Volume Spread Analysis (VSA): Volume and Price DynamicsVolume Spread Analysis (VSA): Understanding Market Intentions through Volume and Price Dynamics.
█ Simple Explanation:
Volume Spread Analysis (VSA) is a trading technique that identifies key market patterns and trends by analyzing the relationship between volume and price spread, revealing traders' actions and market behavior.
Essentials in Volume Spread Analysis (VSA):
Laws.
VSA Indicator.
Signs of Strength.
Signs of Weakness.
Note that while the provided examples are excellent for illustrating the points, they are unlikely to play out perfectly in most scenarios.
█ Laws
Three basic laws forming the foundation of Volume Spread Analysis (VSA).
The Law of Supply and Demand
This law states that supply and demand balance each other over time. High demand and low supply lead to rising prices until demand falls to a level where supply can meet it. Conversely, low demand and high supply cause prices to fall until demand increases enough to absorb the excess supply.
The Law of Cause and Effect
This law assumes that a 'cause' will result in an 'effect' proportional to the 'cause'. A strong 'cause' will lead to a strong trend (effect), while a weak 'cause' will lead to a weak trend.
The Law of Effort vs Result
This law asserts that the result should reflect the effort exerted. In trading terms, a large volume should result in a significant price move (spread). If the spread is small, the volume should also be small. Any deviation from this pattern is considered an anomaly.
█ VSA Indicator
This indicator simplifies the identification of Volume and Spread Levels. It provides options to display volume and/or spread bars. An enhanced version of the indicator auto-scales both volume and spread for optimal chart presentation, reloading every time the chart is moved.
Levels: Representing the levels of both volume and spread using the terminalogy of low, normal, high, and ultra.
Indicator Version 1: Display volume and/or spread bars. When both are displayed, the spread bars are shown in a fixed quantity.
Indicator Version 2: Display both volume and spread bars, with the spread bars scaled to the volume bars.
█ Signs of Strength
Indicates that the market is likely to experience bullish behavior.
Down Thrust: Indicates strong buying interest at lower prices, suggesting a potential upward reversal.
Selling Climax: Signifies a reversal point as panic selling exhausts and smart money starts accumulating.
Bear Effort No Result: A large downward price move without strong selling effort (volume) indicates an anomaly where the result doesn't match the effort, suggesting the down move may be unsustained.
No Effort Bear Result: Strong selling effort (volume) fails to push prices down indicating an anomaly where the result doesn't match the effort, suggesting a potential lack of downward momentum.
Inverse Down Thrust: Shows buyers overpowering sellers, likely leading to a bullish market reversal.
Failed Selling Climax: Failed selling effort suggests strong buying support and a possible upward trend reversal.
Bull Outside Reversal: Indicates strong buying reversing a downtrend, confirmed by higher close.
End of Falling Market: Signifies strong buying absorbs panic selling at new lows, likely leading to stabilized price or reversal.
Pseudo Down Thrust: Suggests weakening of the downward momentum with a potential upward continuation if broken above high.
No Supply: Indicates a lack of selling interest at lower prices, potentially setting up for a price rise.
█ Signs of Weakness
Indicates that the market is likely to experience bearish behavior.
Up Thrust: Indicates sellers overpowering buyers during a price rise, suggesting a potential downward reversal.
Buying Climax: Represents peak buying, typically at price highs, with potential for reversal as sellers take control.
No Effort Bull Result: A large upward price move without strong buying pressure (volume) indicates an anomaly where the result doesn't match the effort, suggesting the up move may be unsustained.
Bull Effort No Result: Strong buying (volume) fails to drive prices higher indicates an anomaly where the result doesn't match the effort, suggesting a potential lack of upward momentum.
Inverse Up Thrust: Increased selling pressure during an uptrend suggests a possible shift to a downtrend.
Failed Buying Climax: High buying volume fails to sustain higher prices, indicating a potential reversal to downtrend.
Bear Outside Reversal: Strong selling pressure reversing an uptrend, signaling a potential downtrend.
End of Rising Market: Indicates buying saturation at market peaks, suggesting a possible reversal as demand exhausts.
Pseudo Down Thrust: Indicates weakening upward momentum with potential for downward continuation if broken below low.
No Demand: Indicates reduced buying interest at higher prices, possibly leading to a price decline.
Chart Patterns
Learn How to Apply Top-Down Multiple Time Frame Analysis
In this article, we will discuss how to apply Multiple Time Frame Analysis in trading .
I will teach you how to apply different time frames and will share with you some useful tips and example of a real trade that I take with Top-Down Analysis strategy.
Firstly, let's briefly define the classification of time frames that we will discuss:
There are 3 main categories of time frames:
1️⃣ Higher time frames
2️⃣ Trading time frames
3️⃣ Lower time frames
Higher Time Frames Analysis
1️⃣ Higher time frames are used for identification of the market trend and global picture. Weekly and daily time frames belong to this category.
The analysis of these time frames is the most important .
On these time frames, we make predictions and forecast the future direction of the market with trend analysis and we identify the levels , the areas from where we will trade our predictions with structure analysis .
Above is the example of a daily time frame analysis on NZDCAD.
