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Criteria that need to be met before entering a tradeHey, wizards! Happy Wednesday and welcome on another Educational Post for the week. Today, we are gonna be talking about trade entry criteria and checklist. In other words, what we should look for before opening a position. First and foremost, we should analyse multiple timeframes and identify the direction of a specific market. As identified on the table, different types of traders examine different timeframes. The most common timeframes used by scalpers are M15, M5 and M1. H1 and H30 are popular among intraday type of investors, D1 and H4/H3 are commonly used by swing traders. After analysing different timeframes and getting the overall picture of a chart, we start identifying various key zones. This could be support and resistance areas, supply and demand zones, Fibonacci retracement levels, descending/ascending trendlines and so forth. After having identified crucial key levels, we start looking for more confirmations to backup our bias. Candlestick patterns (doji, hammer, engulfing), Top/Bottom/H&S figures, Indicators (EMA, RSI, MACD etc.) can be utilised as valid instruments to confirm our ideas. All in all, going through the steps identified above are important before opening a transaction. In addition, remaining patient, keeping it simple, and following risk-to-reward principles are as equally important.
BITSTAMP:BTCUSDEducation
by Investroy
38
The Art of setting a Target ProfitHey, wizards! Happy 2022 and welcome on the first Educational Post by Investroy for the new year. Today we are gonna be talking about different ways of setting a Target Profit (TP), and scrutinizing the benefits and drawbacks of each. Though there are many ways to set targets, as it varies depending on ones trading plan and strategy, here are 3 of the most popular ways of placing a TP. 1)Confluence based Reading the chart and analyzing different timeframes of a certain security, we can use different confluences to spot potential zones of price reversals. On the graphical illustration demonstrated on the chart, we can observe that a rectangular range has been formed and the price is sitting at the lower boundary, in other words at the crucial zone of support. It is highly likely that traders will start going long on this setup and anticipate for the price to keep rising and reach the area of resistance. On the other hand, it is never 100% sure that the price will be able to bounce off the local zone of demand, and therefore risk management should be strictly followed. 2)Risk-to-Reward based (Fixed) The other name of this method is “set and forget”. One group of traders prefers to follow same risk-to-reward ratios for all positions opened (For ex. 1:2 or 1:3 fixed). Another group favors setting different RR ratios for different trades and let the positions run until they hit TP. All in all, the technique implies setting a certain RR Target Profit and letting trades run. On the figure displayed on the screen, it can be inferred that the sentiment of the market is clearly bullish and the price is expected to keep rising. One of the disadvantages would be the following: sometimes due to greed, traders set their targets too high and the price results in not reaching the intended TP. 3)Intuition/Logic based As strange as it may sound, there is actually a number of traders implementing this approach when setting a Target Profit. Moreover, it requires experience to sense where the market is about to move. As illustrated and interpreted on the graph, the market repeats historical actions from time to time. Experienced investors tend to notice some specific patterns and make decisions out of it.
BITSTAMP:BTCUSDEducation
by Investroy
35
Risk Management: the Beauty and the Main Principles of itHey, magicians, hope you are all doing great and enjoying the holiday season! After receiving multiple requests from you, we are back with another Educational Post and the topic is the following: Risk Management and its Principles. As we have already discussed in some of the previous educational posts, Risk Management, alongside with other componenets, is one of the most important elements that need to be followed in the world of Trading. If one wants to be successful and profitable in this journey, obeying the fundamentals of Risk Management is a MUST. We have created a visual illustration which will explain how Risk Management really functions, and how one can be successful by implementing it in a correct way. In order to better understand the table, let us make the following assumptions: -We are journaling our last 28 trades -We have risked 1% on each transaction (trade) -Our win rate is only 50% -We do not have any BREAKEVEN trades, meaning we have left all our positions run open till TP/SL As we can notice from the graphical illustration, most of the trades have different Risk-To-Reward ratios (for example: 1:3, 1:2, 1:1.8 etc.). With only 50% win rate, our Winning Trades will make us a nice +35.2% return, while the losing trades will set us back by -14%. If we do quick maths, we will see that the total return from our last 28 trades will constitute 21.2%! There is no "Holy Grail" in trading, but following the principles of Risk Management can lead one to the door of consistency and profitability. Of course, Risk Management is not the only element, as psychology, patience, mindset, and some other factors should be considered and mastered as well. We will be looking forward to covering other psychological aspects of trading in the next few educational posts! Until then, stay safe and happy, and if you have any requests or proposals, feel free to let us know in the comment section below! Investroy would like to wish you all a Merry Christmas and a happy upcoming New Year!
