GBPCAD LONG - NEW HIGHS EXPECTED!Waiting for a retest of 1.71226 to long GBPCAD back to swing highs at 1.73339
If you agree drop a like and if you have any questions leave a comment :)
Educationalposts
Removing the Guesswork from Trading: Is Trading Gambling?Hello traders of @TradingView community!
Today, let's delve into a question that often arises in the trading: Is trading really just another form of gambling? While both trading and gambling involve risk and speculation, they differ fundamentally in their approaches and outcomes.
Trading, unlike gambling, is not about chance or luck. It's about making informed decisions based on analysis, strategy, and market trends. Successful traders rely on research, technical and fundamental analysis, and risk management to guide their actions. They aim to identify patterns and trends that increase their probabilities of making profitable trades.
On the other hand, gambling is typically a game of chance where the outcome is largely unpredictable. Whether you're playing roulette or rolling dice, the result is random, and your chances of winning are often determined by luck. While some aspects of trading might resemble gambling to an outsider, the key difference is the level of control and analysis involved.
Traders use various tools and methodologies to minimize uncertainty and make calculated decisions. They set entry and exit points, incorporate stop-loss orders, and diversify their portfolios to manage risk.
Traders focus on developing and executing long-term strategies, steadily building profits over time. In contrast, gambling often entails short-term bets with instant outcomes.
Unlike gambling, trading emphasizes risk management. Traders implement stop-loss orders and diversification to protect their investments, showcasing their control over potential losses.
In conclusion, trading is far from gambling. It's an intricate practice that requires education, analysis, discipline, and continuous learning. While both involve risk, trading is grounded in strategy and knowledge, allowing traders to manage their risk and work towards achieving their financial goals.
[Education] How To Be Consistent & Master TradingTrading has always been an alluring career. The promise of financial freedom and the ability to escape the chains of a 9-5 job have led many individuals to explore the world of trading.
This is the same for me. I've first came across trading when I was serving in the army when I was 18. Trading is a whole new world to me. Candlesticks, expert advisors, and indicators all promised a world of luxury and freedom.
However, the path to becoming a successful trader is not an easy one. It requires discipline, knowledge, and the ability to control one's emotions.
My journey was constantly on and off, looking at small successes, then followed by big failures. It was around 5 years ago when I started to be serious in my trading career. It's definitely not a short one, but it's not long either.
In this article, I will delve into the key factors that can help you become a successful trader. From developing a systematic trading system to mastering risk management and overcoming emotional hurdles, we will cover it all. So, let's embark on this journey and unlock the secrets to becoming a profitable trader.
One of the key components of becoming a successful trader is the development of a systematic trading system. Without a well-thought-out plan, trading becomes a chaotic and unpredictable process. As the famous quote goes,
Knowledge is power, but without action, it is useless.
It is not enough to possess knowledge about various trading concepts and indicators. You must have a fixed strategy that you consistently trade with.
You fall into the trap of having a scattered approach to trading. You lack a well-defined trading plan and jump from one strategy to another, hoping to find the holy grail of trading. This lack of consistency and focus leads to poor results and frustration.
It took me years to be profitable. I tried many expert advisors, signals, indicator, PAMM and account management. It took me years of losses. Is it worth it? Probably. I could have accelerated my journey with a good and solid mentor. It took me years to condense my experiences into the trading system below.
Start by marking up your charts and identifying areas of liquidity, points of interest, and demand and supply zones. Conduct a thorough multi-timeframe analysis to identify higher probability trade opportunities. Set alerts at your points of interest to ensure you don't miss any trading opportunities.
Once a trade setup is triggered, write down your analysis on the chart. Clearly articulate what you expect to happen when the price hits your point of interest. This will help you stay focused on your trade plan and avoid impulsive decision-making.
When the alert goes off, evaluate your analysis to ensure it still holds true. If it does, mark out your stop loss and profit target levels based on your risk management principles. Confirm that the risk-to-reward ratio is suitable before entering the trade. If necessary, wait for additional confirmation on a lower timeframe before executing the trade.
Once in the trade, you have the option to either actively manage your position or let it run its course. This decision should be based on your backtesting results and personal preferences. Regardless of your approach, it is crucial to journal your trades. Record your entry, take-profit, and stop-loss levels, as well as any emotions or thoughts you experienced during the trade. This data will be invaluable for analyzing your performance and identifying areas for improvement.
Emotions can be both a greatest ally and a worst enemy. It is crucial to develop emotional discipline and learn how to control your feelings when making trading decisions. Emotions such as fear, greed, and impatience can cloud your judgment and lead to impulsive and irrational trading actions.
One common emotional pitfall is revenge trading. After experiencing a loss, you often feel the need to immediately recoup their losses by taking impulsive trades. This behavior is driven by anger and a desire to prove oneself right. However, revenge trading rarely ends well and typically leads to further losses.
I wasn't good at controlling my emotions in the past. I tend to get angry and sad whenever I had a losing trade. This is made worse when I was having a losing streak. I would deviate from my trading plan and enter into a position when it does not fit my trading plan. You guessed it, I went deeper into drawdown and this vicious cycle continues.
To overcome emotional hurdles, it is essential to stick to your trading plan and follow your predetermined rules. Trust the process and have faith in your strategy. Avoid making impulsive decisions based on short-term market movements or emotional reactions.
One effective way to maintain emotional discipline is through the use of a trading journal. By documenting your trades and recording your emotions and thoughts, you can gain valuable insights into your trading psychology. Reviewing your journal regularly will help you identify patterns and emotional triggers, allowing you to develop strategies to manage your emotions effectively.
Successful trading is not just about making profitable trades. It is also about managing risk. Risk management is the key to preserving capital and ensuring long-term profitability. Without proper risk management, even the most profitable trading strategy can lead to financial ruin.
A crucial aspect of risk management is determining an appropriate position size for each trade. This involves calculating the amount you are willing to risk on each trade based on your account size and risk tolerance. I recommend risking no more than 1% of your trading account on any single trade. This conservative approach helps protect your capital and prevents catastrophic losses.
I once had a losing streak of 7 trades. On the 8th trade, everything was telling me that I should go long on EURUSD. It was a A+ setup. Everything followed my plan. I increased my risk from 1% to 10%. Guess what? I lost this trade.
Anything can happen in the market.
Even with a 80% win rate trading system, it may seem impossible to have 10 losing trades in a row. Statistically speaking, it IS possible.
Another important risk management technique is the use of stop-loss orders. A stop-loss order is a predetermined price level at which you will exit a trade to limit your losses. By setting a stop loss, you define your maximum acceptable loss on a trade. This helps protect your trading account from significant drawdowns and allows you to maintain emotional discipline during adverse market conditions.
Trailing stop-loss orders can also be used to protect profits as a trade moves in your favor. This allows you to lock in profits while still allowing the trade to potentially run in your favor.
Becoming a successful trader requires practice and screen time. The more time you spend observing the markets, analyzing charts, and executing trades, the better you will become at identifying patterns and making informed trading decisions.
Practice is especially crucial to you if you are still developing your skills and gaining experience. Consider starting with a demo account to familiarize yourself with the trading platform and practice your strategy without risking real money. This allows you to refine your trading approach and gain confidence before transitioning to a live trading account.
As you gain experience and confidence, gradually increase the size of your trades while maintaining proper risk management principles. This gradual progression will help you build consistency and avoid the pitfalls of overtrading or taking excessive risks.
For many of you, finding an accountability partner is your path to success. An accountability partner is someone who holds you responsible for your trading actions and helps you stay on track with your goals. They can provide support, guidance, and feedback on your trading performance. Regular check-ins and discussions with your accountability partner can help you stay disciplined and focused on your trading plan.
Accountability partners can offer valuable support, tips and motivation. Conduct thorough research and due diligence to ensure that you are partnering with reputable individuals who have a proven track record. Records should also be verified by third parties such as Myfxbook and not excel, where they can write anything they want.
