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Forex-trading-signals

PSYCHOLOGICAL PRICE LEVELSPsychological price levels Today we will talk about the psychology of the crowd, about price levels, which attract most of the traders and what we should do about it all what levels to pay attention to and how to place orders near them to enter/exit the market. Round levels Remember the last time you went to the store and saw the price for something, say, 3.95 $, you automatically rounded it up to 4.00 $. This is a normal human tendency to simplify things. It's inherent in traders. That's why levels multiple of a hundred (with two zeros at the end) are so attractive to the crowd. It's at levels like 1.3300, 1.5000, 1.2600, etc. that the real struggle between bears and bulls takes place. And who will win is unclear. However, in any case the round price levels are an obstacle, so we can say that price levels divisible by a hundred (00) are support/resistance levels for the price. High activity forex price levels When trading intraday, high activity is observed at certain price values. We've already mentioned 00 levels, and it's clear that they're attracting attention. But there are other levels, which should not be forgotten by fans of intraday trading. 20, 50, 80 - levels of increased activity in intraday trading. The examples: 1.2050; 1.3280; 0.9020. Why on levels 20, 50, 80 there is a big accumulation of Forex orders? The matter is psychology again. 50 is half of the way from one round level to the other. You have to agree that when half of it is done, it becomes much easier to work, right? It's the same with price. Regarding levels 20 and 80, the situation is similar. Until the quotes get to, say, 1.3120, i.e. hang around 1.3115, it looks like the price has barely moved away from 1.3100. There is nothing to act upon. And when the barrier of 1.3120 is reached, the way for the price to go higher becomes open. Naturally, we are now talking about a psychological point of view. The situation with the level of 80 is similar. As soon as the price reaches 1.3180, the trigger "close to 1.3200 level" triggers in our mind and it is the same for other traders. How to place orders considering the price levels of increased activity? Market entry at key levels. Not only we but also market makers know about the levels of increased price activity and accumulation of orders. That's why it often happens that the price does not reach a round level and turns around. Even entries at levels with multiple orders of other traders lead to requotes, i.e. losses of potential profit. Therefore, you should enter the market 5 points above or below (depending on the situation and position) a level, but not at the levels themselves. That is, if you opened a buy with a target of 1.3100, it is better to move the take profit to 1.3095. Do not give the psychological level miraculous properties that will necessarily provoke a sharp reversal or a powerful rally from these levels! Psychological levels are like any other resistance and support levels should be considered by traders as decision-making levels. When price reaches decision levels, traders begin to consider their next moves. These levels are themselves a basis for action, some traders see them as a good place to buy, while others are going to sell at them. The final outcome depends on the outcome of the battle between the bulls and the bears, who represent supply and demand, respectively. It's best for you and me not to get involved in the battle, but just to watch it and wait for the winner to be determined.
Education
by DeGRAM
2
HOW TO PLACE TAKE PROFIT CORRECTLYExit from a position is often more important than entering. We all constantly hear that trading without stops is impossible, but too little attention is paid to taking profit. It's time to correct this misunderstanding. Today's article will discuss the importance of take profit. Take Profit Methods There are many different methods of taking profit. They may vary depending on the trader's trading style and the rules of his trading strategy. By time This method is effective, for instance, in intraday trading. When the trading system is designed to analyze the market during one day's session, at the end of the day all trades must be closed regardless of the result. For example, if a trader opens a sell position in the morning, at 9 o'clock, then at 23 o'clock, when the American session comes to an end and trading slows down, he/she should exit the market. At key levels The key price levels are one of the strongest reference points for setting both stop loss and take profit. The level, at which the price slowed down or turned around earlier, may become a strong support or resistance, depending on which side of the open position it happened to be on. That is why setting the Take Profit at this level is the most reasonable: if the price moves in the necessary direction, it will most likely reach the key level, but whether it will succeed in breaking it is a big question. That's why it is better to take your profit when the price reaches the important level, and if it breaks it later, open a new trade. At Round Levels The principle is similar to the key levels. The round level is also an important psychological barrier for the market, but not always break at the first time. For scalpers and intraday traders, except for round levels (1.2500, 1.2600, etc.) the levels, ending at 20, 50 and 80 (1.3420, 1.3780, etc.) are important. Fibonacci Levels This principle is also similar to take-ins by key levels, but in this case, to determine the target point it is necessary to use Fibonacci tools. Fibonacci lines extend on the basis of the previous trend, and give a reference point for the price movement in the opposite direction (correction). When opening a trade after a trend reversal, a good target will be the 61.8 level. The mark where the Fibonacci level coincides with the round level or support/resistance will be the best option for taking profit. Confluence The optimal Take Profit target will be confluence (overlapping) of several levels. For example, it can be a round level overlap with a support level or with one of the Fibonacci levels, or with all of them at once. The more levels are combined at one mark, the stronger it becomes and the more effective the Take Profit will be. By volatility For setting a take profit on volatility, it is best to use a special service that determines the average value of the candle per hour, per day and other statistical indicators. The take profit will be set on their basis. When trading intraday, the trader will be interested in the average value of the daily candle. If, for example, a GBPUSD price moves 100 pips on average during the day, and a trade is opened when the price has already moved 20 pips in the direction you want, you should not expect more than 80 pips from this trade. Taking profit on volatility is a common option, but it makes sense when the trader has no other reference points, such as key levels. At the local extremum Such exit is performed manually rather than by automatic take profit. If the price, moving in the right direction, has formed a new extreme and then starts to roll back, it makes sense to close the position manually. A new extreme shows that the movement has currently exhausted itself and it is unknown whether the trend will resume. In this case, a new level has already been formed in the price path, which will complicate further movement. Even if the take profit was set earlier and the price did not reach it, in such a situation, it is better to close the position manually and take the profit that is available at the moment. After the big candle One more variant of closing the position manually. As a rule, after the formation of a large candle there is a slowdown and correction, sometimes quite strong. If a big candle was formed during an open trade in the right direction, which produced a significant profit, it is better to close the trade, which will save that profit. By overbought/oversold oscillators This method of exiting the trade is also done manually and will require the personal presence of the trader at the terminal. One of the oscillators must be installed on the chart of the asset most often Stochastic is used to determine the overbought/oversold condition, but you can also work with the RSI or Bill Williams indicators. When buying, we need to wait until the oscillator lines do not rise above the 80 level then the trade is closed. When selling, the indicator is the level of 20. On other oscillators, levels may be different (sometimes you have to set them yourself), but the principle is the same everywhere. The disadvantage of this method is that in a long trend the oscillator gets into the overbought/oversold area rather quickly and stays there, or starts oscillating up and down as the price moves in one direction. As a result, the trader closes the deal at the beginning of the trend, taking only a small part of the possible profit. This drawback can be compensated by adjusting the sensitivity of the indicator. Stop loss * N One of the easiest ways of setting a take profit, but it requires the proper setting of stop loss. After setting the stop loss, the take profit is set at a distance of one and a half, two, three or more times. Thus, a positive mathematical expectation of trade is provided. But the market is not bound to such ratios. The factors that really influence the price at the moment are not taken into consideration when taking a take profit. In some cases (for example in scalping) take profit can be even less than stop loss value. However, this is rather an exception to the rule, and in order to ensure a positive result in the long term, you need to ensure that the potential profit is greater than the loss, even setting a take on the levels or volatility. There are many ways of taking profit, and each of them has its advantages and disadvantages. Taking profit on levels, and in those places where they coincide, for example, with round price values or Fibonacci levels, is an optimal variant according to a number of factors. However, you should also remember about the ratio of stop loss and take profit and positive mathematical expectation. If you trade on a specific trading system, it is likely that it will already have specific rules for taking profit. If there are no rigid frameworks in this regard, it is necessary to choose the method that best suits this TS, taking into account all the general recommendations, as well as the need to comply with the rules of money management.
Education
by DeGRAM
3
HOW TO GET IN TRADING ZONEI'm sure many of you have read Mark Douglas' excellent book, "Zone Trading. So how do you get into the "zone", that state in which you are most productive and make smart decisions? You can put into practice a highly effective exercise that will allow you to focus your attention and also allow you to take your focus away, especially from any negative thoughts that may be griping you, from any doubts and fears that could cause you to close a position too early or move your stop loss. One of the key aspects of getting into the "trading zone" is the ability to stay in the present and focus on current events. Practicing the specific concentration skills outlined in this article will not only help you better focus and master the related skills, but will also help you more deeply develop your ability to stay present, notice and pay attention to those factors that are critical to your trading performance, while being able to avoid the distractions and obstacles that typically lead to poor performance, frustration and lack of discipline. Exercise on Concentration for Entering the "Trading Zone" 1. Begin by focusing on your breath. Concentrate on the inhale and exhale. Just focus on the periodicity of your breathing. 2. Continue to focus on your breath for a set period of time, aim to do this for 10 minutes. 3. You will probably find that your thoughts lag behind your breathing. This is natural, this is how our mind works. Just focus on your thoughts. Let them go. Then focus back on your breathing. 4. Repeat this further until your allotted time for this exercise is up. This is a simple but very powerful exercise that helps you develop not only the ability to sustain your attention, but also the ability to turn it on. Two very important activity skills. Do the exercise daily for 10 minutes. Visualization Perhaps one of the most powerful and useful aspects of psychological training as a forex trader is the use of visualization. Every action, feeling and behavior you have is the result of the activation of neural pathways in the brain. Neural pathways are the connection or system of connections between neurons in the brain. Essentially each pathway is a morphological model for a particular intellectual skill, feeling or behavior. These neural pathways are created and then developed and reinforced through practice and repetition, developing into a particular psychological concept, and after a while they become automatic - habitual. It is somewhat like walking through a field of wheat. The more often you walk along the same path, the more you tread the wheat, and the clearer and more visible your path becomes. Using visualization will give you the opportunity to practice and take part in Forex trading even if you can't access the real markets, thus accelerating your development. You can use visualization more effectively in order to cope with losses or drawdowns, to overcome unhealthy habits and develop new ones useful for trading, to access and create in yourself a sense of confidence to be mentally prepared to trade in the markets or to contribute to achieving your trading goals. Visualization should involve several senses (vision, hearing, sensory perceptions); it is better if it is preceded by a brief relaxation; visualization should be performed for 5-10 minutes. Psychological training increases your potential for trading results and by applying it regularly in practice, you can develop new neural pathways in your brain, which will raise your stress threshold, provide conditions for the development of various emotional reactions and states, new and desirable principles of behavior in trading. Try the above exercises in practice.
