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WHAT IS SMART MONEY TECHNIQUE DIVERGENCE?✴️ WHAT DOES SMART MONEY DOING: ACCUMULATING OR DISTRIBUTING? SMT (Smart Money Technique) Divergence is the divergence of prices of correlated assets or the relationship to inversely correlated assets. Analyzing the SMT Divergence allows you to determine the institutional structure of the market to determine what the smart money is doing accumulating or distributing. Currency pairs are easy to analyze using the DXY US Dollar Index. Every price fluctuation must be confirmed by market symmetry. The occurrence of price asymmetry signals the formation of an SMT Divergence and a likely trend reversal. SMT DIVERGENCE IN ACCUMULATION SMT DIVERGENCE IN DISTRIBUTION ✴️ WHICH PAIR TO CHOOSE FOR TRADING? As traders, we need activity in the markets, volatility is what makes trading easier. The news background is the driver that drives this, which is why the trading day starts with a look at the economic calendar. If GBP news is scheduled to be released, it does not mean that, for example, GBPUSD will be preferred over EURUSD. The logic is that closely correlated pairs are likely to move symmetrically. But when SMT divergences are formed, one of the pairs will show strength or weakness, which signals the approaching high volatility on such a pair. GBPUSD updated the high, while EURUSD failed (showed weakness) which results in opening short positions on EURUSD. As a result, despite the important news on the GBP, EURUSD showed a higher amplitude of movement (volatility). In the following example, EURUSD updated the high, while GBPUSD failed (showed weakness) that as a result we open short positions on GBPUSD.
Education
by DeGRAM
2
MarketBreakdown | GBPUSD, AUDUSD, EURGBP, EURCHF Here are the updates & outlook for multiple instruments in my watch list. 1️⃣ #GBPUSD daily time frame 🇬🇧🇺🇸 The market keeps correcting, after setting a new higher high higher close on a daily. Ahead, I see an important confluence zone based on a major rising trend line and a horizontal structure support. The next bullish wave may initiate from there. 2️⃣ #AUDUSD daily time frame 🇺🇸🇦🇺 The price formed a double top formation last week. Its neckline violation is an important sign of strength of the sellers. The price may keep falling to the next key support. 3️⃣ #EURGBP daily time frame 🇪🇺🇬🇧 The pair violated an important falling trend line and close above that last week. I believe the market will keep growing at least to 0.857. 4️⃣#EURCHF daily time frame 🇪🇺🇨🇭 The pair is trading in a strong bullish trend. I see an ascending triangle formation. Wait for a breakout of its neckline. It will be a strong trend-following signal. Do you agree with my market breakdown? ❤️Please, support my work with like, thank you!❤️
Long
by VasilyTrader
2
THE PSYCHOLOGY OF CHART ANALYSIS:THE ILLUSION OF CONTROLThe psychology of chart analysis is the ability to quickly find patterns and key levels on a chart. It is the ability to quickly switch timeframes and see the main trend. But traders often fall into the other side of the equation. They turn into hypnotized people who do not take their eyes off the magic of charts. The trader hypnotizes the chart and the chart hypnotizes the trader. And it is difficult to break this vicious circle, but it is necessary. Psychological Dependence On The Price Chart 📉🧠 Chart hypnosis has a major problem when it comes to graphical hypnosis constant monitoring of charts takes away time that could be used more productively. It drains the trader's energy: eyes get tired, attention gets tired. The trader takes wishful thinking for reality and makes mistakes. PSYCHOLOGICAL PITFALLS OF GRAPHICAL ANALYSIS: 📊 Constant Monitoring 👀 The chart is captivating, especially when a trade is open. You can follow the price movement for hours, enjoying inwardly when it goes in the right direction and worrying when it reverses. The brain is switched off. A person does not think, does not even analyze the meaning of the changing pictures. This is the most real hypnosis. You can watch water flow forever, fire burn forever. And you can watch price charts forever. Remember how much time you spend watching essentially useless shorts on YouTube? And how much time uselessly watching charts? The only difference is that video relaxes you, while constant price monitoring leads to stress, because your money is at stake. The Nervous Chef Phenomenon 😓 Another psychological trap of chart analysis is constant checking of price changes. It would seem that a trade has been opened within the framework of risk management, stops have been set, take profit has been set. Why do you need to look at the chart every five minutes? But a trader persistently checks every 5 minutes "is the water boiling?" or "are the potatoes boiled?". Such dependence is not only in trading. Similarly, every 5 minutes we check social networks and phone: "What if someone wrote a comment under my photo?", "What if someone sent me a new message?". It is logical that after checking the chart every minute extra money will not appear on the account. But there will be a false sense