investment recommendations or financial advice. They do not endorse or promote any specific trading strategies, financial products, or services. The information provided is based on data believed to be reliable; however, its accuracy or completeness cannot be guaranteed. Trading in financial markets involves risks, including the potential loss of principal. Each individual should conduct their own research and consult with professional financial advisors before making any investment decisions. The author or publisher of this content bears no responsibility for any actions taken based on the information provided or for any resultant financial or other losses.

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What Is a Whipsaw, and How Can One Trade It?What Is a Whipsaw, and How Can One Trade It? A whipsaw occurs when a market exhibits sharp price movements in one direction, followed by a sudden reversal. This pattern can mislead traders and often leads to significant losses if not managed properly. This article explores the causes, identification, and approaches to navigating whipsaws. Understanding a Whipsaw in Trading A whipsaw pattern occurs when a market exhibits sharp price movements in one direction, followed by a sudden reversal. This pattern can be particularly challenging for traders, as it often leads to significant losses if not properly managed. In essence, a whipsaw is a series of rapid, unexpected price changes that can quickly lead to a loss. Whipsaws are common in volatile markets and can be triggered by a variety of factors, including sudden economic news, unexpected geopolitical events, or shifts in market sentiment. In a whipsaw example, the EUR/USD pair broke through a new high, attracting buyers who believed the uptrend would continue. However, the price then reversed sharply, causing those traders to incur losses. After, the price turned around and set a new high but turned down again. Understanding whipsaws is crucial for traders because these patterns can occur across various timeframes, from intraday charts to weekly or monthly ones. Still, those who trade on low timeframes are more susceptible to losses due to smaller capital and tighter stop-loss levels. Recognising the potential for a whipsaw helps traders remain cautious and avoid over-committing to a position based solely on initial price movements. Understanding Whipsaw Trading Recognising a whipsaw involves identifying its distinct characteristics and understanding the market conditions that typically accompany it. Characteristics of a Whipsaw A whipsaw is recognised by its sharp and rapid price movements in opposing directions, usually within a short timeframe. The key characteristics include: - Sudden Price Reversals: Prices often spike up or down, quickly followed by a reversal in the opposite direction. - High Volatility: Whipsaws occur in highly volatile markets where prices are sensitive to news and events. - False Breakouts: A common feature is a false breakout, where prices breach a support or resistance level briefly before reversing. - Stop-Loss Triggers: These patterns frequently hit traders' stop-loss levels due to abrupt reversals, causing unexpected exits from trades. Identifying a Whipsaw To spot a whipsaw, traders typically look for the following indicators and conditions: - Chart Patterns: Whipsaws are visually apparent on charts as sharp zigzag patterns. Traders often see a price move beyond a support or resistance level, followed by a swift reversal. - Momentum Indicators: For example, traders use RSI to gauge momentum. Whipsaws may be identified when the RSI shows overbought or oversold conditions followed by rapid corrections. - Candlestick Patterns: Specific candlestick formations, such as doji or spinning tops, can indicate indecision in the market, which is a precursor to a whipsaw. - Moving Averages: When short-term moving averages cross above or below long-term moving averages briefly before reversing, it may signal a whipsaw. To access these tools and identify patterns in real time, head over to FXOpen’s free TickTrader platform to get started with live charts. Examples and Timeframes Whipsaws can occur across different timeframes, from one-minute to daily or weekly charts. For instance, in intraday trading, a whipsawed stock might break out during the first hour of trading due to news, only to reverse sharply by midday. On hourly charts, earnings announcements can trigger whipsaws as initial investor reactions swing prices sharply before settling. Causes of Whipsaws A whipsaw, meaning a sharp and rapid price reversal, can occur due to several market events. Understanding these causes can help traders navigate and anticipate these volatile movements. Market Volatility High market volatility is a primary cause of whipsaws. When prices react intensely to news, economic data, or geopolitical events, the market becomes highly volatile. This rapid reaction can cause significant price swings in both directions, creating the whipsaw effect. Sudden News or Events Unexpected news or events, such as earnings reports, economic indicators, or geopolitical developments, can trigger whipsaws. For instance, a positive earnings report might initially drive prices up, only for a negative market sentiment or broader economic concern to quickly reverse this movement. Liquidity and Market Depth Low liquidity and shallow market depth often contribute to whipsaws. In markets with fewer participants or limited order sizes, large trades can disproportionately impact prices, causing sharp movements and subsequent reversals as the market absorbs these orders. Algorithmic Trading High-frequency trading and algorithmic trading can amplify whipsaws. These automated systems execute large volumes of trades at high speeds, often reacting to the same market signals simultaneously. This can lead to exaggerated price movements followed by rapid reversals. Trader