We see that the market is trading in a strong bullish trend.
I underlined important support and resistance levels.
The supports will provide the safest zones to buy the market from anticipating a bullish trend continuation.
Trading Time Frames
2️⃣ Trading time frames are the time frames where the positions are opened . The analysis of these time frames initiates only after the market reaches the underlined trading levels, the areas on higher time frames.
My trading time frames are 4h/1h. There I am looking for a confirmation of the strength of the structures that I spotted on higher time frames. There are multiple ways to confirm that. My confirmations are the reversal price action patterns.
Once the confirmation is spotted, the position is opened.
Analyzing the reaction of the price to Support 1 on 1H time frame on NZDCAD pair, I spotted a strong bullish confirmation - a triple bottom formation.
A long position is opened on a retest of a broken neckline.
Lower Time Frames
3️⃣ Lower time frames are 30/15 minutes charts. Even though these time frames are NOT applied for trading, occasionally they provide some extra clues . Also, these time frames can be applied by riskier traders for opening trading positions before the confirmation is spotted on trading time frames.
Before the price broke a neckline of a triple bottom formation on an hourly time frame on NZDCAD, it broke a resistance line of a symmetrical triangle formation on 15 minutes time frame. It was an earlier and riskier confirmation to buy.
Learn to apply these 3 categories of time frames in a combination. Start your analysis with the highest time frame and steadily go lower, identifying more and more clues.
You will be impressed how efficient that strategy is.
Charting the Markets: Top 10 Technical Analysis Terms to KnowWelcome, market watchers, traders, and influencers to yet another teaching session with your favorite finance and markets platform! Today, we learn how to marketspeak — are you ready to up your trading game and talk like a Wall Street pro? We’ve got you covered.
This guide will take you through the top technical analysis terms every trader should know. So, kick back, grab a drink, and let’s roll into the world of candlesticks, moving averages, and all things chart-tastic!
1. Candlestick Patterns
First up, we have candlesticks , the bread and butter of any chart enthusiast. These little bars show the opening, closing, high, and low prices of a stock over a set period. Here are some key patterns to recognize next time you pop open a chart:
Doji : Signals market indecision; looks like a plus sign.
Hammer : Indicates potential reversal; resembles, well, a hammer.
Engulfing : A larger candle engulfs the previous one, suggesting a momentum shift.
Want these automated? There's a TradingView indicator for that.
2. Moving Averages (MA)
Next, we glide into moving averages . These are practically lines that smooth out price data to help identify trends over time. Here are the big players:
Simple Moving Average (SMA) : A straightforward average of prices over a specific period of days.
Exponential Moving Average (EMA) : An average of prices but with more weight to recent prices, making it more responsive to new information.
3. Relative Strength Index (RSI)
The RSI is your go-to for spotting overbought and oversold conditions. Ranging from 0 to 100, a reading above 70 means a stock might be overbought (time to sell?), while below 30 suggests it could be oversold (time to buy?). Super common mainstay indicator among traders from all levels.
4. Bollinger Bands
Bollinger Bands consist of a moving average with two standard deviation lines above and below it. When the bands squeeze, it signals low volatility, and when they expand, high volatility is in play. Think of Bollinger Bands as the mood rings of the trading world!
5. MACD (Moving Average Convergence Divergence)
The MACD is all about momentum. It’s made up of two lines: the MACD line (difference between two EMAs) and the signal line (an EMA of the MACD line). When these lines cross, it can be a signal to buy or sell. Think of it as the heartbeat of the market.
6. Fibonacci Retracement
Named after a 13th-century mathematician, Fibonacci retracement levels are used to predict potential support and resistance levels. Traders use these golden ratios (23.6%, 38.2%, 50%, 61.8%, and 100%) to find points where an asset like a stock or a currency might reverse its direction.
7. Support and Resistance
Support and resistance are the battle lines drawn on your chart. Support is where the price tends to stop falling — finds enough buyers to support it — and resistance is where it tends to stop rising — finds enough sellers to resist it. Think of these two levels as the floor and ceiling of your trading room.
8. Volume
Volume is the fuel in your trading engine. It shows how much of a stock is being traded and can confirm trends. High volume means high interest, while low volume suggests the market is taking a nap from its responsibilities.
9. Trend Lines
Trend lines are your visual guide to understanding the market’s direction. Technical traders, generally, are big on trend lines. You can draw them by connecting at least a couple of lows in an uptrend or at least a couple of highs in a downtrend. They help you see where the market has been and where it might be headed.
10. Head and Shoulders
No, it’s not shampoo. The head and shoulders pattern is a classic reversal pattern. It consists of three peaks: a higher middle peak (head) between two lower peaks (shoulders). When you see this take shape in your chart, it might be time to rethink your position.
What’s Your Favorite?
So there you have it, a whirlwind tour of the top technical analysis terms that’ll help your trading yield better results and, as a bonus, make you sound like a trading guru. What’s your favorite among these 10 technical analysis tools? Share your thoughts in the comments below!
Investment or Trade Mindset With ExampleNow looking to this chart, if we have long term vision then my question is "How long ?" and "Why Long?". Many of you are already familiar with technical or fundamental analysis but my point is how to discriminate your mind into two half for a same script or same sector.