BITSTAMP:BTCUSDEducation
by Investroy
26
Trading Myths vs Reality. Beginners, this one is for you!Hey, wizards! Happy Thursday and welcome on another Educational Post. The topic is the following: Myths and Reality of Trading. As you may already know, there are so many false statements that beginners run into before starting their trading journey. Those statements are illustrated on the layout and interpreted below: 1) Most people think that trading is easy and they can quit their job or whatever they do and start making a living off trading straight away. In fact, in order to be profitable, consistent, and be a full-time trader in general, he or she MUST have a backtested strategy and be experienced enough in this sector. Remember that it takes a while to be successful, but it is fully worth it! 2) “Trading is like a casino”- we hear this one quite often. Only two types of people use this expression a lot: those who have never been able to become successful in this industry, and those that have no plan or idea about what they are doing. One should never open a positions based on a coin flip or what others are saying. Ideas and analyses of other can be used as a confluence and inspiration for a trader to open a positions on a specific security. 3) Whether it is trading or any other industry, one can never be rich over the course of a night. It takes 10-14 for someone to become a licensed surgeon, at least 6 years to become a professional lawyer. What makes you think that you will become a professional trader in just a few weeks or months? 4) No matter what the situation is, always use a Stop Loss to avoid deep losses. Whether liquidity hunt exists or it does not, it is always important to stay safe and sound. 5) Risk management is always more important than the win rate. Imagine having a 1:3 Risk-to-Reward ratio on your next 10 trades and the win rate is only 50%. That means you will win 5 and you lose 5. Now, let’s say that we decide to risk 1% of our total capital per trade. If we do quick maths, we will see that with only 50% win rate and 1:3 RR, we will result in making a juicy 10% return from the total of our next 10 trades. Of course, this is not always the case, as there are some factors that should be considered, such as spreads, fees, pip value etc. However, this is a perfect example to help you get the overall idea. 6) There is a big number of traders who do not like the “Retail Way” and would rather trade the “Smart Money” concept, which is apparently the closest thing that we have to the Institutional Trading. The bottom line is this: choose a strategy that suits you the best, and go with it while optimizing along the way. Changing strategies every week/month will not make one consistent. It is crucial that you stick with one trading plan and be loyal to it. 7) Many beginning traders tend to increase their risk in attempts to make more profits. This approach is so risky and totally wrong. If one is willing to make more money trading, it is important that he or she increases the input, and not the risk.
BITSTAMP:BTCUSDEducation
by Investroy
151
THE ART OF MULTI-TIMEFRAME ANALYSIS AND MULTIPLE CONFLUENCESHey, wizards, hope you are all having a great week so far! We would like to welcome all of you on another educational post, the topic of which is Multi-Timeframe analysis and multiple confluneces involved. As it can be inferred, the Monthly and Weekly timeframes are used to determine the direction of the market, the Daily timeframe is used to identify key areas and important zones, and finally, the 4-hourly timeframe is utilized for entering trades. Now, let’s dig deeper into it and analyze the situation that we have on EUR/USD. MONTHLY: Observing the weekly timeframe graph, we can say that the price has been printing bearish candles for a few consecutive weeks. As one of the main trading principles says, after a strong impulsive move, a correction is needed. We can witness some bearish weakening signs and therefore we are looking for a short-term long position. Our possible target would be set at a previous level of support turned resistance, which aligns with the golden Fibonacci zone. WEEKLY: Leveling down to the weekly timeframe chart, we can see that the price is consolidating, as it is unable to push lower. Technically, after long lasting consolidations, it is believed that the price will either fly like a rocket or drop like a needle. This gives us another confluence and backs up our plan. DAILY: Moving down to the daily timeframe graphic, we can notice that the previous candle was super bullish and some kind of an ascending triangle is being formed. If the price breaks and retests the upper boundary of the formed triangle, we can see some nice bullish moves. 4H: Last but not least, the 4-hourly timeframe a.k.a. the timeframe of entries. After a massive bullish push to the upside yesterday, the price has started correcting before further bullish moves happen. Here, we are using two entry confluences: the area of previously broken structure that nicely aligns with the 61.8% fibonacci retracement level. Before entering the trade, we will carefully monitor the price action and wait for the price to bounce off the local zone. We are hoping that this educational post will be of value for you and we are wishing you all a great day! Regards, Investroy Team
Education
by Investroy
26
Gold: 8 Factors You Must Know, If You Trade Gold8 Factors You Must Know If You Trade Gold Gold has been a favorite of many for centuries. It's used as an investment and holds sentimental value all over the world. Let's take a closer look into some factors that affect these changes: supply & demand dynamics between countries holding large amounts while wanting lower rates so they won't have trouble selling off inventories; economic stability decides whether there'll be. Wh at Moves the Gold Price? There are many reasons plays behind the gold price. Let's discuss some. Supply and Demand Demand and Supply are two forces that constantly affect the price of Gold. When demand for this precious metal increases, its value goes up too. When there's less interest in purchasing or holding onto it, prices will naturally decrease over time due to supply constraints. That means you can buy more at any given moment without worrying about getting stuck paying the total retail cost later. Inflation Gold has been a good hedge against inflation for many years. When prices go up in an economy, people tend to invest their money into Gold and not a currency. Because it's considered stable over time while maintaining its value even when currencies change significantly from one day or year-to-year ranking/rating changes due to economic factors. Such as high unemployment rates, which increase demand by consumers looking for safe-haven assets. Central Banks Decision Gold is typically bought in large amounts by governments and institutions