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A Detailed Guide for New Traders!Technical Analysis: A Detailed Guide for New Traders Technical analysis (TA) is a trading method used to evaluate and predict the future price movements of assets like stocks, cryptocurrencies, commodities, or forex, by analyzing past market data, primarily price and volume. It differs from fundamental analysis, which looks at financial metrics like earnings, revenue, and overall economic conditions. For beginners, here’s a breakdown of technical analysis and its essential tools and concepts: 1. Price Charts: The Foundation of TA Price charts are visual representations of an asset’s price over a specific period. There are different types of charts, but the most common are: Line Charts: Show the closing prices over time. Bar Charts: Display the open, high, low, and close prices (OHLC) for each period. Candlestick Charts: Similar to bar charts but more visually intuitive, displaying the same OHLC data with colored “candles” for up or down movements. Candlestick charts are the most popular among traders because they provide more information and are easier to interpret visually. 2. Key Concepts in Technical Analysis a. Trends A trend is the general direction in which the price of an asset is moving. Understanding trends is crucial in technical analysis because traders aim to follow the market’s momentum. There are three types of trends: Uptrend: Prices are generally increasing, making higher highs and higher lows. Downtrend: Prices are decreasing, making lower highs and lower lows. Sideways Trend (Range): Prices move within a specific range without a clear upward or downward direction. b. Support and Resistance Support: A price level where an asset tends to stop falling due to increased buying demand. Resistance: A price level where an asset tends to stop rising due to increased selling pressure. These levels are essential for identifying potential entry and exit points for trades. c. Moving Averages Moving averages (MAs) are a simple way to smooth out price data over a specified time period to identify trends more easily. There are two main types: Simple Moving Average (SMA): The average price over a set number of periods (e.g., 50-day or 200-day SMA). Exponential Moving Average (EMA): Gives more weight to recent prices, making it more responsive to new information. Traders use MAs to determine the overall trend, and crossovers (e.g., when a short-term MA crosses a long-term MA) are often seen as buy or sell signals. 3. Indicators and Oscillators Indicators and oscillators are tools derived from price and volume data to help identify potential trends, reversals, and overbought or oversold conditions. a. Relative Strength Index (RSI) The RSI measures the magnitude of recent price changes to evaluate whether an asset is overbought or oversold. It ranges from 0 to 100: Above 70: Overbought (price might be too high, possible reversal). Below 30: Oversold (price might be too low, possible reversal). b. Moving Average Convergence Divergence (MACD) The MACD is a trend-following momentum indicator that shows the relationship between two moving averages of an asset’s price. It helps traders identify changes in the strength, direction, and momentum of a trend. MACD Line: The difference between the 12-day and 26-day EMA. Signal Line: A 9-day EMA of the MACD Line. Histogram: Shows the difference between the MACD Line and the Signal Line. A crossover between the MACD Line and the Signal Line can signal buying or selling opportunities. c. Bollinger Bands Bollinger Bands consist of a moving average (middle band) and two outer bands that are two standard deviations away from the middle. The bands expand and contract based on market volatility. When the price moves toward the upper band, the asset might be overbought, and when it moves toward the lower band, it might be oversold. 4. Chart Patterns Chart patterns are formations created by the price movement of an asset, and traders use them to predict future price movements. Some common patterns include: Head and Shoulders: A reversal pattern that signals a change from bullish to bearish or vice versa. Triangles (Ascending, Descending, Symmetrical): Continuation patterns that suggest the price will break out in the direction of the current trend. Double Top and Double Bottom: Reversal patterns indicating that the price may reverse its current trend after testing a support or resistance level twice. 