Coming to the solution:
Let's know about benefits -"FAYDA". If we can then we can ride long term and short term both and by hypothetical calculation it will shock will brain like anything else.
Personally I have no interest to be biased for long term or short term. I can see only "Munafa" means profit.
It's very simple.
Step 1: For long term holding hold the script in account "A"
And for short term use different account "B"
Step 2: Well Define your long term system and short term system and place it in-front of your working table or place.
Step 3: Even for analysis use two different drawing.
Step 4: Even after doing these all your mind will disturb you. Just take a break of your screen by placing alert on your system.
I hope this can help you. Kindly let me know something that I can discuss and share with you.
In this way I am also learning.
Thank you for reading.
MASTERING SYMMETRICAL TRIANGLES: A GUIDE FOR TRADERS👀See the first 3 items on the chart👆
🔰Other details:
⭐D:
⭐E:
⭐F:
⭐G:
🔰Additional Considerations for Triangles:
⭐H: Number of Points: To construct a triangle, we need at least two HIGHS and two LOWS. Occasionally, triangles are formed using six points instead of the usual four.
⭐I: Validity Criterion: The BREAKOUT point (exit point) of a triangle should not be too close to the intersection of its upper and lower sides; otherwise, the triangle loses its validity.
Revisiting the GME JourneyHi, here i'm taking GME as an example to show the use/power of simple drawing tools ( Channel, Curve, Arc and trendlines).
these tools helps in finding the patterns , i do have firm believe that intersection of patterns and timelines creates news/events
i also try to show how using multiple tfs help in analysis, as each time frame (tf) has many possible patterns but it is important to find the pattern followed by the price at that particular time
most of us know the importance of TA in trading and that is the reason why we r using " tv" a great place to analyse
everything on this earth follows some kind of patterns, used by many greats in there trading journey ( ratios/ angles)
you will find many graphics in the comment section which i will add after publishing this , i will also give examples from other assets , but my main focus would be on GME journey
Exploring Bearish Plays w/ Futures, Micros & Options on FutureIntroduction
The WTI Crude Oil futures market provides various avenues for traders to profit from bullish and bearish market conditions. This article delves into several bearish strategies using standard WTI Crude Oil futures, Micro WTI Crude Oil futures contracts, and options on these futures. Whether you are looking to trade outright futures contracts, construct complex spreads, or utilize options strategies, this publication aims to assist you in formulating effective bearish plays while managing risk efficiently.
Choosing the Right Contract Size
When considering a bearish play on WTI Crude Oil futures, the first decision involves selecting the appropriate contract size. The standard WTI Crude Oil futures and Micro WTI Crude Oil futures contracts offer different levels of exposure and risk.
WTI Crude Oil Futures:
Standardized contracts linked to WTI Crude Oil with a point value = $1,000 per point.
Suitable for traders seeking significant exposure to market movements.
Greater potential for profits but also higher risk due to larger contract size.
TradingView ticker symbol is CL1!
Margin Requirements: As of the current date, the margin requirement for WTI Crude Oil futures is approximately $6,000 per contract. Margin requirements are subject to change and may vary based on the broker and market conditions.
Micro WTI Crude Oil Futures:
Contracts representing one-tenth the value of the standard WTI Crude Oil futures.
Each point move in the Micro WTI Crude Oil futures equals $100.
Ideal for traders who prefer lower exposure and risk.
Allows for more precise risk management and position sizing.
TradingView ticker symbol is MCL1!
Margin Requirements: As of the current date, the margin requirement for Micro WTI Crude Oil futures is approximately $600 per contract. Margin requirements are subject to change and may vary based on the broker and market conditions.
Choosing between standard WTI Crude Oil and Micro WTI Crude Oil futures depends on your risk tolerance, account size, and trading strategy. Smaller contracts like the Micro WTI Crude Oil futures offer flexibility, particularly for newer traders or those with smaller accounts.
Bearish Futures Strategies
Outright Futures Contracts:
Selling WTI Crude Oil futures outright is a straightforward way to express a bearish view on the market. This strategy involves selling a futures contract in anticipation of a decline in oil prices.
Benefits:
Direct exposure to market movements.
Simple execution and understanding.
Ability to leverage positions due to margin requirements.
Risks:
Potential for significant losses if the market moves against your position.
Mark-to-market losses can trigger margin calls.
Example Trade:
Sell one WTI Crude Oil futures contract at 81.00.
Target price: 76.00.
Stop-loss price: 82.50.
This trade aims to profit from a 5.00-point decline in oil prices, with a risk of a 1.50-point rise.
Futures Spreads:
1. Calendar Spreads: A calendar spread, also known as a time spread, involves selling (or buying) a longer-term futures contract and buying (or selling) a shorter-term futures contract with the same underlying asset. This strategy profits from the difference in price movements between the two contracts.
Benefits:
Reduced risk compared to outright futures positions.
Potential to profit from changes in the futures curve.
Risks:
Limited profit potential compared to outright positions.
Changes in contango or backwardation could hurt the position.
Example Trade:
Sell an October WTI Crude Oil futures contract.
