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SOME USEFUL TIPS FOR NEW TRADERS here are some tips for newbies. One thing, I want to say again and again don't rush in trading it's not a quick-rich scheme remember that. and every newbie needs to gain knowledge first about markets than most important part risk/money management need to learn because they r so important. Most newbies come into existence and think they have gone to use big leverage in one trade and they gone to be 100% right and gone to rick quick don't think in that way. u not gone to be 100% right all the time. remember u also gone to be face losses as well even experienced traders lose money but because of their money management they able to small their losses and when they win they big win. hope u understand what I mean who earned that GOOD LUCK. I will most more content for newbies so they can get the right path. thanks for reading :)
CRYPTOCAP:BTC
by THELEGENDSINGH
The Ichimoku Cloud (Ichimoku Kinko Hyo) - WTF is itSo, the Ichimoku Cloud (Ichimoku Kinko Hyo) - WTF is it??? At first the Ichimoku Cloud can look a bit daunting, but after reading this, hopefully it will put you at ease & you will realise that it is a really neat and powerful indicator that shows you Momentum, Trend, Support and Resistance . Note that you can use the Ichimoku Cloud for all timeframes, but it may not work on monthly or yearly charts if there is not enough previous data. The Ichimoku Cloud ( Ichimoku Kinko Hyo) is made up of 5 indicators, The Conversion Line (Tenkan Sen), The Base Line (Kijun Sen), Leading Span A (Senkou Span A), Leading Span B (Senkou Span B) and the Lagging Span (Chikou Span). On TradingView the default settings for the Ichimoku Cloud are: Conversion Line Periods = 9 The Base Line Line Periods = 26 Lagging Span 2 Periods = 52: Is actually the Leading Span B Displacement = 26: Is actually the Lagging Span For the Crypto market, these default settings are no good and we need to adjust the settings because Crypto is 24hrs a day, 7days a week, 365 days a year. Crypto never closes “unless an exchange or broker gets worried” 😜. Using the TradingView’s system, the Crypto settings need to be changed to: Conversion Line Periods = 20 The Base Line Line Periods = 60 Lagging Span 2 Periods = 120: Is actually the Leading Span B Displacement = 30: Is actually the Lagging Span Some people have posted online saying the displacement should be 60 for Crypto, but that is incorrect. 60 gives too much distance from the Cloud (Kumo) and you cannot get accurate readings for Resistance and Support, so 30 is perfect for Crypto needs. Using the Crypto Settings, The Conversion Line (Tenkan Sen) is a Midpoint of the previous 20 Period Highs and 20 Period Lows. The Base Line (Kijun Sen) is a Midpoint of the previous 60 Period Highs and 60 Period Lows. So they are not SMAs or EMAs. What is neat is that if you change timeframes then you will get the 20 & 60 Period Midpoints for whatever timeframe you are in, so it is a very useful tool to see if there is a possible cascade effect happening on lower timeframes that may cascade on to higher timeframes. If the Conversion Line (Tenkan Sen) crosses under the Base Line (Kijun Sen), that is a Sell Signal or varying strength depending on where it crosses in relation to the rest of the Ichimoku Cloud Indicator. If the Base Line (Kijun Sen) crosses back under the Conversion Line (Tenkan Sen), then that is considered a buy signal of varying strength depending on where it crosses in relation to the rest of the Ichimoku Cloud Indicator. The Conversion Line (Tenkan Sen) & The Base Line (Kijun Sen) can act as potential Support and Resistance depending on if the current price is above or below either of the indicator lines. Leading Span A ( Senkou Span A) is a Leading momentum indicator and is already calculated from the Conversion and Base Line values, hence why you only need to add a value for Leading Span B (Senkou Span B) which is 120. The Leading Span B (Senkou Span B) uses double the periods so it will react slower compared to Leading Span A (Senkou Span A). The gap between Leading Span A (Senkou Span A) & Leading Span B (Senkou Span B) is the Cloud (Kumo). If the Cloud (Kumo) is green, that indicates we are in a Bullish Trend for that timeframe. If the Cloud (Kumo) is red, that indicates we are in a Bearish Trend for that timeframe. The area above the cloud is the Bullish Zone & the area below the cloud is the Bearish Zone. Inside the cloud is the Equilibrium Zone, which can be seen as trend-less, uncertainty or trading sideways. A key move to look out for is if the Leading Spans A,B are Crossing/Twisting from either a green cloud into a red cloud or vice versa to indicate a trend reversal. Note the Cloud (Kumo) can be Red or Green while the price action is in the Equilibrium Zone depending on if it dipped down or up into the Cloud (Kumo). Note that because we dip downwards outside of the Cloud (Kumo) that doesn’t mean the Cloud will turn red because we may rebound before the Leading Span A (Senkou Span A) gets a chance to cross Leading Span B (Senkou Span B) and vice versa. If the Cloud (Kumo) is thin then this is a good sign of momentum, when the Cloud (Kumo) starts getting wider, that means momentum is slowing down. The Leading Span A (Senkou Span A) & the Leading Span B (Senkou Span B) can act as potential Support and Resistance depending on if the Price is above or below the Cloud (Kumo), or in the Equilibrium Zone. Note that the Leading Span A (Senkou Span A) & Leading Span B (Senkou Span B) are plotted 30 Periods ahead of the current price. The Lagging Span (Chikou Span) is a momentum and a 2nd confirmation indicator that enables you to see potential trend changes. Using the Crypto settings, the Lagging Span (Chikou Span) is calculated by shifting the indicator 30 periods behind the last closing price. If the Lagging Span (Chikou Span) indicator