Education
by DeGRAM
4
Cryptocurrency in the WORLDCryptocurrency has turned the world economy upside down. But she is still young and the future will be even more grandiose. However, not the whole world uses the new opportunities provided by the cryptocurrency. But already there are whole countries that accept the crypt as a means of payment. At the same time, there are also countries in which the use of cryptocurrencies is punishable by a prison term. Let's analyze these countries. Where is it forbidden? ❌ Ethiopia (the use of cryptocurrencies is illegal). ❌ Bangladesh (prohibits any activity with digital currencies. The penalty is a prison term under the article for money laundering). ❌ China (any manipulation of cryptocurrencies is prohibited — mining, trading and transactions). ❌ Vietnam (the issue, supply and use of cryptocurrencies as a means of payment are prohibited. The fine for violation is up to $ 9,000, after repeated violation — imprisonment. The transportation of mining equipment is also illegal. At the same time, it is not prohibited to trade and store crypts as assets). ❌ Iraq (the circulation of digital currencies is prohibited. Criminal liability has been introduced. At the same time, mining is legalized). ❌ Egypt (prohibition of any actions with the crypt). ❌ Bolivia (cryptocurrency is an illegal means of payment, a ban on any activity). ❌ Qatar (ban on any operations with the crypt. Penalty for violation of the law). ❌ Macedonia (the use of Bitcoin and altcoins is illegal). ❌ Nepal (any transactions with cryptocurrency are recognized as illegal). ❌ Algeria (operations on storage, purchase, sale and any use are prohibited. Penalty for violation of the law). ❌ Morocco (prohibition of any actions with the crypt. Penalty for violation of the law). Where is it allowed? ✅ Iran (it is allowed to pay with crypto for imported supplies of fuel, electricity and goods from the mining industry). ✅ Germany (it is allowed to issue, mine, own and trade virtual money, you can also pay in stores with bitcoin). ✅ Italy (you can pay in stores, while legally the crypt is not a means of payment). ✅ Spain (you can legally use cryptocurrency to pay for electronic payments). ✅ Canada (you can pay in stores, while legally the crypt is not a means of payment). ✅ Salvador (Bitcoin is an official means of payment). ✅ Panama (it is allowed to pay taxes and make private transactions with the crypt). ✅ USA (in some states, such as Colorado, you can pay taxes with bitcoin via PayPal). ✅ Switzerland (you can pay for utilities and other services with bitcoins). ✅ Central African Republic (legalized Bitcoin as a means of payment). ✅ Estonia (crypt is used as an alternative means of payment). ✅ Japan (bitcoin and ethereum can be used as a means of payment, and stablecoin will become an official means of payment from 2023, but only licensed banks can legally issue it). So far, only two countries have officially approved bitcoin as a means of payment, and several dozen countries allow the use of crypto as a settlement currency. Use cryptocurrency, Be careful and don't break the law! Traders, if you liked this idea or have your own opinion about it, write in the comments. I will be glad 👩 💻
Education
by Lingrid
15
HOW TO DETERMINE THE SIGNIFICANCE OF SUPPORT OR RESISTANCE ZONES1. The more activity in a zone, the higher its significance Here everything is clear to everyone. If a whole bunch of people are buying or selling at a particular price level, it means that this level is important for them. Very important. Not only that, but our psychology is built in such a way that: We tend to remember events that are important to us. Buyers like to break-even if the price returned to level after buying. Sellers, on the other hand, may buy low in advance and remember that prices were previously hanging out at that level of resistance. Respectively, this is the level they will be looking at to lock in their profits. 2. The greater the speed and duration of the previous movement, the better the levels When price is trying to break through resistance levels, it is similar to the action of a man breaking through a front door. If it is accelerated from a distance let’s say of 10 meters, the momentum of its movement will be very strong and the flimsy door obviously will not resist. If he is speeding up from the nearest store, far away, he will run up to the door and collapse on the threshold without any strength. The door stays the same! Nothing has changed. Its qualities, its "resistance" remain the same. What has changed is the speed of the one who wanted to get in. The same principle is valid for markets, which are a reflection of human psychology. A long, slow, long climb is a long run from the store, and the level of resistance will be a solid door. And the longer each price run, the less sturdy the door (support or resistance level) will need to hold. Let's take a look at the CADJPY chart. As we can see, the price falls to the low and then begins to accelerate. However, the decline begins, extremely steep, prolonged and sharp. As a result, by the time it reaches the support level, the price is completely exhausted, and the sellers can not break through that door any lower. 3. Evaluate the past time The third rule for evaluating the potential of support and resistance levels is to examine how much time has elapsed between the formation of the previous level and the current one. It depends on the characteristics of the selected market, as such. For example, a support level that is 6 months old is much more relevant than a 10- or 20-year level. Although, of course, time after time it is amazing how much the same support or resistance level can be "working", time after time, even if years and generations pass. Bottom line Support and resistance are simply areas of concentration of supply and demand that allow you to slow the price, at least temporarily. They are not a buy or sell signal. They are zones where a smart trader would expect a reversal. These zones should always be complemented with other tools. The significance of support and resistance zones depends on the activity of market participants at these levels, the speed and duration of movement, and how much time has passed since the previous zone was formed.
Education
by DeGRAM
8
THE DRIVING FORCE IN THE CANDLEHello everybody! Today I want to discuss with you the movement hidden in the candle. This struggle inside the candle can tell us a lot about the future movement. Let's go! Fighting Inside each candle there is a serious struggle between buyers and sellers. Unfortunately, most traders not only do not notice, but also do not think about this struggle, and this is very valuable information. The price does not move just like that, you should understand this. Understanding which side is winning gives us information that helps us to keep a deal more confident or close it. Candles We all know that candles consist of a body and shadows. But not everyone understands how candles are formed. Let's take the first candle on the chart. This is a green full-bodied candle, without shadows. Looking at it, we understand that the strength of buyers is much higher than that of sellers. Specifically, there are no traces of sellers in this candle at all. This means that the uptrend is strong and there is no resistance from sellers, which means that if we have opened a long, we can confidently hold the position. The second candle already has shadows. These shadows are not large, but they indicate to us that sellers still managed the market for some time. From the first second, sellers pushed the price down, after which buyers forcefully overcame the situation in their favor - this is how the lower shadow was formed. The upper shadow is a movement created by sellers at the end of the candle formation. By such a candle, we can understand that the trend is still strong, although sellers are already pushing harder, but buyers are still winning quite confidently. We can still hold our position with sufficient confidence. The third candle has shadows even longer than the second. Does this mean that it's time to close a long position? No! Buyers are still strong, but sellers are not asleep either. We should be on the alert and wait for the next candle to show. The last fourth candle has very long shadows. There is no winner here anymore. There is an equal struggle going on here. And if there is no winner, it means that the price can go anywhere. If you look in the context of the previous candles, you can understand that buyers have lost strength, and sellers have become more confident. As we can see at the beginning of the candle formation, the sellers were able to lower the price significantly, after which the sellers got down to business. The price rose until the sellers pushed the price down again. In this candle, both buyers and sellers controlled the market for the same time. But we already understand that sellers are gaining momentum and a trend change is possible. The last candle is the well-known Doji, after which you will often observe a reversal. To better understand the movement, see the lower timeframes. There you will be able to look at the price under a microscope to understand who is still winning the market. Result Each candle contains information. A professional trader knows how to interpret each movement correctly. Maybe it's a correction? Or maybe it's a trend reversal? Using different timeframes, you can better understand who is dominating the market right now. Do not be lazy to analyze. Trade wisely! Good luck! Traders, if you liked this idea or if you have your own opinion about it, write in the comments. I will be glad 👩‍💻
Education
by Lingrid
11
WHAT TRADING STRATEGY SHOULD YOU CHOOSE?Starting to trade manually, a Forex trader is faced with the question "What strategy should I use? Choosing the right strategy is not an easy thing, I'm quite often asked to suggest "some profitable system". There is no single and simple answer to this question, so how to choose a Forex trading strategy that is right for you? First of all, we have to decide when we are going to trade. After all, not everyone has 24 hours a day free time: some study, some work, etc. Of course, there are mobile terminals for smartphones that allow you to trade when you are away from home, but again, not every job allows you to use your gadget whenever you want. So, you have to decide at what time, in what mode you can trade and choose for yourself a suitable timeframe. Those who have an opportunity to check the charts only once a day in the evening, the daily charts will do. Well, if you have more time to trade in your schedule, you can use strategies to trade on timeframes H4, H1, M30 and below. You can even switch to ultra-fast trading using a tick chart, although it requires strong nerves and good reactions. There are also universal strategies that can be used on any timeframe. Let's assume that we have decided on the time to trade, so what strategy to use, because there are so many? First of all, it is worth noting that two different traders trading on the same system can have completely opposite results. What does this have to do with? First of all, with the emotional aspect: one person can be disciplined and the other not so disciplined. Trading in real time is often very different from testing a strategy on a history. Secondly, everyone unintentionally brings some slight changes to the system he or she is using: someone enters/exits a bit earlier/later, someone looks at the higher timeframes, and someone doesn't. Many add their own filters, trade only at certain times, etc. etc. The list goes on for a long time, but the point is that success with the strategy greatly depends on the qualities and experience of the trader. When choosing a strategy, just like when choosing a car or a life partner, you should be guided by your own preferences. When studying a particular system, ask yourself: do you like it? Will you feel comfortable and confident trading with this strategy? Because if you don't have confidence in the system, even after the first losing trade, which you can't do without in trading, you will start to doubt, miss signals, which have could lead to a profit, distort the rules of the trading strategy, etc. You have to feel confident in the system, it must fit your psychology: to hold one position for several days or to open/close many small orders during the same time. The strategy must also be consistent with your beliefs; the same martingale has many opponents, but also many adherents. Some believe that trading on minute charts is impossible, while others will prove the opposite. It is also possible when you take from the system only some elements that you like (some indicator or method of analysis) and thus, leaving the best, over time, you build your own strategy.
