A Guide on How to Stay on the Right Side of Market RiskStaying on the right side of the market is the only thing that matters in investing. The goal is simple: be long the things that go up and avoid the things that go down. Although this sounds straightforward, investors often focus too much on the upside potential and forget about the downside. In reality, avoiding the downside is by far the most important factor that will have the biggest impact on your total returns. This is because a -50% loss will always require a +100% gain just to break even.
Step 1: Follow the Trend
The most effective method to stay on the right side of the market is by following the trend, primarily through moving averages. The two most common types are the Simple Moving Average (SMA) and the Exponential Moving Average (EMA). The EMA assigns more weight to recent price movements, making it more responsive and effective for signalling the start of a downtrend, while the SMA offers a clearer view of the longer-term trend.
The simplest way to construct a trend-following indicator is to combine a short-term EMA with a long-term EMA. A buying signal is triggered when the short-term EMA crosses above the long-term EMA, and a selling signal is triggered when it crosses below. This systematic approach ensures clear and actionable signals.
Optimizing this strategy involves backtesting various EMA combinations to strike a balance between minimal trading frequency, lowest maximum drawdown, and highest profit factor. It’s also crucial to select assets that have historically adhered to trends, as these are more likely to continue doing so.
Assets that typically adhere to trends, such as cryptocurrencies, fiat currencies, commodities, and tech stocks, are often driven by speculative or uncertain future expectations. By incorporating a longer-term SMA and adding a safety margin to the calculation, you can help minimize false signals from the EMAs.
It’s advisable to compare asset performance not only against the USD pair but also against the safest investable asset in the selected asset class. This comparison helps determine if the additional risk is worth taking.
Step 2: Draw the Lines
Trend-following strategies are effective only with a clear market trend. Without it, prices may exhibit range-bound movements and generate false signals. Drawing trend lines and identifying horizontal support and resistance levels are crucial for enhancing the accuracy of these signals. The most reliable entry points typically follow a confirmed breakout from these lines, with older lines often indicating more significant breakouts.
When drawing trend lines, it’s crucial to use both normal and logarithmic chart scales. The most reliable trend lines appear consistent across these scales, with a breakout observed on both further confirming the trend.
Additionally, identifying reliable patterns like head and shoulders, inverse head and shoulders or double tops and bottoms can further validate trend breakouts. TradingView’s pattern recognition tools can automate this process and provide price targets, which can be helpful but are not always guaranteed.
Step 3: Understand the Macro
Following current macroeconomic conditions can enhance your understanding of the overall business cycle. The primary macro forces that influence asset markets are growth, inflation, and policy. These factors are subjective and not directly quantifiable, making them unsuitable for direct investment decisions. However, they are useful for assessing the market’s risk appetite, which should influence only your position size and not your systematic approach.
The US Composite Leading Indicator (CLI) is one of the most informative macroeconomic indicators, providing insights into potential economic growth trends and helping anticipate inflections in the business cycle.
Monitoring the US inflation and unemployment rates is also beneficial, as they significantly influence monetary policy. While minor fluctuations may not provide much insight, sustained trends that align with the Federal Reserve’s targets of 2% inflation and low unemployment are indicative of a healthy economy.
Furthermore, tracking global liquidity can reveal the real-time effects of monetary and fiscal policies implemented by major central banks and governments. This serves as a valuable tool to assess the market’s risk appetite.
In conclusion, this guide helps investors stay on the right side of the market by adopting a systematic approach that captures bull markets while avoiding major downturns. Recognizing that the future is unpredictable and that markets are driven by momentum, this method can both preserve and grow your wealth in a less stressful way. A disciplined, systematic approach, executed dispassionately, is essential for navigating market uncertainties. All indicators discussed are publicly available or can be accessed on my profile.
Disclaimer: This article is for informational and educational purposes only and should not be construed as investment advice.
Community ideas
Gold could rise to 2460After a significant drop of nearly 1,000 pips last Monday, gold has established strong support at 2,380 and began to recover mid-week, reaching the 2,430 resistance zone.
The recent pullback from this resistance found support at 2,415—a level that has served as both support and resistance since the beginning of the month. Once again, support has formed higher, this time at 2,420.
At the time of writing, the price is hovering around 2,435, and we could see a clear breakout to the upside in the hours.
My strategy is to buy on dips, and I will remain bullish as long as the price stays above 2,415.
Thin Markets Unnerve Traders: What to Know About Summer TradingLow trading volume is the market theme of the summer, which is driving investors to question their knowledge and ability to move in and out of markets. Forex, stocks, commodities and even crypto — they all seem more volatile during the summer quarter and there’s a reason for that.
Big-shot traders ditch the trading desks for margaritas, espresso martinis and tan on the Amalfi coast while algo trading gets to slosh around billions of dollars. The result — thin liquidity sinks trades every now and then.
August Trading Shakes and Stirs Markets
The summer months have rolled in and with them a heightened feeling of unease has swept global markets. From a rally in the Japanese yen , to a big meltdown in stocks and crypto market carnage , asset classes got shook from this one market characteristic — volume .
Thinning trading volumes disrupted the usual market rhythm, ushering in an environment dominated by increased volatility and unpredictable swings. Low volumes have the tendency to amplify price declines and increases.
Illiquid August conditions may turn a rather normal move into a violent swing. Fewer shares traded means that a trading instrument is more susceptible to sharp price movements as there are fewer participants to absorb the trades.
