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How to tame Crypto Market?🤑Hello, dear bottom catchers😉 It's difficult looking at the market correction. Waiting for a strong and prolonged correction is doubly difficult. Fears and concerns are very easy to understand, when we see today's prices 😱 Each of Us wants to catch the very bottom. With a high probability I can say, that's almost impossible! You can ask me <> I can answer You😉 1. Undervalued buy orders. Trader expects to see price too low and misses the opportunity to buy during the correction 2. The price hits the bottom too quickly and simply "flies" up. That's very typical of Bitcoin 3. Greed. That's a terrible vice. A trader, seeing, that the price goes down for a long time, constantly looks at the movement and tries to predict and grab the bottom, but that's impossible without experience. I can give You advice for protect Yourself!💥 Split Your buy orders🔥🔥 (that's part of my strategy). What does it mean? Using Fibo levels, find the "golden mean" of the retracement and set several buy orders in this zone. (How to use Fibo levels, You can find in my next EDU post, stay tuned ) What will we get from it?💥 1. We don't have to worry about missing the opportunity to buy at a discounted price. By splitting orders, we can average the average purchase price. 2. You don't have to sit at the computer all day and not spoil your nerves. Take a rest. And You'll forget about greed What do you say, friends? I really wanna be useful to you, guys! I make every post with love and it brings me extraordinary pleasure!🙏🏻 Thank you for staying with me💋 Always sincere with You🧡 Your Rocket Bomb🚀💣
BITSTAMP:BTCUSDEducation
by RocketBomb
25
How to measure the value of companiesValue investing is the pursuit of buying stocks that are currently trading at a discount to their intrinsic value. The idea being, that that discount is likely the result of a short term disappointment, and the share price will – in the long run – turn upwards toward its true value (making you a profit). So how do you know if a stock is good value? A lot of people use multiples, Price to Earnings, Price to Book, Enterprise value to Ebita. But a more in depth way is called Discounted Cash Flow analysis (DCF). DCF looks at the future projected cashflows of a business and then 'discounts' them back to today's value, based on the average cost required to generate that profit, also taking into account the company's growth. Even if you're not looking forward (working with earnings forecasts), going through the steps of understandings a valuation based on a company's cashflows can uncover useful insights about the business and whether it's one you should be investing in. Let's dive into the different metrics. NOPAT / NOPLAT NOPLAT stands for Net Operating Profit Less Adjusted Taxes and it represents the profits generated from the company's core operations, once you've subtracted tax. It's a more accurate measure of profit than say say Net Income – because it's not affected by financing structure / interests payment etc. – and EBIT because it deducts the taxes that inevitably have to be paid. The difference between NOPAT and NOPLAT is that NOPLAT also takes into account tax deferrals, offsetting tax payments into different years, which in some businesses can result in large differences between the two. Looking at our chart, we can see that NOPLAT has been rather flat at Big Lots over the past few years, with the exception of a better 2018. NET INVESTMENT Net investment looks at the amount of capital that is invested back into the business, such as in its plant, property and equipment and working capital (and goodwill). Is a company regularly investing in up-keeping and expanding the assets that make its revenue? In the example of Big Lots, investment declined from 2016 to 2018 (when it had the good NOPLAT year), followed by (then) record investment in Q1 2019 and then a massive increase in 2020, which is likely the result of emergency measures to deal with covid19. Net Investment = Invested Capital - Invested Capital Investment Rate (IR) Investment Rate is the portion of NOPLAT invested back into the business (Net Investment). Looking at at 2019, Big Lots invested 160% of its NOPLAT back into the business, but prior to that % IR was negative. IR = Net Investment / NOPLAT Return on Invested Capital (IR) ROICC is the return the company earns on each dollar invested into its assets. Before its run of re-investment in the business in 2019, the company reached a peak efficiency of 21.5% - each $100 of investment brought in $21.50 in NOPLAT. Problem was, they weren't investing as much. As soon as they did , ROICC drops to 15%. Comparing this multiple with similar companies will give further clues as to whether this is a good return on invested capital or not. ROIC = NOPLAT / Invested Capital GROWTH (g) Is the rate at which the company's NOPLAT grows each year. It's expressed as: g = ROIC * IR If a company gets a good return on its assets and its consistently investing back into the business to increase those assets, then you have a great recipe for growth. As we've seen with other metric, growth was actually declining at Big Lots until 2019 but has now rocketed upwards. Percentage of Debt & Equity At this point, it's good to have a quick sense check on the percent of equity to debt. If a company has too much debt its risk of bankruptcy clearly increases significantly. A good rule of thumb I've heard is no more than 2x debt (66%) to equity (33%), although it'll vary by industry. Looking at our example, Big Lots took out a lot of debt in Q1 2020 as a result of covid, but this has consistently diminished into the year, back into reasonable levels. Further insight can again be found by comparing against similar publicly listed businesses. Cost of Debt Going a bit further into the business's debt structure, you can deduce the company's cost of debt by dividing its interest payment by its total debt. This is reveals the average % the company pays for its debts. In the case of Big Lots, the cost of its debt seems relatively cheap, but again checking against the industry average will uncover more insight. In fact, this 'cost' will be lower because of the 'Interest Shield' debt payments have in reducing taxes. Cost of Debt = Interest / Total Debt Weighted Average Cost of Capital Cost of debt is only part of the equation. You also need to know the cost of equity, which is the % amount of return investors expect for the risk they incur investing in the company rather than a risk free alternative. Calculating the cost of equity is quite complicated: Cost Of Equity = Risk Free Rate +Beta*(Market Rate Of Return - RiskFreeRate (Because my Pine scripting is not quite there, I have instead taken the average rate of return equity holders have historically expected from markets which is 7% in the US and 6% in the UK.) Once you have both the cost of debt and the cost of equity you can calculate the Weighted Average Cost of Capital, or how much on average it costs the rate that a company is expected to pay on average to all its security holders to finance its assets. The formula for WACC is: WACC = Value of Equity/TotalValue* Cost of Equity + (Value of Debt/TotalValue)*(CostOfDebt*( 1 -Corporate Tax Rate)) All super complex, but in essence, if 50% of the capital structure is debt holders expecting 1% return, and 50% is shareholders hoping for a 6% return, then the average return expected by stakeholders is 3.5%. As we know for Big Lots the Return on Invested Capital is circa 15%, and so there is a clear profit margin on its operations to pay its security holders with. Value The hardest one of all to calculate. You can derive the Discounted Cash Flow valuation of the business by multiplying its Operating Profits by its growth and return on invested capital, divided by the weighted average cost of its capital (accounting for growth potential). As a formula this is: Value = NOPLAT * (1 - g/ROIC) / WACC - g The reason this a more in-depth measure of value than say Price to Earnings is because this formula also takes into account not only earnings but also expected growth AND the efficiency of assets to generate a return. As mentioned, I've reach the limits of my Pine script here, but if it is coded correctly, this suggest Big Lots is trading at a small discounted rate. You can also take this formula for any business' future projected cashflow to understand how the price will change in the future (and therefore whether there's a profit opportunity to be found). Conclusion That's it! Hopefully it's clear that doing a deeper dive into key value metric uncovers a lot of colour and understanding of exactly how the business has been operated to date and whether the market might be underestimating (or not) it today Thanks for reading!