If you've been following me for the past few months or years, you would have known about my journey from being an unprofitable trader to a profitable one. I believe I'm successful right now, and is well on track to quitting my 9-5 job. I have a prop firm funded account journey here, where I document my journey to get a public 10k account for growing my YouTube channel. I also have a verified public track record.
Right now, I'm currently $230,000 funded, with 2x $200,000 challenges in Phase 2, and 1x $200,000 in phase 1. If I manage to pass these challenges, my AUM will jump up to $830,000.
Becoming a successful trader is a journey that requires discipline, knowledge, and emotional discipline. By developing a systematic trading system, managing risk effectively, and maintaining emotional discipline, you can increase your chances of achieving profitability in the financial markets.
Remember to focus on the process rather than the outcome. Trading is not a get-rich-quick scheme, but rather a long-term endeavor that requires continuous learning and adaptation. Be patient, stay committed to your trading plan, and continuously work on improving your skills.
With the right mindset, dedication, and a commitment to continuous learning, you can unlock the potential of trading and work towards achieving your financial goals. So, embark on this journey with confidence and embrace the challenges that lie ahead.
Happy trading!
Let me know if this post resonates with you. If it does, how does it relates to you!
Poker + Trading = Winning HandHello dear @TradingView community! Today let’s focus on how Poker game enhances trading excellence.
In the sports, athletes often engage in cross-training to prevent injuries and boost performance.
For instance, football players explore swimming and weight trainings, while runners embrace activities like hiking and cycling. But have you ever considered a form of mental cross-training that could significantly improve your trading skills? Enter the arena of virtual poker.
Picture this: Poker and trading, both sedentary pursuits where your mind takes center stage. In the same way athletes focus on honing specific muscle groups, traders must nurture their mental agility. In this realm, poker emerges as potent tool for refining skills that transcend the trading landscape.
1. Risk Management: A Calculated Gamble
In the world of poker, going "all in" can swiftly lead to losing everything on a weak hand, much akin to the risks of trading. Strategic players understand the value of managing risks. Just as traders avoid recklessly investing their entire capital, poker players refrain from putting all their chips on the line. The lesson is clear: prudent risk management is the bedrock of success.
When trading, the rule of never jeopardizing more than 1% of your account on a single trade reigns supreme. This practice mimics poker's ante system, where even a $100 buy-in allows you to engage in up to 100 hands, each risking only 1%. By staying in control and considering odds, both poker players and traders minimize the chances of "blowing up" their hard-earned gains.
2. Emotional Mastery: The Art of the Poker Face
A trader's prowess lies in following set rules and staying emotionally neutral. In trading, think "Spock-like" focus, or the legendary "poker face." Concealing emotions and making calculated moves regardless of the hand you're dealt defines success.
Just as a poker player keeps a straight face to prevent opponents from reading their hand, traders curb emotional impulses that can lead to hasty decisions.
3. Probabilities and Persistence
Ever heard the phrase "You gotta be in it to win it"? While it may apply to lotteries, poker and trading echo a more nuanced sentiment. In both arenas, it's about understanding the odds and playing consistently.
Just as a skilled poker player capitalizes on favorable odds to raise the stakes, traders must recognize high-probability patterns and seize opportunities.
4. Humility: Staying Grounded in a Fickle Realm
In poker, overconfidence can be fatal. The same rings true in trading. A winning streak can inflate one's ego, leading to rash decisions. A humbling poker loss teaches the crucial lesson of respecting probabilities and staying vigilant.
By acknowledging that the market, like the poker table, is unpredictable, traders guard against costly mistakes borne from hubris.
5. Setting Financial Goals: Knowing When to Fold
Casinos shower players with perks, knowing the allure of winning often overshadows rationality. Similarly, traders who've experienced an early-session surge often squander gains through overtrading.
Establishing a financial target and having the discipline to "fold" when achieved prevents pitfalls fueled by greed. Just as a poker player may walk away after doubling their money, traders secure profits by adhering to predefined goals.
6. Community and Learning: The Power of Like-Minded Allies
Thriving in a community of dedicated individuals fuels growth. Poker players and traders alike benefit from shared insights and experiences. Engaging in online poker communities or joining global poker circles offers a haven for mutual learning.
As traders refine their craft, they unlock not only poker prowess but also a deeper understanding of market dynamics.
Intriguingly, virtual poker emerges as an unexpected but valuable ally for traders seeking to enhance their skills. It's more than a game; it's a training ground for honing the mental acuity vital for success in trading's challenging realm. So, are you ready to deal your hand and sharpen your trading edge?
Remember, whether you're at the poker table or the trading desk, calculated moves, emotional control, strategic thinking, and community engagement are your aces in the hole.
Best of luck, and who knows, maybe we'll even cross paths at the poker table one day!
HFT: Benefits, Controversies, and Technological AdvancementsIntroduction
High-Frequency Trading (HFT) is a sophisticated trading strategy that utilizes powerful technology and algorithms to execute a substantial number of trades within fractions of seconds. While HFT has revolutionized the financial markets and brought numerous benefits, it has also stirred controversies due to its potential impact on market stability and fairness. In this article, we will explore the benefits of HFT, delve into the controversies it has sparked, and examine how advanced technology enables this lightning-fast trading approach.
The Benefits of High-Frequency Trading
a. Enhanced Liquidity: One of the primary advantages of HFT is its contribution to market liquidity. HFT firms frequently provide liquidity by being both buyers and sellers in the market, narrowing bid-ask spreads and ensuring smoother price discovery.
b. Reduced Transaction Costs: The competitive nature of HFT leads to lower transaction costs for all market participants. This translates to cost savings for retail investors, institutional traders, and other market participants.
c. Efficient Price Discovery: HFT's rapid trading enables the market to react quickly to new information, leading to more efficient price discovery and reducing information asymmetry among market participants.
d. Market Efficiency: High-frequency traders help bridge the gap between different trading venues and ensure prices remain aligned, promoting overall market efficiency.
Controversies Surrounding High-Frequency Trading
a. Market Instability: Critics argue that HFT's ultra-fast trading can exacerbate market volatility, leading to abrupt price swings and destabilizing market conditions.
b. Unfair Advantage: HFT firms, with their advanced technology and proximity to trading servers, gain an unfair advantage over traditional investors and retail traders, leading to an uneven playing field.
c. Flash Crashes: HFT has been implicated in certain flash crash events where a sudden and severe market downturn occurs in a matter of minutes. Critics claim that HFT's aggressive strategies may contribute to these incidents.
d. Regulatory Challenges: Regulators struggle to keep pace with the rapidly evolving HFT landscape, leading to concerns about potential market manipulation and inadequate oversight.
Leveraging Technology for High-Frequency Trading
a. Low-Latency Trading Infrastructure: HFT firms invest heavily in low-latency trading infrastructure, such as proximity hosting and direct market access, to minimize communication delays and execute trades swiftly.
b. Advanced Algorithms: Complex algorithms form the backbone of HFT strategies. These algorithms analyze market data, identify patterns, and make split-second decisions on trade execution.
c. Co-location Services: HFT firms often lease space near exchange servers to reduce network latency further. Co-location allows them to place their trading servers in close proximity to the exchange, gaining a speed advantage.
d. Colossal Data Processing: High-frequency traders process enormous amounts of market data in real time to execute trades with precise timing and efficiency.
Regulatory Efforts and Future Outlook
In response to concerns surrounding HFT, regulators worldwide have been working to implement rules and controls aimed at maintaining market integrity and reducing the risk of disruptive events. Measures such as circuit breakers, minimum resting periods, and market-making obligations have been introduced to mitigate potential negative impacts.
The future of HFT remains promising, with ongoing technological advancements driving the industry forward. Machine learning, artificial intelligence, and big data analytics are revolutionizing trading strategies and contributing to even faster decision-making.