Panic Selling and the Carry Trade
A volatility storm swept Japan’s stock market last week, throwing it into its worst single-day performance since 1987. Japan’s broad-based index Nikkei NI225 crumbled 12.4% in a single session while US stocks slumped 3%. Wall Street’s fear gauge, the VIX index of volatility VIX , shot up more than 50% to its highest level in 2020 when the pandemic was wreaking havoc.
A day later, Japan bounced up 10% and the S&P 500 jumped 1%. The VIX shot lower by 28%. Japan ended up in the spotlight due to the unwinding of what’s called the “carry trade” — big hedge funds had borrowed trillions of cheap Japanese yen at near-zero interest rates to buy stocks or jam the cash into Treasury bills that pay a 5% interest. Risk-free.
What’s not to like? The yen’s rise, for one. The sharp appreciation of the yen sent panicked carry traders scrambling to dump their holdings and repay their yen debt, which was getting more expensive.
It’s the Algos’ Market, We All Live In It
In August, traders typically exchange about 9.3 billion of US shares a day. Compared to March, where 13.2 billion shares change hands a day, that’s a 30% decrease in trading volume. Apparently, Wall Street does get a break from trading. Or does it?
The stock market and the currency market, in particular, are dominated by and large by computer-trading algorithms that execute trades at lightning speed based on pre-programmed criteria. These algorithms, or simply algos, are allowed to process huge amounts of data and react to market conditions in milliseconds.
While this can create efficiency and liquidity in normal market conditions, during periods of low volume — such as the summer months — they can contribute to increased volatility, especially if they are levered to the tune of 15, 20, 30 times.
A single large order or a sudden piece of news can trigger a cascade of algorithmic responses, leading to rapid and sometimes exaggerated price movements. In other words, when these algos make a decision, that’s when volatility goes through the roof. Pair it with low volumes and you’ve got an explosion (or implosion) of prices.
How to Survive Wild Markets?
Given the unique challenges of summer trading, traders need to adjust their strategies accordingly. Here are some tips that can help.
Lower Position Sizes : In a thin market, large positions can be harder to exit without moving the market (especially if you’ve loaded up on illiquid meme coins). Reducing position sizes can help mitigate this risk.
Wider Stops : With increased volatility, it may be necessary to widen stop-loss orders to avoid getting wiped out by intraday market noise.
Focus on Liquidity : Stick to trading more liquid instruments where possible, as these will typically be less affected by the summer slowdown. Hint: forex is the most liquid market.
Keep an Eye on Economic Data : Summer doesn’t stop economic data releases , which can lead to outsized market reactions in a light market. Stay informed.
Patience and Discipline : Summer trading requires patience and discipline. The temptation to overtrade in a quiet market can lead to mistakes. It’s often better to wait for clearer setups rather than forcing trades in a challenging environment. While you're waiting for the right moment to step in, test your strategies and find the best moves for future trades.
What Do You Think?
Summer trading presents a unique set of challenges that can unnerve even the most experienced traders. Thin markets, increased volatility, and the dominant role of algorithmic trading create an environment where caution is paramount.
How do you handle volatile markets in thin trading? Let us know in the comments and let’s spin up a nice discussion!
How to get exposure to crypto without owning crypto! Getting into crypto doesn’t always mean buying tokens like CRYPTOCAP:BTC , CRYPTOCAP:ETH or CRYPTOCAP:SOL directly onchain or even on centralized crypto exchanges. Sometimes, it’s easier, cheaper, and even more strategic to gain exposure through traditional investment vehicles
There’s a few reasons why:
* Tax efficiency: Many of these investments can be made through tax advantaged accounts, potentially saving you money come tax season and in the long run.
* Regulatory safety: Traditional investments often come with better regulatory oversight, reducing the risks associated with direct crypto ownership.
* Convenience: No need to set up wallets, remember seed phrases, or stress about hacks and CZ funds are SAFU tweets!
So you know the why, now let’s get into the 5 ways to ride the blockchain wave without owning a single coin.
1/ Crypto ETFs
If you’re looking to dip your toes into crypto, these funds offer exposure to digital assets without the hassle of managing a wallet. Spot/Leverage CRYPTOCAP:BTC & CRYPTOCAP:ETH ETFs: These funds directly track the price of Bitcoin or Ethereum, and some even offer leverage for those looking to amplify their bets.
Think of it as buying Bitcoin or Ethereum, but without needing to worry about wallets or decentralized exchanges.
Tech & Crypto ETFs (like LSE:ARK , AMEX:BLOK , NASDAQ:BKCH , AMEX:BITQ ): These funds mix crypto exposure with other cutting-edge tech stocks, offering a broader play on the future of this technology
2/ Coinbase
Investing in Coinbase gives you a stake in the broader crypto ecosystem.
Coinbase isn’t just a trading platform it’s a gateway to stablecoins, the Base blockchain, and a big chunk of crypto market activity Plus, they’re even an ETF custodian!
And Coinbase’s stock has been COOKING:
3/ Fintech giants
Companies like Robinhood, PayPal, Block, Mercado Libre, and Nubank are embracing crypto tech in a big way. Investing in these fintech giants means you’re betting on the growth of crypto adoption within our existing financial system
The nice thing about investing in the fintech giants is it's a more diversified bet. If something happens to crypto, these fintech companies still have an underlying business with millions of users and real revenues. While they may drive crypto adoption and give you exposure to it, they don’t NEED crypto to still be a good investment.