Editors' picks
BEducation
by JMaddison
30
🎓 EDU 4 of 20: A PROFESSIONAL TRADING APPROACH (FIST)Hi traders, wish you a happy and prosperous New Year. In the last EDU post, we touched on the main factors that move currencies in the short, medium, and long run. Professional traders follow these influences to determine what currencies to buy and sell. However, each trader has its own time horizon, so following long-term market determinants if you want to hold your trade for a few hours doesn’t make much sense. In fact, it’s counterproductive. Currencies can move in the opposite direction of their Purchasing Power Parity (PPP) rate, or Terms of Trade (ToT) for months and even years. While these models work well to provide us with a possible market direction in the long-term, their short-term track-record is rather poor. At CommaFX, we hold our trades mostly intraday or for a few days, and close them ahead of the Weekend (if a trade is still open on Friday.) This way, we can make more short-term trades and avoid the market risk of holding trades over the weekend. News that are releases over the weekend can have a significant impact on open trades after the markets open on Monday! I am following the FIST approach, which is a global macro approach that allows us to take only high-probability trades. FIST stands for Fundamentals, Intermarket, Sentiment, and Technicals. On the Fundamental side, I am following: 1. The current business cycle of a country through leading economic indicators such as housing starts, durable goods orders, and PMIs. Countries that are in the expansionary phase of the business cycle see their currencies strengthen, while countries that are in the recessionary phase usually see their currencies weaken over time. 2. Important news and themes: Such as Brexit, US stimulus, OPEC meetings, Central Bank commentaries... 3. Economic Indicators used by central banks to adjust their monetary policy: inflation rates, labor market indicators, economic growth. On the Intermarket side, I am following the performance of other markets and asset classes that can have an impact on the FX market, such as: 1. Commodities: For commodity currencies like CAD (oil), INR (oil), AUD (copper, gold), NZD (dairy). 2. Stocks: The performance of the stock market can provide clues for future exchange rates (e.g. higher Nikkei 225 usually leads to JPY weakness). 3. Bonds and yields: Global capital chases the highest yield. When bond prices fall and yields rise in a country, the country’s currency will often strengthen. If I see a strong divergence in the Intermarket (for example oil rises but the Canadian dollar falls, such as the case in the previous week), it gets our attention. I become bearish on the CAD from an Intermarket perspective. On the Sentiment side, I am following risk appetite indicators and market sentiment as shown by the options and futures markets. What I pay attention to is: 1. The performance of risky assets vs safe-havens: stocks (risky), risk-currencies (AUD, NZD), oil (market optimism), metals (silver, copper) vs safe-havens such as gold, bonds, JPY and CHF. When risk sentiment is positive (risky assets are bought and safe-havens sold), I become bullish on stocks, AUD and NZD, and bearish on the JPY, CHF, and USD, for example. 2. Market positioning: I follow the positioning of fast money (hedge funds) and smart money as shown by the Commitment of Traders report. When the big guys become bullish on a currency and increase their bullish bias week over week, I become bullish as well. 3. Options put/call ratio: The put/call ratio shows how many put and call contracts are active for a currency. As the ratio rises (i.e. more puts than calls), this is usually a bearish sign for a currency, and vice-versa. Finally, once I see a promising trading opportunity in the market after performing my Fundamental, Intermarket, and Sentiment analysis (matching strong vs weak currencies), it’s time to identify possible entry and exit points with the use of Technicals. Bear in mind that I know what direction I want to trade (i.e. short USD/CAD) before even opening a price-chart! The chart is only used to find suitable levels for a selling position. On the technical side, I focus on important retracement levels, volume profile, and price-action. I don’t trade breakouts, but wait for the market to come to my level (using LIMIT orders) to enter into a trade with an attractive reward-to-risk ratio. This was a short introduction to how professional traders find trading candidates in the market. Unlike the usual retail trader who focuses only on charts, we know what we want to trade before even opening the chart! A chart is the last thing I pay attention to, and my technical analysis takes me around 5 minutes to find where I want to enter into a trade. 90% of the time, I am only focused on fundamentals, intermarket, and sentiment. If you found this post useful, please hit the “LIKE” button and follow. Also, I’ll try to respond to all questions you might have, just post them in the comment section below. Stay tuned for the next part of our Educational Series! In total, there will be 20 posts that will CHANGE the way you trade and look at the markets – PROMISED!
Education
by MujkanovicFX
1
9 Golden Rules of Effective Money Management 9 Rules of Effective Money Management in Trading 1. Choose the correct position size. The basic rule is one: don't forget to minimize your risk and correctly calculate position size in every deal. For example, you can invest all initial capital in one trade. But why? After all, you can never be sure, that particular deal is guaranteed to bring profit. Many professionals use the "Rule of 2% " - when in one position a trader risks no more than 2 percent of him deposit. In this case, if the trade is closed at a loss, you'll only lose a small amount of money. There is also an alternative approach, where the trader risks a fixed amount of money (for example, $ 5), that he would be comfortable with losing. 2. Don't trade too aggressively One of the biggest mistakes is too aggressively trading . Even a small series of several losses in a row, with an incorrectly selected position size, can lead to a significant decrease in the size of your deposit. 3. Always set Stop Loss Placing a Stop Loss order for each trade has practically no drawbacks, only advantages. Very often, traders become emotionally attached to their trades, which can be fatal. For example, if a trade becomes unprofitable, an emotionally involved trader will not want to close it and will believe, that the price can still turn around and go in the right direction. Setting a stop loss helps overcome this problem. Thanks to the stop order, you can strictly control the ratio of profit and risk. You should always follow this rule, so that money management in trading gives you tangible advantages, and the deposit doesn't melt before our eyes. This is one of the basic principles of risk control. Certainly not the only one. 4. Be careful with leverage In the cryptocurrency market, many traders use leverage. It can be useful, but using it can also lead to huge losses. As long as you rationally sizing your position and not using too high leverage, then you are fine, you are safe. 5. Keep your emotions under control Capital management in the market full of emotions: from excitement and euphoria to fear and frustration. Try to free your mind of emotions - this will help you make rational decisions. The easiest recipe not to lose money is to take control of your emotions. All wrong trading decisions are usually made under the influence of emotions. 6. Take responsibility for your results (both losses and profits) How to manage capital? First of all, with full awareness and responsibility. Traders must recognize, that their trades can be both profitable and loss-making. Assuming every transaction will be successful you can be wrong. A realistic trader knows that any result is possible and is ready for it, while accepting at the same time what the market will bring to him. 7. Manage your risk and avoid overtrading A trader should get into the habit of analyzing all types of risks. You should zvoid overtrading, which is often the case for newbies traders , who don't have a plan. With such an approach, the attempt to stick to effective money management in trading often ends in failure. 8. Set the position size and take profit level It is a key element of money management in trading. Before trading, a trader must determine: 🪄Position size 🪄Stop loss size 🪄Take profit level 9. Cut losses quickly and let profits grow According to this money management advice, you should close those trades that lead to losses according to your trading system on time and get the most out of winning trades. Enjoy your trading journey! I try to be useful to You🧡 Always sincerely with You😊 Your Rocket Bomb🚀💣
BITSTAMP:BTCUSDEducation
by RocketBomb
29
How to Properly Use the Fibonacci Retracement ToolI've recently come across a lot of posts where the fibonacci retracement tool was erroneously used, and this gave me a good idea for an educational post. Introduction: The Fibonacci Sequence - Before talking about fibonacci retracements, it's important to understand what fibonacci sequences are. - Fibonacci sequences are numbers that are equal to the sum of the preceding two numbers, starting with 0 and 1. - So a fibonacci sequence would look like this: 0, 1, 1, 2, 3, 5, 8, 13, 21, and so on. - The fibonacci sequence is also known as nature's code, as these numbers are commonly found among nature as well. The number of petals of flowers is a prime example. The Fibonacci Ratio - The fibonacci ratio is derived by dividing the numbers within the fibonacci sequence - The 0.618 (61.8%) for instance, is approximately the value when we divide 21 by 34, and 55 by 89 - The 0.382 (38.2%) ratio is calculated by dividing a number by another number located two spots to the right. - The 0.236 (23.6%) is calculated by dividing a number by another one three spots to the right. - Just like the fibonacci sequence, fibonacci ratios are commonly found in nature as well, through flowers, galaxy formations, and spirals on shells Fibonacci Retracement - The fibonacci retracement is a tool in which horizontal lines are drawn to help traders identify support and resistance - These horizontal lines are based on the fibonacci ratios - Interestingly enough, just as the fibonacci ratios are commonly found in nature, they are also found in the market, reflected by charts - A fibonacci retracement can be identified by connecting the swing high to the swing low of a downtrend, and the swing low to swing high of an uptrend - The connection between the high and low points are where most traders get confused. Application - On the left hand chart, we can see that the swing high has been connected with the swing low - As a result, we could identify possible resistance levels for Bitcoin's bullrun in 2019. - Prices touched the 0.618 fib resistance level , and eventually attempted to break the 0.5 fib, but failed - We can also see that the 0.382 and 0.786 levels played a key role as support and resistance - On the right hand chart, we can see the swing low connected to the swing high - Based on the fib levels of this retracement, we could identify strong support at the 0.786 level, around $4k. Conclusion The fibonacci retracement tool can be a very effective way to identify areas of support and resistance , but they need to be applied correctly. Don't forget to connect the swing highs and lows based on the trend! If you like this educational post, please make sure to like, and follow for more quality content! If you have any questions or comments, feel free to comment below! :)
BITSTAMP:BTCUSDEducation
by Michael_Wang_Official
43
What is a Symmetrical Triangle?A symmetrical triangle is a chart pattern characterized by two converging trend lines connecting a series of sequential peaks and troughs. These trend lines should be converging at a roughly equal slope. Trend lines that are converging at unequal slopes are referred to as a rising wedge, falling wedge, ascending triangle, or descending triangle. KEY TAKEAWAYS Symmetrical triangles occur when a security's price is consolidating in a way that generates two converging trend lines with similar slopes. The breakout or breakdown targets for a symmetrical triangle is equal to the distance between the initial high and low applied to the breakout or breakdown point. Many traders use symmetrical triangles in conjunction with other forms of technical analysis that act as a confirmation.