Behaviour Emotional reactions from traders, such as panic selling or greedy buying, can cause whipsaws. When traders react impulsively to market movements, they contribute to the rapid up-and-down price swings characteristic of whipsaws. This behaviour is often driven by fear of missing out (FOMO) or fear of loss. How to Approach Whipsaws Navigating whipsaws requires a combination of strategic planning and disciplined execution. Traders can potentially mitigate risks and manage their positions by following several key principles. Higher Timeframe Bias Maintaining a higher timeframe (HFT) bias is crucial. By analysing longer-term charts, traders can identify the broader market trend, which can help maintain confidence during short-term whipsaws. This perspective may prevent knee-jerk reactions to minor fluctuations and align decisions with the overall market direction. Confluence of Factors When in a trade, seeking multiple factors of confluence is essential. This includes aligning technical indicators, chart patterns, and volume analysis with the HTF bias. A strong confluence of signals may provide greater confidence, reducing the likelihood of emotional reactions during volatile whipsaw events. Risk Management Strategies During a whipsaw, traders use three primary risk management options: Do Nothing Traders might choose to do nothing if they can justify that the whipsaw is a minor swing relative to their trade idea. If the price is already far from their stop loss, holding the position might be justified. This approach requires a solid rationale to avoid emotional decisions. Trim Position Size Reducing the position size, typically by half, decreases exposure to potential losses while remaining in the trade. This strategy allows the trade more time to work out without the full risk of a volatile market. Move the Stop Loss Moving the stop-loss level to a potentially safer, more distant level can potentially avoid being stopped out by volatility. However, this should be accompanied by reducing the position size to maintain consistent risk. For example, if a trader initially risks 1% with a 10-pip stop loss, moving the stop to 20 pips should be matched by closing half the position to continue risking only 1%. Exiting or Staying Flat In some cases, traders prefer to exit the position or stay flat until more confidence in the market direction is achieved. If a whipsaw is occurring, exiting around breakeven or at a slight loss might prevent the mental stress of watching a position swing back and forth. This approach can potentially preserve capital and emotional stability, enabling a clearer mindset for future trades. Common Mistakes to Avoid Navigating whipsaws can be challenging, and traders often make several avoidable mistakes. Understanding these pitfalls might help in managing trades more effectively. Overtrading in Volatile Markets Overtrading during high volatility is a common error. Traders often react impulsively to sharp price movements, entering and exiting positions too frequently. This can lead to increased transaction costs and reduced overall returns. Ignoring Fundamental Analysis Relying solely on technical analysis without considering fundamental factors can be detrimental. Economic data, news events, and geopolitical developments can drive whipsaws. Ignoring these elements can result in unexpected and adverse price movements. Misinterpreting Market Signals Traders sometimes misinterpret market signals, confusing a whipsaw with a genuine trend reversal. This misinterpretation can lead to premature exits from effective trades or entry into losing positions. Careful analysis and confirmation across multiple indicators can help potentially mitigate this risk. Neglecting Risk Management Failing to adjust risk management strategies during a whipsaw is a critical mistake. Traders might leave stop losses too tight, leading to unnecessary exits, or fail to reduce position sizes, increasing potential losses. Effective risk management, including appropriate stop-loss placement and position sizing, is crucial. Emotional Trading Emotional reactions to market volatility can cloud judgement. Panic selling or greedy buying often exacerbates losses. Maintaining discipline and sticking to a well-thought-out trading plan can help in avoiding decisions driven by fear or greed. The Bottom Line Whipsaws are challenging yet common patterns in volatile markets, characterised by sharp price movements and sudden reversals. Understanding their causes, identifying their characteristics, and employing strategic approaches can help traders navigate these turbulent conditions. Open an FXOpen account to access advanced trading tools and resources that might enhance your trading strategies and help you navigate market volatility with confidence. FAQs What Is a Whipsaw in Trading? In trading, a whipsaw refers to a scenario where the price of a security moves in one direction but then quickly reverses direction, resulting in rapid and often unexpected gains and losses. This phenomenon can be highly frustrating and costly for traders, particularly those who employ trend-following strategies, as it makes it difficult to analyse market trends. What Does Whipsawed Mean in Stocks? Being whipsawed in stocks means a trader experiences a sharp price movement in one direction followed by an immediate reversal. This often results in triggering stop-loss orders and causing traders to exit positions at a loss, only for the price to revert to its original trend shortly after. How to Avoid Whipsaws in Trading? To avoid whipsaws, traders typically maintain a higher timeframe bias, seek the confluence of multiple indicators, and employ robust risk management strategies. Reducing position size, carefully placing stop-loss orders, and avoiding impulsive trading decisions are essential techniques to mitigate the effects of whipsaws. 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.