Conclusion
High-Frequency Trading has undoubtedly transformed the financial landscape, introducing benefits like enhanced liquidity, efficient price discovery, and reduced transaction costs. However, its lightning-fast pace and perceived unfair advantages have sparked controversies and regulatory challenges. As technology continues to evolve, the future of HFT will likely see further innovations and improvements, but it will also require careful monitoring and oversight to ensure fair and stable markets for all participants.
The Cup and Handle Pattern in TradingGreetings, fellow traders and investors of @TradingView 📈🚀
Keep your eye for cup and handle pattern, a chart formation that hints at potential market possibilities.
The Cup and Handle:
Visualize a cup, complete with a 'U' shape and accompanied by a handle. This chart pattern mimics that very shape, capturing price shifts that can hint at noteworthy market movements. Here's the essence: a cup forms through a gradual downward trajectory, leading to a stabilizing phase, and eventually, a rally that mirrors the extent of the initial decline. This sequence of price action is pivotal in identifying the characteristic cup and handle formation.
Initiated by low trading volume, the formation gathers momentum with rising volume as the left lip of the cup takes form. Subsequently, volume recedes near the cup's bottom, only to surge again towards the right lip and breakout.
The initiation involves a dip in price, followed by stabilization, and finally, a rally that aims to retrace the plummet's impact.
As the cup materializes, it curves into a 'U' shape, while the price dips slightly to craft the handle. Notably, the handle must be smaller than the cup and should exhibit a minor downward trend within the trading range. It's imperative that the handle doesn't dip below one-third of the cup's depth.
Strategy and Execution
Now, how can you effectively trade this compelling pattern? The strategy involves positioning a limit buy order just above the upper resistance of the cup and handle. Simultaneously, set a stop-loss order slightly below the handle's support. This calculated approach ensures that your buy order triggers only when the price breaks through the upper resistance level. This cautious measure shields you from premature entry due to false breakouts.
For traders seeking an extra layer of assurance, patiently waiting for the price to conclusively close above the upper trendline of the handle can provide a higher degree of certainty before initiating the trade.
🌟 Wishing you successful trades and profitable outcomes as you leverage insights from @Vestinda. Remember, patience and careful analysis are your allies on trading path.
Happy trading! 💰
GOLD sellGold sell is having bearish trend from the last weak as we have given a buy trade on Gold but it has gone the other side but now what i see on top down anylisis on daily time frame gold is forming a falling wedge which is yet not completed now moving to moving average exponential of 200 states that price has just broke down and now will continue 👇
Now in H1 timeframe price is moving downwards and the confluance of 200EMA is also supporting bearish momentum as price will reach is significant support level price can bounce back still its bearish also we are having a Trendline which is also giving us a Resistance level on 1902 to 1904 level and if price breaks above that level and gives us any signal of staying upwards we will be buying this pair but still we are bearish
Can HIRECT Re-Erect ?Hind Rectifiers Ltd. is primarily engaged in developing, designing, manufacturing, and marketing Power Semiconductor, Power Electronic Equipment's, and Railway Transportation Equipment's.
The Co. provides complete solutions in design, manufacturing and services in the field of power electronic equipment for aviation, power, telecommunication, and various industrial plants. It manufactures Active Harmonic Filters, Constant Current Regulators, Water Cooled Rectifier, Thyristor Controlled Rectifier, etc. It offers a range of products including Stud/Flat Base/Capsule devices, Power Stack/Assemblies, and Rotating Assemblies. The Co. is involved in the transport projects of Railways, Mass Transit Projects, and Metropolitan Transport Systems and it manufactures Propulsion system, Transformers, Microprocessor, Driver Display Unit & Inverters.
The Company has a strong brand and leadership position in the market for the equipment of 3Ph locomotives and LHB coaches along with the pollution control and environmental protection equipment. The Co. caters to major players such as Indian Railways and Bharat Heavy Electricals Ltd (BHEL), resulting in repeat orders from them and an increase in revenue. The Co. derives 70% of its revenue from the railway sector and increased competition and slowdown in the railway sector will hamper the growth of the company.
The Co. has incorporated 2 wholly-owned subsidiaries with an objective to leverage the growth opportunities in the service activities and to leverage the growth opportunities in the E-commerce place for B2B as well for B2C business respectively. In Q4FY22, the Co. has secured orders of Rs.127.72 Cr (including an order of Rs.46.18Cr from Railways)
This analysis is only my view and is in no way responsible for your trade. Please consult your financial advisor before making any investment.
The Carry Trade
With the current aggressive interest rate hikes happening with some of the world's leading central banks due to inflation problems, we figured it would be an ideal time to discuss the carry trade.
This post will go into further detail about the carry trade and how it works in the forex market. We will also discuss one of the most popular carry trades to take place in forex history and the risks traders should be wary of when trying to implement this strategy.
What is the carry trade?
The simple explanation of the carry trade is that a speculator borrows one financial instrument to buy another financial instrument. For example, let's assume that you go into a bank and borrow $10,000, which then charges you a 1% lending fee ($100). You then take that $10,000 and purchase a Treasury bond that pays you 5% a year. Your profit is 4% (minus commissions and other costs). Basically, you have profited from the difference in the interest rate. This is the carry trade in its simplest form.
The carry trade in the Forex market
The carry trade in the forex market is one of the oldest and simplest forms of forex trading strategies. It was first developed by fund managers to take advantage of the interest rate differentials between currency pairs. A carry trade occurs when you buy a high-interest currency against a low-interest currency. For each day that you hold that trade, the broker will credit you the interest difference between the two currencies (this difference is called the 'interest rate differential'), as long as you are trading in the interest-positive direction. To understand this further, let's give an example:
In the forex market, currencies are traded in pairs (so if you buy USD/JPY, you are actually buying the US dollar and selling the Japanese Yen at the same time).
You receive interest on the currency position you BUY and pay interest on the currency position you SELL.
What makes the carry trade unique in the forex market is that interest payments take place every trading day based on your position. This is because technically, all positions are closed at the end of the trading day in the forex market. You just don’t see it happen if you carry your position overnight due to the fact that brokers close and reopen your position, and then they credit or debit you the overnight interest rate differential between the two currencies (this is also called a rollover or swap).
The amount of leverage available from forex brokers has made carry trades very attractive in the forex market. Most, if not all, forex trading is margin-based, meaning you only have to put up a small amount of the position and your broker will put up the rest. Many brokers ask traders for as little as 1% or even less as margin to trade a position.
Continuing from our above USDJPY example, let's assume that interest rates are 6% for the US dollar and 1% for the Japanese Yen (so the interest rate differential is 5%). Let us assume that you deposit $10,000 with a broker and decide to buy USDJPY with the intention to carry trade and earn +5% interest a year. Let's say the broker offers you 100:1 leverage and you want to purchase $10,000 worth of that currency. Since the broker is offering you 100:1 leverage, you would only require a 1% deposit for the position; therefore, you hold $100 in margin. Now you have an open USDJPY trade that is worth $10,000 and is receiving 5% a year in interest. To get a clearer picture of this, let's see the image below:
What will happen to your account if you do nothing for a year? There are three possibilities. Let’s take a look at each one in the image below:
Due to the 100:1 leverage being offered to you, in this scenario you have the potential to earn at least 5% a year from your initial $10,000, but there are huge risks to this (we will get to that later).
The infamous AUDJPY carry trade
During the early to mid-2000s, traders experienced near-perfect combinations of these conditions across numerous forex pairs, most popularly the AUDJPY. This particular FX carry trade involved going long on the AUDJPY.
The Australian dollar has historically yielded higher interest rates than other global currencies. The Bank of Japan has been keeping interest rates low since the mid-1990s in an effort to revive the economy after a stock market crash caused a recession. The Bank of Japan has persisted with its approach to low interest rates, and in 2016, it announced negative interest rates. This means Japanese banks now pay interest on the cash they deposit with the Bank of Japan instead of earning interest on it.