Buy a September WTI Crude Oil futures contract.
Target spread: Decrease in the difference between the two contract prices.
In this example, the trader expects the October contract to lose more value relative to the September contract over time. The profit is made if the spread between the December and September contracts widens.
2. Butterfly Spreads: A butterfly spread involves a combination of long and short futures positions at different expiration dates. This strategy profits from minimal price movement around a central expiration date. It is constructed by selling (or buying) a futures contract, buying (or selling) two futures contracts at a nearer expiration date, and selling (or buying) another futures contract at an even nearer expiration date.
Benefits:
Reduced risk compared to outright futures positions.
Profits from stable prices around the middle expiration date.
Risks:
Limited profit potential compared to other spread strategies or outright positions.
Changes in contango or backwardation could hurt the position.
Example Trade:
Sell one November WTI Crude Oil futures contract.
Buy two October WTI Crude Oil futures contracts.
Sell one September WTI Crude Oil futures contract.
In this example, the trader expects WTI Crude Oil prices to remain relatively stable.
Bearish Options Strategies
1. Long Puts: Buying put options on WTI Crude Oil futures is a classic bearish strategy. It allows traders to benefit from downward price movements while limiting potential losses to the premium paid for the options.
Benefits:
Limited risk to the premium paid.
Potential for significant profit if the underlying futures contract price falls.
Leverage, allowing control of a large position with a relatively small investment.
Risks:
Potential loss of the entire premium if the market does not move as expected.
Time decay, where the value of the option decreases as the expiration date approaches.
Example Trade:
Buy one put option on WTI Crude Oil futures with a strike price of 81.00, expiring in 30 days.
Target price: 76.00.
Stop-loss: Premium paid (e.g., 2.75 points x $1,000 per contract).
If the WTI Crude Oil futures price drops below 81.00, the put option gains value, and the trader can sell it for a profit. If the price stays above 78.25, the trader loses only the premium paid.
2. Synthetic Short: Creating a synthetic short involves buying a put option and selling a call option at the same strike price and expiration. This strategy mimics holding a short position in the underlying futures contract.
Benefits:
Similar profit potential to shorting the futures contract.
Flexibility in managing risk and adjusting positions.
Risks:
Potential for unlimited losses if the market moves significantly against the position.
Requires margin to sell the call option.
Example Trade:
Buy one put option on WTI Crude Oil futures at 81.00, expiring in 30 days.
Sell one call option on WTI Crude Oil futures at 81.00, expiring in 30 days.
Target price: 76.00.
The profit and loss (PnL) profile of the synthetic short position would be the same as holding a short position in the underlying futures contract. If the price falls, the position gains value dollar-for-dollar with the underlying futures contract. If the price rises, the position loses value in the same manner.
3. Bearish Options Spreads: Options offer versatility and adaptability, allowing traders to design various bearish spread strategies. These strategies can be customized to specific market conditions, risk tolerances, and trading goals. Popular bearish options spreads include:
Vertical Put Spreads
Bear Put Spreads
Put Debit Spreads
Ratio Put Spreads
Diagonal Put Spreads
Calendar Put Spreads
Bearish Butterfly Spreads
Bearish Condor Spreads
Etc.
Example Trade:
Bear Put Spread: Buying the 81.00 put and selling the 75.00 put with 30 days to expiration.
Risk Profile Graph:
This example shows a bear put spread aiming to profit from a decline in WTI Crude Oil prices while limiting potential losses.
For detailed explanations and examples of these and other bearish options spread strategies, please refer to our published ideas under the "Options Blueprint Series." These resources provide in-depth analysis and step-by-step guidance.
Trading Plan
A well-defined trading plan is crucial for successfully executing any strategy. Here’s a step-by-step guide to formulating your plan:
1. Select the Strategy: Choose between outright futures contracts, calendar or butterfly spreads, or options strategies based on your market outlook and risk tolerance.
2. Determine Entry and Exit Points:
Entry price: Define the price level at which you will enter the trade (e.g., breakout, UFO resistance, indicators convergence/divergence, etc.).
Target price: Set a realistic target based on technical analysis or market projections.
Stop-loss price: Establish a stop-loss level to manage risk and limit potential losses.
3. Position Sizing: Calculate the appropriate position size based on your account size and risk tolerance. Ensure that the position aligns with your overall portfolio strategy.
4. Risk Management: Implement risk management techniques such as using stop-loss orders, hedging, and diversifying positions to protect your capital. Risk management is vital in trading to protect your capital and ensure long-term success.
Conclusion
In this article, we've explored various bearish strategies using WTI Crude Oil futures, Micro WTI Crude Oil futures, and options on futures. From outright futures contracts to sophisticated spreads and options strategies, traders have multiple tools to capitalize on bearish market conditions while managing their risk effectively.
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.
EURUSD - Another Trade Analysis Using ICT ConceptsVery beautiful again today.
With the expectation of higher prices, I took a long on EURUSD. As I illustrate in the video, there were very nice algorithmic price action and sentiment manipulated. All the things I love to see in a high-probability setup.
I hope you enjoy the video and found it insightful.