5. Volume Analysis Volume refers to the number of shares, contracts, or lots traded during a particular period. It can confirm trends or warn of potential reversals: Rising volume during an uptrend confirms the strength of the trend. Decreasing volume in a rising trend can indicate a weakening trend and potential reversal. Volume spikes often occur at trend reversals. 6. Risk Management No trading strategy is foolproof, and technical analysis is not a crystal ball. To succeed, you must manage your risk: Stop-Loss Orders: Automatically sell a position if the price moves against you by a certain amount, limiting your losses. Risk-Reward Ratio: Determine the amount you're willing to risk for a potential reward. A typical ratio is 1:2, meaning for every $1 risked, you aim to make $2 in profit. Position Sizing: Only risk a small percentage of your total capital (e.g., 1-2%) on a single trade to prevent significant losses. 7. Combining TA with Fundamental Analysis While technical analysis is valuable, many traders combine it with fundamental analysis to get a complete picture. For instance, in the stock market, technical analysis might show that a stock is oversold, but if the company’s fundamentals (earnings, revenue) are strong, it could be a buying opportunity. 8. Conclusion Technical analysis is a powerful tool for traders to predict price movements and make informed trading decisions. However, it requires practice and patience. Start with the basics, use demo accounts to test your skills, and never forget to manage your risk. For beginners, mastering the key concepts like trends, support and resistance, moving averages, and common indicators like RSI and MACD will set you on the path to becoming a successful trader. Like and follow if you found this helpful! #Crypto #Bitcoin #bullrun
Education
by CRYPTOMOJO_TA
2
Keywords for beginnersHello, dear TradingView members. This idea is dedicated to our new traders who might need a few introductions. This is the first part of the 'Keywords for beginners' idea. The next part will be published tomorrow. If you're around in trading platforms like TradingView, you will see some keywords used by analyzers and publishers, which you might not know what exactly they mean in the context of the trading market. In this post, we will cover the first 11 keywords. 1. Cryptocurrency: Digital assets people use for investments, trades, and purchases. Like Bitcoin, Ethereum and Cardano. 2. Forex (FX): Short for Foreign Exchange. The trading of one currency for another. For example, you can trade Euros for Dollars. 3. Stock: The goods, merchandise, or properties kept on the assumptions of a business, available for sale or distribution. For example, the stock of Apple, Meta, Google, Netflix, and Tesla. 4. Indices: The plural form for Index. Index trading is also a type of trading of a group of stocks that make up the Index. Like S&P 500, Dow Jones Industrial Average, and NASDAQ Composite. 5. Futures: Futures are a type of derivative contract to buy or sell a specific item or asset like Bitcoin at a set future date for a fixed price. You can either set it as the price is going up or down. 6. Spot: The traditional buy and sell or invest in any asset. You can invest in a specific stock or Bitcoin, and you can sell it when you decide to. 7. Demand Zone: A demand zone is the price area traders decide to buy. That area is where the buy volumes go higher, which is one factor that pushes the value up. 8. Supply Zone: A supply zone is the price area traders decide to sell. That area is where the sell volumes go higher, which is one factor that pushes down value. 9. Indicator: Indicators are tools based on calculations that help traders understand the prices, volumes, trends, and timeframes. For example, the RSI, Bollinger Bands, and Fibonacci Retracements, are known trading indicators. You can find and use these indicators on the upper side of your TradingView charts. 10. Take-Profit (TP): Stands for Take-Profit Order. It's a limit order that defines the price to close out an open position for a profit. They are also known as Targets. 11. Stop-Loss (SL): Stands for Stop-Loss Order. It's a limit order that defines the price to close out an open position to stop your assets from more losses or liquidations. You can control your positions with this order and protect them from sudden market crashes. Are there any keywords you would like to know about? Let me know. Thank you, and good luck.