AUDJPY Exchange Rate and Interest Rate Differential 2001–2014
As you can see in the image above, the interest rate differential between Australia and Japan was consistently high. Due to the Australian dollar yielding a much higher return on investment compared to the Japanese yen, the situation provided retail traders and big institutions great opportunities for carry trading to occur with this currency pair and reaped huge profits from it. These conditions boomed, especially throughout the early to mid-2000s; however, this seemed to change just before the end of the 2000s. In 2008, with the global recession, the economic conditions surrounding Australian and Japanese investments changed as interest rates in Japan drifted slightly upward from near zero to just above zero, while interest rates in Australia fell considerably. As a result of both countries having their interest rates close to each other, the Japanese yen drastically appreciated against the Australian dollar, which would have caused traders huge losses when implementing the carry trade method during this period. You can see this in the chart below:
AUDUSD 3-Month Chart
Interest rates have changed since then: as of August 2023, Australia's interest rates are now back up to 4.10%, while Japan's interest rate remains at -0.1%.
Risks of the carry trade
The biggest risk in a carry trade strategy is the absolute uncertainty of exchange rates. For example, if a trader is buying a currency to profit from that currency pair's interest rate differential and the country of the currency cuts its interest rate unexpectedly, the exchange rate of that currency will most likely drastically fall, which can potentially cause the trader to suffer sudden and big financial losses. Due to this, it is important to look at more than just the interest rates on the currencies before you trade on the forex market. Additionally, if a country’s economic outlook does not look positive, the demand for that country's currency will decrease, especially if the market thinks that their central bank will have to lower interest rates to help their economy.
Another important risk factor for traders to consider with the carry trade is that if substantial leverage is used to implement it, then big market moves against the trader's favour could result in losses that may cause margin calls, the position being automatically stopped out, or worse, losing more than your initial deposit and the trader's account ending up in a negative balance.
Lastly, global markets and economies have still not fully recovered from the global crash of 2008. Carry trades are very difficult to do now with major forex pairs due to the majority of brokers no longer offering positive swaps on major pairs. Traders have been looking at some exotic currency pairs as viable options because some of their countries' interest rates are still high. Exotics such as the Mexican peso, the South African rand, and the Nigerian naira are all options that many forex brokers offer, with currency pairs featuring USD, GBP, EUR, and even JPY variations. However, exotic currency pairs can be extremely volatile and dangerous as traders are susceptible to experiencing big market moves constantly in both directions, which makes these currencies very unpredictable and can cause traders big losses. These currency pairs can also be very expensive to trade due to the high spreads and possible additional commission costs.
1 Month MXNJPY chart example:
The above chart shows that traders have been looking at exotic currencies as alternative options to continue carry trades, though they pose very high risks and can be very expensive to trade.
The carry trade, while potentially lucrative and rewarding, can be very dangerous, and you must consider all risk factors if you are looking to implement this trading method. Trading this way with major and cross-currency pairs is very difficult to do now, and we cannot stress enough that you must trade with absolute caution if you’re implementing the exotic currencies into your own carry trading strategy. That being said, we may get to a time again where carry trades are possible with major currency pairs as interest rates are going back up globally in an attempt to recover from the global inflation crisis. Forex brokers may be open again to offer traders positive swaps on majors and crosses.
BluetonaFX
Exploring Minor Trends in Trading
Hey traders! Today, we're diving into the fascinating world of minor trends – those subtle shifts in the market that can hold hidden opportunities.
Minor trends are like whispers in the trading landscape, often overshadowed by major trends but with their own significance. They occur within shorter timeframes, making them perfect for agile traders seeking quick moves.
Timing is Everything: Minor trends typically span from a few days to a couple of weeks. They're like brief guest appearances on the trading stage, offering chances to capitalize on short-term fluctuations.
Spotting the Signals: Keep a keen eye on price action, volume, and technical indicators to catch the subtle hints of a minor trend forming. These clues can help you stay ahead of the curve and make informed decisions.
Ride the Ripples: Minor trends can present both bullish and bearish opportunities. Whether it's a minor uptrend offering potential long trades or a minor downtrend for short plays, adaptability is key.
Seize the Moment: While major trends may get the spotlight, minor trends offer quicker rewards. By understanding when and how they occur, you can add a dynamic layer to your trading strategy.
So, traders, embrace the power of minor trends! Sharpen your skills to harness these fleeting yet impactful movements in the market. Remember, success lies in staying nimble and seizing opportunities, no matter how small.
Happy trading!#TradingInsights #MinorTrends #TradingStrategies #StayNimble
EURGBP LONG - ONE MORE LEG HIGHER!Waiting for a retest of 0.66230 to long EURGBP back to 4H swing high at 0.86847
If you agree drop a like and if you have any questions leave a comment :)
NZDUSD SHORT - STILL A LONG WAY TO GO!Waiting for a retest of 0.60521 to short NZDUSD back to Daily key support at 0.58802
If you agree drop a like and if you have any questions leave a comment :)
XAUUSD SHORT - MORE DOWNSIDE TO FOLLOW!Waiting for a retest of 1946.057 to short XAUUSD back to Daily swing lows at 1896.016
If you agree drop a like and if you have any questions leave a comment :)
Fundamental vs Technical Analysis📊🔍 Fundamental vs Technical Analysis: Unveiling the Differences and Advantages 🔍📊
In the exciting world of trading, two distinct yet equally important methodologies dominate the landscape: Fundamental Analysis and Technical Analysis.
Both approaches provide valuable insights, but they stem from different philosophies and offer unique advantages.
Let's dive into the heart of this debate to explore the contrasting attributes of these two analytical powerhouses.
Fundamental Analysis: Delving into the Essence
Fundamental analysis revolves around the study of a company's intrinsic value by assessing its financial statements, economic indicators, and market trends.
This approach examines the broader economic context that influences the asset's price, making it a staple for long-term investors. By scrutinizing earnings reports, balance sheets, and macroeconomic factors, fundamental analysis seeks to identify whether an asset is overvalued, undervalued, or fairly priced.
🔍 Advantages of Fundamental Analysis:
• Provides a holistic view of the asset's health and potential future growth.
• Useful for long-term investment decisions.
• Helps investors understand market trends driven by economic events.
Technical Analysis: Unveiling Price Patterns
Technical analysis, on the other hand, is all about decoding price patterns and historical data. It relies on charts, indicators, and patterns to predict future price movements.
The emphasis is on understanding market sentiment, trends, and psychological factors that impact buying and selling decisions.
Technical analysts believe that historical price data can indicate potential future price direction.
🔍 Advantages of Technical Analysis:
• Well-suited for short-term trading decisions.
• Helps traders identify entry and exit points more precisely.
• Focuses on price action, which reflects market sentiment and behavior.
The Synergy of Both Approaches: A Balanced Strategy
While fundamental and technical analysis may seem to belong to separate worlds, combining both can yield powerful insights. Successful traders often utilize a hybrid approach, leveraging fundamental analysis to understand the broader context and technical analysis to fine-tune entry and exit points. This combined approach can enhance decision-making and help traders navigate the complexities of the market more effectively.
🌟 Conclusion: The Path to Informed Trading
Fundamental analysis and technical analysis are like two sides of the same coin, each offering distinct benefits. The choice between them often depends on your trading style, time horizon, and risk tolerance.
As you delve deeper into the world of trading, consider incorporating elements of both approaches to develop a more comprehensive understanding of the market dynamics and make more informed trading decisions.
Remember, understanding the nuances of both fundamental and technical analysis can be a valuable asset on your trading journey. Stay curious, stay informed, and keep refining your analytical toolkit.
Happy trading! 💙💛
Feel free to share your thoughts and experiences in the comments below. Let's support and inspire each other on this exciting trading path.
Your Kateryna💙💛
Boom And Bust Cycle of BitcoinGreetings, esteemed members of the @TradingView community and all Vesties out there!
The financial markets is a complex and dynamic arena where investors seek to capitalize on opportunities and generate profits.