- R2F
Engage: Type of trading Day { DOUBLE DISTRIBUTION TREND DAY}DOUBLE DISTRIBUTION TREND DAY
A double distribution trend day is an extension of a regular trend day. It exhibits two distinct price distribution phases within the trading session, with each phase characterized by a different price range. The first distribution typically follows the morning market open, while the second occurs later in the day.
Key features:
The market opens with brief consolidation phase
After the consolidation, a new trend emerges, usually with higher volatility
Followed by another consolidation phase
Trading strategies:
Use Initial base Breakout trade.
The Concept shared from the Book " Secrets of a Pivot Boss: Revealing Proven Methods for Profiting in the Market " by Frank O Ochoa (Author)
How to apply top down analysis There are three main categories of time frames:
1. Higher time frames
2. Trading time frames
3. Lower time frames
### Higher Time Frames Analysis
Higher time frames, such as weekly and daily charts, are used to identify the market trend and the overall picture. This analysis is crucial for making predictions and forecasting the market's future direction through trend analysis. Additionally, structure analysis on these time frames helps identify key levels and areas for trading.
When analyzing higher time frames, look for bullish, bearish, or consolidating conditions. Marking out support and resistance levels is essential, as these are the safest points for buying, selling, and swing trading, especially when looking for trend continuation or breaks.
### Trading Time Frames
Trading time frames are where positions are opened, based on the analysis of higher time frames. For instance, using 4-hour and 1-hour charts, you look for confirmation of the strength of structures identified on higher time frames. There are multiple ways to confirm this, such as through reversal price action patterns, rejections, break and retest levels, and moving averages. Once confirmation is spotted, positions can be opened.
### Lower Time Frames
Lower time frames, like 30-minute and 15-minute charts, are generally not used for trading long positions but can provide additional clues. Riskier traders might use these time frames to open trading positions before confirmation appears on the trading time frames.
Video Recap On This "3 Step System"The rocket booster strategy is a very powerful
trading system and i want to share it with you so that
you can have a stepping stone into your trading
Journey, because even a small step ahead is better than no
step at all.
Trading is a very hard skill to understand, and so i want you
to take your time to learn it, eventually if you stay committed
you should learn more about it.
In this video, i share with you the Rocket Booster 3-Step System
Watch it now to understand more about this powerful system
Disclaimer: Trading is risky you will lose money wether you like it
or not, please learn risk management , and profit taking strategies.
4 conditions for profitable trading👀Be sure to read the description on the FIG
Thank you for supporting me❤️❤️
✅If you have seen these 4 items, you can have a profitable trade
1️⃣ Let's have a trend. No side
2️⃣ Find a price pattern that is forming (before confirmation).
3️⃣ Let the price hit a key support or resistance
4️⃣ If you see a price pattern in the lower time-frame on the key level, trade after seeing the confirmation.
🔰In this case, you can get the targets from the bigger pattern
Gold Trading Strategies: Mastering Technical Indicators for InsaLearn how to master technical indicators for gold trading and maximize your profits with these effective strategies. In this video, we will provide valuable insights on how to use technical indicators specifically for gold trading, helping you make informed decisions and achieve insane profits. Whether you are a beginner or an experienced trader, understanding these techniques can significantly improve your trading success. Watch now to enhance your gold trading strategies and take your skills to the next level!
"Rivian Stock Gaps: Key Insights"There are 2 gaps formed in ''Rivian Automotive'' in the 1st half of 2024; the first gap called '' Exhaustion Gap'', formed on last February, as it appeared after a downtrend that started in July 2023, (which means this downtrend is finished!), and after this, the stock witnessed a sideway move for 4 months, which is considered an accumulation phase, then after this accumulation, the stock witnessed high volatility in the end of June 2024, to form a new gap called ''Breakaway Gap'', as this gap shows conviction in the new uptrend direction, and this gap is not ''Filled''.
currently, the stock closed below the last peak 16.35, which is considered the level that needs to be violated to confirm the uptrend, which will trigger further rises near 16.85 - 18.15 - 19.50 - 20.50 - 22 on the short term.
The stop-loss lies below 14$.
the indicators are heading toward the positive side, which confirms the mentioned positive scenario.
The information and publications are not intended to be or constitute any financial, investment, commercial, or other types of advice or recommendations provided.
What is RSP telling us about this market ? For the longest, analyst were not convinced of the market strength although market was making new highs. This is because in their opinion the market was being led by a handful of stocks and the broader market was not participating in this uptrend.
Today we have RSP, the equal weighted S&P 500 index breaking out of a triangle and looking set on claiming new highs. So what's the Difference between SPY and RSP ? I'm glad you asked :)
SPY is a cap weighted index meaning that the companies with the highest (smallest) market cap hold more (less) weight in the Index and while the equal weighted means each companies have the same weight (2% in the RSP). As of June 21st 2024 (that'll work for the explanation)
MSFT 7.19%
NVDA 7.01%
APPL 6.61%
AMZN 3.69%
Totaling 24.5% in the SPY. In the RSP they would each have a weight of 2% totaling 8%. Great, but what does that mean ? This means that large caps have less power and small and mid caps have more influence in the RSP than in SPY. So RSP breaking out might potentially signal that small and mid cap companies are on the move.