Education
by Yuriy_Bishko
7
Elliott wave : corrective wave How to use fibonacci retracement and extension this entire trend was started at 1857 and ends at 1900 with wxy zigzag corrective wave. wave x is subdivide into abc flat correction which retraced upto 0.382 of wave X at 1870 wave y made 1.382 projection of wave w at 1900. the entire wxy trend made 50% retracement at 1878. (retracement after wave y overlap wave x high which made clear that these are corrective wave not the impulsive wave ) how to trade ? buy at 0.383 retracement of wave X and exit at 1.382 projection sell at 1.382 projection at 1900 and exit at 0.50 retracement
FOREXCOM:XAUUSDEducation
by Sangam-Agarwal
4
🎓 EDUCATION 2: STOP Trading (Only) with Technicals ❌Happy Thursday traders! It’s time to continue with our Educational Series on how to become a successful trader with a professional trading approach. It's holiday season, and closed markets mean more time to sharpen our trading skills! Let's go... In the last post, we touched on the main ingredients of a successful trader (check the link to "related idea"). Let’s reinforce those again: 1. Market Analysis – Your “Analyst” side. Here, you are going to combine Fundamentals, Intermarket analysis, Sentiment analysis, and (the correct) Technical analysis (FIST approach). 2. Trading – Your “Trader” side. Once the analyst in you spots a promising trade idea, the trader in you is responsible to execute the trade with proper entry and exit levels. 3. Management – Your “Manager” side. Every trader is a risk manager. Your manager side is responsible to manage your trade and risk levels, scale in and out of positions, open the correct position sizes, evaluate the reward-to-risk of your trades, etc. Alright, so far we are still covering your “Analyst” side. Your analyst side determines whether you will buy EURUSD, sell GBPJPY, buy gold, and sell silver. It’s the part of your trading that constantly scans for profitable trade ideas and setups in the markets, and passes them on to your “Trader” side. Why You Shouldn’t Rely on Technical Analysis? The majority of new traders I see in the retail space place too much attention on technical analysis. They search the internet for TA articles, look for the “holy grail” indicator, read dozens of technical analysis books, but still don’t manage to improve their trading performance. The truth is, they don’t understand the markets. I don’t care how many TA books you’ve read in your entire life, if you don’t understand how markets work and what moves prices up and down, you won’t succeed as a trader. Unfortunately, almost every retail trading website promotes and publishes those articles, because they are attracting clicks of inexperienced traders. Here is a hint: When I worked in the trading department of a large European bank, I didn’t even look at charts. There are almost no charts and no indicators on the trading floors of big banks and hedge funds! Do you really think that banks will move hundreds of millions into a trade because the 50-day MA crossed the 100-day MA, or because the price formed a Head & Shoulders pattern? The first time you do this in a bank will likely be your last day as a professional trader. So why do retail traders trade like that? Because they don’t know of better ways to trade. No one has taught them that trading based purely on technical analysis will never work. It’s in nobody’s interest to teach you this because large market participants need the “dumb money”. Yes, they make a profit when you trade badly and lose money. So, what’s moving the market if it’s not technicals? The Forex market is the marketplace for the world’s currencies, and currencies are influenced by supply and demand. To be more precise, interest rates influence currencies, with higher interest rates increasing demand for a currency (therefore leading to higher prices) and lower interest rates decreasing demand for a currency (therefore leading to lower prices.) We as Forex traders are interest rate traders. We trade currencies based on (short-term) views about their future interest rates. For example, let’s say the market expects higher inflation rates (inflation represents the change in the price of goods and services during a year) in Australia, which could lead to a response from the Reserve Bank of Australia by hiking interest rates. This will create demand for the AUD (remember, global capital is always chasing yield), which in turn would lead to a higher exchange rate of the AUD. If you only followed technicals and identified a bearish divergence on the RSI in AUD/USD - and you entered short - it’s your fault. The pair would likely move higher on higher interest rate expectations in Australia. So, when do technical levels work? When the market trades in fair value (in fundamental equilibrium), you’ll find that simple technical rules work. If large market participants agree that the current exchange rate of a currency pair is “fair” given the current fundamentals, smaller players may move the market when the price reaches a support or resistance level, or when the price breaks above or below a triangle. Unfortunately, markets are always in a state of flux and rarely in equilibrium, so following other analytical disciplines (besides technical analysis) will improve your trading performance dramatically. This chart shows the Band of Agnosticism. This band represents a span of exchange rates where fundamental-based traders are unlikely to join the market because the market is already in a fundamental fair-value zone. As the exchange rate starts to approach the upper or lower band, fundamental-based traders (which happen to be large banks and hedge funds) start considering opening new positions. The volume of their orders pushes the price back inside what is considered fair value. Professional traders first look at a variety of other factors before they decide what currency pair they want to trade. Once we identify a good trading candidate (our “Analyst” side does that), then it’s time to open the chart and find areas where we could enter with a long position (and those are not trendline breakouts!) We will cover all of this, step by step, in the coming Educational posts. Don't forget to FOLLOW to receive all future trade ideas and educational posts! Happy holidays everyone. 🎆
Education
by MujkanovicFX
1
⭐ STAGES OF TRADER's FORMING ⭐Hello! Traders professional growth involves going through several stages. Let's talk more about them. 🔥1. Unconscious incompetence 💡 randomly opens and completes transactions without a specific trading system; 💡 doesn't care about risk management; 💡 often changes the direction of trade on the spot, following the price; 💡 keeps afloat only for small successful deals and doesn't care about losses at all; 💡 but as soon as loses, motivation immediately runs out. 🔥 2. Conscious incompetence 💡 Do you change your trading system several times in half a year without ever exploring a single one? 💡 You are actively looking at your trading history trying to figure out what you are doing wrong. 💡 Are you still making impulsive mistakes that cost a lot of money? 💡 Do you repeat the same trading mistakes again and again? 🔥3. The moment of "EURECA" 💡 No longer changes the system, but focuses on main and works with it. 💡 Begins to maintain a trading plan and a trading journal. 💡 The understanding comes, that trade is a daily routine. 💡 Understands, that in order to earn money, he needs to work on all the components of his system. 🔥 4. Conscious competence 💡 Understood the rules of the game and stopped losing money. 💡 Begins to make a steady profit. 🔥5. Unconscious competence That's a stage of mastery👊🏻. You follow your trading plan on autopilot.✈ Just one question will help you to verify have you reached the highest level or not: ❗do you feel stress, when you're trading ? If so, then you have not reached this stage.❗ Thank you for staying with me💋 Always sincere with You🧡 Your Rocket Bomb🚀💣
BITSTAMP:BTCUSDEducation
by RocketBomb
29
Major Advanced Candlestick Patterns You Never HeardCandlestick Definition ----- What Is A Candlestick? A candlestick is a type of price chart used in technical analysis that displays the high, low, open, and closing prices of a security for a specific period. It originated from Japanese rice merchants and traders to track market prices and daily momentum hundreds of years before becoming popularized in the United States. The wide part of the candlestick is called the "real body" and tells investors whether the closing price was higher or lower than the opening price (black/red if the stock closed lower, white/green if the stock closed higher). KEY TAKEAWAYS Candlestick charts display the high, low, open, and closing prices of a security for a specific period. Candlesticks originated from Japanese rice merchants and traders to track market prices and daily momentum hundreds of years before becoming popularized in the United States. Candlesticks can be used by traders looking for chart patterns. The candlestick's shadows show the day's high and low and how they compare to the open and close. A candlestick's shape varies based on the relationship between the day's high, low, opening and closing prices. Candlesticks reflect the impact of investor sentiment on security prices and are used by technical analysts to determine when to enter and exit trades. Candlestick charting is based on a technique developed in Japan in the 1700s for tracking the price of rice. Candlesticks are a suitable technique for trading any liquid financial asset such as stocks, foreign exchange and futures. Long white/green candlesticks indicate there is strong buying pressure; this typically indicates price is bullish. However, they should be looked at in the context of the market structure as opposed to individually. For example, a long white candle is likely to have more significance if it forms at a major price support level. Long black/red candlesticks indicate there is significant selling pressure. This suggests the price is bearish. A common bullish candlestick reversal pattern, referred to as a hammer, forms when price moves substantially lower after the open, then rallies to close near the high. The equivalent bearish candlestick is known as a hanging man. These candlesticks have a similar appearance to a square lollipop, and are often used by traders attempting to pick a top or bottom in a market. Traders can use candlestick signals to analyze any and all periods of trading including daily or hourly cycles—even for minute-long cycles of the trading day. Two-Day Candlestick Trading Patterns There are many short-term trading strategies based upon candlestick patterns. The engulfing pattern suggests a potential trend reversal; the first candlestick has a small body that is completely engulfed by the second candlestick. It is referred to as a bullish engulfing pattern when it appears at the end of a downtrend, and a bearish engulfing pattern at the conclusion of an uptrend. The harami is a reversal pattern where the second candlestick is entirely contained within the first candlestick and is opposite in color. A related pattern, the harami cross has a second candlestick that is a doji; when the open and close are effectively equal. Three-Day Candlestick Trading Patterns An evening star is a bearish reversal pattern where the first candlestick continues the uptrend. The second candlestick gaps up and has a narrow body. The third candlestick closes below the midpoint of the first candlestick. A morning star is a bullish reversal pattern where the first candlestick is long and black/red-bodied, followed by short candlestick that has gapped lower; it is completed by a long-bodied white/green candlestick that closes above the midpoint of the first candlestick.