One recurring phenomenon in the financial world is the "boom and bust cycle", characterized by periods of rapid asset price escalation followed by sudden and often dramatic declines. Understanding this cycle is crucial for investors to make informed decisions and navigate market volatility effectively. In this article, we will delve into the life cycle of a bubble within the context of the financial markets, using the Bitcoin price chart as a compelling example. Additionally, we will explore how Bitcoin's circulating supply contributes to its perceived value.
The Anatomy of a Bubble:
A bubble refers to a speculative phase during which the prices of assets, such as stocks or cryptocurrencies, soar to unsustainable levels fueled by investor euphoria, media hype, and the fear of missing out (FOMO). These bubbles are often followed by a sharp correction or crash, resulting in significant losses for those caught up in the frenzy. The cycle typically consists of four key phases:
a) Stealth Phase: Prices begin to rise slowly, driven by fundamental factors or innovative breakthroughs. Initial interest is limited, and only a few astute investors take notice.
b) Awareness Phase: Media coverage and public attention increase as prices gain momentum. More investors start to notice the rising prices and may begin to invest, contributing to further price appreciation.
c) Mania Phase: FOMO sets in as a growing number of investors rush to buy the asset, driving prices to astronomical heights. Speculative behavior dominates, and valuations become detached from underlying fundamentals.
d) Blow-Off Phase: The bubble reaches its peak, and prices begin to plummet as profit-taking and panic selling ensue. The market experiences a rapid decline, erasing gains made during the boom phase.
Bitcoin's Boom and Bust Cycle Example:
Bitcoin, the pioneering cryptocurrency, has experienced multiple boom-bust cycles since its inception. One particularly notable example is the bubble of 2016-2017-2018 period:
a) Stealth Phase: Bitcoin's price had been steadily increasing due to growing interest and adoption within the tech and financial communities.
b) Awareness Phase: Media coverage intensified, drawing mainstream attention to the soaring Bitcoin prices. Retail investors started entering the market.
c) Mania Phase: The price skyrocketed to nearly $20,000 per Bitcoin, fueled by widespread FOMO. New investors poured money into the market, believing the rally would continue indefinitely.
d) Blow-Off Phase: The bubble burst, and Bitcoin's price tumbled, ultimately losing over 80% of its value. Many inexperienced investors who bought at the peak faced substantial losses.
The Role of Bitcoin's Circulating Supply:
Bitcoin's circulating supply, the total number of coins available for trading in the market, plays a crucial role in shaping its perceived value. The scarcity of Bitcoin is often cited as a driving factor behind its price appreciation. With a fixed supply of 21 million coins, the principle of supply and demand suggests that as demand for Bitcoin increases, its price should rise over time.
a) Halving Events: Approximately every four years, Bitcoin undergoes a "halving" event, where the rate at which new Bitcoins are mined is cut in half. This scarcity-inducing mechanism further accentuates the notion of limited supply, potentially driving up prices.
b) Investor Perception: Investors often view Bitcoin as a store of value and a hedge against traditional financial markets. As this perception grows, demand for Bitcoin increases, putting upward pressure on its price.
Understanding the life cycle of a bubble is essential for investors to make informed decisions and mitigate the risks associated with market volatility.
By examining the case of Bitcoin's boom and bust cycle and considering the impact of its circulating supply, we gain valuable insights into how market dynamics and human behavior can shape asset prices. As the financial world continues to evolve, these lessons remain relevant, serving as a reminder of the importance of rational investment strategies and a clear understanding of market fundamentals.
The Quest for the Trading "Holy Grail": A Realistic PerspectiveDiscover why the concept of a trading "holy grail" is more myth than reality. Why successful trading involves understanding market uncertainties, human behavior, and adaptable strategies?
Experienced traders know: there's no magical "holy grail" guaranteeing 100% profits. In truth, consistent traders recognize losses as much a part of trading as gains. Despite this, a stream of novice traders still seek the one-size-fits-all path to profitability.
Consider these three reasons why discovering a trading "holy grail" is as likely as reaching the sun:
Unpredictable Market Uncertainties: The market's complexity thwarts all-knowing predictions. Influences are countless, making extended manipulation improbable. Unless you've got superpowers foreseeing central banker statements or impending crises, the holy grail remains elusive.
Human Behavior Influences Markets: Human decisions continue to shape market dynamics. While automated systems play a role, it's human actions that cause market fluctuations. Trading opportunities emerge from discrepancies between price and value, often influenced by individual interpretations. Variations in approaches, like Nick vs. Mike, and factors like John's hesitance to cut losses, contribute to market complexities.
Adaptable Strategies are Essential: Market patterns echo human behavior, but shifting conditions render "surefire" systems obsolete. The ebb of trend-following tools demonstrates adaptability's importance. Profits hinge on discretion, recognizing pattern shifts, and mastering risk management.
Remember, a holy grail isn't essential for trading success. Full-time and part-time traders alike profit with prudent risk management. Understanding of risk management — your keys to sustainable trading success.
Overview of the Elliott Wave TheoryThe theory of Elliott Waves, an intricate subject we've delved into in previous posts, beckons me once more to distill its essence. Let's gather the pivotal elements anew, unraveling the complexities to forge a deeper understanding.
Elliott Waves exhibit fractal characteristics. Each wave possesses segments that closely resemble the entire wave, a quality known in mathematics as "self-similarity."
A trending market adheres to a distinct 5-3 wave structure.
The initial 5-wave pattern is termed the impulse wave.
One among the three impulse waves (1, 3, or 5) always extends, with Wave 3 typically being the elongated one.
The subsequent 3-wave pattern is recognized as the corrective wave, denoted by letters A, B, and C in lieu of numbers for tracking the correction.
Waves 1, 3, and 5 consist of smaller 5-wave impulse patterns, while Waves 2 and 4 are comprised of lesser 3-wave corrective sequences.
While there exist 21 varieties of corrective patterns, they fundamentally stem from three straightforward and comprehensible formations.
These core corrective wave shapes encompass zig-zags, flats, and triangles.
Three fundamental principles define the labeling of waves within the Elliott Wave Theory:
First Principle: Wave 3 must NEVER be the shortest impulse wave.
Second Principle: Wave 2 must NEVER surpass the commencement point of Wave 1.
Third Principle: Wave 4 must NEVER overlap with the price region of Wave 1.
Upon thorough chart analysis, you'll observe that the market indeed advances in waves.
Since the market seldom conforms precisely to theoretical models, honing your ability to analyze waves requires extensive practice over numerous hours before you find yourself at ease with Elliott waves.
🙌🏻Persevere diligently and remain steadfast in your pursuit!Happy trading!
Your Kateryna💙💛
Top 10 Trading IndicatorsWelcome to the dynamic world of trading indicators! These meticulously crafted metrics, born from the intersection of mathematics and market psychology, offer traders a distinct advantage by transforming raw market data into actionable intelligence. Join us as we embark on a journey through the top 10 trading indicators, exploring their intricacies, strengths, and applications in deciphering the ever-shifting landscape of global markets. Whether you're a seasoned trader seeking to refine your strategies or a novice investor eager to grasp the essentials, this exploration promises to illuminate the fascinating realm of trading indicators and their pivotal role in the pursuit of financial success.
1. Moving Averages (MA)
The Moving Average often referred to as the SMA (Simple Moving Average), serves as a valuable tool for discerning the prevailing direction of a current price trend, while filtering out short-term price fluctuations. Through a calculated amalgamation of price points over a defined time span, divided by the total data points, the MA indicator presents a singular trend line that encapsulates the overall trajectory.
The timeframe utilized for the MA computation dictates the dataset employed. For instance, a 200-day MA necessitates 200 days' worth of data. By harnessing the insights offered by the MA indicator, one can delve into the realm of support and resistance levels, gaining insights from past price movements and the market's historical evolution. This, in turn, facilitates the anticipation of potential future patterns with enhanced precision.