Education
by DeGRAM
8
3 Simple Rules of Psychological Risk ManagementIn trading, psychological traps lie in wait for us at every corner, it is a revenge trade or an irrepressible attempt to win back. To help ourselves, we need an analogue of money management, only from the psychological point of view. It is created and adapted to ourselves, that's why I will describe my variant: 1.Stop trading for a few hours/days after 2-3 unsuccessful trades in a row. 2.Then 1-2 positive trades on a demo account or chart. 3.Return to real trading. The rules are simple. They are also extremely effective. But you have no idea how difficult it is for most people to follow them. Unbearably anxious to get back lost money What does a beginner who has lost money in three or four unsuccessful trades in a row do? Ask yourself, what will you do? You are hurt, mentally bad from the loss of money. You're already short of it, and you've lost even more. It's suffocating, it's such a nasty, disgusting feeling. How do you get rid of it, quickly? Immediately, right now? That's right it’s REVENGE TRADE. You start taking the trading as a game. Now tell me this: you've been wrong three times in a row. You don't understand the market phase. What makes you think your next trades will be successful? How do you know? You're not sure. You're just emotionally unhappy. The child inside you is crying and wants his toy back. You want the numbers back on the deposit. That's all your motivation. The only chance of salvation in this situation is to stop, to stop this psychological masochism and strictly forbid yourself to lose even more. If you can’t do this then the market has won. Professionals know how to deal with losses. Amateurs do not. Psychological Stop Loss. When the price goes against your forecast and reaches a certain level, the trade is closed. That's it. You are in a loss. Having lost a part of the capital, you have saved the rest. After 2-3 losses in a row, you need to stop. Most do not know how to do this. But this is what distinguishes a professional from a beginner. A pro knows that everyone loses in the market. Always. Even if you have 10 years’ experience, you still lose money, you just learn to accept it and use your skills to make more money than you lost. That's the job of the market professional to pull the mathematical expectation of the trades in your favor. Losses are always followed by profits, losses again, and so on in a circle. And if you are losing, it is important to make the losing streak stop. A psychological stop loss gives you that opportunity. After 2 to 3 failures in a row you: - Stop trading for at least a few hours. - Stay away from the chart for a couple of hours, to calm down emotionally - Take apart your mistakes and put them in a trader's diary. - After a few hours make some forecasts by the chart - and only after 1-2 successful predictions in a row you switch to the real capital. This is a universal, powerful rule. But it's hard to follow because you have to accept the loss. However, you have no chance of doing that if you haven't learned to accept the simple fact that you are not smarter than the market and losses will happen regularly. You can come up with your own variations, but stopping a trade (psychological stop loss) is a must, without exception. That's the whole point of "risk prevention" you stop when things get bad so they don't get worse. Much worse. For failure to follow these rules not only kills your capital, but also your faith in yourself. Risk and money management is the only thing that stands guard over your capital. The tight union of risk and money management will allow you to pacify your greed and emotions. Save your capital at all costs The saving of capital is the main, key task of a trader. And not at all to make money, as beginners think. It is impossible to do without the correct risk, money and time management. Following of the rules you have created yourself will lead to forgetting what it is like to lose your whole capital on emotions. After all, it's not difficult to stop losing money. You just need to get away from the chart and the terminal. It would seem, what there is difficult? But people who have confused speculative markets with casinos, keep on "winning back" and lose everything. Take care of your money. Use the tools that are designed to do the job. Only then you can make a qualitative leap forward and enjoy all the pleasures of compound interest when profit piles up on the capital you've saved, new profit piles up on it.
Education
by DeGRAM
4
CORRECT AND INCORRECT RISK MANAGEMENTHello everyone! Today I want to remind you about the risks! Risk management is very important in every trade , but most traders are too lazy to act according to the rules, so I decided to remind the basic rules. They look simple, but following them will greatly reduce losses and increase the win rate. Let's go! Correct calculation of possible losses Beginners are AFRAID to think about losses. And even more so to count them! But it must be done, otherwise you will lose much more than you should. Even BEFORE opening a position, you should know how much you are willing to lose under unfavorable conditions. Cut losses and let your profits grow It's strange, but people are ready to quickly fix a profit, but not fix a loss. Premature profit-taking is a normal phenomenon, as is overexposure of unprofitable transactions. why? Because traders are afraid of losing profits and hope that the loss will decrease and even turn into profit. Don't move your stop loss If you followed the first advice and calculated the stop loss, and after placing it you started moving, then you did not understand the essence! Stop loss is very important and it is important not to move it. In each trade, you risk a certain percentage and should not increase this indicator by moving the stop loss. Monitor your drawdowns It's unpleasant to lose, it's unpleasant to analyze your losses, but you have to do it. Without loss analysis, you will not get better as a trader. You have to keep track of losses, you have to analyze trades to improve your trading and not repeat mistakes. Opening positions without risk management Most traders don't think about risk at all, much less risk management. Most of them open trades without risk management and therefore most of them lose all their money. Trading without stop losses The fear of losses and the fear of being wrong leads to the fact that the trader does not set a stop loss. If you do not set a stop loss, know that the stop loss is still set, how? It's simple, in this case your stop loss will be equal to your capital. The position will close when your account is 0. Is it easier this way? Let the losses run Why don't traders close unprofitable positions? As mentioned above, it's all about hope . do you think that the price will sooner or later go in your direction? Perhaps. But by that time, most likely you will already be closed by margin call. Ignoring drawdowns and other important indicators of risk management Ignoring is a favorite thing of novchikov. They think that they have understood everything, they think that the market will spare them. Unfortunately, the market doesn't work that way. Risk management was invented long before you and will be and will be used after you. And all because it works and without it YOU CANNOT BECOME a SUCCESSFUL PROFESSIONAL TRADER . And then it's up to you who you want to be. Traders, if you liked this idea or if you have your own opinion about it, write in the comments. I will be glad 👩‍💻
Education
by Lingrid
18
HOW TO IDENTIFY POTENTIAL SUPPORT AND RESISTANCE 1️⃣ Previous Lows and Highs The highs and lows act as potential support or resistance levels. The highs, in general, are extremely important because many market participants are constantly staring at them, entering the market either at or near the high. The human psychology is a funny to observe when the price goes against them. People do not take a loss and do not close a position but keep it and hold on, because psychologically it hurts less, than when you have closed the position and fully realized the money is lost. Accordingly, when the price returns to the previous maximum, those who bought at this level have an irresistible desire to close the position and get to zero, and begin to close their positions frantically. Those who bought below it usually want to take profits at the old maximum, because they understand it psychologically. Any prices higher than the maximum seem to be too expensive to potential buyers, and people get upset and leave such a market. When the price accelerates and falls to the previous minimum, these low prices begin to attract buyers. At the end of the day, they missed the first price return to that level and are now grateful for a new chance. For the same reason, sellers are extremely reluctant to part with their money when the price returns to the previous low, because they have seen a pullback from that low before! And so, they think, "why don't the price bounce again?Unfortunately, there's no way to tell in advance which level will be support and which will be resistance, and there's no way to say with certainty that it will work out the way we want it to. That's why any levels are just areas of interest where we expect a potential, temporary reversal. Accordingly, we will need help from other indicators, say oscillators. 2️⃣ The magic of round numbers Support and resistance love to form around round numbers. The reason is clear, all these 10, 50 and 100 are the simplest psychological markers on which traders justify their decisions. In the 1970s, the Dow Jones Industrial could not get broke the 1,000 level. Gold in the 1980s and mid-1990s was always hanging around the magic $400 level, and so on. The round level is a potential pivot point that we are interested in 3️⃣ Trend lines and moving averages are dynamic support and resistance levels A good trend line always reflects the underlying trend. One of the simplest rules for determining the significance of a line is how often price has touched or approached it. The more, the better. If price keeps coming back to a low, that level becomes a strong support zone. A similar rule works for trendlines and moving averages. Every time price returns to a trendline or rising moving average and bounces back from it, the line or moving average becomes a dynamic resistance level. The same works for downtrend lines and moving averages. Therefore, when price returns to an uptrend line, the buy option becomes interesting and the sell option becomes interesting if price touches the descending line or moving average. In this case, an excellent low-risk stop loss can be placed under the line or the sliding line. The principle is the same as if we were building a house and increased the thickness of the roof. The same principle works when the moving average and the trend line are at the same level, they trivially double the strength of the resistance level (or support, if the price goes up). 4️⃣ Emotional zones on the chart indicate possible support/resistance levels An emotional zone is a place on a chart where the price, going in a strong steady trend, encounters an abrupt, literally explosive reversal on the formation of the next candle/bar. Gaps are another example of emotional zones. Gaps are formed when buyers or sellers react so emotionally to news that an empty space aka a "gap" forms on the chart. 5️⃣ Proportional movements and pullbacks If we paraphrase one of the laws of dynamics, we find that for every action there is a counteraction. Prices formed in financial markets reflect nothing less than the psychology of the crowd in motion, so the laws of dynamics apply to them in full measure. As a result: It is the changing emotional state of the crowd that we often see in proportional price movements. Perhaps the most famous principle of proportionality is called the 50% rule. For instance, many bear markets, if followed through the DJIA index, lost half their value. In 1901-1903, 1907, 1919-1921, 1937-1938 markets fell by 46, 49, 47 and 50%, respectively. The first phase of the 1929-1932 bear market decline ended in October 1929 at 195, which was exactly half of the September high. Past the halfway mark often serves as a balancing act, often hinting at further price movement or an important reversal ahead.