Editors' picks
BITSTAMP:BTCUSDEducation
by GoldenEngine
207
15 Types of Financial Market Participants ExplainedIn this post, I’ll be going over the 15 types of financial market participants as listed above. You want to keep your friend close, and your enemies closer. As an investor or a trader, jumping into the market without knowing what these entities are doing is like jumping into a battlefield with just a stick in your hand. So understanding the roles of each of these entities can help you significantly later as you mature as an investor, especially if you’re a beginner. Investment Banks - Investment banks buy, sell, and issue stocks and bonds, lead mergers and acquisitions, conducts market research, and provide asset management services. - They act as a bridge between people who want to invest their capital, and people who need investments. - Investment banks can be more specifically divided into two types: bulge brackets and boutiques. - Bulge brackets are general investment banks like Goldman Sachs, JP Morgan, Morgan Stanley, and Deutsche Bank. - Boutiques are more specialized investment banks such as Lazard, Evercore, and Guggenheim. Structure of an Investment Bank - A general investment bank can be divided into three offices: the front, middle, and back office. - The front office consists of four divisions: the investment banking division, sales and trading, asset management division, and research division. - The front office refers to the divisions that directly interact with clients, and are in full charge of generating profits for the company. - The image of investment bankers portrayed in movies generally all refer to the front office. These are the people who make six figure monthly salaries. - The middle office is in charge of supporting the front office. - They are responsible for risk management or capital management. - The back office is in charge of the operations of the investment bank as a company, so it includes IT, HR, and other administrative teams. Front Office Divisions Explained 1) Investment Banking Division (IBD) - The investment banking division is in charge of everything that happens in the primary market. - The primary market is where securities are created, and the secondary market is where those securities are traded. - Normally when retail investors invest, it all happens in the secondary market. - In the primary market, investment banks offer a variety of services including the issuance of stocks and bonds, leading an IPO, or leading an M&A. - Teams are normally divided by sectors, but they can also be divided into specific teams depending on the deal they’re doing. - Their day to day work involves company valuation, industry analysis, analyzing a company’s financials, preparing for presentations, and financial modelling. (When I say financial modelling, I mean that they use excel. They don’t really use extremely sophisticated statistical models in this division.) 2) Sales and Trading - When you think of Ivy League alumni who work in finance, it usually refers to people in the investment banking division, or in sales and trading. - But recently, this division has been dying, and is on a downtrend. - Trading can be divided into two types: prop trading or proprietary trading, and flow trading. - Prop trading refers to the type of trading that we know, where traders buy low, and sell high. - Flow trading refers to order flows, where if a client makes an order the trading desk fills that order on the client’s behalf. - In that process, they leave a small profit margin and take a certain amount of fees. - In the past, both types of trading were extremely active. - But with the global financial crisis in 2008, prop trading within investment banks got banned, according to the Volcker rule. - As a result, most major banks spun off their prop trading desks, and the people who used to be prop traders in investment banks left to create their own hedge fund. - What’s left now is flow trading, but since flow trading refers to simply filling orders on the customer’s behalf, this process has recently been automated to a huge extent, especially with the emergence of high frequency trading - Along with this, their profit margins and commission started to decline, and the sales and trading industry as a whole is shrinking over time. - As such, the teams left in this division are teams such as high frequency trading teams, quant teams, and OTC market traders. (OTC refers to over-the-counter, which is where customized products are bought and sold, as opposed to standardized products that we see in secondary markets.) 3) Research - The research division is in charge of market research. - They make analyst reports that we’re familiar with. - But this is another division that’s dying. - Research conducted by these institutions were actually provided to their clients as a token of gratitude for using their services, and paying commission. - But, with brokers like WeBull and Robinhood offering zero commission, their business model deteriorated. - Especially in Europe, laws have been set to distinguish payments for commissions and payments for research material, and people don’t really want to pay money for services like these. - Lastly, with the development of data science, the way research is conducted has completely changed. - It has become more technical, using machine learning techniques of pattern recognition, and it’s becoming more common on the buy side. Mutual Funds, Hedge Funds, Proprietary Trading Firms - In the case of mutual funds, the capital of the fund comes from people, or the general public. - The capital for hedge funds come from accredited investors who qualify the capital requirement. - Normally, these investors need to invest a minimum of $500,000 to $1 million. - In the case of prop trading firms, they trade with their own money. Hence the term ‘proprietary’. - In terms of their investments, mutual funds are mostly limited to investments in stocks and bonds. - Hedge funds and prop trading firms don’t have any limitations or regulations in terms of the asset they want to invest in. - Even in terms of the trading/investment strategies that are used, mutual funds strategies are quite limited and regulated heavily, as opposed to hedge funds or prop trading firms that have no restrictions in their strategies. - The logic behind restricting strategies that mutual funds use is that mutual funds manage capital of the general public, and thus have to be more careful with how they manage their funds. - The regulations that the government poses on mutual funds are essentially ways to protect the general public from potential losses that might incur. - As such, even when it comes to revealing information, mutual funds need to be transparent about everything. - In the case of hedge funds, the government acknowledges that accredited investors with $3-4 million to invest are probably aware of the potential risks, and thus is relatively less limited in having to reveal their information. - Lastly, in the case of prop trading firms, because they’re trading with their own money, they have no obligation to reveal any of their information. - This is why prop trading firms use exclusive trading techniques and strategies that cannot be exposed to the general public. - Mutual funds take a 1-2% management fee, and don’t take any other incentive fees. - Thus, they focus on gathering as many people as possible in order to capitalize on a huge management fee. - They are also legally allowed to advertise and do sales. - Hedge funds take 1-2% as management fees, and 15-20% in incentives. This is also known as the Two and Twenty. - Hedge funds are also limited from advertising. - Lastly, prop trading companies take all of the profits they generate, and thus do not need any advertising at all. - Examples of mutual funds include Vanguard, Fidelity, and State Street. - Famous hedge fund examples include Bridgewater Associates, Renaissance Technologies, and Elliott. - Lastly, prop trading companies are companies like D. E. Shaw, Hudson River Trading, and DRW. Private Equity - Private equities are very similar to hedge funds in terms of their nature, the way they receive management fees and incentives. - But as opposed to hedge funds that normally invest and trade in the secondary market, private equities directly invest in a company. Hence the name ‘private’ equity. - A prime example is a leveraged buyout fund. This is when private equities acquire a huge stake within a company, increase its profitability, and sell their stake for a higher price. - In movies, these people are portrayed as bloodless and merciless people who lay off tens of thousands of workers to cut costs of a company. - Similarly, there are venture Capital funds that invest in early startups, and Growth Equity Funds that invest in startups at later stages. Exchange Traded Funds (ETFs), Index Funds - Before I explain index funds, it’s important that you understand exchange traded funds, or ETFs. - An ETF is essentially a basket of securities that trades on an exchange like a stock. - In mutual funds, when they have a fund that tracks an underlying index, it’s called an index fund. - Similarly, an ETF that tracks an underlying index is an Index ETF. - An Index ETF is essentially the same thing, but a security listed on an exchange, into smaller bits, so that individuals can buy and sell the ETF like a stock. - For instance, for an individual to invest in all 500 companies on the S&P 500 index is extremely difficult. - What institutions do is, they buy the shares of all 500 companies on the client’s behalf, creating a basket with all companies. - From there, they sell the ownership of the basket to clients, which is the ETF. - Because these companies actually own the underlying asset, they are not exposed to the risk of bankruptcy. - This is a passive fund, in which a fund manager does not really intervene actively. - Thus, the fund manager of an Index ETF just needs to mechanically buy and sell shares according to the index, so that the ETF can perform in correlation to the index. - Ever since the global financial crisis in 2008, quantitative easing has pushed market indices to move upwards over time, making passive Index ETFs a very attractive option for investment. Sovereign Wealth Funds, Pension Funds, Endowment Funds - A sovereign wealth fund is a state-owned investment fund that invests in financial assets, and is run by the state. - A pension fund is a fund that is set up by contributions from employers, unions, or other organizations to provide retirement benefits to its employees or members. - Pension funds are one of the largest players in the market by size. - They invest in stocks and bonds, but also increasingly stated exposing themselves to other asset