Fundamentally this could be due to the fact that if rates come down, the smaller companies who rely more on debt might face less financial pressure and increase their bottom line.
So its good to keep our eyes open on the smaller companies.
This is not a call to action nor a recommendation but more of an idea im throwing out there.
Cheers,
4 entry-strategies with head & shouldersContrary to popular belief, which considers the head and shoulders pattern to be a reversal pattern, this pattern can also be a powerful continuation pattern!!did you know??
1-reversal role: in this case, when the neck-line of the head and shoulder breaks, sell and buy signals are issued (see the 2 items on the left in the picture)
And an BULLISH trend turns into a BEARISH trend or vice versa!!
2-continuation role: In this case, you should draw a line parallel to the neck-line, on the left shoulder. The break of this line is equivalent to buy or sell signal. In this case, we move in the direction of the trend before the formation of the pattern(see the 2 items on the right in the picture)
Important points of the head and shoulders pattern:
1- Before the pattern, an BULLISH or BEARISH trend should be seen. Just extend the neck-line to the left, if it passes through the body of the candles, then there is a PRE-trend.
2- Pay attention to the head and shoulder time-frame. You should consider a time-frame where the distance of the left shoulder from the head in this pattern is 15 to 55 candles!!
If you want to learn more, support me on this page!
Regarding training, I give examples on analytical posts. Be sure to follow.
Liquidity is KEY to the MarketsIn this video I go through more about liquidity and why it is important.
The markets move because of liquidity. Without liquidity, there is no trading. The larger the trader, the larger the liquidity required. Understanding the concept of liquidity and the fractal nature of price, trading becomes very interesting. A whole new world opens up to you and you no longer have to keep guessing where price is going. You no longer have to keep chasing candles.
I hope you find this video insightful.
- R2F
Understanding Technical Indicators - Avoid FaultsI received a question from a member today related to Divergence on RSI or Stochastics.
I've been lucky to actually sit down with the creator of Stochastics, George C. Lane, to discuss his indicator and how he used it to trade.
I've also been luck to be able to attend multiple industry conferences over the past 20+ years where I've been able to watch and listen to dozens of the best technicians and analysts explain their techniques.
Boy, those were the days - right?
This video is going to help you understand most technical indicators are designed based on a RANGE of bars (usually 14 or so). This means they are measuring price trend/direction/strength/other over the past 14 bars - not longer.
And because of that you need to understand any trend lasting more than 14+ bars could result in FAILURE of the technical indicator.
Watch this video. I hope it helps.
Get some.
Engage - The Set Up. Type of trading Day { The Trend Day}First Step of a successful trader is to build a Trade plan & review what he has done.
This is my Trade Journal . (education purpose for all )
This is an Education Video explaining The Type of Trading Day.
There are 6 Types of Trading Day, In this video we will look deep into First type
1> The Trend Day
Key features:
Price moves in a clear and continuous direction
Pullbacks are shallow and limited.
Trading strategies:
Enter on first 15min Break out
Ride the full day and exit 15 min before the market ends.
Thanks
TradeplanNifty
Do Not Overwhelm Your Price Chart!
In this article, we will discuss a very important term in trading psychology - paralysis by analysis in trading.
Paralysis by analysis occurs when the trader is overwhelmed by a complexity of the data that he is working with. Most of the time, it happens when one is relying on wide spectra of non correlated metrics. That can be various trading indicators, different news outlets and analytical articles and multiple technical tools.
Relying on such a mixed basket, one will inevitably be stuck with the contradictory data.
For example, the technical indicators may show very bearish clues while the fundamental data is very bullish. Or it can be even worse, when the traders have dozens of indicators on his chart and half of them dictates to open a long position, while another half dictates to sell.
Above, you can see an example of a EURUSD price chart that is overwhelmed by
various technical indicators: Ichimoku, MA, Volume, ATR
support and resistance levels
fundamental data
As a result, the one becomes paralyzed , not being able to make a decision. Moreover, each attempt to comprehend the data leads to deeper and deeper overthinking, driving into a vicious circle.
The paralysis breeds the inaction that necessarily means the missed trading opportunities and profits.
How to deal with that?
The best option is to limit the number of data sources used for a decision-making. The rule here is simple - the fewer indicators you use, the easier it is to make a decision.
EURUSD chart that we discussed earlier can look much better. Removing a bunch of tools will make the analysis easier and more accurate.
There is a common fallacy among traders, that complexity breeds the profit. With so many years of trading, I realized, however, that the opposite is true...
Keep the things simple, and you will be impressed how accurate your predictions will become.
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Best Price Action Pattern For Beginners to Start FOREX Trading
There are a lot of price action patterns:
wedges, channels, flags, cup & handle, etc.
If you're just starting out your Forex journey, it's natural to wonder which one to trade and focus on.
In this article, I will show you the best price action pattern for beginner s that you need to start forex trading. I will share a complete trading strategy with entry, stop and target, real market examples and useful trading tips. High accuracy and big profits guaranteed.
The pattern that we will discuss is a reversal pattern.
Depending on the shape of the pattern, it can be applied to predict a bearish or a bullish reversal.