Education
by DeGRAM
12
INTRADAY FOREX TRADINGGreetings everyone. Today we are going to talk about such a difficult topic as intraday forex trading. The tips below will be helpful to any intraday traders. 🔷 Don't chase the number of trades. Select the most obvious setups. You have opened a chart. There are no setups. You zoom in the picture, change the timeframes, looking for some reason to enter the market. Does this situation sound familiar? The fact that you, following the stereotype "intraday trading is a lot of deals, almost every minute", really want to open a trade, and then some more. Only this is not trading based on the system, but trading at random. What does it lead to? I think you've guessed it. Enter only when you see a clear, text book setup. Enter the market only when you see clear setups. Ignore confusing, unclear situations. Just wait for clear entry signals. 🔷 Limit the Number of Traded Instruments Intraday trading requires quick and clear actions. There is no time for long thinking. So, a large number of trading pairs will only confuse and distract you. You don't need 20 charts when trading intraday; limit your portfolio to two or three instruments, no more. In the beginning, I would advise to trade no more than one pair. 🔷 Risk no more than 1% of your deposit in each trade The psychological pressure is very high when trading intraday. It is very easy to get enraged by a couple of losing trades and start making more and more mistakes trying to win back. It is very hard to stay calm, risking 5-10% of deposit in every trade, because we open trades quite often during the day, and there is just no time to calm down, to assess the situation thoughtfully and without emotions. So, the best variant is to risk only a small part of your capital. That in case of a string of losses you will stay morally steady and be able to continue trading in order to recover these losses later. Try to aim not to earn much at first, but to earn steadily. 🔷 Monitor the news The release of important economic data can easily turn the market in either direction. And while this factor is neutralized by the timeframe size when trading on daily charts, in intraday trading you have to pay attention to news releases. Do not trade half an hour before and after the news release. If you see some kind of Price Action setup, but half an hour later the news comes out just wait. After the news release, if the market moves in the direction indicated by the setup, you can enter the market. But not before the news release. 🔷 Watch the higher timeframe Forex charts of the same currency pair can be completely different. It all depends on the timeframe, on the selected timeframe. And if you trade, for example, on H1, then it will be useful to look at the higher timeframe like H4. But we have to do it wisely considering the stage of the event on the higher timeframe. 🔷 Limit your profits / losses for 1 day First, never set yourself a goal: to make N points in one day. This leads to looking for non-existent points to enter the trade, feeling angry at the market, and in the end, there are just quiet days when it's hard to extract your N pips even in theory, let alone in practice. I'm talking specifically about setting limits. A kind of total take profit and stop loss on trades within one day. It may seem silly at first sight, but this approach helps a lot in maintaining the discipline which is so important in intraday trading. 🔷 Consider the daily volatility of the traded pair Let's assume you know that the average distance from the High point to the Low point of the daily candlestick for pair X is 100 pips. If your profit on a trade opened during intraday trading was about 70-80 pips, then it would be logical to close the position, because the potential for movement is almost exhausted. Likewise, if the price has already gone 70 pips in the trend, and a new pattern appears in the same direction, it would be quite stupid to open a new trade, because the price is about to "run out of fuel". 🔷 Do not leave the position for the next day A serious error of beginners is to leave open positions overnight. Think about it: why should the set up that you found intraday be valid tomorrow? The market has long forgotten about it. The traders have a lot of new data, signals, someone has opened positions on higher timeframes, and so on. So why should your position hold? By leaving open positions overnight you are simply playing roulette, trying your luck. And luck has no place in Forex. So, in order to avoid unnecessary losses, if at the end of the American session you have open positions, no matter what just close them.
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Education
by DeGRAM
21
How to Read A Price Chart▶️ How Does the Market Move? At any given point in time, the market is likely to be moving in one of three directions: up, down, or sideways. Which direction is up? Which direction is down? And which way is sideways? When the market is moving up or down, it is said to be in a trend. When the market is moving sideways, it is typically in a period of consolidation. There are two types of trends that markets can be in: a bullish trend continuation trend or a bearish continuation trend. ▶️ Bullish Trend Continuation: Buyers can control price action when the market is in a bullish trend. This market identified by price action that has started at an Initial Low and continued to rise up, achieving a New High when it breaks and closes above the previous high. As the market retraces, price action will continue to fail to break and close below the most recent structure lows. This will create a Higher Low. As the process repeats itself, we see a pattern of new highs and higher lows being created. This pattern reflects the changing dynamics of the market, and provides insight into the market's future movements. When price action is presenting this type of pattern, trend continuation traders should look for opportunities to buy in the market. ▶️ Bearish Trend Continuation: A bearish trend continuation pattern indicates that the current downtrend is likely to continue. The sellers have taken control of the market and are looking to drive prices lower. This process is identified by price action starting at an initial high and then moving downward. This creates a new low as it breaks and closes below the previous structure lows when looking left. As the market pullbacks, price action fails to break and close above the most recent highs. This has created a Lower High. As the process repeats itself, we see a pattern of new levels being created, followed by decreases in the level of the old level. If you're a trend continuation trader, be on the lookout for selling opportunities in the market. ▶️ Consolidation: When the market is in a period of consolidation, it is difficult to tell whether it is heading in a bearish or bullish direction. Instead, price action is “choppy” as there is no clear directional movement. During the period of consolidation, trend continuation traders should be careful when looking for trading opportunities. ▶️ Support and Resistance After the formation of a New High, the market will retrace and create a higher low. When a movement occurs, the now-forming area of resistance is an indication that something important is happening. As price action pushes up from the newly created higher lows, that resistance level becomes the last line of defense for sellers to try and stop the buyers from rallying. Failure to break through the resistance level could indicate an uptrend period or reversal. If the price moves past the resistance level, this means that the trend is continuing. Remember the previous NH that turned into resistance after the retrace? Well, once this resistance level is broken, it becomes support. If price action retraces back down from our recent highs, this structure level should support the overall trend. ▶️ Forming Structure: To create a valid new structure high or low, we need to watch for the market to break and close above/below the previous structure. When a trend is bullish, the market can create a "Higher High" near or above the highest point reached in the trend. When a trend is bearish, the market can create a "Lower Low" by trading near or below the lowest point reached in the trend. In order to have a valid Higher High, Higher Close, we need a candlestick that breaks and closes above the previous candles' all-time highs. It is only after we have generated a new structure that is highly formed that we can consider it to be a valid one. If you are looking for a bearish trend, simply use the opposite. ▶️ Why Is Structure Important? Structure is important because it can help you predict where price action is likely to go. Previous support and resistance levels in the market act like a magnet, pulling price action towards them. When price action reaches high levels that have been hit multiple times in the past, it is considered to be a major structure level. It is important to pay attention to the main structural levels, because it is likely that the price action will be related to these levels. Smaller ebbs and flows of a trend can be detected inside minor structure levels. These levels serve as both support and resistance, although they lack the strength of the primary structure levels indicated above.