classes. - There are also endowment funds, which is a fund that invests with the money that was gifted to them. - These funds are often run by universities, nonprofit organizations, and sometimes even churches. - The funds operated by Harvard and Yale are known as Super Endowment Funds due to their fund size and impressive returns. - A general portfolio that consists of 60% stocks and 40% bonds would give an annual return of 5.4%. - Super Endowment Funds have managed to reach an annual return rate of 11.5% over the past 20 years. - These funds have great network value, easy access to premium information, and expertise in alternative asset class investments. - This means that they don’t invest in just stocks and bonds, but also real estate, private equities, emerging equities, global bonds, and natural resources. Brokers, Dealers, Exchanges - Brokers play the role of middlemen who connect buyers and sellers within a market, and profit from commissions. - Exchanges play the same role within the cryptocurrency market. - Dealers play the role of market makers for customized financial products that are traded in the OTC markets. - Essentially, they take the opposite position of the person trying to trade. - Dealers mostly do business with institutional investors, because individual investors normally don’t trade customized financial products. - As a rule of thumb, when someone says dealers, think of investment bankers who trade interest rate swaps, bonds, or CBS over the counter. Insurance Companies - Moving onto insurance companies; they receive premiums from their clients, and while their role is to pay their clients back in case of an accident, during day to day operations, they also participate in the financial markets with the capital they have. - However, compared to the size of their fund, they play a relatively less significant role in the market. Federal Reserve Board - The Federal Reserve Board, or Fed, consists of 12 regional federal banks. - They control the national monetary policy, supervise and regulate banks, and maintain financial stability. - There’s a colloquial term that ‘the Fed prints money’, but this is not to be taken literally. - One of the ways in which they control money supply is by buying or selling bonds in the open market, also called the open market operations. - One of the reasons that all asset markets have been so bullish ever since the market drop in March is because the Fed has increased money supply at an unprecedented rate, thereby inflating asset prices. Limited Liability Companies - Limited liability companies are also players within the financial markets. - They initiate share buybacks, give out dividends to shareholders, and insider transactions take place as well, which is actually highly illegal. - Insider transaction refers to an insider of the company trading the company’s shares based on information asymmetry. - For instance, if an executive at Pfizer bought the company’s shares before the vaccine announcement, knowing that the vaccine was ready, that would be considered insider trading, and he’d do jail time for it. Securities and Exchange Commission (SEC) - The Securities and Exchange Commission is in charge of imposing federal securities laws and regulating the stock and options exchange. - In the example suggested previously of an executive from Pfizer, the SEC would be the entity to investigate the case. Retail Investors, Accredited Investors - Retail investors refer to the general public that take part in the financial market. - These are the people who work 9-5 jobs, and invest in stocks over the long run, or sometimes they’re full time traders and investors. - Accredited investors are similar to retail investors in that they are an individual, but they’re different from other retail investors in the sense that they’re acknowledged by the SEC. - Essentially, the government understands that an accredited investor has more knowledge and capital, and is capable of bearing more risk compared to the average retail investor. - Thus, they get more opportunities to participate in the financial market that normal retail investors don’t. - For instance, they can buy private companies that aren’t listed on the secondary markets, and they can invest their capital in hedge funds. - To become an accredited investor in the US, your net worth must exceed $1 million, not including primary residence, or your annual income must exceed $200,000 for the past 2 years, or $300,000 in annual income with your spouse for the past 2 years. If you like this educational post, please make sure to like, and follow for more quality content! If you have any questions or comments, feel free to comment below! :)
Editors' picks
TVC:SPXEducation
by Michael_Wang_Official
41
PRICE ACTION WINNING TRADE – BULLISH RE-ENTRY STRATEGY Hi traders, This is a 45-minute chart of the BTCUSD. A bullish Pin Bar seen we took the trade. after a bullish move price fell and hit stop-loss orders placed around the low of the Pin Bar (a common pattern stop level). The market recovered quickly and offered a re-entry chance with a second bullish Pin Bar. We bought as price broke above its high. After our entry, the market rose with a strong thrust. I strongly recommend that you adopt this re-entry trading approach. It offers a trading technique that lowers trade frequency and increases probability of success. Thank you.
BITSTAMP:BTCUSDEducation
by Priceaction776
2
CANDLSTICK or BARS. What common?There are public rules for graphing price movements on the charts of various market assets. There are two main types of designation: Candles They were invented by the Japanese rice merchant Homma Munehisa, which is why they got the name - Japanese candles. The candlestick gives information about deals within the selected period: - Opening - the initial price of the period, the price of the first deal. - High - the maximum price of the period - Low - reasonable price of the period - Close - the closing price of the period, the price of the last deal. - The bod y of the candle is the distance between the open and close. - Candle shadow - deviations from the opening and closing prices, maximum and minimum values ​​of prices. Depending on which direction the price went: rose or fell - the candlestick can be bearish or bullish. Bars This type of image is not much different from candles. They consist of exactly the same parts and display all the same information. The bar is rather a more compact candlestick image. Instead of a full-fledged "body", only a vertical stroke is displayed. What kind of depiction of price movements do you prefer? Traders, if you liked this idea or if you have your own opinion about it, write in the comments. I will be glad 👩‍💻
Education
by Lingrid
22
Fibonacci Levels - Rocket Bomb's EDU post 🔥Hi guys, as I promised, this post is about Fibonacci Levels for YOU!🧡 Leonardo Fibonacci is a great mathematician who lived in the XI century. The scientist deduced a number of natural numbers, which later began to bear his name. Each number in the series was the sum of the two previous numbers: 1 + 1 = 2; 1 + 2 = 3; 2 + 3 = 5 etc. The result is a series of numbers: 1, 2, 3, 5, 8, 13, 21, 34, 55, 89, 144, etc. Fibonacci numbers have some properties: 📌Division of any number of the series into the subsequent tends to 0.618 (the golden ratio in ancient Greek and ancient Egyptian cultures); 📌dividing any number of the series by the next + 1 tends to 0.382; 📌dividing the subsequent number of the series by the previous one tends to 1.618; 📌division of the number of the series by the second number preceding it tends to 2.618. Fibonacci numbers are often used not only in technical analysis , but also in physics, astronomy and other disciplines.💪🏻 Fibonacci levels are a tool that sets horizontal support and resistance levels on the price chart based on price movement. It's important to understand, that Fibo levels work well when there is a trend in the market. How to determine Fibonacci levels? To determine Fibonacci levels, you need to find the recent significant high and low of the last price movement. When plotting levels for a downtrend, the first point should be at the maximum and the second at the minimum. For an uptrend, you need to do the opposite. Click on the low of the price swing and drag the cursor to the high. In this case, the construction of levels always occurs from left to right. How to trade by Fibonacci levels? The basic variant with an upward movement: we determined the minimum and maximum, set the levels, waited for a rollback, entered the market. The price continues to move - we drag the levels to a new maximum, wait for our rollback level, and enter the market. In a downward movement, we do the same, entering a movement on a pullback. The technical analysis usually uses the number 0.618 or 61.8%, 0.382 or 38.2%, as well as the psychological half (middle) of 50%. ✔ Very often, based on these coefficients in the technical analysis of the market, Fibonacci lines, Fibonacci levels and Fibonacci periods are built. Fibonacci lines are built relative to significant highs / lows and represent support or resistance lines, from which they make a purchase or sale. Fibonacci numbers - the magic of numbers that works in trading and in everyday life . 💥You can simply draw arbitrary horizontal lines on the chart, and ... oh that's mystic... they will also be worked out both in the past and in the future.💥 We can make some conclusions: 🔵Fibonacci tool draws support and resistance lines on the chart based on price movement; 🔵the Fibonacci tool is always applied on the price chart from left to right, both in the case of long positions in an uptrend, and in the case of short positions in a downtrend; 🔵the levels marked between the beginning and the end of the price movement are correction levels, they show which levels the price is likely to return to; 🔵the most common Fibonacci retracement levels are 38.2%, 50% and 61.8%, they are often used to enter the market; 🔵there are two ways to use correction levels to enter the market: aggressive (entry at each of the levels) and passive (waiting for the price to correct in the originally observed direction); 🔵It's important to note that Fibonacci levels are not a trading system, they are an additional tool that only suggests possible correction levels; it should be used only in combination with a trading system or as part of a trading system. I hope everything was clear for You, and You found this post as helpful🙏🏻 I really wanna be useful to you, guys! I make every post with love and it brings me extraordinary pleasure!🙏🏻 Thank you for staying with me💋 Always sincere with You🧡 Your Rocket Bomb🚀💣
BITSTAMP:BTCUSDEducation
by RocketBomb
30