who view it as an essential store for wealth preservation. But this can also mean traders take notice. Central banks worldwide have recently been buying substantial quantities because they want to diversify their reserves away from US dollars which currently make up most international finance markets valued at close to $200 trillion (€170 T). The result has already shown itself, with spot prices rising 6 percent higher than last year despite economic uncertainty following recent hikes on interest rates over America's quantitative easing program. Interest Rates Interest rates are the driving force behind Gold's price movements. When interest rates increase, people sell their assets to earn higher returns on existing investments. At the same time, at other times, they might buy back in if prices have fallen too far for them not to make up that loss with purchasing power today - this increases demand for precious metals like never before. The relationship between these two economic indicators means different things depending upon one another. For example, when there is inflation (worst-case scenario), investors seek out safe-haven currencies such as Gold, which protect wealth against devaluation or hyperinflationary policies imposed by countries worldwide seeking currency stability through international agreements like SDRs. Central Banks Reserve The government holds a large number of gold reserves. Therefore, when most of the Reserve Banks worldwide start to buy Gold more than they sell. The gold prices increase because there will be insufficient supply in the future and vice versa when central banks sell greater quantity than it buys; therefore, these transactions result in currency rates against other currencies. Currency Fluctuations Gold is traded on the international market in US dollars. When you convert your currency from USD to any other currencies during import, it becomes more expensive as the price fluctuates concerning both currencies. Let's compare prices between countries like the United States and Saudi Arabia, where one has a more robust economy than others do. There can be a hike of up to 30 – 50% extra cost for purchasing an item because these economies have been performing better over recent years, meaning they provide higher rates of return that give them power over minting new coins. In contrast, some country's revenue may only last one year before another recession strikes, making importing items not profitable anymore. A co-relation with other asset class Gold is a highly effective portfolio diversification because of its low negative correlation to major asset classes. In addition, when shares fall in companies, there's an inverse relationship shown between Gold and equities. This makes it easy for investors looking at their investments from either side to have peace of mind when they know that one goes down. Then others will likely recover - especially considering how much more stable stocks tend towards being over time than fluctuating prices do. Geopolitical Factors Gold has often been seen as a haven during times of political and geopolitical turmoil. During such periods, Gold does well compared to other asset classes due to an increase in demand from investors who won't keep their money away from unstable markets or currency values that could change at any moment.
TVC:GOLDEducation
by Gold_Trading_Expert
Want To Improve Your Trading Game? Play Poker!In virtually any field of athletics it is advised that you should cross-train in order to both avoid injury and increase performance . For example, Football players are encouraged to take up pilates, yoga, and swimming. Runners can reduce injury and increase performance by incorporating Rollerblading, Barre, and Zumba into their routines.  So what should traders do in order to "cross-train" that will make them better traders, to help them "avoid injury" (as in lose money ) and "increase performance" (as in make money )? My answer: Play Poker! Yes, Poker and Trading are both "sedentary" activities where you are sitting at a desk or table. It is the brain that needs to be toned, limbered up, and made flexible, not the body. (Though you need to make sure your body is healthy too!) So it is safe to say that the peak performance trader needs a mental cross-training routine, not necessarily a physical one. So why is Poker the ideal cross-training exercise for traders? 1: Poker Teaches Risk Management Unless you're a novice or not seriously playing in a virtual poker App, there's little chance you will go "All In" at the poker table. I can count on one hand the number of times I went "all in" and I won every time. Such opportunities rarely happen. When I did move my pile of chips to the center of the table it was because I knew what was in my hand. I "managed my risk". Likewise, the trader or investor should almost never go "all-in", putting their entire account into asset X, Y, or Z because "the market will market" on you and you will lose it all. In trading terms, you can very easily "blow up your account."  As Kenny Rogers says, "You've got to know when to hold'em... and know when to fold'em." Good risk management requires that even if you lose say, 5 times in a row, you will live to trade another day. I frequently talk about never risking more than 1% of your account on any single trade . A 5% loss is easy to recover from with two 3-R wins, or one 7-R win. Likewise in poker, with a $100 buy-in, you usually have $1 antes, allowing you to play up to 100 hands (even if you were the worst poker player in the world) risking only 1% per hand. In poker, only if the "odds are in your favor", that is, you have two-pair, or you have three or four-of-a-kind, or a straight, would you consider raising the stakes to 2, 5, or even 10% of your bankroll. If you can make 20R from a 4R "risk" with the odds in your favor, you are now thinking like a professional trader where Risk Management is "Job One". 2: Poker Teaches Emotional Management I like to teach that our goal as a trader is to be totally mechanical - totally rules-based. Our goal is to "Trade like a Vulcan" or "Trade like Spock: Trade long and prosper!" What's the poker analogy? Having a " Poker Face ". Or as the old antiperspirant commercial said, "Never let'em see you sweat."  