Education
by DeGRAM
8
COMMON CAUSES FOR OVERTRADING👋 Hello, fellow Forex traders! Overtrading is the most common problem, especially for traders trading on lower timeframes. It can arise for a number of reasons, so if you don't know what the main purpose of your trading is - i.e., what instruments you trade on, how you trade, what your trading strategy is, your motivations, personal styles and your trading and personal history I will give some explanations why traders become addicted to trading and give some possible solutions to this problem, hoping that among them you find your own solution. In order to determine when you become overly active, you need to have some basic criterion with which you can build off and thus be able to determine the amount of deviation from this value - it could be, for example, the number of trades made or your trading volume. Of course, there can be situations where a high trading frequency is acceptable, such as when markets are volatile and there are significantly more trading opportunities than usual. 1️⃣ Emotional Trading This happens when a trader trades forex, transfixed by feelings of excitement and pleasure, rather than for profit. Just like most people who play in a casino. If your goal is solely to have fun and get emotionally excited, then you must also realize that in the long run you are likely to develop an addiction to trading, and you are unlikely to profit. If you want to profit from your trading, then you need to change your goals, forget the fun and excitement, and move to a more professional and structured approach whose desired result would be trading productivity expressed in monetary or percentage terms. 2️⃣ Lack of trading strategy When a trader does not have a rule-based strategy and, therefore, any parameters for determining when to trade and when not to trade, any price movement in the market tempts him. In this situation traders are very prone to chase trends and often find themselves buying when the trend is down and selling when the trend is up. They get the impression as if they are doing everything in vain, as if the market is watching their actions. Do you know this situation? The most important thing you can focus on is developing your trading strategy, which clearly identifies whether there is a particular trading opportunity, fundamental data, technical analysis or a combination of both. This will help you become more selective in your trading. 3️⃣ Boredom In a quiet market where traders spend most of their time in front of their computer screens, there will be times when there are weak or no trading opportunities. It’s time when traders can get bored. These are natural periods in trading. For some traders, this can be very challenging especially for beginners, traders whose trading activity is based on emotional excitement, who work on enthusiasm. An important question you should ask yourself is the following: "Am I trading to relieve boredom or to make money?" 4️⃣ You need the money This is one of the worst situations in trading. It is a strong and powerful state, but it will not contribute to good trading overall if your decision-making is focused solely on making money and not on your trading strategy. Evaluating your financial needs and the effectiveness of your trading is very important. And you don't have to adjust your search for entry signals with what you don't have enough for beer. Any action you can take to alleviate your acute need for money will be a big step forward for you. 5️⃣ Enthusiasm in Trading Novice traders are full of enthusiasm. Traders who are entering new markets and using new trading methodologies also tend to be more enthusiastic and passionate. While this enthusiasm is undoubtedly a positive quality, there is also a dark side to it, seeing it as excessive enthusiasm and looking for any opportunity to open a trading position. Maintain your enthusiasm, but channel it into developing your trading strategy and discipline. If you have certain trading considerations, practice them on a simulator/demo account, where costs are obviously much lower. 6️⃣ Lack of Patience Traders who suffer from a lack of patience become addicted to trading because they will take opportunities that are not part of their trading strategy, and thus they will naturally make more trades than necessary. Develop patience in yourself, look for opportunities to analyze the markets, and take the time to just look at them rather than act on them. You might want to try practicing self-awareness to help identify and work with overcoming the desire to alleviate feelings of impatience. 7️⃣ Revenge Trading This is when traders have lost money in losing positions, making mistakes or accidentally opening positions, etc. and are usually eager to "get their money back". Despite the fact that the goal of such behavior/thought is positive, the subsequent behavior usually is not. Simply put, a desire to "get even". Traders chasing their losses will deviate from their trading strategy by opening positions that are probably profitable, whether they are consistent with their trading strategy or not, for, according to their psychological mindset, their goal now will be to make money, not to stick to their trading strategy. If you have incurred major losses or lost a large amount of money in a number of trades, you should generally take a time out. This timeout will allow you time to redirect your trading state and refocus, and most importantly, it will break the "losing money → feeling angry → wanting your money back" behavioral pattern. Time out breaks this behavioral pattern and allows you to refocus - use breathing and relaxation techniques or take a slow walk that will help you dilute your emotions and reduce your desire for revenge trading. 8️⃣ Fatigue When you are tired, physically or mentally, your brain does not have enough energy to function at full capacity, and with low "fuel" your work will have low levels of self-control. It is self-control, not a trading strategy, that is needed to engage the brake in your brain to stop your trading, and that requires a source of energy. When you are tired and your fuel level is low, your self-control will also be low, there will be more chances for excessive and unreasonable trading. Rest and glucose (which we get with food and sweets) are the two main factors in optimizing brain function on the energy level. When you trade, you must be firmly convinced that you are awake and full of energy. ✅ Thus, there are several reasons why traders overtrade, and I have provided you with some possible solutions to help you overcome them. Analyze which one might be most appropriate to your situation, test them out and write about them in the comments.
Education
by DeGRAM
8
DOUBLE TOPS/BOTTOMS🔵The double top and double bottom are a pattern that can be used to find a counter-trend trading opportunity. This pattern can also be used as an entry technique in the markets. When this pattern is seen, the market is signaling to traders that a particular level of structure is important because price action is refusing to break and close above or below it. A double top and bottom are a sign that the market is failing to break through previous levels. When identifying a trend continuation pattern in bullish market, the trader is looking for a new high in a price action, followed by a pullback, followed by the market again hitting a new high. In cases of a double top, the market does not rally high enough or close above the previous top, indicating that the price action does not have strength to break through the previous level. 🔵 Filters Although it is possible to trade the double top and bottom successfully as mentioned above, I have added a few filters to eliminate some of the false signals and to be sure that I take only the high probability trades. There are many different filters that you can use when trading, but the main one I use is the Relative Strength Index (RSI). I look for overbought and oversold conditions as well as divergence to help me make decisions. When identifying this pattern, I first look for the RSI to be overbought for double top and oversold for double bottom. If this happens, then I have a valid trigger bar. After price action retests the trigger bar, I look for divergence. 🔵 Divergence: A divergence between the RSI and price is formed when the two send contradictory signals. If price is producing repeated high and lows, the RSI should also be trending up. Divergence occurs when price is producing higher highs and higher lows, yet the RSI shows a higher high, then a lower high. In the case of a double top, as price action gives us an initial high (trigger bar), followed by an equal high (the retest), the RSI usually prints a lower high, suggesting that the trend may be losing momentum. 🔔 The best place to put stop loss is above or below double top/bottom. As with any trading technique, your stops for this pattern will ultimately be up to you and I would advise that during your back testing you test out multiple areas, but here are some common rules that I use for this pattern. When placing a stop on a double top and bottom, I will take 1-2 ATR way and put it above or below the high and low of the pattern.
Education
by DeGRAM
8
HOW TO SPOT A REVERSALLet's see how the characteristics of a reversal and a pullback differ. 📈 A pullback: - Usually occurs after a strong price movement; - It does not last long; - The fundamental (macroeconomic) data does not change; - In an uptrend there are hints of its continuation, similarly for a downtrend. 📉 Reversal: - Can occur at any time; - Long term; - The fundamental data is changing it is often the reason for the reversal; - In an uptrend there is no hint to its continuation, the buyers' strength decreases (and vice versa for a downtrend). Unfortunately, there are of course no guaranteed methods to determine where there is a pullback and where there is a trend. I would buy this one for any money, and everyone would buy it. That is why it is determined by a number of different instruments, from a simple multiframe analysis and trend lines to various systems. 🔴 Reversal: Fibonacci Levels Although I myself am not a fan of Fibonacci levels and its many counterparts, it seems that everyone uses them but me. Let's listen to the practitioners of this tool, since the market likes it so much. According to them, statistically, pullbacks most often occur at levels 38.2%, 50% and 61.8% those Fibonacci retracement levels. If price broke through those levels, it could very well be a trend reversal. But technical analysis is not science, so we will always deal with probabilities. In the case of Fibonacci, pullbacks are identified like this: As you can see, each pullback tests a certain level before reversing further along the trend. And this repeats itself. But if price were to confidently break through these levels one after the other, that would indicate a long-term reversal. 🔴 Reversal: Pivot Points Another method of determining the reversal is the use of the pivot points. In an uptrend, the lower support points (S1, S2 and S3) will act as conventional levels, breakout of which can indicate a change of trend, but not a reversal. And vice versa for resistance points (R1, R2 and R3). Breakdown of these levels is another hint to a reversal. 🔴 Reversal: Trend Lines Trend lines are generally an elementary method of determining if a trend has changed or if it is a pullback. If you combine trend lines with candlestick combinations and price action patterns, you can get really impressive results. 🔴 Reversal: Price Highs and Lows Finally, my favorite method for identifying pullbacks and reversals is to use the basis of Dow theory: price lows and highs. The simplest technique for this is described by Martin Pring. Pring gives the simplest explanation that improves the basic understanding of any market. 📊 Market condition of price As you can see, using simple techniques, we can build up practical decision options for determining whether price is reversing or going further along the trend. Trends, pullbacks, and consolidation are the three pillars of any market. I also advise you to be extremely attentive to candlestick combinations in reversal zones, whether it be trend lines , pivots , or other tools. Study them. Keep screenshots. Look for them on the history. Do not be lazy. This is the only way to learn, over time, to better identify price behavior. At some point, you will feel it on an intuitive level. But this is just a continuation of your trading practice, which has moved, after many months of practice, to a new level. Experienced drivers don't think about when to squeeze the clutch and when to change the gear stick. Not only that: they can even feel the dimensions of the car. Seemingly unbelievable thing: you are inside and you feel that there is 5 cm from the bumper to the sidewalk. In trading, you just have to reach a similar level of intuitive perception based on hours of theory and practice. Therefore, the specific instrument is not so important. Much more relevant is your level of proficiency in it.