2. Average True Range (ATR)
The Average True Range (ATR) is a widely used technical indicator designed to measure market volatility and assess potential price movement within a given trading period. Developed by J. Welles Wilder, ATR offers traders insights into the range of price fluctuations, accounting for both intraday price spikes and overnight gaps. Unlike many other indicators, ATR does not provide directional signals but instead focuses on quantifying volatility levels.
ATR is computed by considering the true range for each trading period, which involves calculating the greatest value among three key metrics: the difference between the high and low prices of the current period, the absolute value of the difference between the previous period's high and the current period's close, and the absolute value of the difference between the previous period's low and the current period's close. These true range values are then smoothed over a specified number of periods, often 14, to create the ATR line.
Traders employ the ATR indicator for multiple purposes. It aids in setting stop-loss levels, as larger ATR values suggest increased volatility and the potential for wider price swings. Additionally, ATR can assist in determining position sizing, with lower volatility suggesting smaller trade sizes and vice versa. Overall, ATR provides a valuable quantification of market volatility, enabling traders to adapt their strategies to prevailing market conditions and manage risk more effectively.
3. Stochastic oscillator
The Stochastic Oscillator is a momentum-based technical indicator that offers traders insights into potential trend reversals and overbought or oversold conditions in a market. Developed by George C. Lane, this oscillator compares the most recent closing price of an asset to its price range over a specified period, typically 14 periods. The resulting value, often expressed as a percentage, indicates the relative position of the closing price within that range. The Stochastic Oscillator comprises two lines: %K, the faster line that represents the current price's relationship to the recent range, and %D, a smoothed moving average of %K, providing a more stable signal.
Traders commonly use the Stochastic Oscillator to identify potential turning points in price trends. When the oscillator ventures into the overbought zone (typically above 80), it suggests that the asset might be overvalued, potentially signaling an impending price reversal or correction. Conversely, readings in the oversold zone (typically below 20) indicate potential undervaluation and may signal an upcoming price bounce. By analyzing the crossovers, divergences, and relationships between %K and %D, traders can derive valuable insights into the market's underlying momentum, facilitating more informed trading decisions and strategic entries or exits.
4. Moving average convergence divergence (MACD)
The Moving Average Convergence Divergence (MACD) is a versatile and widely used technical indicator that provides traders with insights into trend direction, momentum shifts, and potential buy or sell signals. Created by Gerald Appel, the MACD consists of two main components: the MACD line and the signal line. The MACD line is derived from the difference between two exponential moving averages (usually 12-period and 26-period EMAs), reflecting the convergence or divergence of short-term and long-term price trends. The signal line, often a 9-period EMA of the MACD line, acts as a trigger for potential trade entries or exits.
Traders leverage the MACD for various purposes. When the MACD line crosses above the signal line, it generates a bullish signal, indicating a potential upward price momentum and suggesting a favorable buying opportunity. Conversely, when the MACD line crosses below the signal line, a bearish signal is generated, suggesting a potential downward trend and a possible selling opportunity. Additionally, traders analyze the MACD histogram, which represents the difference between the MACD line and the signal line, providing insights into the strength and intensity of price momentum. With its ability to capture both short-term and long-term trends, the MACD remains a valuable tool for traders seeking to navigate complex market dynamics and make well-informed trading decisions.
5. Bollinger bands (BB)
Bollinger Bands, a cornerstone of technical analysis, provide traders with a unique perspective on price volatility and potential trend reversals. Created by John Bollinger, this indicator comprises three distinct lines that encapsulate price action: the middle band, typically a simple moving average (SMA), and an upper and lower band, which flank the middle band at a specified standard deviation distance. The width between the upper and lower bands dynamically adjusts according to market volatility, expanding during periods of heightened price swings and contracting during calmer phases.
These bands offer traders invaluable insights into market dynamics. When prices gravitate towards the upper band, it suggests potential overbought conditions, signifying that prices might have risen too far, too fast, potentially foreshadowing a reversal or corrective move. Conversely, when prices approach the lower band, it indicates potential oversold conditions, implying that prices might have fallen excessively and could be due for a rebound. Additionally, traders scrutinize Bollinger Band squeezes, characterized by a contraction of the bands, as they often precede significant price breakouts. By incorporating Bollinger Bands into their analytical toolkit, traders gain a nuanced understanding of price movements and volatility patterns, enabling them to make more informed decisions and better navigate the intricacies of financial markets.
6. Relative Strength Index (RSI)
The Relative Strength Index (RSI) stands as a pivotal momentum oscillator in the realm of technical analysis, offering traders a comprehensive measure of an asset's strength and potential overbought or oversold conditions. Conceived by J. Welles Wilder, the RSI compares the magnitude of recent price gains to losses over a specific time frame, typically 14 periods. This computation yields a value between 0 and 100, with readings above 70 often indicating overbought conditions, implying that the asset may have experienced excessive buying and could be due for a price correction. Conversely, readings below 30 signify potential oversold conditions, suggesting that selling pressure might have driven the asset's price too low and could lead to a rebound.
Traders wield the RSI as a versatile tool to uncover potential trend reversals and assess the underlying strength of an asset. By identifying divergence between the RSI and price movements, traders can pinpoint situations where momentum might be shifting before it becomes evident through price action alone. Moreover, the RSI's ability to generate signals when crossing key thresholds adds an element of decisiveness to trading strategies, guiding traders on when to buy or sell based on the prevailing market sentiment. With its capacity to unveil underlying market dynamics, the RSI empowers traders with a deeper comprehension of asset behavior, enabling them to make more informed decisions and navigate market fluctuations with greater confidence.
7. Fibonacci retracement
Fibonacci analysis, rooted in the pioneering work of Leonardo Fibonacci, has become an essential tool in technical analysis, guiding traders and analysts in deciphering potential price levels, retracements, and extensions within financial markets. The Fibonacci sequence, a mathematical progression where each number is the sum of the two preceding ones (1, 1, 2, 3, 5, 8, 13, and so on), forms the foundation of this technique. In trading, Fibonacci ratios such as 0.618 (Golden Ratio), 0.382, and 0.236 are applied to various price movements to identify significant levels of support and resistance. These ratios, when combined with key price points, create Fibonacci retracement and extension levels that aid in predicting potential price reactions and trend continuations.
Traders utilize Fibonacci analysis to comprehend price patterns, predict reversals, and identify areas of interest for market entry or exit. The technique's widespread application spans across different timeframes and asset classes, making it a versatile tool for both short-term traders seeking precise entries and long-term investors analyzing broader trends. By integrating Fibonacci ratios with chart patterns, trendlines, and other technical indicators, traders can enhance their decision-making processes, improve risk management, and gain a deeper understanding of market psychology as reflected in price movements.
8. Ichimoku Cloud
The Ichimoku Cloud, a distinctive and comprehensive technical indicator developed by Goichi Hosoda, stands as a multifaceted analytical tool that provides traders with a holistic view of an asset's price action and potential trend direction. Comprising five lines and a shaded area, the Ichimoku Cloud offers a layered perspective that transcends traditional technical analysis. At its core, the indicator features the Senkou Span A and Senkou Span B lines, which, when combined, form the cloud-like area on the chart. The cloud serves as a dynamic support and resistance zone, with its thickness reflecting market volatility and potential trend shifts. The Tenkan-sen and Kijun-sen lines, akin to fast- and slow-moving averages, contribute to the indicator's depth by indicating current momentum and trend direction. Finally, the Chikou Span, plotted backward, provides insights into the relationship between current and past prices.
Traders and analysts employ the Ichimoku Cloud for its comprehensive insights into market conditions. The cloud's shifting nature offers early indications of potential trend changes, while crossovers between the Tenkan-sen and Kijun-sen lines provide buy or sell signals. Furthermore, the Ichimoku Cloud accommodates various timeframes, catering to both short-term and long-term trading strategies. Its intricate combination of lines and the cloud presents traders with a holistic picture of price dynamics, enhancing decision-making through a blend of trend analysis, momentum assessment, and support/resistance identification.