Everything You Need to Know About SPACsIn this analysis, I'll be covering everything you need to know about Special Purpose Acquisition Companies, or SPACs, and my own strategy that I use to choose for risk minimization, and profit maximization. SPAK, the chart above, is an ETF that was specifically designed to invest in SPAC companies. This is not investment advice. This is for educational and entertainment purposes only. I am not responsible for the profits or loss generated from your investments. Trade and invest at your own risk. 1. What is a SPAC? - SPAC stands for Special Purpose Acquisition Company. - They’re also called Blank Check Companies or Shell Companies. But what is this special purpose that they’re talking about? - Their purpose is to acquire an existing company, so that it’s available for trades and investments in the stock market. - They need to acquire a company within a given time frame between 18 to 24 months, sometimes 36 months depending on the conditions. 2. SPAC vs. IPO - Normally, companies go public through a process called an Initial Public Offering, or an IPO. - There’s another method called Direct Listing, which is the method that Spotify and Slack used to go public, but for the sake of simplicity, we’ll just look at a comparison of IPOs and SPACs. - In terms of time period, SPACs can help companies go public much faster than if they were to go public through an IPO. - The process is also much simpler, and has less requirements, and it also costs less to go public through a SPAC. - But, the company’s valuation is discounted, when they get listed through a SPAC. - So for instance, if a company that has an enterprise value of 100 billion were to do an IPO, they’d be valued as a 100 billion dollar company, whereas if they get listed through a SPAC, they’d be discounted as an 80 billion dollar company. 3. Who Makes SPACs? - Normally, people with a reputation in the market make these SPACs. - For instance, Bill Ackman, who’s the CEO of Pershing Square Capital, is extremely well known as one of the best investors, and a lot of people want to bet their money on him. - So people like Bill Ackman are the ones who gather investors up, and create a SPAC. 4. Constituents - When a SPAC is created, and goes through an IPO, the shares are owned by three entities: the founder, individuals, and PIPE, which stands for Private Investment in Public Equity. - Private stake refers to the shares that the founders, or the creators of the SPAC get. - Public stke refers to the shares that individuals buy when the SPAC gets listed. - PIPE refers to the investors who lend money to the SPAC so that they can acquire a company. - So for instance, Let’s say that SPAC is trying to acquire a $10 Billion dollar company, but they only have $5 billion in their trust. - A PIPE can hop in, and lend the remaining $5 billion to the SPAC, and in return, they get shares of the acquiring company for a cheap price. 5. One SPAC Unit - One SPAC unit consists of 1 share and the warrant that comes with the share. - The Warrant is essentially the right to purchase the SPAC share at a designated price later in the future. - It essentially acts as an incentive for the SPAC investors who take on risk. - But you can use the warrant only within a designated time period, which is usually divided into two conditions: 1) either 30 days after the new company’s IPO 2) Or 365 days after the SPAC IPO 6. SPAC Trust Account The money for the SPAC is deposited in a trust, and the funds cannot be used for any other purposes than acquiring a company or refunding the investment seeds back to the investors, in case an acquisition does not happen. 7. Negotiation and Acquisition - When the SPAC gets listed, it’s time for people to search for companies to acquire, and negotiate. - Once everything is prepared, they now move onto searching innovative firms, normally between a timeframe of 18 to 24 months, sometimes a little longer depending on the conditions. - The business that they acquire needs to be at least 80% of the value of the trust account. - So for instance, if the trust account has $10 billion, the company that the SPAC acquires needs to be at least around $ 8 billion in fair market value. - Once the negotiation is done, and the acquisition is announced, they go through a process of getting permission from the SPAC shareholders. - If the SPAC shareholders agree to the acquisition, they get shares of the new company equivalent to the shares of the SPAC they hold, at a 1:1 ratio. - If they were to disagree, they can simply cash out their stake. 8. Example Here's an example to help your understanding: - A SPAC sponsored by BIll Ackman’s Pershing Square Capital made its debut to the New York Stock Exchange, with the largest blank-check IPO (PSTH). - The offering includes 200 million units at $20 each, railing $4 billion in proceeds. Each unit consists of one common share and one-ninth of a warrant, exercisable at $23. - So the ticker of this SPAC is PSTH, and the company they’re acquiring hasn’t been announced yet, so let’s just say that they’re buying a company called Mike’s Burgers, which’ll be listed under the ticker MIKE. 1. As an investor, you buy 9 shares of PSTH at $20 as soon as it gets listed. 2. You now have 9 shares, and a warrant that you can use, since 1 unit of the stock includes 1 ninth of a warrant. 3. So you have 9 shares, and a right to purchase 1 more share at $23. 4. Let’s say Mike’s Burgers got listed on the New York Stock Exchange, and the stock goes wild because the burgers taste great. 5. After the IPO, the stock trades at $50 a share. 6. You, as an investor, think that the stock prices could go higher for whatever reason. 7. So, you decide to wait 3 more weeks, so you can use your warrant. 8. 3 weeks later, the stock soars a bit more, and trades at $60 a share. 9. You now have 9 shares that you bought at $20, and you use the right to purchase 1 more share at $23. 10. You then sell all 10 shares at market value. So, when you sell all your shares for $600, and you’re left with an initial investment of $203, and $397 in profits. 11. So in a trade like this, you could double your investment easily. 9. Risks - First of all, there are risks involved with PIPEs selling their stake. - It’s not like these entities have a lockup period, they can sell their shares as long as they have permission granted from the SEC, so there’s risk involved in that. - For instance, Nikola’s stock prices (NKLA) plummeted after its PIPE sold all their stake. - Secondly, you’re investing in a paper company and you don’t know which company they’ll acquire. - Normally, SPACs are run by veteran investors who know what they’re doing, but there’s absolutely no guarantee that the company it acquires will be a good one. - For instance, there were rumors about how Bill Ackman’s SPAC would be acquiring Airbnb (ABNB) , but as you guys know, it turned out to be false. - So as an investor, who’s not an insider, it’s hard to invest in a paper company without knowing what’ll happen to the SPAC company. 10. How to Choose the Right SPACs - So, we obviously want to minimize risk, and maximize our returns, and to do that, it’s important to choose the right SPACs to get into. - I’ll be providing my own strategy on finding the right SPACs. I’ll call this the 2N strategy. - The key of this strategy is the combination of narrative and numbers . - This is how I select stocks to invest as well, but the approach to SPACs are slightly different. - What do I mean by narrative? I mean that the SPAC or the company that they’re acquiring, needs to have a good story. - They need to have a good leader for the SPAC, they need to acquire a company in a prominent field, and a management team with expertise in the field. - So here are some things I’d look for: - First of all, I would want to see a figure who’s already acknowledged and successful. - Of course it’d be better if they have a successful SPAC deal experience. (Bill Ackman is a good example of someone I’d have my money on.) - I’d also look at the backgrounds of members of the management team. - Look into what their expertise is, their work experience, professional backgrounds, and any noteworthy achievements. - This type of information is normally all available on the SPAC’s website, but you can also look them up on linkedin. - Also look into the institutions that are involved. - If big names like BlackRock and CVC are taking part, and they hold SPAC shares, that’s good news. - You want to make sure that acknowledged institutions are behind the project. - Last but not least, it’s important to look at the industry that the SPAC has eyes on. - You want to take part in a prominent industry, and obviously the trend is tech. - Electric vehicle SPACs have also shown some crazy gains recently, but make sure you invest in a SPAC that operates in a field that you’re familiar with, and has high growth potential. - Now, let’s take a look at what I mean by numbers. - Before we can talk about numbers, we first need to understand how we can capitalize on SPAC opportunities . - The best thing about SPACs is that you can minimize your losses, or even trade risk free if you’re lucky enough. - The offering price of a SPAC stock varies, depending on the company, but normally it’s around $10. - And the best thing about investing SPACs is that there is a price floor. - It’s not that prices are legally prevented from trading below the initial IPO price, but there’s no reason for it to be traded anything below than its offering price, because in the unlikely case that an acquisition does not take place, everyone gets a refund anyways. - So basically, given that you enter at the offered price, there’s nothing to lose, and everything to gain. This is what makes SPACs special. You might ask, how much is there to gain? - The answer is at least as much as its net asset value. - In case you don’t know, the net asset value is calculated by subtracting all liabilities from the assets a company has, and dividing it up by the total number of common shares. - If you actually do your due diligence, and calculate the net asset value of the SPAC you’re investing in, you’ll realize that the net asset value normally ranges around $10.10 to $10.25 right off the bat. - This means that you have a 1-2.5% default return before even taking into account the warrant value, which is substantial, and the upside opportunity. - So, going back to what I mean by numbers, you want to either find a SPAC that is traded at around its offered price or below its offered price. - A SPAC that is already trading at 3 times its offered price probably won’t get you the best returns. - You want to find a SPAC that’s cheap. - Also, make sure you check the trust value, the SPAC’s market cap, and their net asset value. - You want to make sure you get into companies with a high trust value, and a net asset value that is not too far from its market price. Conclusion As long as investors conduct their own research, there is huge opportunity they can capitalize on, with very little to no downside. Thus, I highly encourage that people start exploring the world of SPACs, and maybe even consider adding prominent companies to their portfolios early on. If you like this analysis, please make sure to like the post, and follow for more quality content! I would also appreciate it if you could leave a comment below with some original insight :)