4/ MicroStrategy and MetaPlanet
These two public companies are heading up the “Bitcoin on the balance sheet” charge
MicroStrategy is like the ultimate Bitcoin bull and holds billions in CRYPTOCAP:BTC and Metaplanet is a Japanese blockchain consulting firm that has adopted a similar strategy.Buying NASDAQ:MSTR is similar to leveraged $BTC. When CRYPTOCAP:BTC goes up, NASDAQ:MSTR goes up higher, same for the other direction though so be careful
5/ Bitcoin mining companies
Want to bet on the infrastructure behind Bitcoin?
Bitcoin mining companies (like NASDAQ:RIOT , NASDAQ:MARA , and NASDAQ:HUT ) are the backbone of the CRYPTOCAP:BTC network.
By investing in these companies, you’re betting on a combination of the performance of the mining company and the price of Bitcoin.
Bitcoin mining companies can also find additional revenue streams, like providing compute for Artificial Intelligence or heating homes. Similar to the Fintech giants, Bitcoin miners provide another diversified way to invest in crypto.
As you can see, there are plenty of ways to get your slice of the crypto pie without ever buying a single token Sure, some options come with a bit more spice yet betting on companies means you’re not just riding the CRYPTOCAP:BTC or CRYPTOCAP:ETH wave, you’re also banking on those companies’ success.
But depending on your situation, this might be the perfect way to dip your toes in the crypto waters or even beef up your portfolio.
which way you chose and why?
How to Read the RSI Indicator: The Market's Lie DetectorAttention TradingViewers, market gurus, and Instagram influencers, this one indicator goes hard whenever it’s onto something. Let's talk about the RSI — the Relative Strength Index . This bad boy is like the lie detector test of the market, calling out overhyped moves and under-the-radar opportunities.
What’s RSI All About?
The RSI is a momentum-based oscillator that captures the speed and change of price movements. It operates on a scale of 0 to 100, and if you know how to read it, it’s like having X-ray vision into the market’s moods. The best part? It’s super easy to use — slap it on any chart, any time frame and let it do its thing.
The Numbers
Above 70 : Overbought alert! If the RSI shows a reading above 70, the trading instrument may have been partying a little too hard. Anywhere above 70 means that it’s flashing “overbought” – like a sugar rush that’s about to crash. Traders who follow the RSI usually interpret this as a signal to sell and move out of the asset before the line reverses course and dives back under the high-water mark. Sometimes, however, the price keeps climbing well above 70.
Below 30 : Now we’re in “oversold” territory – it’s like spotting a hidden gem in a bargain bin. When RSI drops below 30, the market’s saying, “This thing’s been beaten down, but maybe – just maybe – it’s time for a comeback.” Keep in mind that sometimes the dip may keep dipping.
How It’s Calculated
RSI is all about relative strength — it compares the magnitude of recent gains to recent losses. Picture a tug-of-war between bulls and bears. The RSI score tells you who’s winning the battle right now, but also hints at who might be running out of strength.
Trading with RSI
Overbought? Maybe Sell (obligatory DYOR) . When RSI hits 70 and above, you might be looking at a market running out of fuel. You may start thinking about trimming your position, or at least keep an eye out for a reversal. After all, what goes up must come down (except maybe Bitcoin BTC/USD ?)
Oversold? Maybe Buy (obligatory DYOR) . If the RSI drops to 30 and below, it could be a signal to start looking for a buying opportunity. The market is going through a meltdown and sometimes that’s your cue to go bargain hunting and snap up some discounted assets. Just make sure that your stock or crypto of choice isn’t falling for a specific reason — no indicator can save you from an actual rug pull.
The Sweet Spot — Divergences: Ever notice when the RSI and price action don’t agree? That’s called a divergence, and it’s like catching the market in a lie. If the price is making new highs but the RSI isn’t, or vice versa, it’s a clue that something fishy’s going on and you may want to be on the lookout for a sur- price reversal.
Bonus Tip: RSI in Different Timeframes
Wanna get fancy and earn some bragging rights? Use RSI across different timeframes. A stock might be oversold on the daily but overbought on the weekly. By spotting the trend across different time frames, you can pick your desired time frame to trade in and follow closely. The higher the time frame, the longer the time horizon for the move to actually pan out.
So, there you have it – the RSI. It’s not a crystal ball, but it’s pretty close.
Use it wisely, and you might just outsmart the market — or at least stay ahead of the next big move. Keep those charts hot, continue learning about technical analysis and go smash those trading goals of yours. 🔥
Understanding Dark Pools█ Diving Into Dark Pools
In recent years, dark pools have become a significant part of the financial markets, offering an alternative trading venue for institutional traders. But what exactly are dark pools, and how do they impact market quality and price efficiency? This article delves into the comprehensive study titled "Diving Into Dark Pools" by Sabrina Buti, Barbara Rindi, and Ingrid Werner, which sheds light on the complexities of dark pool trading in the US stock market.
█ What Are Dark Pools?
Dark pools are private financial forums or exchanges for trading securities. Unlike public stock exchanges, dark pools do not display the order book to the public until after the trade is executed, providing anonymity to those placing trades. This lack of pre-trade transparency can help prevent large orders from impacting the market price, which is particularly beneficial for institutional investors looking to trade large volumes without revealing their intentions.
█ How Do Dark Pools Work?
In dark pools, the details of trades are not revealed to other market participants until the trade is completed. This lack of transparency helps prevent significant price movements that could occur if the order were known beforehand. Dark pools typically execute trades at the midpoint of the best bid and ask price in the public markets, ensuring fair pricing for both parties involved.
█ Why Are Dark Pools Used?