We may have an awesome hand, but we can't display a "woo-hoo" face because no one will bet against us. We may have a terrible hand, but we can't put up a "oh, good grief!" face and let others know that they have even the slightest chance of beating us. We have to play every hand waiting for the last card drawn (the river) because that last card can make or break what we are holding in our hand. And very often it is that last card dealt, "the river", that can make or break a poker hand. 3: Poker Teaches You to Play the Probabilities Growing up in Brooklyn, New York, I remember the famous slogan from the New York Lottery: "You gotta be in it to win it!" They threatened (coerced?) every New Yorker with "fear of loss" if they didn't play the lotto... "Well, yeah, we all know the odds of you winning are are actually close to zero, but of you don't play then they really are zero so you better play or you will feel more like the loser than you already are!" Thankfully, the odds in winning at Poker are much higher than winning a set of numbers printed on ping-pong balls, which teaches you that when you have an "edge"... when you have a "system" that has the odds in your favor (a winning trading system) you can't try to outsmart the system – you need to play every hand that meets the criteria of your system.  As hockey great Wayne Gretzky said, "You miss 100% of the shots you don't take." So as Poker players and as traders, we have to play every hand, or every trade that appears that meets our trading plan's criteria, otherwise if we try to "outsmart the market" we will lose every time. And more often than not, even with a terrible hand, say a 2 and 4 of spades, you might find that if you don't fold, every once in a while three spades will appear on the table giving you one of the high-probability hands: the flush . So play every hand . And in trading, take every trade opportunity that appears that qualifies under your rules-based trading system. 4: Poker Teaches You To Stay Humble My poker buddies and I play every month or so. Early in my tenure when I learned to play poker I realized "Hey, I'm pretty good at this.... I'm gauging the probabilities, I'm keeping my risk-per-hand low, I'm taking small profit after small profit and leaving with twice the money I bought in for or more. Drinks are on me!" Then I got cocky... Walking into game four I thought to myself "I'm the Vulcan, emotionless, rules-based, odds-calculating poker player, right?" And that night my proverbial hat was handed to me. It was one of the worst games I'd played to that point. I over-bid, I bluffed (something I had never done before and my opponents knew it!), and I raised bets on hands I know I should have folded. I re-bought in after losing my original buy-in and lost all of that! And I went home with a valuable lesson: Don't think you can out-smart the probabilities.  The reason we win at poker is the same reason we win at trading. We must always play the odds, we must never play the low probability hands, we must always keep our emotions get the best of us, and when it's time to fold, it's time to fold!" Last week our poker group met again. I bought in for $50 and left with $135. In trading parlance, that was a 170% return. I was grateful. I learned my lesson. I've got to stay humble and let the hand come to me, let the trade come to me, and never think I can out-smart the table or the market. 5: Poker Teaches You To Set a Financial Target One of the reasons that casinos give their players free drinks, free upgrades to already expensive suites, and free food is they know that "the more you play, the more you'll pay." You can be up $5,000 for the night, then go get yourself some free lobster tails paired with filet mignon, a bottle of wine, and a decadent dessert. Then you return to the tables all fat, happy, and lubricated and proceed to hand all your winnings back to the House.  I know more than one poker player who has a rule: "When I double my money, I'm done . I may walk in with $500, and when I'm $500 to the positive, I quit and go on to enjoy the rest of my night, otherwise I'll just give it all back." Similarly, I know many a trader (yours truly included) who may have been up a sizable amount wonderfully early in the trading session, then proceed to give all those winnings back to the market an hour or so later. Setting a daily "win" will prevent you from getting mentally "fat and sassy" where you will become overconfident and then hand your winnings back to the market.  As a Poker player, you may want to make a certain amount of money per game. As a trader, you might want a daily amount of "R" or dollar amount to the positive. In either case, when you hit your goal, even if it's in the first 20 minutes of the trading session you need to close all open trades and enjoy the fact that you did what 90% likely did not do that day: end the day in the green! On other words, "Quit while you're ahead!" 6: Poker Player Are Part of a Vibrant Community Full of Fun People! Like traders, the number of people who are committed to improving their poker game are few. We need to belong to a strong community of passionate poker players to perfect our craft just as we need to belong to a strong community of passionate (and profitable) traders in order to continually perfect our skill at taking money from the markets each and every day. There are online poker communities you can join (think: Simulated Trading) and there are global in-person Poker communities that can link you up with other players once you're ready to "go live". These communities are generally free to join and will help you build up the skill to become a proficient and profitable Poker player which, more importantly, will help you become an even more proficient and profitable trader.  Is there anything else about Poker that you think needs to be added to the list? Leave a comment below.  As always, Trade well! (And maybe I'll see you at the table!)
NYSE:GEEducation
by ocaptain
3
The biggest “MYTH vs REALITY” in tradingDear traders, happy Friday and welcome on our Educational Post for this week. Today we will be talking about the most popular myths in the trading world and compare it to the reality. “99.99% win rate”, “50 trades winning streak”, “100% monthly return”. Do these phrases sound familiar? All of us have come across people and companies promising that they accomplish the above stated proclamations GUARANTEED. These individuals tend to deceive the beginners and sell them a fake dream. However, trading does not work like that. If we take a look at the chart, we can see the 4H timeframe graphic of GOLD. We decided to use this graph to illustrate the idea. On the left hand side of the chart, we can see an example of the strategy that the above stated type of individuals use to deceive a huge mass of people. Fake and unrealistic risk-to-reward ratios, impractical percentage returns and other tricks appeal the newcomers and lead them to the mousetrap set by the so-called “gurus”. On the other hand, on the right side of the screen, we can see the reality of trading. Not every trade will be a winning one. The most important thing is to follow the principles of risk management, have patience and discipline! We hope you enjoyed this educational post! If you have any proposals on what should our next educational post be about, please feel free to write down the topics of your interest in the comment section below. Investroy team is wishing you all a great upcoming weekend!