9. Standard deviation
The Standard Deviation indicator, a fundamental component of technical analysis, offers traders a quantitative tool for assessing the volatility and dispersion of price data within a given trading period. By quantifying the degree of variability in prices around their average or mean, this indicator aids in comprehending market dynamics and potential price fluctuations. Computed by analyzing the differences between each data point and the mean, squaring these differences, averaging the squared values, and finally taking the square root of the result, the Standard Deviation indicator produces a numerical value that represents the degree of price dispersion. A higher value suggests greater market volatility and potential risk, while a lower value indicates more stable and predictable price movements.
Traders harness the Standard Deviation indicator to achieve a variety of objectives. Firstly, it helps identify periods of heightened market volatility, guiding traders to exercise caution or implement risk management strategies during times of potential turbulence. Secondly, it contributes to the assessment of potential price targets and support/resistance levels. By recognizing how price data typically deviates from the mean, traders can anticipate potential price levels at which reversals or trend changes might occur. Furthermore, the Standard Deviation indicator can be employed in conjunction with other technical tools to fine-tune trading decisions and develop strategies that align with prevailing market conditions. Its quantitative approach to measuring volatility enhances traders' ability to make informed choices and navigate market uncertainty with a greater degree of confidence.
10. Average Directional Index (ADX)
The Average Directional Index (ADX), a pivotal technical indicator, empowers traders with insights into the strength of a prevailing trend and the potential for trend reversals. Developed by J. Welles Wilder, the ADX operates in conjunction with two companion lines, the Positive Directional Index (+DI) and the Negative Directional Index (-DI). The +DI line gauges upward movement's strength, while the -DI line measures downward movement's strength. The ADX itself is a non-directional indicator, designed to quantify the intensity of the trend rather than its direction.
The ADX is particularly valuable for traders seeking to gauge the robustness of trends and assess their suitability for trading strategies. When the ADX value is ascending, it suggests an intensifying trend, while a descending ADX indicates a weakening trend or a market in consolidation. A low ADX reading may signify a lack of trend, while a high ADX reading implies a strong, sustainable trend. Traders often use the ADX alongside other technical indicators, such as moving averages or trendlines, to validate the strength of a trend before executing trades. This versatile indicator plays a vital role in enhancing traders' ability to navigate markets by offering a quantifiable measure of trend strength and aiding in the identification of opportune entry and exit points.
Trade Discipline - Improving Your Entries
How many times have you been stopped out of a great trading idea you noticed just because you missed your original entry and decided to enter at a worse price?
This was most likely due to the fear of missing out (FOMO) and lack of discipline that got you into the trade.
You were right on the market direction, but due to FOMO and your lack of discipline, the trade entry was bad, and you ended up being stopped out, only to then painfully watch the market go your way.
Do not feel bad, as this has happened to the best of us, so this post will discuss methods on how to improve your entries and discipline to ensure that you do not get stopped out again because of a bad entry.
Never chase missed entries.
Let’s say the market is in a nice healthy trend, making a series of higher highs and higher lows. And when you overlay the 20-day moving average over it, you notice the market bounce off the moving average quite a few times. You then get a buy signal near the moving average, but unfortunately, you missed the entry and are just watching the market go up without making any money from it.
Now, when you look at the chart, the market is very far away from the 20-day moving average. So even though the market is currently in an uptrend, ideally you don’t want to be buying now because, from looking at your analysis, the market tends to pull back to the 20-day moving average. If you impulsively buy when the price is very far away from the 20-day moving average, when the price is overstretched and the market has been overbought, there’s a high probability the market will reverse or pullback, and you will most likely get stopped out.
We all miss entries and opportunities; it is completely normal to do so, and sometimes the market can give you a second chance to enter by coming back to your original level. If it does not and you completely miss the move, do not dwell on it; dust it off and move on. The markets are not going anywhere, and plenty more opportunities will come your way.
You can see in the above image why it is a bad idea to chase missed entries. When the impulsive move has happened and you missed the initial move, leave the market alone at that current time. Either wait for a pullback to trade the continuation, or if your analysis is suggesting a possible market reversal, then wait for a confirmation signal and trade the reversal at a good entry price.
Be Proactive.
Many traders, especially beginners, do not place enough importance on entries when trying to get consistent profits in the markets. The reason why entries are important is due to market noise and the limited funds that traders have. Let me explain further: Traders are buying and selling constantly; therefore, all markets have ups and downs (market noise). This means that markets rarely go up and down in a straight line, so when you put your hard-earned capital at risk in a trade, due to the up and down ticks, your capital will float up and down as the market moves up and down. So if your entry is bad, then you are more likely to get stopped out due to market noise.
If you want to see consistency in your trading, it is crucial to work on your timing and discipline. The best thing you can do to improve the entries in your trades is to be proactive, not reactive.
Being proactive means planning ahead for your trade entry. You must do your homework to anticipate and predict the key levels in the markets to help you get the best entries. Setting up trades after the market closes or during quiet hours is one effective way to be proactive and help improve your entry. You will not second-guess yourself as compared to being a reactive trader because you are prepared. The reactive trader, as the name suggests, reacts to the constant ebb and flow of market prices, always working in "the now." More often than not, reactive traders will end up jumping into momentum plays that will reverse on them, leaving this type of trader frustrated and confused.
Use Limit Orders to improve trade entry.
When using a limit order, you place a limit on how much you're willing to pay to buy or sell a specific product. Limit orders allow traders to enter the market at the best possible price. For example, if you have a specific setup with a good entry level that the market may reach, you can place a limit order at that specific price to buy or sell. Limit orders are very helpful in giving traders the patience and discipline to wait for their entry prices instead of spontaneously entering the market at random levels that will most likely stop them out.
The main disadvantage of a limit order is that there are no guarantees that the order will actually go through. The product price must meet the limit order specifications to execute properly; however, even with this disadvantage, it is still better to have better control by entering at a price you want instead of entering at a price you are not comfortable with.
Support and Resistance levels.
Support and Resistance levels are in the markets for a reason, and you should use them to help with your entries. One of the worst things you could do is think the market is going up and end up buying it at a resistance level before it heads down to stop you out, only for it to go back up again.
Always look at your charts, and get into the habit of looking to the left. Why? Because looking to the left will give you information on historical price movements, and with those movements, you will see consistent areas where the market bounced off (Support) and consistent areas where the market pulled back (Resistance). When you really understand this and grasp how support and resistance levels work, you will instinctively understand these levels and will actually notice the market moving towards them to test them. So the next time you think the market is going up, try to enter near or at a support level, and if you think the market is going down, try to enter near or at a resistance level.
The image above shows support and resistance levels in the market. Can you notice how the market is always drawn to these levels? You can see the numerous times the market has traded around these areas. These areas are often good entry points for your trades, and you should always take the time to look at your charts for these levels.
Use additional timeframes.
Using one or more additional timeframes to double-check a trend can help improve your entries.
For example, if you’re using a four-hour chart as your main timeframe to look for opportunities on a specific product and you spot a pullback from a bull run that has the potential of a big reversal, you could confirm the broader move by taking a look at a daily chart to confirm how long the trend has lasted or identify some support and resistance levels in its wider trend. Alternatively, you could hop over to an hourly chart or 30-minute chart and see what is happening on a smaller timeframe.
By doing this, you can also check whether buyers or sellers are in charge during the current trading period.
What you want to avoid doing, though, is adding too many different charts to your analysis and moving between them at random to find opportunities. Instead, stick to a ‘base chart’ that you use to trade, with one or two others for confirming moves.
As you can see in the image above, there are three charts. On the main time frame, a potential reversal signal was spotted, and there may be a possible pullback to the bull run. By looking at both the longer time frame and the shorter time frame to help support the analysis, this will help improve your entry because, for example, if all timeframes clash with each other or show conflicting signals, this may help the trader second guess their original analysis and may decide to wait for clearer confirmation signs on all time frames before deciding to enter the market.