Dark pools are primarily used by institutional investors who need to execute large trades without revealing their trading intentions. Displaying such large orders on public exchanges could lead to unfavorable price movements due to market speculation and front-running by other traders.
█ Benefits of Dark Pools
Reduced Market Impact: Large orders can be executed without affecting the stock's market price.
Anonymity: Traders can buy or sell significant amounts without revealing their identity or strategy.
Lower Transaction Costs: By avoiding the public markets, traders can often reduce the costs associated with large trades.
Improved Execution: Dark pools can offer better execution prices due to the lack of market impact and reduced volatility.
█ Why Do Large Actors Hide Their Orders Using Dark Pools?
Large institutional investors use dark pools to hide their orders to:
Avoid Market Manipulation: Prevent others from driving the price up or down based on the knowledge of a large pending trade.
Maintain Strategic Advantage: Keep trading strategies and intentions confidential to avoid imitation or counter-strategies by competitors.
Achieve Better Prices: Execute trades at more favorable prices by not alerting the market to their actions.
█ Actionable Insights for Traders
Understand Market Dynamics: Knowing how and why dark pools are used can provide insights into market liquidity and price movements.
Monitor Market Quality: Be aware that increased dark pool activity can improve overall market quality by reducing volatility and spreads.
Assess Price Efficiency: Recognize that while dark pools can enhance market quality, they might also lead to short-term inefficiencies like price overreaction.
█ Key Findings from the Study
The study analyzed unique data on dark pool activity across a large cross-section of US stocks in 2009. Here are some of the critical insights:
Concentration in Liquid Stocks: Dark pool activity is predominantly concentrated in liquid stocks. Specifically, Nasdaq stocks show higher dark pool activity compared to NYSE stocks when controlling for liquidity factors.
Market Quality Improvement: Increased dark pool activity correlates with improvements in various market quality measures, including narrower spreads, greater depth, and reduced short-term volatility. This suggests that dark pools can enhance market stability and efficiency for certain stocks.
Complex Relationship with Price Efficiency: The relationship between dark pool activity and price efficiency is multifaceted. While increased activity generally leads to lower short-term volatility, it can also be associated with more short-term overreactions in price for specific stock groups, particularly small and medium-cap stocks.
Impact on Market Dynamics: On days with high share volume, high depth, low intraday volatility, and low order imbalances, dark pool activity tends to be higher. This indicates that traders are more likely to use dark pools when market conditions are favorable for large trades.
█ Conclusion
Dark pools play a crucial role in modern financial markets by allowing large trades to be executed without revealing the trader’s intentions, thus minimizing market impact and reducing costs. For retail traders, understanding the mechanics and implications of dark pools can lead to better-informed trading decisions and a deeper comprehension of market behavior. The study concludes that while dark pools generally contribute to improved market quality by reducing volatility and enhancing liquidity, their effect on price efficiency is nuanced. For small and medium stocks, dark pools can lead to short-term price overreactions, while large stocks remain largely unaffected. The findings underscore the importance of understanding the different impacts on various stock categories to make informed trading decisions.
For institutional traders and market participants, understanding the role and impact of dark pools is crucial for navigating the modern financial landscape. By offering an alternative venue for executing large trades discreetly, dark pools play a pivotal role in today's trading ecosystem.
█ Reference
Buti, S., Rindi, B., & Werner, I. (2011). Diving into Dark Pools. Charles A. Dice Center for Research in Financial Economics, Fisher College of Business Working Paper Series, 2010-10.
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Disclaimer
This is an educational study for entertainment purposes only.
The information in my Scripts/Indicators/Ideas/Algos/Systems does not constitute financial advice or a solicitation to buy or sell securities. I will not accept liability for any loss or damage, including without limitation any loss of profit, which may arise directly or indirectly from the use of or reliance on such information.
All investments involve risk, and the past performance of a security, industry, sector, market, financial product, trading strategy, backtest, or individual's trading does not guarantee future results or returns. Investors are fully responsible for any investment decisions they make. Such decisions should be based solely on evaluating their financial circumstances, investment objectives, risk tolerance, and liquidity needs.
My Scripts/Indicators/Ideas/Algos/Systems are only for educational purposes!
Gold, The Dollar, and Everything In BetweenHey there,
So, today we're looking at the recent performance of the dollar and the sudden recovery on Gold.
Which indicates a very interesting outlook in the weeks to come leading up to the expected rate cut scheduled to happen September (Next Month).
So if you're curious about what you need to keep an eye out for, be sure to check out today's video were we discuss the markets from both a fundamental and technical perspective.
$SKEW CBOE SKEW Index and two recent signalsSKEW is a measure of options prices in the S&P500 Index that divides the options volatilities of puts/calls.
How to use the CBOE:SKEW Index gets a bit more cloudy since it isn't always clear or perfect in its "signal generation". But I think it is important to know what it is showing so you can at least decide what the general sentiment and positioning is in the options market for the S&P500 or $SPY.
So let's talk about a couple of scenarios:
1. Rising CBOE:SKEW and Rising AMEX:SPY prices. The thinking process behind this combination is that people are selling calls and using the proceeds to buy puts to protect against a market drop. This is a market that is "hedging" as the market goes up. So if people are hedging their longs, they are effectively showing that they are worried about falling prices and that implies the market is "climbing a wall of worry." Markets usually continue to climb in that condition. I have labeled this setup in late May which preceded the advance in stock prices in June.
2. Falling CBOE:SKEW and Falling AMEX:SPY prices. The logic behind this setup is that people are buying calls as stock prices fall, getting more emboldened with price declines, which is a very bearish setup implying lower prices ahead. This is the scenario we had going into the end of July which preceded the drop in August.