OANDA:XAUUSDEducation
by Investroy
6
Trade like a casino! 🎰🎲💵Yep you heard me right you need trade like a casino 🎰 Key bit here is trade like the casino operates their business model. Don't trade like the clients that frequent the casinos. Why should you trade like a casino? Profitable traders understand how casinos are successful. Casinos are profitable and make money because they have an edge which they let play out. They know probability is in their favour. How many times have we all been at a roulette table thinking we have a 50% chance of winning betting on red or black. We all seem to forget about that green zero on the table and here in lies the casinos edge. With having an edge they let play out it's impossible for them not to make money. The casino is comfortable with every outcome on the bets placed knowing the edge will play out. Losses are seen as a cost of business, risk is controlled and emotions to are in check. This is why the house always wins! 🎰🤑 If you as a trader apply the same logic's to your trading strategies the end results will be the same as the casino. If you choose to trade like one of the clients in the casino with no fixed rules you essentially are gambling with you trading. Subjectivity and emotions will come in to play. Random winning and losing runs will occur which will impact trading psychology. This way of trading will only end in one way and that's by giving everything to the house or in this case your broker! Development of a strategies with proven mathematical edges ensures you will become the house 🏦💰 Once an edge is established trust your strategy and let that edge play out. ----------------------------------------- Please hit the 👍 LIKE button if you like my ideas🙏 Also follow my profile, then you will receive a notification whenever I post a trading idea - so you don't miss them. 🙌 No one likes missing out, do they? Also, see my 'related ideas' below to see more just like this. Thank you. Darren
Education
by pow_removetheguesswork
A lesson in Revenge Trading"Cut your losses short, but let your winners ride!" We have heard that quote, one and a million times, it's one of the first things you hear when you start trading, a quote almost as known as "Buy low, sell high" And why is it so important and so widespread?. The reason is pretty simple: You need to make more on your winning trades, to compensate all your losses and still make a profit. Sounds pretty simple right? Your win ratio and Risk to Reward are your most important stats, Well it's easier said than done, and today I learned something about that coupled with revenge trading. But what is revenge trading? It's as simple as looking to make quick profits in a quick and aggressive way, after suffering losses, revenge trading also involves forgetting your own trading rules and risk management. Anyone experienced trader can tell you the same, revenge trading is one of the worst things you can do and one of the fastest ways to losing your ENTIRE ACCOUNT You can wipe out, months and even years, of savings and trading profits in a manner of hours or even minutes. So when you take a loss, you should step away for a while, review what you are doing and get back in the game with a clear head. In this case, I didn't take losses, I actually did make some profits BUT I was angry that I didn't make all the profits from the top to the actual bottom. So I revenge traded, even though I was up quite well in the day. Instead of even following my own earlier analysis (linked below) I decided that the best way to make quick profits, was by trying to time the absolute bottom and get a high leverage long in there. Not only I was increasing the leverage I was also increasing the risk, by trading against the trend and trying to time the exact moment the market reversed. I didn't manage as you can see in the chart. The lesson is pretty simple: Don't ever revenge trade and don't let good trades that weren't perfect enough make you become irrational. I could have pretty good profits today, but I let myself become my own worst enemy. ALWAYS PRACTICE RISK MANAGEMENT, RISK MANAGEMENT IS VITAL TO TRADING
Education
by CryptoEstratega
4
MY MORNING TRADING ROUTINE - Steps I take before I tradeComplete Routine: 06:30: Wake up – My Morning Routine Starts I just get right up and start my day. Don’t hit the snooze button! 06:40: What’s My Daily Report Card Goal? Each day my trading journal includes a specific goal that particular trading session, concrete actions that I’ll take to achieve that goal, and self-evaluation at the end of trading to gauge my success in reaching that goal. The idea is to never trade without consciously working on some aspect of my trading. 06:50: Risk Control Process I define the risk for the day : Position sizing guidelines Per-trade loss limits Per-trade price targets Daily loss limits 07:00: Frame The Context I do a quick scan of my markets, and I frame the context by doing my analysis and establishing potential directional biases. This doesn’t take me a long time since I build upon yesterday’s analysis. 07:20: Define Market Conditions Here I start by asking myself two questions: Should I or shouldn’t I trade? If I do trade, whether to do so cautiously or aggressively? And then, I go through some variables to understand the market environment 07:30: Identify/Look For Setups Now I understand what I want to improve on, my risk profile, market context, and how the market moves (the environment; fast, slow, etc.?) I have specific setups and plays that I love to trade; I wait patiently for these setups to develop. Usually, they develop during London Open, but if there’s a setup at this very moment, I take it and immediately go into my breathing and meditation. 07:50: Deep Breathing + Meditation (Mental rehearsals) This is where I get my mindset right. Breathing and meditation help me be and sustain a state of calmness and staying focused. 08:40: Cold Shower Cold showers are amazing; they fill me with energy and the concentration to stay fully immersed in the present moment while I trade the markets. 09:00: Trade The London Open I’m fully ready and confident to start my trading day. I’m focused, calm, and immersed in front of the screen. Why We Need Routines: As traders having routines in our life that encompasses all our desired best practices and habits is key to sustain consistent performance day in and day out in the markets. Trading is hard, and having to maneuver the world of trading without any routines or systems in place, is really doing yourself a disservice. Routines make your life easier. They reduce stress because you don’t have to think about what to do; your brain and body already know what to do because of the patterns you’ve set in place! This is quite amazing and really powerful; therefore, seek to build a routine to facilitate your trading performance.