The goal of every trader is to be successful in achieving consistent profits, and entries play a big part in this. You can correctly call the market and still lose money due to bad entries. The more you understand key market levels and have the discipline to wait and trade around them, the more probability you will have of trades going your way. Though it is still possible to lose trades on good entries, trading is a probabilistic outcome with no guarantees, so why would you want to enter at a bad entry price to give yourself a disadvantage in the markets before the trade has even started?
Trade safely and responsibly.
BluetonaFX
Using the Research Method in TradingGreetings, fellow traders!
Trading is both an art and a science, and the research method is your secret weapon to unraveling market intricacies. It's about adopting a systematic approach, making informed decisions, and refining your strategies based on solid data.
Applying a analytic mindset in trading can offer a valuable edge. Let's explore the basics of the research method and how you can integrate it into your trading practices.
Start with Observation:
Just like scientists, traders begin by carefully observing the markets, noting patterns, and identifying repeat occurrences or random incidents. This process helps build a comprehensive understanding of market factors, that influence price action.
Formulate Hypotheses:
Based on your observations, create hypotheses or assumptions to explain market behavior. These hypotheses act as initial theories that can be tested for validity.
Test Your Hypotheses:
Conduct empirical tests by taking trades, that align with your hypotheses. Record the results and analyze how price action unfolds. Keep a detailed trade journal to document your observations.
Embrace Open-Mindedness:
Remain open to new data and market complexities. The markets are ever-changing, and no hypothesis is an absolute truth. Be prepared to adjust your trading strategies based on new information and shifts in market sentiment.
Fine-Tune Your Trading Plan:
Use the insights gained from testing your hypotheses to fine-tune your trading plan. Continuously refine your strategies based on new observations, and be flexible in adapting to changing market conditions.
Treat Each Trade as a Learning Opportunity:
View each trade as a source of valuable information, regardless of the outcome. Learn from both winning and losing trades to enhance your understanding of the markets and improve your trading approach.
By integrating the research method into your trading routine, you can enhance your decision-making process, manage risks more effectively, and avoid overconfidence.
Stay curious, keep learning. Happy trading!
Basics of Options TradingIntroduction
Options trading is a versatile and potentially lucrative investment strategy that allows traders to speculate on the future price movements of underlying assets. Unlike traditional stock trading, options trading grants investors the right, but not the obligation, to buy or sell an asset at a predetermined price (the strike price) within a specified time frame. This article aims to provide a comprehensive overview of the basics of options trading, empowering readers with essential knowledge to navigate this exciting financial market.
Understanding Options
Options are financial derivatives that derive their value from an underlying asset, such as stocks, commodities, indices, or currencies. There are two types of options: call options and put options.
• Call options: A call option provides the holder the right to buy the underlying asset at the strike price before or on the expiration date.
• Put options: A put option grants the holder the right to sell the underlying asset at the strike price before or on the expiration date.
The Option Contract
Each option contract represents a specific quantity of the underlying asset, known as the contract size. For equity options, one contract typically covers 100 shares of the underlying stock. The contract's expiration date determines the period during which the option can be exercised, making it crucial for traders to choose an appropriate time frame for their investment objectives.
Option Premium and Factors Influencing Pricing
The option premium is the price paid by the option buyer to the seller for acquiring the option. Several factors influence the pricing of options:
• Intrinsic Value: The difference between the current price of the underlying asset and the option's strike price. For call options, the intrinsic value is positive when the underlying asset's price is above the strike price. For put options, the intrinsic value is positive when the underlying asset's price is below the strike price.
• Time Value: The additional value attributed to the option due to the time remaining until expiration. The more time an option has until expiration, the higher its time value, as it provides more opportunities for the underlying asset's price to move favorably.
• Implied Volatility: A measure of market expectations for the underlying asset's future price volatility. Higher implied volatility results in increased option premiums, as uncertainty enhances the potential for significant price swings.
Trading Strategies
Options offer a wide array of trading strategies, catering to different risk appetites and market outlooks. Some popular strategies include:
• Buying Call or Put Options: Traders purchase call options if they anticipate the underlying asset's price to rise, and put options if they expect the price to fall. This strategy limits the potential loss to the premium paid while allowing unlimited profit potential.
• Covered Call: Involves holding a long position in the underlying asset while selling call options against it. This strategy generates income through the premium received but caps the potential upside.
• Protective Put: Involves buying put options to protect an existing long position in the underlying asset. If the asset's price drops, the put option provides downside protection.
• Straddle and Strangle: Both strategies involve buying both call and put options simultaneously. Straddles work when significant price movement is expected, while strangles work when traders anticipate moderate price movement.
Conclusion
Options trading offers a dynamic and flexible approach to investing, empowering traders to profit from various market conditions and tailor strategies to their risk tolerance. By understanding the basics of options trading - the types of options, pricing factors, and popular strategies - investors can effectively leverage options as a valuable tool in their financial toolkit. However, it is essential to recognize that options trading involves inherent risks and complexities, and beginners are encouraged to start with a solid understanding of the fundamentals and practice prudent risk management before diving into this exciting financial realm.
Explanations for Not Following Your TPHi! Have you ever abandoned your trading plan?🧐
If not, you should still read this, because you might be deceiving yourself!😉
If you have, why do you think you've been "unfaithful" to it?
It's about you.
Do you attribute it to your personality? Temporary loss of reason? Or perhaps, you see it as an inherent part of trading?
Several factors could contribute to your lack of discipline. Depending on your personality, background, training, and experience with markets, you may struggle to control impulsive actions.
For some, impulsiveness is ingrained. They find it challenging to concentrate, easily get bored, and seek quick thrills for relief.
For others, impulsive behavior is linked to emotional vulnerability. Some individuals have difficulty managing their emotions, leading them to act impulsively out of frustration.
Temporary setbacks are inevitable in trading.
When highly emotional traders face these setbacks, they become overly distressed, leading them to close positions prematurely or make major trading errors in a frantic state, which can only be rectified by closing the position.
No trader is perfect; any trader can be impulsive at times. Research has indicated that tiredness can impair concentration.
As much as your conscious mind cares about adhering to your trading plan, your unconscious mind might think, "Who cares? I just want to get this over with and relax."
Your psychological resources get depleted. Pushing yourself to the limit makes it difficult to concentrate on and adhere to your trading plan.
Other traders may be impulsive due to lack of experience. It's unrealistic to expect adherence to a trading plan when you're uncertain about what you're doing.
If you're new to trading, you may lack confidence and feel uneasy. You might hesitate to act, unwilling to risk your money because you don't have the strong belief in your plan's profitability that seasoned traders exhibit and it’s ok. "Who does nothing makes no mistakes."
It's not you, it's your trading plan.
You can't stick to a trading plan that you can't follow.
If your trading plan is incomplete and crucial aspects remain unclear, you'll have difficulty following it.
A trading plan should have well-defined entry and exit strategies. Monitoring signals that indicate trade progress are also crucial. Underestimating the importance of a clearly mapped-out trading plan is a mistake.
The successful trader is a disciplined trader. Disciplined traders adhere to their trading plans and don't act impulsively.
It's crucial to identify the reasons behind impulsive trading. It might be related to your personality or your trading plan, but whatever it is, gaining awareness of these factors and resolving them is essential.
Once you control the impulse to act, you'll trade more profitably and consistently.
In conclusion, a successful trader is not only someone who achieves consistent profitability but also someone who continuously learns and grows in this dynamic market. Remember to stay disciplined, manage risks effectively, and embrace both wins and losses as opportunities for improvement.
As you continue your trading journey, may the charts align in your favor, and may your strategies be filled with wisdom and insight. Wishing you the best of luck and success in all your trading endeavors!
Feel free to share your thoughts and experiences in the comments below. Let's support and inspire each other on this exciting trading path.
Best regards and happy trading!
Your Kateryna💙💛
AUDCHF SHORT - ALL TIME LOWS SOON!Waiting for a retest of 0.57990 to short AUDCHF back to Daily level at 0.55690
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