Its bearish variation has a very particular shape.
It has 4 essential elements that make this pattern so unique:
A strong bullish impulse,
A pullback and a formation of a higher low,
One more bullish impulse with a formation of an equal high,
A pullback to the level of the last higher low.
Such a pattern will be called a double top pattern.
2 equal highs will be called the tops ,
the level of the higher low will be called a neckline .
Remember that the formation of a double top pattern is not a signal to sell. It is a warning sign. The pattern by itself simply signifies a consolidation and local market equilibrium.
Your confirmation will be a breakout of the neckline of the pattern.
Its violation is an important sign of strength of the sellers and increases the probabilities that the market will drop.
Once you spotted a breakout of a neckline of a double top pattern,
the best and the safest entry will be on a retest of a broken neckline.
Target level will be based on the closest support.
Stop loss will lie above the tops.
A bullish variation of a double top pattern is called a double bottom.
It is also based on 4 main elements:
A strong bearish impulse,
A pullback and a formation of a lower high,
One more bearish impulse with a formation of an equal low,
A pullback to the level of the last lower high.
2 equal lows will be called the bottoms ,
the level of the lower high will be called a neckline .
The formation of a double bottom pattern is not a signal to buy. It is a warning sign. The pattern by itself simply signifies a consolidation and local market equilibrium.
Your confirmation will be a breakout of the neckline of the pattern.
Once you spotted a breakout of a neckline of a double bottom pattern,
the best and the safest entry will be on a retest of a broken neckline.
Target level will be based on the closest resistance.
Stop loss will lie below the bottoms.
Double top & bottom is a classic price action pattern that everyone knows. Being very simple to recognize, its neckline violation provides a very accurate trading signal.
Moreover, once you learn to recognize and trade this pattern, it will be very easy for you to master more advanced price action patterns like head and shoulders or triangle.
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Exploring Bullish Plays with E-minis, Micro E-minis and OptionsIntroduction
The S&P 500 futures market offers a variety of ways for traders to capitalize on bullish market conditions. This article explores several strategies using E-mini and Micro E-mini futures contracts as well as options on futures. Whether you are looking to trade outright futures contracts, create sophisticated spreads, or leverage options strategies, this guide will help you design effective bullish plays while managing your risk.
Choosing the Right Contract Size
When considering a bullish play on the S&P 500 futures, the first decision is choosing the appropriate contract size. The E-mini and Micro E-mini futures contracts offer different levels of exposure and risk.
E-mini S&P 500 Futures:
Standardized contracts linked to the S&P 500 index with a point value = $50 per point.
Suitable for traders seeking significant exposure to market movements.
Greater potential for profits but also higher risk due to larger contract size.
TradingView ticker symbol is ES1!
Margin Requirements: As of the current date, the margin requirement for E-mini S&P 500 futures is approximately $12,400 per contract. Margin requirements are subject to change and may vary based on the broker and market conditions.
Micro E-mini S&P 500 Futures:
Contracts representing one-tenth the value of the standard E-mini S&P 500 futures.
Each point move in the Micro E-mini S&P 500 futures equals $5.
Ideal for traders who prefer lower exposure and risk.
Allows for more precise risk management and position sizing.
TradingView ticker symbol is MES1!
Margin Requirements: As of the current date, the margin requirement for Micro E-mini S&P 500 futures is approximately $1,240 per contract. Margin requirements are subject to change and may vary based on the broker and market conditions.
Choosing between E-mini and Micro E-mini futures depends on your risk tolerance, account size, and trading strategy. Smaller contracts like the Micro E-minis provide flexibility, especially for newer traders or those with smaller accounts.
Bullish Futures Strategies
Outright Futures Contracts:
Buying E-mini or Micro E-mini futures outright is a straightforward way to express a bullish view on the S&P 500. This strategy involves purchasing a futures contract in anticipation of a rise in the index.
Benefits:
Direct exposure to market movements.
Simple execution and understanding.
Ability to leverage positions due to the margin requirements.
Risks:
Potential for significant losses if the market moves against your position.
Requires substantial margin and capital.
Mark-to-market losses can trigger margin calls.
Example Trade:
Buy one E-mini S&P 500 futures contract at 5,588.00.
Target price: 5,645.00.
Stop-loss price: 5,570.00.
This trade aims to profit from a 57-point rise in the S&P 500, with a risk of a 18-point drop.
Futures Spreads:
1. Calendar Spreads: A calendar spread, also known as a time spread, involves buying (or selling) a longer-term futures contract and selling (or buying) a shorter-term futures contract with the same underlying asset. This strategy profits from the difference in price movements between the two contracts.
Benefits:
Reduced risk compared to outright futures positions.
Potential to profit from changes in the futures curve.
Risks:
Limited profit potential compared to outright positions.
Changes in contango could hurt the position.
Example Trade:
Buy a December E-mini S&P 500 futures contract.
Sell a September E-mini S&P 500 futures contract.
Target spread: Increase in the difference between the two contract prices.
In this example, the trader expects the December contract to gain more value relative to the September contract over time. The profit is made if the spread between the December and September contracts widens.