Education
by ShawnMCR
2
Technical Indicator(s)What is a Technical Indicator? The purpose of a technical indicator is to give signals to traders: when to buy or when to sell an asset and this is done based on the price or volume. For future contracts, open interest rates are used to forecast market trends. A technical indicator is included in the technical analysis and is used by those that use technical analysis as a way to determine what way the price will go. Technical analysis will show whether a price is "overbought" or "oversold". Technical indicators gather information by analyzing statistical trends, while fundamental analysts get the information from financial or economic data that includes earnings, revenue, or profit margins. In general technical indicators/analyses are used by short-term investors as they need to know the "exact" pattern a price will have in the next minutes/hours. Price is not that important for long-term investors, but it doesn't mean they don't look at such information. What is different for the 2 types of investors is the % the technical indicators have in the decision traders make. Is a technical indicator useful or not? This is a long debate that it's been going on for years with the result: some think it is useful and some don't think they are useful. Although many studies were done on this matter, the balance hasn't tilted one way or another. Many people who join the trading area tend to use them as they are simple to use. The best suggestion in this kind of situation is to do it yourself. Try some indicators and see how they work for you/if they are useful or not. However, don't base a decision only on an indicator or a sum of indicators. How accurate are the technical indicators? Although there are a lot of technical indicators out there, new ones are revealed to the public each year. The purpose is to get better and better results. BUT, no matter how good the indicator might be, they can fail due to timing slacks, inconsistencies of information, or other reasons. This would give to the trader a false signal. Therefore you can include technical indicators in your strategy but it's risky to trade based only on indicators. The settings used by the trader can cause a lot of problems, with "time" setting causing different results as the time frame changes. The results might be good but not for the next hour or day OR they can be good for the next hour, but not for the next day. This can cause a lot of variables and too much information offered to the trader, which usually leads to stress if not poor decisions. Although this is not an exact top, most used technical indicators are: MACD, RSI, volume, Bollinger Bands, and SMA - Simple Moving Average. Are these indicators better than the others? An even better question would be: are the indicators popular due to their performance or other aspects like marketing, author popularity, or the visual aspect of the indicator? Trader psychology is very important. For example, colors can influence traders to choose a chart or another, a pattern or another, or an indicator or another. Another aspect would be that the more information a trader receives, the more complex the analysis is so it offers an advantage over the others. Attention: this is the perception and it might be true or not. So the indicators might seem popular but this doesn't influence the performance it shows. An indicator offers data. Those data don't take into account the number of those who use it or not. As previously suggested: is better to test the indicators yourself and see how good/useful they are for you. However, too much information will make any decision hard to make, as the compilation of the data takes time. Since the market is very active and is changing rapidly, sometimes, the result you get after compiling the data was needed 1 minute ago. Now it has no value. It doesn't have to be too much information from only one indicator. The chart can have multiple indicators that will create a picture hard to read. Understanding the chart will take extra time that adds to the need to compile the information. Conclusions Indicators are used to see "great" entry or exit points for an asset. So any trader should look for indicators that reveal useful information (for that trader). At all times any trader should remember that the trader makes the decisions based on the information he has. This is different from a phrase like: I found this indicator, seems to be good, I should do exactly what it says. The success in trading is based on the traders' moves, moves that can be supplied with information gathered from different indicators.
NASDAQ:AAPLEducation
by AngelAlgo
1
Trading PsychologyIn order to make it on green in the trading area, you need a lot of skills or a mind "all over the place". You will need to analyze a lot of data like profit, earnings, market share, and competition in order to see how the stock will go. Numbers are an important part of the game. However, an even bigger part of the game is the "emotional" part, or how you handle difficult and good times. We can call this part: what is your "mindset" when it comes to trading? Emotions can be negative - FUD or positive - greed What is FUD? FUD is short for fear, uncertainty, and doubt. Who likes bad news? I guess nobody, but still, we have bad news everywhere. It's normal to be scared when you see a bad report/a "bad news". However, what is "normal" on paper might feel very strong for some and that can lead to irrational moves like liquidating all just to feel safe having cash. This overreaction can be: 1. Good - in the sense you avoided more losses. 