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GAIL: This is why People lose money This is one important case study as to why investors lose money in the stock market. Now if you look at the chart, Here is what you see: 1. 32 Months of pure range-bound consolidation 2. Clearly defined support and resistance zones 3. Five months of consolidation at the resistance zone 4. A beautiful high-volume breakout followed by a retest. 5. This is one textbook setup for a long trade So, We should go long here, right? If I zoom out of the chart, Here is what you will see. - We have a strong resistance zone sitting just above the breakout level. - The price took a strong rejection from the exact resistance zone. Also, Observe the volatile consolidation zone that lasted almost 2 Years. That volatile zone may not be passed through in one instant. What we investors do is draw conclusions based on partial data and predict the price action that is yet to come. What we fail to do is observe the previous price action in its entirety. Does that mean that GAIL will not rise in value, Absolutely not. It just means that the uncertainty it has on the charts for a mere 10% gain ( breakout to ATH Distance) is super high. The market is full of opportunities. Why invest in something that already has a foreseeable red flag? If you liked the read, Would you give us a boost and a follow for our efforts? Have Requests, Questions, or Suggestions? Let us know in the comments below.👇 ⚠️Disclaimer: We are not registered advisors. The views expressed here are merely personal opinions. Irrespective of the language used, Nothing mentioned here should be considered as advice or recommendation. Please consult with your financial advisors before making any investment decisions. Like everybody else, we too can be wrong at times ✌🏻