You can see that CBOE:SKEW has returned to the middle of the range here, so there is no new signal to work from here.
Stay tuned for one of these scenarios to set up again. The next variable to use is the level of TVC:VIX to alert us to whether there is active buying of options or selling of options to give us deeper insights into what is likely to happen.
Cheers,
Tim
10:59AM EST 8/8/2024
Microsoft: More Oversold than During Covid?Microsoft has declined along with other AI names in the last month. How big was the pullback? Some traders may be surprised to know its intensity.
The first noteworthy signal on today’s chart is Wilder’s Relative Strength Index (RSI). The oscillator hit 24.69 on Monday. That was the lowest reading since August 2015. In other words, MSFT this week was more oversold than March 2020 -- at the depths of the coronavirus selloff.
Next, the software giant tested and held its April 25 low around $388. That may suggest support remains in effect.
Third, MSFT is trying to hold its 200-day simple moving average for the first time since March 2023. That could indicate the presence of a longer-term uptrend.
TradeStation has, for decades, advanced the trading industry, providing access to stocks, options and futures. See our Overview for more.
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XAUUSD 8 Aug 2024Based on the latest data, the current price of XAU/USD (Gold Spot US Dollar) is around $2,387.40.
Support and Resistance Levels:
The current support level is around $2,381, while the resistance level is near $2,391. If the price breaks above the resistance level, we could see further upward momentum.
Economic Factors:
Fed Rate Decisions: Speculations of potential rate cuts by the Federal Reserve could support gold prices as investors seek safe-haven assets.
Geopolitical Tensions: Ongoing geopolitical uncertainties can also drive investors towards gold, further pushing the price upwards.
Entry Price:
Entry Type: Limit Order
Entry Level: $2387.00 (This is a point of confluence being near a support level and near the 38.2% Fibonacci retracement level from the recent swing low to swing high.)
Stop Loss:
Stop Loss Level: $2375.00 (Below the recent low and the support zone to avoid getting stopped out by minor fluctuations. This gives a risk of $12 per trade, which is within the 1% risk tolerance.)
Target Price:
Target Price Level: $2410.00 (A level of high liquidity and potential retracement. This provides a reward-risk ratio of approximately 1.92 ($23 potential reward/$12 risk).)
Adjusting Stop Loss to Trail Profits:
First Adjustment: Once the price reaches $2395, move the stop loss to break even at $2387.
Second Adjustment: Once the price reaches $2400, move the stop loss to $2392 (locking in $5 profit).
Final Adjustment: As the price approaches the target of $2410, adjust the stop loss to $2405 to secure more profits while allowing room for the price to reach the target.
Trade Execution:
Order Type: Limit Buy Order
Entry Price: $2387.00
Stop Loss: $2375.00
Take Profit: $2410.00
BOJ Rate Hike Causes Unrest in the Stock Markets: What next?When the Bank of Japan hiked its interest rate at the end of July, global markets went into turbulence.
We will discuss what currency carry trade is, why the yen carry trade has caused this global volatility, and, importantly, whether the market will resume its uptrend.
Micro E-Mini Nasdaq Futures and Options
Ticker: MNQ
Minimum fluctuation:
0.25 index points = $0.50
Japanese Yen Futures
Ticker: 6J
0.0000005 per JPY increment = $6.25
Disclaimer:
• What presented here is not a recommendation, please consult your licensed broker.
• Our mission is to create lateral thinking skills for every investor and trader, knowing when to take a calculated risk with market uncertainty and a bolder risk when opportunity arises.
CME Real-time Market Data help identify trading set-ups in real-time and express my market views. If you have futures in your trading portfolio, you can check out on CME Group data plans available that suit your trading needs www.tradingview.com
SPY/QQQ Plan Your trade For 8-7 : Perfect Flat-Down PatternToday's Flat/Down pattern played out perfectly. Now, as price nears support, we should be looking to position our trading for the next big move higher over the next 5+ trading days.
If my research is accurate, the SPY/QQQ should begin to setup a base mid/late tomorrow and start to rally into Friday - carrying into early next week.
Watch the video I created this morning to learn more.
This short follow-up video will help you understand how my SPY Cycle Patterns work and how you can benefit from their interpretive capabilities.
Get some.
#trading #research #investing #tradingalgos #tradingsignals #cycles #fibonacci #elliotwave #modelingsystems #stocks #bitcoin #btcusd #cryptos #spy #es #nq #gold
Classic Wyckoff accumulation. Markup phase coming ! This video is an analysis on the Wyckoff accumulation setup. All aspects of the method are being checked off so it's just a matter of time before we get a breakout due to a "catalyst in the news". Obviously, good news for the vaccine sector will probably be bad news for the overall market.
What about altcoins, will the "BULLRUN" begin !What about altcoins, will the "BULLRUN" begin !
In this review:
>Others Marktecap
>Total2 Marketcap
>Total3 Marketcap
>Others Dominance
>BTC Dominanace
>ETH/BTC
>ETHUSD many forms
>ETHUSD/NVDA
Lets start with Others Marketcap
--We see that the volume is slowly increasing in the retest zone. this is positive for us.
When we examine the Rsı levels, we see that it is at the covid level. for such an index, this is "oversold"
RSI(14) 1w and Gaussian Channel
CM Slingshot and LMACD
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TOTAL2 Marketcap 1w
level 1= Accumaltion
Trend mildline
level 2= Bullrun
1008 passed from the summit to today. That's enough :D
Total2 with Keltner Channel
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Total3 Marketcap
"SAME"
2020 vs 2024 !