Education
by DeGRAM
6
American Trading SessionThe American trading session is considered the largest in terms of volume and strength of market movements. All this is connected with the American economy, which is larger and stronger than the economies of other countries. The ability to correctly identify and use market fluctuations in the American session will help everyone earn a lot and quickly. The opening hours of the American trading session in New York are from 8:00 to 17:00. The largest financial platforms in New York and Chicago create the main activity of the American trading session. Trading sessions At 9 o'clock in New York, the largest market in the world opens - the New York Stock Exchange. At this time, the giants of the financial world come into play and the market is gaining momentum. An hour later, another major exchange opens, which is called the commodity exchange, the Chicago Mercantile Exchange. Due to the overlap of the two sessions of London and America, there is a lot of activity and a lot of volume at the beginning of trading. High activity is observed almost throughout the entire session and stops when the offices of financial giants close in New York. After about one hour, the offices in Chicago also close, marking the end of the session. Assets With the opening of the American trading session, trading begins on large platforms in the USA, Mexico, Brazil, Canada. In Canada, during the American trading session, trading opens on the TSE and CSE exchanges in Toronto, ME in Montreal. At the same time, trading starts on the Mexican Stock Exchange BMV. During the American trading session, the largest Brazilian exchanges also begin trading: Bovespa in Sao Paulo, as well as BVRJ in Rio de Janeiro. During this period, key indices are traded: NASDAQ is a group of stock indices of five thousand companies listed on the exchange of the same name. XAX is an index traded on AMEX and reflects the dynamics of stock prices and depositary receipts of all companies traded on the exchange. The Dow Jones is one of the largest indices in the United States, including securities of organizations in almost all industries, except transport and utilities. The S&P 500 is the stock index of the 500 largest companies on the NYSE and NASDAQ. S&P/TSX is an index of high–capitalization companies whose securities are traded on the TSE. Mex IPC is a Mexican stock index that includes securities of 35 large companies traded on the Mexican BMV. BOVESPA is a Brazilian index based on the securities of 71 large companies traded on the exchange of the same name. Thus, the American trading session takes place during the work of the world's largest exchanges, where most of the most significant stock indices are traded. Currency pairs The pairs that include the currency of one of the countries of this session have the greatest volatility during the American session: Pairs with the US dollar: AUD/USD, EUR/ USD, GBP/ USD, NZD/ USD, USD/BGN, USD/CAD, USD/CHF, USD/CZK, USD/DKK, USD/HKD, USD/HUF, USD/ILS, USD/JPY, USD/MXN, USD/NOK, USD/PLN, USD/RON, USD/RUB, USD/SEK, USD/SGD, USD/TRY, USD/ZAR Pairs with the Canadian dollar: CADJPY, CADCHF The volatility of the euro–Mexican peso pair is also increasing. Features By right, the American trading session is considered the most active session among others. The main reason is the large economies of London and America, which are trading simultaneously at this time. As you have already understood, the high volatility that is observed during the American session is capable of destroying any trader's account. It will be extremely difficult and dangerous for beginners to trade at this time. The beginning of trading is considered an excellent time for scalpers, because during these hours there are strong price jumps, since strong movements can literally earn a decent profit in minutes. After 11:00, sharp unexpected jumps may occur in the market caused by the actions of large American players, often working together and trying to get maximum profit by reducing the number of players in the market after the closing of European trading. Before the weekend, during the American trading session, there is usually a pullback on the main trends, since Japanese investors do not trade, European investors leave for the weekend, and American investors try to lock in profits and not leave positions for the next week. Conclusion The American trading session is the most volatile part of the entire trading period. During this period, it is worth making transactions with caution, since powerful movements caused by large players are not uncommon. This session is best suited for scalpers due to fairly strong fluctuations within the day, when a fairly large movement can be taken in a short period. The most careful approach should be taken to assets related to the US dollar in one way or another, and, accordingly, follow the US news published mainly at the beginning of the session.
Education
by Lingrid
12
How The 80/20 Rule Applies To Forex TradingToday's article will be entirely devoted to reflections on such wonderful topics as: psychology, risk, workspace management, and analysis. 20% effort gives 80% results Many people probably heard about Pareto's law, the so-called 20/80 principle. Whether you agree with it or not, let us project this statement to the approach to trading as a technical analyst. What is the 80% result obtained with 20% of effort? I believe that only with the right psychological approach and attitude trading will give 80% of the result with 20% of effort. Hence the simple truth even a child can be taught to trade. But it doesn't mean that he/she will bring a stable and guaranteed income in the long run. I mean technically trading is a very simple thing, if not complicated. Is it difficult to find the trends according to Dow's theory? Find the right patterns on the chart according to Steve Nisson or price action methods? To delve into Elliot waves or swings to apply them in practice? All these things may scare only a beginner trader. But this article is not for beginners, it is for people who have some experience in trading. Thus, the bare technical aspect gives only 20% of the result and the rest will fall on your shoulders. The obstacle to successful trading is the trader We all can agree that the main obstacle to successful trading is the trader himself. You can distinguish an implication in favor of algorithmic trading, and a bold disadvantage in the manual trading. I would not say so, for the simple reason that it is easier for a trader to adjust to the current market situation and the process that is not included in the logic of the algorithm. But for this it must be developed a sixth sense: intuition, NOT your technical skills. By intuition and a sixth sense I mean, of course, only experience and knowledge, embedded at a subconscious level, rather than trading at random. And what are non-technical skills? It is clear that these are such basics as risk and money management, because this is the root cause of all troubles and misfortunes for a trader if he doesn't follow them. Often, during active trading, most traders have words like discipline, willpower in their minds and of course excitement, greed and pursuit of money. These are the exceptional, aggressive emotions that lead to the draining. I can't teach you how to deal with it, everyone's character is different, but you need to break down these emotions. It's impossible to make a million in a month, six or a year out of a thousand. No matter how you look at it, if you break the rules your MM you’ll get a guaranteed loss. But if you work systematically and according to the rules, you can have stability and turn over a profit. The small things we miss. It's no secret that life consists of the little things, put together in large formations. If you leave them out, in an instant they will all pile up and collapse like a snowball at the most inopportune moment. One of these little things is the workspace. The ergonomics of things in your room (chair, desk, device, color of curtains, view out the window) to the color of the bull candle on the chart. The little things that are subconsciously perceived every day. And it's up to you whether they will help, or vice versa, press and aggravate. Is it possible to trade successfully when there are screaming children, an un-walked dog, or an uncomfortable chair? You're staring blankly at a poisonously colorful schedule and trying to trade. It may well be that everyone has their own view of cozy and comfortable work, but what I see in this picture is a lack of focus on all levels. We need to remove all outside triggers so that nothing distracts from seeing the essence. Make hours of silence in the house so no one bothers you during that time. So, here's what gets you 80% of the results: order, discipline, deliberate action, motivation. It's not as much effort as charting. It comes to the aid of a variety of types of organization and management, once you radically put order in yourself, in your life, and you will do it always and then the results of trading will noticeably improve.
Education
by DeGRAM
8
How To Remove Doubts in TradingHave you ever wondered why do you feel uncomfortable when you enter a trade, doubt your prediction and then look at it and realize, if you had entered, here or here, everything would have worked out, but damn, something kept you from doing it? So, what could it be, why would there be such doubts before entering the trade? In my opinion these doubts may be caused by the following: ▶️ The absence as such a trading system, at least some (where and under what conditions entries are made). ▶️ No trading plan, looking at which it will be easier to work before trading, there will be past examples of successful entries, which may well affect the next one. Size of the trade. Psychologically it is easier to trade with a smaller amount risk than with a larger one. Say, you never risk not more than 3% of your capital, but you still do not feel comfortable. You should feel comfortable with the size of the trade. For example, if you have $50 000, but $500 is too much for you and it is hard to part with it? In that case work on the minimum, which is, say $100. Gradually, once again, gradually increasing its size. You trade with $100-200 per trade, move on to $300-400 risk per trade. When you trade with $100-200 per trade, the stake is small, you not afraid to lose this amount but when you increase the risk, then the problems begin, doubts begin to plague you. ✅ Doubt is the worst enemy of the human mind. So how to deal with all of this? Trade an amount that you can afford to lose comfortably, gradually increasing it as confidence grows. Sum that you are afraid to lose can lead to a lost capital, because there will be a great desire to restore the figures on the screen. There is a concept in trading - "Turtle trader" - which implies that you have to grow slowly in trading. Believe in yourself and in your trading system. Make notes on previous trades, where it is better to enter and where it is undesirable, history repeats itself. An important point, do not trade when you are upset about something, or just not in the mood, when you are tired. When you trade, you should not have extraneous thoughts, especially negative ones. Read a book on psychology, for instance, relax, or trade on a demo if you really want to trade. To sum up When you experience self-doubt, don't make the situation worse. Everyone experiences doubts. This is normal when trading in such chaotic markets. If you are a novice trader, take comfort in the fact that your doubts will subside once you have honed your trading skills and gained trading experience. If you're an experienced trader, it may be helpful to remind yourself that everyone has slumps sometimes. You'll regain your strength if you keep trading. The key to success is to remember that insecurity usually leads to stagnation.