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by TheChartereds

Updated

Asymmetric Risk Reward: The Secret to Success in Trading?Be as bold as you want yet protect your capital with the asymmetric risk reward strategy — an approach adopted by some of the greatest market wizards out there. In this Idea, we distill the concept of asymmetric bets and teach you how to risk little and earn big. Spoiler: legendary traders George Soros, Ray Dalio and Paul Tudor Jones love this trick. Every trade you open has only two possible outcomes: you either turn a profit or make a loss. Perhaps the greatest thing you can learn about these two outcomes is the balance between them. The fundamental difference between making money and losing money — the mighty risk-reward ratio . The risk-reward ratio is your trade’s upside relative to the downside you baked in (or realized). Let’s Break It Down 🤸‍♂️ Most traders believe that you have to take huge risks to be successful. But that’s not what the big guys in the industry do with the piles of cash they’ve got. Instead, they try to take the least amount of risk possible with the most upside. That’s what asymmetric risk-reward ratio means. Think of it this way: you invest $1 only if you believe you can ultimately make $5. Now your risk-reward ratio is set at 1:5, or a hit ratio of 20%. Safe to say that you’ll likely be wrong lots of times. But step by step, you can risk another dollar for that $5 reward and build up a good track record or more wins than losses. That way you can be wrong four times out of five and still make money. Let’s scale it up and pull these two further apart. Let’s say you want to chase a juicier profit with a small risk. You can pursue a risk-reward ratio of 1 to 15, meaning you risk $1 to make $15. The odds are very much in your favor — you can be wrong 14 times out of 15 and still break even. What Does This Look Like in Practice? 🧐 Suddenly, the EUR/USD is looking attractive and you’re convinced that it’s about to skyrocket after some big news shakes it up. You’re ready to ramp up your long position. Now comes decision time — what’s a safe level of risk relative to a handsome reward? You decide to use leverage of 1:100 and buy one lot (100,000 units) at the price of $1.10. That means your investment is worth €1,000 but in practice you are selling $100,000 (because of the leverage) to buy the equivalent in euro. In a trade of that size one pip, or the fourth figure after the decimal (0.0001), carries a value of €10 in either direction. If the exchange rate moves from $1.1000 to $1.1100, that’s 100 pips of profit worth a total of €1,000. But if the trade turns against you, you stand to lose the same amount per pip. Now, let’s go to the practical side of things. You choose to widen the gap between risk and reward and aim for profit that’s 15 times your potential loss. You set your stop loss at a level that, if taken out, won’t sink your account to the point of no return. Let’s say you run a €10,000 account and you’ve already jammed €1,000 into the trade. A safe place to set your stop loss would be a potential drawdown of 2%, or €200. In pip terms, that’s equal to 20 pips. To get to that 1:15 ratio, your desired profit level should be 300 pips, aiming for a reward of €3,000. If materialized, the €3,000 profit will bump your account by 30% (that’s your return on equity), while your return on investment will surge 200%. And if you take the loss, you’d lose 2% of your total balance. It’s How the Big Guys in the Industry Do It You’d be surprised to know that most of the Wall Street legends have made their fortunes riding asymmetric bets. Short-term currency speculator George Soros explains how he broke the Bank of England with a one-way bet that risked no more than 4% of his fund’s capital to make over $1 billion in profits. Ray Dalio talks about it when he says that one of the most important things in investing is to balance your aggressiveness and defensiveness. “In trading you have to be defensive and aggressive at the same time. If you are not aggressive, you are not going to make money, and if you are not defensive, you are not going to keep money.” Paul Tudor Jones, another highly successful trader, spotlights the skewed risk-reward ratio as his path to big profits. “5:1 (risk /reward),” he says in an interview with motivational speaker Tony Robbins,” five to one means I’m risking one dollar to make five. What five to one does is allow you to have a hit ratio of 20%. I can actually be a complete imbecile. I can be wrong 80% of the time, and I’m still not going to lose.” What’s Your Risk-Reward Ratio? 🤑 Are you using the risk-reward ratio to get the most out of your trades? Do you cut the losses and let your profits run by using stop losses and take profits? Share your experience below and let’s spin up a nice discussion!

Education

Unlocking the Power of Option Analysis for Forex Trading Filtering Options by Sentiment: A Key to Profitable Trading As traders, we're constantly on the lookout for ways to gain an edge in the markets. Option portfolios analysis is not a magic solution for success itself, but it can and should be a great tool to add to your trading strategy. Learning how to analyze the option portfolios of big and successful players on one of the world's biggest exchanges can really improve your market awareness and give you more confidence when reading the current market trends. The Power of Option Analysis Option analysis is not just about identifying bullish or bearish sentiment. It's about understanding the nuances of market psychology and identifying opportunities that others may be missing. By filtering options by sentiment, we can identify portfolios that are more likely to result in profitable trades. Key Factors to Consider When filtering options by sentiment, there are several key factors to consider: 1. Size and value of the option portfolio 2. Distance from the central strike (Delta) 3. Time to expiration 4.Appearance on the rise/fall of the underlying asset By considering these factors, we can identify option portfolios that are more likely to result in profitable trades. As mentioned above, option portfolios with names such as vertical spread, butterfly, and condor (in English - VERTICAL SPREAD, IRON FLY/FLY, CONDOR/IRON CONDOR) have predictive sentiment regarding the direction of the asset's price movement. However, it is critically important to be able to filter out such sentiment, since similar portfolios are widely used and appear almost daily in CME exchange reports, but only a small percentage of them have predictive value. Portfolios that are traded during a price movement with an obvious trend have low value. On the other hand, if a portfolio appears in a sideways market before the start of a trend and meets other conditions, which will be discussed later, it is reasonable to fix such a portfolio on the chart and subsequently track its correction (closure/partial closure/re-sale). If you "caught" such a portfolio that is already generating profit for its owner, i.e., the price is moving in the desired direction, you get an additional bonus: by tracking changes in this portfolio, you can understand whether the price movement will continue in the chosen direction or whether the movement is fading or has exhausted its potential and it's time to close your position. It is necessary to track changes daily using QuickStrike and GlobexTradeBrowser by CME GROUP. If you track less frequently, you can lose the thread of sentiment. I recommend performing analysis on a regular basis. Some examples: On July 17th, there was a really big beat on the Japanese yen in the options market for October. The bed was based on the idea that the yen futures would go up (or the dollar/yen forex rate would fall). As we saw, the bat started to pay off almost immediately, and the yen came really close to the target in just a few days! Could we have used this information for forex trading? Absolutely. The risk-reward ratio on this trade was about 1 : 3, but importantly , when we made this trade, we had real insider information. Insiders are required by the exchange to disclose their trades, just like other market participants. Not using this free information in your trades would be a big mistake for a serious trader who doesn't want to gamble in market. Another example: In April this year, we saw a strong bullish option sentiment for Silver prices rising between $32 and $35, based on a large options portfolio stated at around $27.5. We released our forecast for Silver, and you can find a copy of it with our reasoning at the link Cooper example: The forecast was made after analyzing option activity on the CME exchange on April 2. You can check the results yourself and see if the time we spent studying option sentiment and analyzing was worth it. In conclusion, as you can see, incorporating option analysis into your toolkit can really help you make more informed trading decisions. To all serious traders, I wish you patience and dedication on your journey to trading success. Remember that mastering the art of trading takes time, effort, and perseverance. Don't be discouraged by setbacks or losses, but instead, use them as opportunities to learn and improve. Stay focused, stay disciplined, and stay committed to your goals.