TVC:USOILEducation
by INotFancy
2
Risk per unit (R) & ExpectancyIn this article, we will expand the notions presented in the first part of the series. If you haven’t read the first part, you can check it out below in our related ideas section. We define risk as to how much you’ll lose per unit of your investment if you are wrong about the position. We called this in the first part initial risk (1R) . All your profits and losses should be related to your initial risk. Example 1: You buy a stock at $100 and decide to sell it if it drops to $80. What’s your initial risk? The initial risk is $20 per share. So, in this case, 1R is equal to $20. If you buy 10 shares then your total risk is $200. R represents your initial risk per unit. Example 2: You want to do a foreign exchange trade with a $10k account, selling the EURUSD. Let’s say that $100 USD is equal to 77 Euros. The minimum unit you must invest is $10,000. You are going to sell if your investment drops by $1k. What is your risk? What’s 1R for you? It may sound complex, but it is very simple. If you’d close your position if it drops $1k from $10k to $9k, then your initial risk is $1000 and that is equal to 1R. R represents your initial risk per unit. Let’s say that you have noted on your trading journal the following trades: 1. 400 CSCO at $23 - R $1000 - P&L $2,317 2. 80 IBM at $80 - R $1000 - P&L ($813) 3. 300 VLO at $50 - R $1000 - P&L $3,413 4. 400 HRB at $51 - R $1000 - P&L ($1,531) The R multiples for these trades are: 1. 2.32 R 2. -0.81R 3. 3.41R 4. -1.53R The average R for your system is: 0.84R Expectancy really refers to the mean (average) R-multiple of your system. As a trader, if you want to be successful you need to start quantifying your trading performance. You should always calculate your R-multiple and it’s average (expectancy). The expectancy of your system is the average of the R-multiples (both positive and negative) of your system . It tells you what you can expect in terms of R, on average over many trades. This information is pretty straightforward and easy to grasp. In our example above if we have a system with an expectancy of 0.84R and we risk 1% per trade we should expect a profit of 0,84% per trade. After 100 trades you should be up 84%! The average however is not the total picture! To understand how much your system can deviate from the expectancy, you must not only know the average R-value, you must also know the variability of R or standard deviation. The variability will tell us how far away from the mean most samples are likely to be. It would be great if all samples were at mean, but this is never the case because it would mean that there is no variability to the sample. Now you truly understand why the 3rd and 4th golden rules that we mentioned in the first article are very important! Trade with care. If you like our content, please feel free to support our page with a like, comment & subscribe for future educational ideas and trading setups.
TVC:GOLDEducation
by financialflagship
20
Introduction to Dow TheoryThe Dow Theory is the core of contemporary technical research. Its premises have stood the test of time and underpin the study of market behavior research. The basic principles of Dow Theory and their importance in today's markets will be discussed in this article. Origins and History of the Dow Theory Many of the early studies that contributed to what is now known as Dow Theory is credited to Charles H. Dow. Dow's successor, William P. Hamilton, continued to establish and organize many of Dow's initial early publications, including the Wall Street Journal editorials written at the turn of the twentieth century. Robert Rhea, a Hamilton student, was later responsible for categorizing, refining, and formal codifying Dow's fundamental principles, which were set out in Rhea's book The Dow Principle. In 1884, Dow reported an 11-stock stock market average, which he later extended into a 12-stock Industrial Index and a 20-stock Railroad Average. Instead of attempting to gauge market activity by individual stock movement, Dow decided to build an index of stocks that would better represent the aggregate action of the markets. The averages' movement was intended to serve as a barometer of the overall business environment. Since then, the 12-stock Industrial Index has morphed into the Dow Jones Industrial Average, which now contains 30 stocks. Market trends according to Dow Theory Robert Rhea explains in this book that three distinct patterns are considered to prevail in the market according to Charles H. Dow. 1. Primary trend – that lasts from months to years 2. Secondary reaction (intermediate trend) – weeks to months in duration 3. Short term trend – days to weeks The Primary trend The primary pattern is by far the largest, and it is typically predicted to last months to years. Main trends, according to Rhea, are less vulnerable to distortion and therefore provide a more accurate indicator for investment decisions. There are 2 types of primary trends: primary bull trend and primary bear trend . An uptrend is described in Dow Theory as a series of successively higher highs and lows. The concept "downtrend" refers to a sequence of lower highs and lows. Primary trends have 3 phases. A primary bull or bear trend consists of these 3 phases: a) Accumulation phase b) Trending phase c) Distribution phase Accumulation usually happens after a sharp and fast drop in values, usually as a result of companies releasing extremely negative results. At this point, the uninformed market participants are normally incredibly bearish, selling whatever shares they have left at any amount. Market investors who are well informed and trained continue to buy shares at incredibly low levels. The uptrend and downtrend phases make up the trend process. After a sustained and dramatic rise in prices, distribution usually occurs. Both newspapers and news reports are extremely bullish, and businesses appear to outperform. Uninformed market traders are prone to being too bullish, buying up whatever shares are available in the market at any expense, a condition known as excessive exuberance. Margin debt is at an all-time high. During the distribution process, smart investors begin to liquidate shares steadily, taking care not to push down rates too fast so that they can continue to sell at higher prices. The secondary trend or reaction The secondary trend or reaction moves or reacts in the opposite direction of the existing primary trend. It normally lasts a few weeks to three months, but it can last a little longer in some cases. The secondary reaction typically retraces one-third to two-thirds of the spectrum of the primary trend. Any retracement or reversal of more than two-thirds of a percent on big volume typically suggests that the secondary response is a new primary bear market. Dow Theory further emphasizes the value and psychological meaning of the 50% retracement stage, which is a viewpoint held by another influential technician, W. D. Gann. The minor trend Minor patterns aren't taken into account in Dow Theory. “The stock market is not rational in its fluctuations from day to day,” Hamilton wrote in his book The Stock Market Barometer. Minor patterns will last anywhere from a few days to a few weeks. Trade with care. If you like our content, please feel free to support our page with a like, comment & subscribe for future educational ideas and trading setups.