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Others Dominance
is waiting for the UP movement at the channel bottom leve =)
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ETH/BTC 1w
2016-2024
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ETHUSD
CHart 1/5
Ethereum Log Curve Zones
Chart 2/5
RSI Level and 1008 days
2020 vs 2024
Chart 3/5
Keltner Channel // Top, Bottom and Retest zones
Chart 4/5
-Bullrun EVE
Chart 5/5
CYCLE chart ( just some MATH:D)
Parallel Channel MODE
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TOTAL2/Nasdaq
3...2...1... GO !
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ETHUSD/NVIDIA
Its Ready =)
When you analyse all these chart, the following rings in your head:
>>>ALTSEASON is inevitable.
Think in Probabilities Embracing Uncertainty Your Key To SuccessPicture this: You’re at your trading desk, eyes on the charts, heart pounding as the market swings unpredictably. Do you feel that fear creeping in?
Now, imagine knowing that this unpredictability doesn’t have to scare you. Instead, it can be the key to your success. Let's dive into why thinking in probabilities and staying calm in the face of uncertainty can turn trading from a gamble into a calculated path to consistent success.
Many traders struggle with uncertainty because they lack a solid, tested system. Trading randomly or without a proven strategy leads to anxiety and inconsistency. But once you have a reliable system that suits your lifestyle and mindset, and you fully understand your edge, you realize that while the outcome of each trade is random, the probabilities of your trading system will work out for you over time.
The Role of Probabilities in Trading
Trading isn’t about predicting the next big market move; it’s about understanding the odds and working them to your advantage. Each trade is a small part of a larger statistical framework, where the focus shifts from individual outcomes to the bigger picture.
Why Is Learning To Think In Probabilities So Important For Trading Success?
Reduces Emotional Bias : By thinking in probabilities, you understand that each trade is just one in a series of many. This helps reduce emotional reactions to individual losses or gains, such as revenge trading, doubling up on position sizing, or even smashing your new iPhone against the wall (been there, LOL).
For example, if you know that your strategy wins 60% of the time, you won't be devastated by a single loss. You'll see it as part of the statistical outcome.
Encourages Rational Decision-Making: Knowing your strategy has an actual edge helps you stick to your plan, even during losing streaks, and avoid impulsive decisions. To know your edge, you need to do plenty of backtesting and forward testing so you can gain confidence in the system.
For instance, if you experience a string of losses, understanding that this is normal and statistically probable helps you remain disciplined and not deviate from your strategy.
Builds Confidence in Your System : Confidence comes from knowing your strategy is backtested and has a proven edge over a large number of trades.
This knowledge helps you stay disciplined and focused on executing your plan. For example, if your backtesting shows a positive expectancy over 1,000 trades, you can trust your system even when short-term results are unfavorable.
Things That Have Helped Me Over the Years to Deal With the Uncertainty of Trading
Finding or Developing a System/Strategy That Suits You : As humans, we are all different, and this is especially true in trading. Some people are happy to be in and out of the market fast (scalpers) and have the ability to make big decisions quickly under pressure.
Others are slower thinkers and like to make decisions carefully, staying in the market for a longer period of time (swing traders).
You need to find what you're best at and stick to it. If you have a busy life with work and family, maybe swing trading suits you. If you’re younger and not as busy, then perhaps scalping is your style.
Playing Strategy Games and Games of Chance : This may not be something you've heard before, but I've met many traders, including myself, who have found that games like poker can really help your trading by teaching you to think in probabilities.
Another game I love to play is chess, as it encourages you to think ahead, and I’ve found it has helped me in my trading over the years.
Practicing Visualization : If you've ever read anything on the subconscious mind, you know it’s responsible for 95% of all your automatic behaviors, especially in trading. The subconscious doesn’t distinguish between what is real and what is imagined.
This is why visualization is such a powerful tool to help you embrace market uncertainty. By visualizing yourself placing trades confidently, managing risks well, and handling outcomes calmly, you prepare your mind for real trading scenarios.
This mental practice reinforces your belief in your system and prepares you for the market's ups and downs.
Books That Helped Me Think in Probabilities
Reading has been an invaluable part of my journey to understanding probabilities. Here are some books that have profoundly impacted my trading mindset:
"Thinking, Fast and Slow" by Daniel Kahneman
This book helped me understand how cognitive biases affect decision-making and how to overcome them by thinking more strategically.
"Fooled by Randomness" by Nassim Nicholas Taleb
Taleb's insights into the role of chance and randomness in our lives and the markets were eye-opening and changed how I view risk and probability.
"Beat the Dealer" by Edward O. Thorp
Although this book is about blackjack, Thorp’s exploration of probability and statistics offers valuable lessons for trading.
"The Theory of Poker" by David Sklansky
Sklansky breaks down the mathematics of poker, showing how to make decisions based on probability, a skill directly applicable to trading.
"The Intelligent Investor" by Benjamin Graham
This classic on value investing emphasizes the importance of long-term thinking and understanding market probabilities.
"A Man for All Markets" by Edward O. Thorp
This autobiography offers a fascinating look at how Thorp applied probability theory to beat the casino and the stock market.
"Sapiens: A Brief History of Humankind" by Yuval Noah Harari
Harari’s book provides context on human behavior and decision-making, offering insights into the psychological elements of trading.
"The Signal and the Noise" by Nate Silver
Silver’s exploration of how we can better understand predictions and probabilities is highly relevant to making informed trading decisions.