Education

by ClashChartsTeam

Trade out of balance markets like a pro (simple TPO concept)Educational video explaining in simple terms how to identify out of balance markets and use that in your day trading. It simplifies the concepts of James Dalton from "Mind over Markets" using volume profile and TPO charts and breaks it down into actionable steps. It also covers the thinking of Stacey Burke, with price always "trading in a box". You learn the meaning of value area, point of control, other timeframe traders and out of balance markets. You learn how institutional traders act in the market and how to observe and identify what they are doing and how to follow them. This can lead to massively profitable setups and trades

Education

26:52

Prop Trading - All you need to know !!A proprietary trading firm, often abbreviated as "prop firm," is a financial institution that trades stocks, currencies, options, or other financial instruments with its own capital rather than on behalf of clients. Proprietary trading firms offer several advantages for traders who join their ranks: 1. Access to Capital: One of the most significant advantages of working with a prop firm is access to substantial capital. Prop firms typically provide traders with significant buying power, allowing them to take larger positions in the market than they could with their own funds. This access to capital enables traders to potentially earn higher profits and diversify their trading strategies. 2. Professional Support and Guidance: Many prop firms offer traders access to experienced mentors, coaches, and support staff who can provide guidance, feedback, and assistance. This professional support can be invaluable for traders looking to improve their skills, refine their trading strategies, and navigate volatile market conditions. 3. Risk Management Tools: Prop firms typically have sophisticated risk management systems and tools in place to help traders monitor and manage their exposure to market risks. These systems may include real-time risk analytics, position monitoring, and risk controls that help traders mitigate potential losses and preserve capital. 4. Profit Sharing: Some prop firms operate on a profit-sharing model, where traders receive a share of the profits generated from their trading activities. This arrangement aligns the interests of traders with those of the firm, incentivizing traders to perform well and contribute to the overall success of the firm. Overall, prop firms provide traders with access to capital, technology, support, and learning resources that can help them succeed in the competitive world of trading. By leveraging these advantages, traders can enhance their trading performance, grow their portfolios, and achieve their financial goals.