TVC:DJIEducation
by financialflagship
29
How To Avoid The Market Makers Stop Hunt Movement As part of the daily movement in the forex market is the stop hunting done by the market makers. They don't mean to hunt the normal and small trader at all, they are targeting the big investors and hedge funds you just happen to be in the wrong place at the wrong time. As shown in No.1 this huge wick is an obvious stop hunt movement in this case the market makers are hunting the ones entered in the middle or at the end of the uptrend. Lesson learned here "NEVER ENTER A TRADE IN THE MIDDLE OF A TREND ALWAYS WAIT FOR A RE-TRACEMENT" In NO.2 after the price gave a good bearish signal ( hanging man candlestick ) it made a a shooting star candle with huge wick to hunt the stop losses. in this case lesson learned here " WHEN YOU ENTER A TRADE WITH PRICE ACTION MAKE SURE TO PUT YOUR STOP LOSS ABOVE/BELOW IT WITH AT LEAST 20 - 30 PIPS" In NO.3 when you trade you will see this low (blue line) broken so you would assume that it will continue to the downside and after you enter a sell trade NO.3 will occur. Lesson learned here is "DON'T ENTER AT THE END OF A SMALL TREND AND USE A GOOD BREAK SIGNAL" And a last tip " TRY TO THINK AS A MARKET MAKER AND ANTICIPATE THE AREAS THEY WOULD HIT AND PUT YOUR STOP LOSS ABOVE/BELOW IT BY 20-30 PIP"
Education
by FX_Elite_Club
2
The continuous feedback loop of a successful traderDo you know what’s more important than winning in trading? It is knowing exactly why you actually won . Why? So that you can do it constantly. Needless to say, it is equally important to know why you lost when you lost. The successful trader is constantly winning money, no matter the conditions. The economy may be in recession … or not … Algorithmic trading may be accounted for most of the trading volume. The volatility may be over the edge or down to ridiculous levels due to the summer holidays. So what … these are all part of the job . You need to make money because this is your job and if you complain and blame external factors for your poor results then think about choosing another profession. Many would ask how is that possible … to constantly make money in ever-changing markets? Among the other 999 little things, your overall strategy is built upon there is one directly linked to your consistency. That is the continuous feedback and adjustment loop of your trading approach . This is where your post-trade analysis takes place and where you should find out WHY you won or lost. For a discretionary trader, this feedback loop is not an easy thing to put in place, but it’s crucially important to have it. Because, the more useful you want the feedback, the more accurate the analysis should be. The difficulty of building the whole feedback mechanism is finding a fine balance between the depth of the trading details you take into consideration and the time and effort needed for analyzing them. From personal experience, I can tell you that you may fail to have a useful mechanism if you are too superficial. You might as well get lost in “analysis paralysis” as well as if you go too deep. That level of needed compromise is somehow personal. You know you’ve reached it when it can answer the following questions: 1. Is your selection technique giving you enough opportunities per your time frame? 2. Are your entries able to give you the price moves you want? 3. Are your exit techniques able to cut your losers short and let the winners run? If the answer is “No” to any of these questions then you need to ask the next question “Why?” and dissect the effectiveness of that particular technique. Be ready to do the required adjustments if necessary. There is a point in a trader’s career when being able to answer these questions alone will be more useful than an advice from the mentor. From that point on you can be on your own.