Editors' picks
SEducation
by Michael_Wang_Official
42
📚 Learn More 💰 Earn More with us: FLAG = Impulse + Correction📚 LEARN MORE 💰 EARN MORE With ForecastCity FLAG pattern Definition: A FLAG pattern is a continuation chart pattern, named due to its similarity to a flag on a flagpole. A flag is a relatively rapid chart formation that appears as a small channel after a steep trend, which develops in the opposite direction. After an uptrend, it has a downward slope. After a downtrend, it has an upward slope. IMPULSE Definition: A “flag” is composed of an explosive strong price move forming a nearly vertical line. This is known as the "IMPULSE" or ”flagpole”. The sharper the spike on the flagpole, the more powerful the bull flag can be. Corrective Wave Definition: After an uptrend, it has a downward slope. After a downtrend, it has an upward slope. This downward or upward slop known as "Corrective Wave". Flag patterns can be bullish or bearish: A bullish flag is known as a Bull Flag. A bearish flag is known as a Bear Flag. How to Trade FLAG Patterns: When the trend line resistance on the flag breaks, it triggers the next leg of the trend move, and the price proceeds ahead. Breakouts happen in both directions but almost all flags are continuation patterns. This means that Flags in an uptrend are expected to break out upward and Flags in a downtrend, are expected to break out downward. ❤️ If you find this helpful and want more FREE forecasts in TradingView . . . . . Please show your support back, . . . . . . . . Hit the 👍 LIKE button, . . . . . . . . . . Drop some feedback below in the comment! ❤️ Your Support is very much 🙏 appreciated! ❤️ 💎 Want us to help you become a better Forex trader ? Now, It's your turn ! Be sure to leave a comment let us know how you see this opportunity and forecast. Trade well, ❤️ ForecastCity English Support Team ❤️
Editors' picks
Education
by ForecastCity
20
🎓 EDUCATION 1: What Does It Take to Become a Successful Trader?EDU 1: What Does It Take to Become a Profitable Trader? Hello traders. With this post, I am starting an educational series on TradingView unlike any other. We’ll go through all the aspects and nuances of becoming a professional, consistently profitable, and successful trader. Now, those are big words. You have likely heard them from various other sources that claimed to teach you the holy grail of trading or that offered some sorts of “secret indicators” that would pave the way to financial freedom. The truth is, nothing is secretive about successful trading. Thousands of professional traders are consistently profitable, and large institutional traders manage to beat the markets, year over year. The key is learning how to trade the correct way. That’s my trading approach as well: Institutional trading for the retail trader. I have been fascinated by the markets since the early 2000s. I am not only a self-taught trader, but also have an academic background that has helped me tremendously in understanding market forces and applying them in my daily trading. I enrolled at the Faculty of Economics in 2008, finished my undergraduate degree in technical analysis and my Master’s degree in fundamental analysis in the FX market. Since then, I have been following markets daily, created various trading strategies, backtested them, and chose the ones that work best for me. Alright, now it’s time to finally start the educational part. What does it take to become a successful trader? A successful trader is an analyst , trader , and (risk and psychology) manager – all at once. The analyst side of a trader generates trading ideas, the trader side executes the trades, and the manager side manages both the risk and psychological aspects of trading. We’ll go through each of them in this educational series. Trading is not about following technicals all day long. Professional traders and large players in this market don’t buy EUR/USD (or any other pair) when a Moving Average crosses above or below another Moving Average, or when the RSI shows overbought or oversold levels. Forget about trendlines and wedge patterns for a moment (how many times did you catch a fake breakout trading them?) and open your mind to a trading approach that combines: Fundamentals Intermarket analysis Sentiment analysis ...and (the correct) technical tools Those disciplines form the cornerstone of what I like to call the FIST analysis. We’ll use technicals only to enter into a trade after we already have a direction derived from the other types of analyses. So, this educational series will start with your analyst side (FIST), continue with your trader side (process/strategy/execution), and finish with your manager side (managing risks, managing yourself, position-sizing, scaling in and out of positions, etc.). By the end of the series, you’ll hopefully get a completely different picture of trading than you had before. If you find this trading educational series useful, please follow and hit the “LIKE” button. Have questions? Post them in the comment section below. Coming Up: Why Technicals Alone Are Not Enough?
Education
by MujkanovicFX
BUDGET TO FINANCIAL FREE DOOM / 7 Steps To Paying Of Your Debt All You Need To Know About Managing Money Wisely October 3, 2016 by National Debt Relief managing moneyManaging money wisely is not as complicated as you think – but it can be quite tedious. Maintaining a healthy level of finances is the same as keeping yourself physically fit. Just because you achieved your ideal weight, you will cease making an effort to live a healthy lifestyle. It is a continuous endeavor that will never stop. Of course, once you have reached your goal, maintaining it will not be as difficult as the effort you had to exert previously. But the bottom line is, you still need to exert effort. Some people have used financial management as a way out of debt. Most people have used it to improve their financial situation. The reason for managing money wisely is not really important as long as you are doing it. Regardless of your situation in life, it will help you take your money to the next level. According to an article from MarketWatch.com, consumers are starting to feel more confident about their money. Data reveal that they are beginning to increase their spending in non-essential expenses like entertainment and travel. While there is nothing wrong with feeling confident about your money, it should be approached with caution. The increase in spending should be done with money management in mind. Although consumers may be more financially abundant, they should increase their spending in accordance with their knowledge of their financial position. Without financial management, this would be hard to determine. The danger lies in spending too much and getting used to it. When your income is suddenly compromised, you might find yourself unable to cope with the changes that you need to implement to keep your finances from sinking. Three concepts you should know to manage your money well The key to keeping your finances in top shape is to manage it smartly. According to an article published on USAToday.com, making more money is the key to having a high credit score. A credit score is one of the indications of a strong financial position. Earning more is not the way to improve it. The best way is to start managing money wisely. Some people feel overwhelmed by this task. However, it is actually not complicated. It can be tedious to maintain a good financial position but it is not a complex concept to understand. In fact, there are only a couple of financial thoughts that you need to master in order to manage your finances well. Here are three of the most important. Interest. Admittedly, this is one of the most confusing for most consumers. For a beginner, it seems complicated but once you get a general idea, it can help you make smart decisions about your money. The interest is important on two financial fronts. One is your debt. You need to understand how this affects the amount of debt that you owe. If you have a high-interest debt like a credit card, you might end up paying a lot more than what you actually used the credit for – just because of the interest. The interest is also something that you can use to your advantage – specifically when investing is involved. Investing is the best way to make your money work for you. When you place your money in profitable investments, it earns compound interest. That means the amount you invested earns interest and even the accumulated interest will help you earn more. If you choose the right investments, that can really help you grow your finances – even without doing anything! Budgeting. The next concept that you need to master is budgeting. This is probably the most direct tool that will help in managing money wisely. In fact, if you want to achieve financial independence, this is one of the first habits that you should learn. A budget plan monitors your income and the various expenses that it funds. It allows you to control and manage where your income will be spent. If you need to add an expense, you can easily see the current categories that you are spending on. A budget plan will allow you to identify what expenses to sacrifice in order to make way for a new one. Current numbers. Finally, you need to master your own financial position. No matter how sophisticated your budget plan is and even if you perfectly understand the concept of interest rates, it will be for nothing if you do not know your finances. You need to keep your financial knowledge current so you can update your budget plan. Not only that, you can use this knowledge to help you decide if you can afford to get new credit or not. It will also allow you to make the right decisions about your investments. The current numbers involve not just your own financial number but also that of the market. You do not have to be a financial expert but you should at least know when the interest goes up or down. That way, you can take advantage of it. For instance, late last year, it was reported that the Federal Reserve will raise interest rates. That means the rest of the financial institutions will follow. If you have this knowledge, you should start to be aggressive in paying off your