"Superforecasting: The Art and Science of Prediction" by Philip E. Tetlock and Dan M. Gardner
This book teaches how to improve forecasting skills through careful analysis and thinking in probabilities.
Thinking in probabilities was a game-changer for me. It shifted my focus from trying to predict every market move to playing the long game. By embracing this mindset, I turned fear into confidence and uncertainty into strategy.
Remember, trading isn’t about guessing the market. It’s about responding with a clear, composed mind. Trust your strategy, know your edge, and let the probabilities work in your favor. This approach transformed my trading journey, and it can do the same for you. Happy trading!
Jobs Data Giving Recession Vibe. Is the Fed Late to Act (Again)?Why does it seem like the Fed is playing catch-up with the economy? In 2021 and 2022, the US central bank was jamming stimulus at a fast clip. Suddenly it stopped and reversed course to raise interest rates at never-before-seen speed (that’s when officials were saying inflation was transitory). Now, the skyrocketing interest rates are threatening to derail the economy. Or worse — throw it in a recession.
The red-hot US labor market is no more. Or at least there wasn’t anything red-hot for America’s workers and job seekers in July (except for maybe the coast-to-coast summer heat). And now financial markets are in limbo.
America’s employers added just 114,000 new hires to the workforce — a far cry from the expected 174,000 and even that consensus view was soft. The bigger-then expected slump in US jobs growth fanned concerns over a flailing economy and there was one major player to pin the blame on — the Federal Reserve.
What’s the Fed?
The Federal Reserve, or just the Fed, is the central bank of the United States. Its daily grind is to keep the economy from veering off a cliff or overheating like a meme stock on WallStreetBets. The Fed is currently headed by Jerome Powell, or Jay Powell, or even JPow if you’re cool enough, and serves a dual mandate of maximum employment and stable prices.
For about a year, markets have been building up the conviction that the Federal Reserve should start thinking about cutting rates. But for months, the Fed didn’t even think about talking about cutting rates as a flurry of economic indicators was more or less suggesting that one slash might be a good idea. And now markets fear it may be too late for that.
The steep drop in the employment figure for July suggested that the economy has started to crack under the pressure of interest rates sitting at a 23-year high of 5.50%. When rates are high they make borrowing more expensive and discourage businesses and consumers from taking out loans to run their lives better. Instead, they shove their cash in deposit accounts and generate passive, risk-free yield. In a nutshell, high rates = economic contraction; low rates = economic expansion.
When rates stay higher for longer, the Fed runs the risk of tilting the economy into the very recession it is fiercely trying to avoid.
Talk About Bad Timing
The timing for that jobs data couldn’t have been more inconvenient. July’s nonfarm payrolls arrived just two days after the Fed praised the growth of the economy and voted against reducing its benchmark interest rate. To defend this decision, Chairman Jay Powell said that his clique of top central bankers need more good data that shows inflation is heading down toward the bank’s 2% goal. He also went on to say that he “wouldn’t like to see material further cooling in the labor market.”
The press conference after that rate call did end on a high note. The Fed boss noted that an interest rate cut was on the table at the next meeting slated for mid-September. The issue, however, is whether a single 25-basis-point cut, as communicated, will be enough. Markets have already ramped up bets for a juicier 50-basis-point reduction to borrowing costs — a more aggressive monetary policy measure that will provide a stronger lean against a faltering economy.
And while the difference between jobs added and jobs expected might be a factor, the severe pullback seems more about investors throwing a tantrum. "You should've cut rates, now deal with our unusually strong reaction as we make a statement," kind of play.
The painful scenario where the Fed may have fallen behind the curve shook Wall Street and spread into global markets. Stocks in the US are in a free fall. The tech-heavy Nasdaq Composite slipped into correction territory, dropping 10% from its peak in mid-July.
Tech giants , the main driver of the broad-based gains across the major US indexes, are heavily battered. But the selloff is widespread, jolting everything from stocks , to the US dollar to Bitcoin .
Add to this an earnings season weighed by investor concerns over spending on artificial intelligence and you’ve got quite a few things to consider before you jump into your favorite stock out there.
What Do You Think?
Do you think the Fed will trim rates by a bigger 50-basis-point cut in September or even introduce an urgent interest rate cut before their next regular meeting? And are you comfortable betting on beaten-down equities across the board? Let us know your comments below!
Does the Market Rally When the Fed Begins to Cut Rates?The relationship between rate cuts and the stock market, as illustrated in the provided graph, shows that major market declines often occur after the Federal Reserve pivots to lower interest rates. This pattern is evident in historical instances where the Fed's rate cuts were followed by significant drops in the S&P 500. Several factors contribute to this phenomenon, which are crucial for investors to understand.
Economic Weakness:
Rate cuts typically respond to economic slowdown or anticipated recession.
Each instance of the Fed pivoting to lower rates (1969, 1973, 1981, 2000, 2007, 2019) corresponds to significant market declines soon after.
Rate cuts signal concerns about economic health, causing investors to lose confidence, as reflected in the graph.
Delayed Impact:
Rate cuts do not immediately stimulate the economy; it takes time for their effects to propagate.
The graph shows that the majority of the market decline occurs after the Fed's pivot, indicating that initial rate cuts were insufficient to halt the downturn.
During this lag period, the market may continue to decline as economic data reflects ongoing weakness.
Investor Sentiment:
Rate cuts can trigger fear among investors, who interpret the move as an indication of severe economic issues.