is above where the price was at 30 periods ago then that is considered an uptrend for the timeframe you are in. If the Lagging Span (Chikou Span) indicator is below where the price was at 30 periods ago then that is considered a downtrend for the timeframe you are in. A Bullish and Bearish confirmation signal can be seen if the Lagging Span (Chikou Span) indicator crosses up or under that previous 30 period price respectively, but also using the other indicators as conformation. If the Lagging Span (Chikou Span) is inside the previous Price from 30 Periods ago, then that is considered sideways trading, choppy or trend-less. The Ichimoku Cloud (Ichimoku Kinko Hyo) is designed to be used as a whole and each of the indicators complement one another. It’s best practice to use it with other indicators like, Volume , RSI , VPVR, MACD , ADX or the SMI. This is my first educational post on TradingView, so i'd thought id keep it brief. I’ll update and go into the different confirmation buy/sell levels, and more on each of the indicators at a later date. I hope you have found this educational post helpful 🙏 In fact, reading this thing back, its not really that brief is it 😅👍
Editors' picks
BINANCE:ADAUSDEducation
by entertheroach
85
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
The mental aspect of trading ( save this post and read it )What are fear and greed? and human behavior in trading? Before continuing make sure to save this post and follow this profile. Fear and greed are emotional experiences that occur when triggered. Emotional triggers can be virtually anything – previous negative or positive experiences, beliefs, expectations. Emotions probably evolved because of the need of humans to survive threats in the environment. The fight or flight concept is probably the result of evolution because it effectively generates actions that result in survival. You can accept that you are here because your ancestors were fearful and greedy at the right times. They ran when they were going to be eaten and they chased when they wanted to eat. It became so intense and repetitive, that it became part of the DNA of their offspring. Those who ran the slowest or underestimated the threat, died and had no offspring. Those who were not greedy and did not want more, were left with no food during winter and they died with no offspring. So, those who ran the fastest and those who collected the most, survived and became us! Fear or panic Humans experience fear in response to a stimulus (a change in the internal or external environment) that creates a perception of risk to body or life. In trading, a stimulus can be a previous experience of failure such as a failed trade. FOMO, or fear of missing out, is not a fear by definition in that it does not present danger to body or life, but in trading it can be just as influential. Hesitation, reservation, internal conflict and a lack of confidence, can all be based in fear. To overcome fear in trading you need to learn the skill of acting without fear. Do what you fear most and you have nothing to fear. Do the necessary study to understand what underlies fear, so you will know what it is when you experience it. Fear can lead to over-selling, out of proportion to market reality. Greed and euphoria: Greed is an irresistible urge to possess more, regardless of what is needed or adequate. In forex and other trading it is often used in a wider sense of wanting to profit. Greed can lead to a rise in buying, out of proportion to market reality. Understand what greed is. To overcome the threats posed by greed in your trading, you need to act without greed. How do you overcome fear and greed in your trading? If you think you know what is going to happen in the future, you are making it up, it is in your mind, because there is no way you can know. we want to predict and not to react. Our minds are wired to think that a recent experience will be repeated in the near future. In trading, as in life, that is not necessarily true. Fear and greed are both emotions that can trigger actions which are out of proportion to the seriousness of the threat. That is why fear and greed can trigger market fluctuations out of proportion to reality. You have overcome the influence of fear and greed, when you have no conflicting thoughts when putting up a trade. You don’t even think about not putting up a trade that meets your requirements (strategy). Don’t focus on the result, focus on the plan (skills) Deviating from your trading plan or strategy is usually an indication that you are succumbing to either fear or greed. Be self-aware (know what you emotions are in this the moment) to know what it is that you are experiencing. If you can accept that you are unable to predict the future, you have made a good start. Find your comfort zone where you are at peace with the loss should your trade turn against you. If the potential loss creates tension, reduce your exposure to a level where the tension (fear) disappears. If you can’t predict (know) the future, what do you know? You know a trade can go either way. You know you could make a loss. You know you could make a profit. That is all you know or can know. If you accept that your trading strategy has a statistical level of success, it reduces tension. Measure your success over a series of trades before you emotionally react to the outcome. If you accept that your strategy is successful, there is no need to react emotionally to individual trades. Keep in mind that charts don’t predict the future, they show what has happened and they show a probability for something happening, based on previous, repeatable patterns. The opposite of fear and greed is a carefree state of mind, and you reach that by mentally defining the risk out of the trade – Mark Douglas. save this post and drop a comment ! :)
OANDA:XAUUSD
by AIRFOREXONE_
21
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