Education
by DeGRAM
6
European Trading SessionHello everyone! Today we continue the review of trading sessions on the forex market. The European Trading session is next in line. Let's get started! The European trading session is considered the most volatile of all. The main reasons for high volatility are the coincidences of the opening of the session with the work of the Asian session, in addition, the European session closes during the opening of the American stock exchange. It is at this time that 5 major financial platforms are operating – the exchanges of London, Frankfurt, Paris, Luxembourg and Zurich. Trading sessions Zurich, Frankfurt, Paris, Luxembourg are three major trading platforms that open at 2:00 New York time, while the London Stock Exchange, the main trading center, opens at 3:00. The opening time of trading in Europe is considered to be from the beginning of work in London, since it is on the London site that 30% of all transactions are made. The largest companies and banks enter trading on the London Stock Exchange at about 4:00 New York time, so at this time there is the greatest volatility. Opening hours The period of such activity lasts about 2 hours, after which the activity of traders decreases and it is lunchtime in the offices. With the opening of trading in America at 9 o'clock, a new momentum of volatility begins in the European trading session. The activity will last about two hours, after which it will gradually fade due to the closure of the Frankfurt, Zurich, Paris and Luxembourg exchanges. Stock Market assets With the opening of the European session, trading begins on the largest exchanges in Europe: the London LSE, the Austrian WBAG, the Berlin, Munich and Hamburg stock Exchanges in Germany, the Irish Stock Exchange, the Italian ISE, the Spanish BM in Madrid, the Swiss SWX, the Stockholm Stock Exchange in Sweden, as well as groups of pan-European exchanges Euronext and OMX. During the work of the largest exchanges in the European session, the fundamental European indices are traded: Euro Stoxx is a group of indices of 600 companies of different capitalization levels located in 18 Eurozone countries. FTSE – index of securities of the 100 largest companies traded on the London Stock Exchange CAC 40 – Euronext Paris Blue Chip Index DAX – index of securities of 30 companies with high capitalization of the Frankfurt Stock Exchange IBEX 35 – blue chip index of the BM exchange FTSE MIB – index based on quotations of 40 largest companies on ISE OMX STKH30 – Swedish index of securities of 30 companies with the largest capitalization traded on the Stockholm Stock Exchange SMI – stock index of the 20 most liquid companies of the Swiss Stock Exchange The MOSBIRZHI Index is a Russian index of shares of 50 companies belonging to the blue chips of the Moscow Exchange, calculated in rubles. RTSI is an index of shares of the 50 largest companies on the Moscow Stock Exchange, calculated in US dollars. Currency pairs of the European trading session During the European session, currency pairs of countries whose exchanges are active at this time have the greatest volatility. Currency pairs with euro: EUR/USD, EUR/JPY, EUR/GBP, EUR/AUD, EUR/CAD, EUR/CHF, EUR/NZD, EUR/TRY, EUR/SEK, EUR/NOK, EUR/HUF Currency pairs with the pound: GBP/USD, GBP/AUD, GBP/BGN, GBP/CAD, GBP/CHF, GBP/CZK, GBP/DKK, GBP/HKD, GBP/HUF, GBP/JPY, GBP/NOK, GBP/NZD, GBP/PLN, GBP/RON, GBP/SEK, GBP/SGD, GBP/TRY, GBP/ZAR Swiss Franc pairs: AUD/CHF, CAD/CHF, CHF/BGN, CHF/JPY, CHF/RON, CHF/TRY, NZD/CHF, USD/CHF It is also necessary to pay attention to the currency pairs of the US dollar with the Swedish, Czech, Danish krona, as well as the Hungarian forint, the volatility of which also increases slightly during the European session, especially in its last hours, when the European session intersects with the American one. Features Intersecting with two sessions at once: the Asian and the American, the European session becomes very volatile during the hours of intersection. It is at this time that scalpers come into play, who earn on fast movements and sharp trend changes. Due to such high volatility, beginners are not advised to trade at this time or should at least be very careful, because one move in the European session can destroy all capital. A distinctive feature of the European Session is powerful movements and rapid change of quotes. The lion's share of movement and trends is formed when the European Trading Session comes into play. This session also features a lot of manipulations – false breakouts, probing levels and collecting stop losses. That is why it is very important to be attentive during this session and not risk a large percentage of capital. Conclusion The European trading session itself is very volatile, because it is at this time that financial centers around the world turn on. However, during the intersection of sessions, volatility increases significantly, which creates large jumps and price movements. It will be very difficult for beginners to trade at this time, because strong movements will often reach stop losses, there will be a lot of false breakouts after which they will turn around sharply. At the same time, professional traders who are able to analyze a large amount of information and are able to make quick decisions will be able to earn a lot of money. Traders, if you liked this idea or if you have your own opinion about it, write in the comments. I will be glad 👩‍💻
Education
by Lingrid
8
Why Perfectionism is Killing Your TradingDo you have a tendency to perfectionism? So, the biggest question is, do you have a tendency toward perfectionism? "Perfectionists are people whose standards are very high and out of reach; they are people who are strenuous, involuntary, and unstoppable in their pursuit of an unattainable goal and who evaluate their own worth solely in terms of effectiveness and accomplishment of the task at hand." Does this sound like you? Perfectionists suffer from setting excessively high standards, fear of failure, procrastination, never being satisfied with their successes and can become emotionally unstable if their standards are not met, which can often be the case in trading; they fear competition, are not trainable, are meticulous in their way of thinking, being overly self-critical and intolerant of mistakes, and can also be prone to high levels of fear of possible failure. Fear of loss, hesitation, fear of pulling the trigger, falling into extreme frustration or anger when your trading strategy fails or when you miss an entry point, or if you are extremely self-critical of your forex trading activity, can be evidence that you are prone to perfectionism. One way to test you for a tendency toward perfectionism is to have the words "have to" in your vocabulary or thinking. 7 ways to overcome the tendency toward perfectionism So, if you have some tendency toward perfectionism, what can you do? 1️⃣ One of the most useful things and important principles to remember is that humans are prone to make mistakes (that they are imperfect) and therefore you, as a forex trader, are also prone to make mistakes (that you are also imperfect). Following this as one of your trading beliefs, as part of your mental map, can be very helpful in that it will keep your reactions to events more realistic and less emotionally intense. 2️⃣ Since you are operating in an imperfect and uncertain environment, it is crucial for you to learn to think in terms of probabilities. Interestingly, research in behavioral finance has consistently shown that people are not so effective at drawing conclusions or thinking probabilistically, which is a skill that many people will need to develop in themselves. Mark Douglas (author of Zone Trading) writes, "every trade has a probabilistic outcome that does not preclude the possibility of loss. A shift in thinking from the concept of perfection to the concept of probability will help shape trading behaviors that improve the quality of trades and response to events. 3️⃣ Try to do your best to strive for excellence rather than obsessing over being the best; set a goal to become a good trader (but not the best in the world) and focus on it. Focus on learning and improving, including understanding, you accept mistakes and learn from them. 4️⃣ Focus on your trading process, not just the outcome. By focusing on your trading process, you fence yourself off from some of the anxiety and frustration that occurs when you are too attached to your results. Try to focus on how well you're trading, not just how much money you've made or lost. 5️⃣ Train yourself to take on the challenge of trading and find enjoyment in what you do. The process of having fun along with learning is the foundation of effectiveness. By accepting this, you will also allow yourself to look at the ups and downs of trading from a different angle, and this rethinking of the situation will give you a different perception of these events, with less frustration and emotional turmoil. 6️⃣ It is important to note that being able to see forex losses and drawdowns as learning opportunities is not self-judgmental. One of the disadvantages of the perfectionist can be his negative reaction to mistakes, missteps, and his inability to learn from them. Mistakes provide us with ample opportunities to learn and improve performance, but only when we actually perceive them as such. 7️⃣ Finally, it is important to learn to accept that your personal fortune is not your own capital that you are a worthy individual regardless of your trading performance at any given time. On a fundamental and profound level, this is a key belief for optimal human functioning, a sense of happiness, and successful trading. ✅ Conclusion You won't win every trade. And that's perfectly normal. Remember that it's inherently human to make mistakes in an uncertain environment a world of perfection is out of reach; we live in a probabilistic world.