The graph shows substantial percentage drops in the S&P 500 following each pivot, demonstrating how negative sentiment can exacerbate declines.
The fear of a worsening economy leads to a sell-off in stocks, contributing to further market drops.
Credit Conditions:
During economic stress, banks may tighten lending standards, reducing the effectiveness of rate cuts.
Post-rate cut periods in the graph align with times of economic stress, where credit conditions likely tightened.
Businesses and consumers may not be able to take advantage of lower borrowing costs, limiting economic recovery and impacting the market negatively.
Historical examples such as the crises in 2000 and 2007 highlight substantial market drops after rate cuts, as seen in the graph. In both cases, the rate cuts responded to bursting bubbles (tech bubble in 2000, housing bubble in 2007), and the economic fallout was too severe for rate cuts to provide immediate relief. The graph underscores that while rate cuts aim to stimulate the economy, they often follow significant economic downturns. Investors should be cautious, recognizing that initial market reactions to rate cuts can be negative due to perceived economic weakness, delayed policy impact, and deteriorating sentiment.
Panic selling? I'm buying!A triangle is drawn, accumulation which came after active growth, I expect the trend to continue
Medium/long term, we'll see what happens in the Autumn, I expect a test of a new all-time high around 5.000
I make purchases in parts based on given values, where the price is now, and I use a spot account and do not use leverage. I believe that this support is the optimal point for opening a mid-term or long-term long position, since we see a test of the trend line and 3.000 where there is strong support
Tesla Fell More Than 12% After Earnings. Where Might It Go Next?CEO Elon Musk of Tesla NASDAQ:TSLA has said that if you believe in the future of his EV company’s FSD technology (short for “full self-driving”), then you should probably be invested in TSLA stock. If you don’t have faith in FSD, then perhaps you shouldn’t be.
I don't know about that, but one thing that technical analysts can understand is the stock’s chart, seen here as of midday Wednesday (July 31):
As the chart above shows, TSLA rallied heading into release of its earnings on July 23 after the bell, but has mostly pulled back since then -- including falling more than 12% on July 24.
Could such action have been forecasted and acted upon? Let’s check it out.
The first thing to note is the stock’s inverse head-and-shoulders pattern -- the set of three purple curved lines in the chart above. That pattern is historically bullish.
Tesla’s breakout from the admittedly crooked neckline (the downwardly sloping purple line above) ran some 42% to the upside before the stock apexed at $271 intraday on July 11.
However, July 11 is in the past. What about the future?
As of midday Wednesday, Tesla was still about 15% below its $271 peak. Tesla’s daily Moving Average Convergence/Divergence (MACD) was also postured rather bearishly.
The stock’s 12-Day Exponential Moving Average (EMA) -- denoted by the black line at bottom right in the chart above – was below Tesla’s 26-Day EMA (the orange line above). Add in the fact that the stock’s histogram of its 9-Day EMA (the blue bars at the chart’s bottom right) was below zero and that’s an historically bearish technical pattern.
Meanwhile, the stock’s Relative Strength Index (the gray line with the purple background in the chart above) appears neutral, but is curling back in a bullish direction.
But what if we erase our inverse head-and-shoulders pattern and make it part of a larger story?
Check this out:
Tesla’s RSI and MACD are both the same in this chart as they were in the first one, but this graph no longer shows an aged inverse head-and-shoulders pattern that has already run its course.
Instead, this chart shows an historically bullish cup-with-handle pattern, as denoted by the big purple arc above.
In fact, the diagram above appears to show multiple technical positives for Tesla:
• The cup-with-handle pattern has a $271 pivot point, marked with the small purple line at right.
• Tesla is trading above both its 50-Day Simple Moving Average (the blue line) and its 200-Day SMA (the red line).
• The 50-Day SMA has crossed above the 200-day one, forming a so-called “golden cross.” That’s historically a bullish sign.
Things will likely look even better for Tesla if the stock can take back the 21-day Exponential Moving Average (EMA) to get the swing traders in line. That would likely budge the 9-day EMA’s histogram (the blue bars at bottom right) into positive territory, which is typically bullish.
It would also probably push the 12-Day EMA (the black line at bottom right) above the 26-Day EMA (the orange line at right). That’s an historically bullish sign as well.
This presentation discusses technical analysis, other approaches, including fundamental analysis, may offer very different views. The examples provided are for illustrative purposes only and are not intended to be reflective of the results you can expect to achieve. Specific security charts used are for illustrative purposes only and are not a recommendation, offer to sell, or a solicitation of an offer to buy any security. This presentation discusses technical analysis, other approaches, including fundamental analysis, may offer very different views. The examples provided are for illustrative purposes only and are not intended to be reflective of the results you can expect to achieve. Specific security charts used are for illustrative purposes only and are not a recommendation, offer to sell, or a solicitation of an offer to buy any security. Past investment performance does not indicate or guarantee future success. Returns will vary, and all investments carry risks, including loss of principal. Moomoo makes no representation or warranty as to its adequacy, completeness, accuracy or timeline for any particular purpose of the above content. Moomoo is a financial information and trading app offered by Moomoo Technologies Inc. In the U.S., investment products and services on Moomoo are offered by Moomoo Financial Inc., Member FINRA/SIPC. TradingView is an independent third party not affiliated with Moomoo Financial Inc., Moomoo Technologies Inc., or its affiliates. Moomoo Financial Inc. and its affiliates do not endorse, represent or warrant the completeness and accuracy of the data and information available on the TradingView platform and are not responsible for any services provided by the third-party platform.