of control, not counting the loss of time. The more often you open the lid of the pot, checking the boiling of water, the longer the water takes to boil. Emotional Mistakes 📌 Statistics show that 70% of the time the price moves chaotically. Trying to constantly look for a trend or pattern on the chart, you fall into the trap of emotions. Under the emotional influence you open a trade in a bad time zone or close it prematurely, although initially there was a clear direction; to strictly follow the risk management, the established rules of the trading system. Illusion Of Control 💡 According to statistics, a person has a much higher chance of losing their life in a traffic accident than flying in an airplane. But people continue to fear airplanes more than cars. To the person behind the steering wheel, it's like: "I'm buckled up, I know the traffic regulations, I'm in control." This is called the illusion of control. There is a classic experiment in psychology. One group of participants is asked to choose a lottery ticket, the second group is given one. Then they are offered to exchange tickets. The second group goes to the exchange without questions, while the first group is less willing to exchange. The experiment shows that people who made an independent decision feel responsible for it and therefore are more confident in winning. There is a similar trap in trading. The trader thinks that she/he has mastered technical analysis, has considered all the risks, and therefore opened the trade correctly. And now she/he watches the chart every 5 minutes to make sure that she/he is right. In psychology, this is called "thirst for control". How to Overcome It? ✅ Catch yourself thinking that you've already fallen into one of these traps. And if so, force yourself to simply turn off the screen. Convince yourself that all the rules of risk management have been followed, which means you don't need to spend time on constant monitoring. Force yourself away from the monitor. Watch TV, take care of the garden, do some repairs, go for a bike ride. In other words, there is a temptation to constantly sit at the monitor - try to be as far away from it as possible. In summary, the psychology of chart analysis in trading is crucial for identifying patterns and key levels and understanding the overall trend. However, overdependence on charts can lead to psychological pitfalls like constant monitoring, causing mental fatigue and mistakes. To overcome these challenges, we should recognize when we fall into these traps, trust our risk management strategies, and engage in other activities to maintain a balanced life. Traders, If you liked this educational post🎓, give it a boost 🚀 and drop a comment
Education
by Lingrid
21
WHAT IS THE POWER OF THREE (PO3)?Lets look at the basic model of manipulation for the purpose of accumulation and distribution within separately taken time periods the power of three. Understanding this model is a fundamental skill for working through the methodology of trading disciplines such as swing, short-term and intraday trading. ✴️ WHAT IS THE POWER OF 3? The power of three is a candlestick/bar formation stages relevant for all timeframes, especially applied within daily and weekly trading ranges, where the opening price is considered to be the beginning of the period. For intraday trading, we only need to apply the weekly and daily powers of three, but we should also pay attention to the monthly candle, as the zones of interest on the higher timeframes increase the chances of success. ✴️ WEEKLY POWER OF 3 The logic of the weekly PO3 is useful for constructing a trading bias. Bullish Bias. Expect a move below the opening price early in the week, which would be a weekly manipulation (Judos Swing). The low of the week is usually formed between Monday and Wednesday, most often on Tuesday or Wednesday. If the price moves back above the opening level after leaving it, a reversal scenario is possible. Bearish Bias. We expect a move above the opening price at the beginning of the week, which will be a weekly manipulation (Judos Swing). The high of the week is usually formed in the interval between Monday and Wednesday, most often on Tuesday or Wednesday. If the price moves back above the opening level after leaving it, a reversal scenario is possible. ✴️ DAILY POWER OF 3 The opening price level is used to determine a favorable opening zone to take a trade. Manipulation (Judas Swing). We wait for the completion of the liquidity grab before making a decision. Expansion is a price action that traders capitalize on. Distribution is an area in which we take profits.
Education
by DeGRAM
1
GBPUSD: Waiting For Confirmation 🇬🇧🇺🇸 Update for GBPUSD. After a breakout of multiple key daily resistances, we see a correctional movement. The price is steadily falling within a bullish flag pattern on a 4H time frame. We see a test of a significant demand zone now. I am waiting for a bullish breakout of its resistance - a 4H candle close above. It will be a strong bullish signal. A bullish continuation will be expected then. ❤️Please, support my work with like, thank you!❤️
Long
by VasilyTrader
1