2. Butterfly Spreads: A butterfly spread involves a combination of long and short futures positions at different expiration dates. This strategy profits from minimal price movement around a central expiration date. It is constructed by buying (or selling) a futures contract, selling (or buying) two futures contracts at a nearer expiration date, and buying (or selling) another futures contract at an even nearer expiration date.
Benefits:
Reduced risk compared to outright futures positions.
Profits from stable prices around the middle expiration date.
Risks:
Limited profit potential compared to other spread strategies or outright positions.
Changes in contango could hurt the position.
Example Trade:
Buy one December E-mini S&P 500 futures contract.
Sell two September E-mini S&P 500 futures contracts.
Buy one June E-mini S&P 500 futures contract.
In this example, the trader expects the S&P 500 index to remain relatively stable.
Bullish Options Strategies
1. Long Calls: Buying call options on S&P 500 futures is a classic bullish strategy. It allows traders to benefit from upward price movements while limiting potential losses to the premium paid for the options.
Benefits:
Limited risk to the premium paid.
Potential for significant profit if the underlying futures contract price rises.
Leverage, allowing control of a large position with a relatively small investment.
Risks:
The potential loss of the entire premium if the market does not move as expected.
Time decay, where the value of the option decreases as the expiration date approaches.
Example Trade:
Buy one call option on E-mini S&P 500 futures with a strike price of 5,500, expiring in 73 days.
Target price: 5,645.00.
Stop-loss: Premium paid (e.g., 213.83 points x $50 per contract).
If the S&P 500 futures price rises above 5,500, the call option gains value, and the trader can sell it for a profit. If the price stays below 5,500, the trader loses only the premium paid.
2. Synthetic Long: Creating a synthetic long involves buying a call option and selling a put option at the same strike price and expiration. This strategy mimics owning the underlying futures contract.
Benefits:
Similar profit potential to owning the futures contract.
Flexibility in managing risk and adjusting positions.
Risks:
Potential for unlimited losses if the market moves significantly against the position.
Requires margin to sell the put option.
Example Trade:
Buy one call option on E-mini S&P 500 futures at 5,500, expiring in 73 days.
Sell one put option on E-mini S&P 500 futures at 5,500, expiring in 73 days.
Target price: 5,645.00.
The profit and loss (PnL) profile of the synthetic long position would be the same as owning the outright futures contract. If the price rises, the position gains value dollar-for-dollar with the underlying futures contract. If the price falls, the position loses value in the same manner.
3. Bullish Options Spreads: Options are incredibly versatile and adaptable, allowing traders to design a wide range of bullish spread strategies. These strategies can be tailored to specific market conditions, risk tolerances, and trading goals. Here are some popular bullish options spreads:
Vertical Call Spreads
Bull Call Spreads
Call Debit Spreads
Ratio Call Spreads
Diagonal Call Spreads
Calendar Call Spreads
Bullish Butterfly Spreads
Bullish Condor Spreads
Etc.
The following Risk Profile Graph represents a Bull Call Spread made of buying the 5,500 call and selling the 5,700 call with 73 to expiration:
For detailed explanations and examples of these and other bullish options spread strategies, please refer to the many published ideas under the "Options Blueprint Series." These resources provide in-depth analysis and step-by-step guidance.
Trading Plan
A well-defined trading plan is crucial for successful execution of any bullish strategy. Here’s a step-by-step guide to formulating your plan:
1.Select the Strategy: Choose between outright futures contracts, calendar or butterfly spreads, or options strategies based on your market outlook and risk tolerance.
2. Determine Entry and Exit Points:
Entry price: Define the price level at which you will enter the trade (breakout, UFO support, indicators convergence/divergence, etc.)
Target price: Set a realistic target based on technical analysis or market projections.
Stop-loss price: Establish a stop-loss level to manage risk and limit potential losses.
3. Position Sizing: Calculate the appropriate position size based on your account size and risk tolerance. Ensure that the position aligns with your overall portfolio strategy.
4. Risk Management: Implement risk management techniques such as using stop-loss orders, hedging, and diversifying positions to protect your capital. Risk management is vital in trading to protect your capital and ensure long-term success
Conclusion and Preview for Next Article
In this article, we've explored various bullish strategies using E-mini and Micro E-mini S&P 500 futures as well as options on futures. From outright futures contracts to sophisticated spreads and options strategies, traders have multiple tools to capitalize on bullish market conditions while managing their risk effectively.
Stay tuned for our next article, where we will delve into bearish plays using similar instruments to navigate downward market conditions.
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.
A Simple/Consistent Trading Strategy Using AnchorBars For AllI was talking with a friend today and he stated he just wanted something simple and consistent.
He stated he was using Weekly, Daily, and 30 Min charts to try to confirm his trade setups.
He did not want to swing for trades too often - only when the Weekly, Daily, 30 Min charts aligned.
I've build multiple systems somewhat like the one I'm showing you in this video. The trick to managing this system is to avoid consolidation periods. When price settles into an extended sideways range - you want to cut your trading down to almost NOTHING and wait for a more defined trend.
Here you go. Simple and easy.
If you don't understand AnchorBars, you can learn more on my other TradingView videos.
Go Get Some...