high-interest debts. These three are the important concepts that you need to consider while managing money wisely. There may be other important financial ideas to learn but that would depend on your own financial goals. Why is it important to manage your finances It is important to manage your money well because you use it on practically everything. While we do not want to be materialistic, your finances play an important role in this consumerist society. This is the main reason why you need to manage it well. Here are the specific reasons why you need to boost your financial management efforts. It helps you make smart decisions. Financial management involves a lot of decision-making. The more informed decisions you make, the better the outcome. Having a direct hand in managing your finances makes it easier for you to make informed and smart decisions precisely because you know your financial situation. When you know how much you have in your budget after sending out your monthly payments, you will know how much you can allot for your financial goals. It gives you an idea about the amount that you need to set aside for your retirement fund, reserves and even for your annual vacation. It allows you to avoid borrowing too much debt. According to the data from ValuePenguin.com, the average American Household Debt is currently as $16,048 – if you only include the households that are in debt. If you include all the households in the country, the average debt is $5,700. The current outstanding debt is $3.4 trillion with $929 billion specifically borrowed through revolving credit – the most common being credit card debt. 38.1% of households have some form of credit card debt and this high-interest debt is what can pull you down. If you fail in managing money wisely, all of these debts might go unnoticed. Not only that, poor financial management usually ends up compromising your savings. When you do not have savings, one emergency can push your finances over the edge and into a lot of debt. It lowers the risk of living from paycheck to paycheck. If you learn how to manage your money well, you can also avoid living from one paycheck to the other. You can budget your money well so you are not living up to your income limit. It is wise to live below your means because that leaves you with extra money to use on your financial goals or even emergencies. It keeps financial stress from ruining your life. When you are managing money wisely, that means you are in full control of your money. Being in full control will help eliminate or at least lower financial stress. Sometimes, we are stressed about something because we are uncertain about how it will end up. Having a full knowledge of your finances and being in full control will help you lower this uncertainty. It builds financial confidence. Apart from lowering stress, you will also feel more confident about your finances. This is a great trait to have when you are investing your money. It allows you to be braver in taking high-risk investments that will get you bigger returns. All of these make managing money wisely very important. You can significantly increase the opportunities for financial growth because you have a firm understanding of your finances. Common questions about managing money Question: What does managing money mean? Answer: This means you understand your financial position and you are organized in all your financial transactions. This keeps you from falling short on your budget and assures that important expenses are met. You are aware of every transaction and you are making smart financial decisions about it. Question: How should I manage money while self-employed? Answer: Managing your finances while self-employed is tougher because of your irregular income. The danger is budgeting for the lean months – which is usually the period when you do not have a high income coming in. To keep your household running, it might be best to base your budget on the income you get from the lean months. It is also best to give your emergency fund a boost to sustain your expenses when the income is quite low. Question: Why is managing money an important skill? Answer: This will help you avoid a lot of financial problems like wrong investment or credit decisions. It helps you reach your financial goals. More importantly, it helps you avoid incurring too much debt. Question: How can I start managing money wisely? Answer: You need to start by getting the tools that will help you keep track of your finances. A budget plan is a great way to start. Soon, you can add a spending plan, retirement plan, and a portfolio. These should cover the important aspects of your finances that you need to monitor. Question: Where can I learn to manage money? Answer: There are actually a lot of articles and self-help books that can give you the basic knowledge of managing money wisely. The challenge is in identifying which of them suits your purposes. It is best to know your financial goals first so you can choose the right advice that will help you reach your goals.
BITSTAMP:BTCUSDEducation
by GoldenEngine
8
Wedges Pattern by Rocket Bomb 🚀💣Hello, my dear friends! As I promised, today we are talking about Wedges Patterns! Link on a good view👇🏻 Wedges are some of the main classical figures in technical analysis . There are two types of wedges: - Rising Wedge pattern - both sides of the figure are directed up; - Falling Wedge pattern - both sides of the figure are directed down. ✔A rising wedge pattern is formed when price increases slow and a tapering pattern forms. Price can't go longer rise further, but at the same time, as if they continue to gradually update local highs. That's suggests, that the pressure of sellers (bears) is gradually increasing in the market. ✔A downward wedge pattern is formed when price decline slows down and a tapering pattern is formed, and volume indicators gradually decrease. Prices are no longer able to decline further, but at the same time, as if they continue to gradually update local lows. That's suggests, that the pressure of buyers (bulls) is gradually increasing in the market. 💡My picture shows, that the “Wedge” directed 👇🏻 down is a bullish 🐃 model, since the trend is up and the price has broken the resistance line (went up). And the “Wedge” directed up ☝🏻is a bearish 🐻 model, as the trend is directed down and the price has broken through the support line (went down). These signals are strong and YOU can trade on them. 💣But if the price in both cases would go in the opposite direction (the opposite direction to the trend), then this would be a weak signal. Trading in this case is not recommended, as it's too risky. 🙅🏻‍♀️ Guys, thanks for reading me!🙏🏻 Subscribe and stay with me forever🧡 I'm appreciate Your support🥰 Your Rocket Bomb🚀💣 PS : 👇🏻👇🏻👇🏻Below I put links on my previous ideas 👇🏻👇🏻👇🏻
BITSTAMP:BTCUSDEducation
by RocketBomb
8
Harmonic Patterns With Advanced Explanations Check It OutHarmonic price patterns are those that take geometric price patterns to the next level by utilizing Fibonacci numbers to define precise turning points. Unlike other more common trading methods, harmonic trading attempts to predict future movements. Let's look at some examples of how harmonic price patterns are used to trade currencies in the forex market. ----------- KEY TAKEAWAYS Harmonic trading refers to the idea that trends are harmonic phenomena, meaning they can subdivided into smaller or larger waves that may predict price direction. Harmonic trading relies on Fibonacci numbers, which are used to create technical indicators. The Fibonacci sequence of numbers, starting with zero and one, is created by adding the previous two numbers: 0, 1, 1, 2, 3, 5, 8, 13, 21, 34, 55, 89, 144, etc. This sequence can then be broken down into ratios which some believe provide clues as to where a given financial market will move to. The Gartley, bat, and crab are among the most popular harmonic patterns available to technical traders. ---------- Geometry and Fibonacci Numbers Harmonic trading combines patterns and math into a trading method that is precise and based on the premise that patterns repeat themselves. At the root of the methodology is the primary ratio, or some derivative of it (0.618 or 1.618). Complementing ratios include: 0.382, 0.50, 1.41, 2.0, 2.24, 2.618, 3.14 and 3.618. The primary ratio is found in almost all natural and environmental structures and events; it is also found in man-made structures. Since the pattern repeats throughout nature and within society, the ratio is also seen in the financial markets By finding patterns of varying lengths and magnitudes, the trader can then apply Fibonacci ratios to the patterns and try to predict future movements. The trading method is largely attributed to Scott Carney although others have contributed or found patterns and levels that enhance performance. Issues with Harmonics Harmonic price patterns are precise, requiring the pattern to show movements of a particular magnitude in order for the unfolding of the pattern to provide an accurate reversal point. A trader may often see a pattern that looks like a harmonic pattern, but the Fibonacci levels will not align in the pattern, thus rendering the pattern unreliable in terms of the harmonic approach. This can be an advantage, as it requires the trader to be patient and wait for ideal set-ups. Harmonic patterns can gauge how long current moves will last, but they can also be used to isolate reversal points. The danger occurs when a trader takes a position in the reversal area and the pattern fails. When this happens, the trader can be caught in a trade where the trend rapidly extends against him. Therefore, as with all trading strategies, risk must be controlled. It is important to note that patterns may exist within other patterns, and it is also possible that non-harmonic patterns may (and likely will) exist within the context of harmonic patterns. These can be used to aid in the effectiveness of the harmonic pattern and enhance entry and exit performance. Several price waves may also exist within a single harmonic wave (for instance, a CD wave or AB wave). Prices are constantly gyrating; therefore, it is important to focus on the bigger picture of the time frame being traded. The fractal nature of the markets allows the theory to be applied from the smallest to largest time frames. To use the method, a trader will benefit from a chart platform that allows him to plot multiple Fibonacci retracements to measure each wave. Types of Harmonic Patterns There is quite an assortment of harmonic patterns, although there are four that seem most popular. These are the Gartley, butterfly, bat, and crab patterns.
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BITSTAMP:BTCUSDEducation
by GoldenEngine
122