Education
by DeGRAM
10
HOW OFTEN DO YOU NEED TO CHECK THE CHARTS?How many times have you looked at the chart trying to figure out if this signal is worth taking or not? And how many times have you made a profit in such cases? You don't have to look for good trades on purpose. You just wait and react. How often you should check the chart in forex trading, as well as the reasons why our brain sees trades where there are not there (and what to do about it), we're going to talk about today. There is no need to search for trades at all. Good signals are visible immediately. Instantly. Like 2 frogs above. You do not have to look for them. You turn on the terminal, and you see everything at once. You do not guess, do not draw, do not change the scale of the chart (narrower/wider). If you do not see a signal on the chart in the first 1-2 seconds, it is not there. In general, if you know at least 4-5 techniques of technical analysis , you, if you want, will find at any time on any chart a signal in any direction. At any time on the chart, if you want you can find any signals. Impatience, desire to make money, bitterness after a previous unsuccessful trade or euphoria after a successful one all this clouds our brains and we look for the trades where there are none, proving ourselves right at the same time. The longer you look at the chart, the more trades you’ll see According to research by scientists, our brain works in such a way that the less often we encounter a familiar and familiar phenomenon, the more often we start to notice it. Think about this phrase. Once you're looking for trades, you find them. The vigilante syndrome There was an interesting experiment: in an area with high crime rates, teams of volunteer vigilantes were introduced, who reported any violations of public order to the police. At first, only serious crimes were reported. But then the crime rate in the neighborhood dropped significantly, and the vigilantes began to call the police for less important things: crossing the road in a wrong place or someone walking on the street at night, that sort of nonsense. The Phantom Menace In yet another experiment, people were shown several sets of sketches with completely different facial expressions: from frightening to totally friendly. And they were asked to choose from them the ones that looked threatening. In the beginning, people chose the most "beastly" faces quite adequately, but then the scientists began to remove them from the samples leaving more "normal" faces. And people began to call those faces that seemed harmless to them at first threatening. Why? Because they were told to SEE the threatening faces. The experiments described above clearly show that when you look for something, you are bound to find it. So do the trades on the chart. Our brain tries to match all the facts so as to confirm our point of view. And this leads to losses. The only way to combat this effect, according to psychologists is to define your goals as precisely as possible and write down specific wording. In the case of trading the cure is simple - a checklist. If a trade corresponds to all of the checklist items there is a signal. If they do not correspond to at least one you are simply bored. Practice using a demo account Naturally, having installed a new system on the char you will not see trades in 2 seconds. Any new strategy requires that you get used to it. A demo account is an excellent way to do that. How long should you get used to a new trading system? It depends on the timeframe and the frequency of trades. If it is intraday trading a week is enough. If it is a daily chart (D1), then about a month. How often do you need to check the chart? Whatever timeframe you have that's how you should check it. If D1 - once a day, if H1 - once an hour and so on. On timeframes below D1, you should limit the trading range when you are looking for signals. Checking charts at night on low timeframes usually makes no sense. To summarize: the more you look at the chart, the more wrong trades you have (they can be profitable, given the random nature of the market, but not according to the system). The best signals are visible immediately, literally in the first second.
Education
by DeGRAM
7
Asian Trading SessionHello everyone! Each trading session has its own characteristics. According to these features, you as a trader should act. And today I want to discuss with you the specifics of the Asian trading session. Working hours The Asian trading session is open from 19:00 to 4:00 New York time. Trading in Asia begins with Tokyo, the main trading center is opened, the Tokyo Stock Exchange, followed by all the major financial institutions of Japan. The centers of activity of the Asian session are Tokyo, the largest financial center in Asia. Then, in an hour, Hong Kong and Singapore open, which contributes to the increase in trading. The trading peak is reached at the opening of the European session, which overlaps with the Asian one at 2:00 New York time. The Asian and Pacific sessions coincide in terms of working hours and therefore they are often considered as one. The trading period at this session coincides with the opening hours of the largest Asian exchanges, such as the Hong Kong Stock Exchange, the Israeli TASE, the National Stock Exchange and BSE in India, the Shanghai and Shenzhen Stock Exchanges in China, the Abu Dhabi Stock Exchange and DFM in the UAE, the Saudi Stock Exchange, Singapore SGX, Korean KRX, as well as the Japanese TSE, which in many ways is the market conductor in the Asian session. Also, during this period of time, trading is underway on the Australian ASX, the New Zealand Stock Exchange in Wellington, as well as the Port Moresby Stock Exchange. Currency pairs It should be understood that during the Asian session, the Asian currency is characterized by increased volatility. Currency pairs with the Japanese yen: AUD/JPY, CAD/JPY, CHF/JPY, EUR/JPY, GBP/JPY, HKD/JPY, NZD/JPY, SGD/JPY, TRY/JPY, USD/JPY. Currency pairs with the Australian dollar: AUD/CAD, AUD/CHF, AUD/USD, EUR/AUD, GBP/AUD. Pairs with Hong Kong Dollar: EUR/HKD, GBP/HKD, SGD/HKD, USD/HKD. There is also an increase in volatility in the currency pairs CHN/USD, CHN/RUB, EUR/SGD, GBP/SGD, USD/SGD. It is these pairs that traders pay the main attention to during the Asian session. Session Features The Asian session is considered to be the calmest session, where sharp fluctuations are practically excluded, so it will be easier for beginners to trade at this time. Due to the fact that the market is closed on the weekend, on Monday, driven by the news of what happened over the weekend, the price can create strong movements and even form gaps. Asian traders form a trend that is most often supported by European and American traders. The main players during the Asian session are the Japanese Central Bank, as well as large companies. The economies of Japan and China are export-oriented, which causes their companies to be more active in foreign exchange transactions. Due to the active activity of the state in the market, which are caused by the currency interventions of the Japanese Central Bank, significant deviations of the Yen can be observed, and since 16% of all transactions in the market take place with the participation of the Yen, this also affects other currencies. Conclusion It should be understood that most of the time the market is influenced by the state, which by its actions (interventions) pushes the market and creates a trend. That is why news monitoring, tracking the economic indicators of the Asian region, greatly help to predict the future movement of the market. The Asian session is the quietest trading period, the most suitable for training beginners. Strong jumps are quite rare, while trends are often replaced by strong sideways movements. Volatility during the Asian session is considered to be the lowest, which makes it the least convenient for scalping strategies and the greatest for technical analysis. Traders, if you liked this idea or if you have your own opinion about it, write in the comments. I will be glad 👩‍💻
Education
by Lingrid
15
Trading BooksI can say unequivocally that without reading the trading book in this market you can't go far. People who do not develop will eventually end up with nothing. The well-known argument what is better, books or practice, makes no sense they are parts of a single coin. The question of "what to read" is also abstract. There is plenty of meaningful reading. Except that I would advise not to bury yourself especially in books about the stock market, if you work in the Forex market, for example. The candles are different there (daily gaps between sessions), and it's a different world. Don't skip books about trading psychology. They are often fascinating and your brain will rest after looking at the charts all day. Practice on the charts. Read again. Work through them again. In parallel, work with a live chart. That's how you slowly become a trader. Always keep in mind the main thing whatever is described in the book, it is only a particular view of one author and there are thousands of such views. What you need is a personal, individual approach to the market. If trying to copy or adopt someone else's style of trading you will not get far. You can only trade by being yourself. And to become a self-sufficient trader, you must break through the mind of someone who's been in the market for decades. Take from them what suits you psychologically and create your own. Only yours that you will then not be able to pass on to anyone. What books to read This is a very popular question. There are a lot of books to read. Books on technical analysis; Books on psychology of trading; Books and articles about price action. Your task, averagely, is to get at least a general idea about trading at first. Therefore, read about the basics of technical analysis: Reuters. Technical Analysis for Beginners. The basics of candlestick analysis: Steve Neeson. Japanese Candlesticks. Chart Analysis of Financial Markets Gregory Morris. Method for analyzing stocks and futures Psychology: Mark Douglas. Trading in the Zone. Edwin Lefebvre. Memories of a Stock Speculator Sometimes a whole book is worth reading for the sake of a single phrase that can sort out the mess in your head. How to Read a Trading Book Most books, as you know are easier to find in electronic form. Personally, I read mostly in electronic form on my MacBook and iPad. Why is it convenient to read on the laptop exactly the trading books? Well, you can immediately open the chart, practice what you read, plus write down the appropriate thoughts in your electronic diary, take screenshots. An alternative method is print the books you want on a laser printer. Some people get it at work and others buy a simple laser printer at home. You can buy the least expensive model and print thousands of pages. It is not difficult to staple them and your eyes will be less tired (although I am more than satisfied with the apple screen). Likewise, a good e-reader like the Amazon Kindle or Pocketbook. No one owns the market. Hence the logical consequence there is no grail, no secret mathematical formula or method of guaranteed prediction. Not in any book or course. Not a single indicator. Not one candlestick pattern or price action pattern. No teacher on the planet that "knows the market." No guaranteed signals that make you feel good. There aren't any. There is only mathematical probability and all the traders in the world are learning to "tilt" it slightly in their direction, reducing losses and increasing profits. The market is a zero-sum game. Money constantly moves from one hand to another without ever sticking around. Many hedge funds last 3-4 years and disappear. Now you made a million, tomorrow you gave 2, the day after you made 4, lost 5, went bankrupt, came back again, etc. Books allow us to learn a lot of these stories. Thousands, tens of thousands of author's views are what trading books are all about. Not a guarantee, not some special way to suddenly become a unique forecaster by reading it.
Education
by DeGRAM
7