2. Bad - true you might avoid some losses, but markets tend to recover. That means you sit on cash so you lose the gains made by the same recovering stocks that you liquidated in red. I'm talking at points 1 and 2 about "uncertainty". Nobody knows how the stock market will go. Sure we have a lot of tools but in the end, all they do is to give us estimates: might go up or might go up. So what do you do? It's obvious why people "doubt" what they should do. The information is not clear and furthermore the information changes rapidly. It's not: - OK the market is going up, so I will buy the market and make money. No. Nope. It's more like: now it's going down, now up, but overall down, but now up, what a spike up, but happened too fast in order to take advantage of it ... what shall I do (considering that I already lost some money - that only adds more pressure to the situation)? To put it short: If training would be easy, everyone would be rich! So what can you do to prevent this? First, you should know that all these emotions are normal reactions of the mind. Furthermore: you probably already lived these emotions in your life so this is not something special (only) for the trading area. For example, fear is a natural reaction to a perceived threat. A trader might feel fear not only because he might lose the profit made, but also cause he can lose his invested capital! If you have a lot of info the uncertainty will vanish. Ok, not vanish, but knowing what you are dealing with will lead to a better judgment of the situation so therefore better decisions. All you have to do is DYOR (do your own research) meaning: have information. Why should you doubt when you have a plan? In some tight situations, you can doubt your plan, but the plan is what might save you from doing dumb stupid moves. For example, a good plan in the stock market will include lines like: it is important to know that the markets are going to go up and down. No, of course you won't like it when the market will go down, but at least you will know that this is normal and you will probably also know what to do in such situations. By planning ahead (what can/will happen?) a trader can be prepared for different events that might occur in the market. These plans will make the trader "skip" the emotional part and focus more on what he should do in the situation he is facing. Note: I must tell you this is easy only on paper and much harder when being in that situation. However, with patience, perseverance, and taking into consideration your past moves, trading events will become much easier. What is greed? Greed is an uncontrolled longing for an increase in the acquisition or use of material gain or social value. To put it simply: people don't know when to stop. Who remembers the hot stocks from '80? A reason for not knowing those stocks: most of them and I mean more than 95% are not on the market anymore! Sooner or later any company will have its downfall. Now it doesn't have to be bankruptcy or lose all your money type of situation, but it can cause you to lose from 50 up to 90% of the money invested with that firm. The problem is that greed comes in a masked form and that is why only a few see it. Greed is based on the feeling to do better or to have more. So are you trading based on greed OR you are just doing your plans to do better? It's every trader's job to answer this question as there is no general predefined answer. Discipline beats luck! Repetition can become boring so adding $$$ each day to make "that million $" is out of the question for most people. Because let's face it: Everyone wants to be rich fast. BUT: Investing is not a get-rich-quick scheme! Can you see the conflict between the ideas? That is why you need a plan that should contain a line called: Resolving my emotional conflicts. To improve your trading psychology you should answer questions like this: What risk am I willing to take? What should I invest in? Should I be a day trader? Or a long-term investor? Or between them? Or all at once? When do I enter a trade? When do I exit? After EPS, the launch of a product, after naming a new CEO? Should I place an order, stop loss, or take profit? Do I use leverage? Answering these questions might be time-consuming (can take even weeks), but it's very important to know them. To put it short: it's important to know what you are doing and why. Knowledge can overcome emotions especially fear. For example, you will probably sell your stock if you would know that a company will fall the next day. But how would you know that if don't research? Reading the news, looking at charts, analyzing competitions, talking to other traders, learning and testing new strategies are actions that need to be done every day. At least 5 days out of 7. Results The purpose of handling your emotions or taking advantage of what they are communicating is to have results. No one will pay for how much effort you do! People pay for results. But emotions change depending on your strategy or what you want. It's not the same emotion when you invest $100 or $10.000. Although they might seem similar (the emotion caused by investing money) they are not. There are 2 different emotions for each case that require 2 different strategies. You got to be flexible and know that handling your mindset is a daily set of tasks. The more you go in-depth about what you are going to do, the more you increase your chances to become successful each day. Lose aversion An example of how emotions lead a crucial role in the trading strategy is related to lose aversion. This happens because most of the trades haven't lost money anywhere! Sure if you lose a $10 bill on the street you lost your money! But: 1. How often do you lose money on the street? 1 time in 5 or even 10 years? 2. It's only $10. You will survive without them. The rest is only depreciation (not losing money). After 5 years a car will lose its value. But in these 5 years you used the car, you went to work or on holiday. So for the money "lost" in the depreciation process, you got something in return. When you invest in a company, what do you get when you lose 20% of the invested value after only 20 minutes? And what people don't realize: ANY trade will start on red, due to the commission/spread paid to the broker. So before you make money, first you lose money! That is mindboggling and in most cases, due to "loss aversion" or the lack of experience in losing money, most beginners (but even experienced traders) will start doing unexplainable moves (most of them dictated by the emotions they feel). Conclusions: Mastering your emotions is a skill that will lead you to success in trading. However, it takes a lot of dedication, patience, and work to get to a level where you can handle your emotions and still make the right moves. But it is worth it! Your bank statement will be proof that your work was worth it!
BYBIT:BTCUSD.PEducation
by AngelAlgo
1