Education

What is Confluence ?✅ Confluence refers to any circumstance where you see multiple trade signals lining up on your charts and telling you to take a trade. Usually these are technical indicators, though sometimes they may be price patterns. It all depends on what you use to plan your trades. A lot of traders fill their charts with dozens of indicators for this reason. They want to find confluence — but oftentimes the result is conflicting signals. This can cause a lapse of confidence and a great deal of confusion. Some traders add more and more signals the less confident they get, and continue to make the problem worse for themselves. ✅ Confluence is very important to increase the chances of winning trades, a trader needs to have at least two factors of confluence to open a trade. When the confluence exists, the trader becomes more confident on his negotiations. ✅ The Factors Of Confluence Are: Higher Time Frame Analysis; Trade during London Open; Trade during New York Open; Refine Higher Time Frame key levels in Lower Time Frame entries; Combine setups; Trade during High Impact News Events. ✅ Refine HTF key levels in LTF entries or setups for confirmation that the HTF analysis will hold the price. HTF Key Levels Are: HTF Order Blocks; HTF Liquidity Pools; HTF Market Structure.

Education

Market Structure Identification !!Hello traders! I want to share with you some educational content. ✅ MARKET STRUCTURE . Today we will talk about market structure in the financial markets, market structure is basically the understading where the institutional traders/investors are positioned are they short or long on certain financial asset, it is very important to be positioned your trading opportunities with the trend as the saying says trend is your friend follow the trend when you are taking trades that are alligned with the strucutre you have a better probability of them closing in profit. ✅ Types of Market Structure Bearish Market Structure - institutions are positioned LONG, look only to enter long/buy trades, we are spotingt the bullish market strucutre if price is making higher highs (hh) and higher lows (hl) Bullish Market Structure - institutions are positioned SHORT, look only to enter short/sell trades, we are spoting the bearish market strucutre when price is making lower highs (lh) and lower lows (ll) Range Market Structure - the volumes on short/long trades are equall instiutions dont have a clear direction we are spoting this strucutre if we see price making equal highs and equal lows and is accumulating . I hope I was clear enough so you can understand this very important trading concept, remember its not in the number its in the quality of the trades and to have a better quality try to allign every trading idea with the actual structure

Education

Trading EURUSD | Judas Swing Strategy 30/07/2024 Risk management ought to be a trader's closest ally, as the previous week demonstrated the practical significance of incorporating risk management into every trader's toolkit. Last week, we executed four trades; despite having only one win and three losses, we concluded the week with a mere 1% loss on our trading account. This has heightened our excitement for the opportunities that this week may present. As is customary, at 8:25 AM EST, we commenced the day by reviewing the essential items on our Judas Swing strategy checklist, which comprises: - Setting the timezone to New York time - Confirming we're on the 5-minute timeframe - Marking the trading period from 00:00 - 08:30 - Identifying the high and low of the zone The next 5 minute candle swept liquidity resting at the low of the zone, which meant our focus would be on identifying potential buying opportunities for the trading session. To increase the likelihood of success of our trades, we wait for a break of structure (BOS) towards the buy side. Once the BOS occurs, we anticipate price to retrace to the initial Fair Value Gap (FVG) created during the formation of the leg that broke the structure. We patiently waited for price to retrace into the created Fair Value Gap (FVG), and executed our trade upon the closing of the first candle that entered the FVG, as all the conditions on our checklist for trade execution were satisfied. Please note that our stop loss is set at the low of the price leg that broke structure, and we implement a minimum stop loss of 10 pips. The minimum stop loss value was not chosen randomly; it was determined through extensive backtesting. This allows trades sufficient space to fluctuate, avoiding premature stop-outs and trades later moving in our anticipated direction. After 15 minutes, a large bearish marubozu candle formed, which could have exited us from the trade if we had set our stop loss solely based on the low of the price leg that broke structure, without including a minimal stop loss in our checklist. By using that price leg, our stop loss would have been around 6 pips, whereas a 10 pip stop loss provides the trade with sufficient breathing room. We are aware that our strategy does not guarantee a 100% win rate but rather hovers around 50% on EURUSD, indicating that some losses were inevitable. To avoid becoming emotional over the position, we used only 1% of our trading account with the goal of achieving a 2% gain. Upon checking our position later, we observed that the position was a few pips away from hitting SL. We remained calm despite the drawdown we were experiencing and were prepared for any outcome of the trade. All that was left was to wait for either our stop loss or take profit to be triggered to determine the result of our trade. A few hours later, the trade began to move in our favor. After 13 hours, our Take Profit was triggered, and our patience paid off as we hit our target on EURUSD, resulting in a 2% gain from a 1% risk on the trade.

Education

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