OANDA:XAUUSDEducation
by Mihai_Iacob
30
The 90-90-90 rule - Why do traders fail?"Many are called, but few are chosen". Ever heard this proverb? This is certainly true for trading, in fact, there is even a rule in trading about this, the 90-90-90 rule. So what does this rule say? "90% of traders lose 90% of their money in 90 days" 😱😱😱 That's right, statistics show that 90% of people who start trading lose the majority of their money in less than 3 months. But why is that so? In this post I will try to lay out the reasons for failure, if you are a new or struggling trader, I'm sure you'll find this useful. Let's get into it ... 🤯 EXPECTATIONS Many start trading because they've seen or read about success stories, people becoming rich overnight, they might even have a friend who has been successful in trading and they think (to say it in Jeremy Clarckson's famous words) "How hard can it be?. With this approach, failure is imminent... 📐 NOT HAVING A PLAN "If you fail to plan, you are planning to fail - Benjamin Franklin . Trading without a plan results almost certainly in failure. Your trading plan should include the definition of your setup, entry, stop loss, profit taking, trade management, risk management and money management. 🔄 NOT TESTING YOUR PLAN OK, you have determined how you will trade, what defines your entries and exits, how much of your capital you will risk and how you will manage your trades. But do you know what is the expectancy of that plan? Do you know how much trades you will win on average, and how many you will lose? How much money can you expect to make? Backtesting your plan, executing it flawlessly time after time on historical data will give you that information and the confidence to execute your plan time and time again without hesitation. 😱 EMOTIONS - THIS IS THE BIG ONE! If did not take the time to create a trading plan and backtest it, you don't really know what you are doing and emotions will have the best of you. Fear, greed, hope, excitement, anxiousness, boredom and frustration will drive your hard earned capital away from you. Results of these emotions are : trading too much, letting your losers run and cutting winners short, revenge trading, overleveraging etc... I could write an entire post about each of the emotions and how they can affect you while trading, but it would make this post too lengthy. Just know that emotions are your biggest enemy when trading, for best results you should be in a stoic state when trading. 🕺 EGO "The market can remain irrational longer than you can remain solvent.". If you want to prove the market that you are right, you are doomed to fail. The market is always right, no matter what happens, so you better learn to accept that your analysis or prediction of what would happen was wrong and cut your losses. Fast! 📚 LACK OF EDUCATION It takes many years to learn a skill or a profession, trading is no different. If you think about making lots of money without putting the time in to learn and test, you pretty much guarantee yourself to fail. You wouldn't want a lawyer without education to defend you in court, or a self-proclaimed surgeon who learned on YouTube to operate on you, would you? 💰 STARTING CAPITAL TOO LOW If you're starting with a low capital, you will tend to try and make it grow fast, resulting in taking too many trades, too high of a risk, too high leverage. If you start with a low capital, you'll have to be OK with the fact that it will grow slowly and that it will take (a lot of) time to build up a sizeable account. 🚦 BUYING OR FOLLOWING SIGNALS "There is no such thing as easy money." You might think that you don't have the time to learn about trading, making and backtesting a trading plan. So why not follow signals? Ask yourself what you know about this service? How profitable is it (and don't just go from the claims they make)? Do you know anything about the reason for a signal, why was it triggered? Have you talked to other users who used the service, what do they think about it? Why is this person/company selling signals if they are so successful as they claim? Philanthropy ? 🤔 📉 INDICATORS OVERLOAD Indicators can help you make decisions for trading, but too many indicators can and will lead to opposite signals or "analysis paralysis. Most indicators are derived from price, so it makes sense to learn how to read price action and discover the story behind the candles. 🆕 THE NEXT SHINY OBJECT SYNDROME You took the time to develop a trading plan and even tested it, but you run into a drawdown... Rather than counting on your experience and the expectancy that you know is there, you look for a new shiny method of trading, until the same thing happens again with this new method ... Rinse & repeat, never giving the chance for your original method, which you know was working when you tested it, to prove its worth ... Alright, I think I have provided the main reasons why new or inexperienced traders fail. Knowing why they (or you) fail is one thing, doing something about it is not a small feat. But with enough dedication, persistance and the right mindset, you can prove these statistics wrong! Feel like reasons are missing, let me know in the comments below. So what is your story? Are you a successful trader now but recognize these reasons for failure? Are you a new trader? Was this helpful? What did/will you do to overcome this? What did/do you struggle most with? Help the TradingView community by commenting below. "Trading is a ruthless business that does not take any hostages, so you better come prepared." - Nico Muselle Liked this post ? "Smash that like button!" 👍 - follow for more educational posts and alerts 🔔 when a new one is published. Thank you for your visit! 🙏
Education
by Profit_Through_Patience
40
5 Things You Should Stop Doing As A Trader1-listening to others -you don’t know their trading plan 2-strategy hopping -focus on one trading method -learn more about the trading method 3-tweaking one strategy -develop new strategies instead 4-thinking in terms of absolute 5-comparing yourself to others if you are interested any crypto that you want analyze with me and any questions please do not hesitate and comment below the chart! if u like it press like-comment and folow me.thx
Education
by Meisam_TA
2
🎓 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
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. 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TVC:SPXEducation
by Michael_Wang_Official
41
📚 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 ❤️
Education
by ForecastCity
20
📚 Learn More 💰 Earn More with us: FLAG = Impulse + CorrectionFLAG = Impulse + Correction 📚 LEARN MORE 💰 EARN MORE With ForecastCity After a significant drop in Bitcoin price , the price is in a correction wave. What makes the chart interesting today is that: . Bitcoin is likely to challenge the 18042 ~ 18227 resistance area. . A break above 18227 could push the pair to the 19487 area . . A resistance rejection , however could lead to another retest of the lower supports. Will the Bitcoin see a rejection from the resistance area or an upside breakout? No one knows it! We have to wait and see! ❤️ 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 ❤️
BITFINEX:BTCUSDEducation
by ForecastCity
25