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Fundamental Analysis

TRADING PSYCHOLOGY: HOW TO OVERCOME YOURSELF?Hello forex traders! How much money have you lost because of emotions? How many losing trades have you closed because they went negative and it annoyed you? And how many times did the currency immediately reversed after you recorded a loss? As we all know up to 80% of success in forex trading depends on psychology. Money management is of great importance and only then strategy. Not everyone realizes it, but this is the harsh reality. How to defeat yourself? How to remain calm in any situation? How to protect yourself from negative emotions that cloud your mind? The Impact Of Emotions On Analysis When you are sitting in losses, you do not pay attention to what is happening on the chart. That is, your brain rejects the signals that indicate that the price will continue to go against you. On the contrary, your brain tries to convince you that the price is about to turn around, which, of course, does not happen. If you close the position and look at the market with a clear eye, you will realize that the situation in the market is not the same as it was in your head a moment ago. This distraction in the form of a minus on the position affects your attentiveness, and you do not notice the obvious. There is such a thing as analysis paralysis. That is, when some event literally knocks you out of the rut, after which you cannot adequately perceive the situation. This can be avoided with the help of reasonable sufficiency. That is, you stop looking for the perfect solution. Instead, you make the most correct and simple decision to close a losing position. Also, traders are often afraid of losing profit. But then again, how many times have you held a losing trade, hoping for a reversal, and it still went against you? It is the same with profitable trades. There is a constant feeling that the price is about to turn around and all the profit will be lost. As an option, in this case you can use a trailing stop. Then you will in any case know that in case of price reversal, the profit will not be lost. In principle, the cure for the influence of any emotions on the analysis is correct money management. That is, you just need to simply reduce your trading lot. The goal is to place such a lot, which would not cause you strong emotions. Until you are used to being disciplined in every situation, it is better to trade at a lot that you could forget about. For example, you could open a trade on the daily chart and forget about it (accidentally or naturally). At the very initial stages this approach is justified, as no open positions will not prevent you from analyzing the situation competently. At the same time, the very fact of a negative trade will not knock you out of your game. You Are Not Perfect Remember, you are not perfect. There is no person who, like a robot, does not get nervous about trades, who performs absolutely perfect trading and never makes mistakes anywhere and ever. All of us make mistakes, it is normal, and it should be understood. Let's say you read that you need to reduce the lot, not to be emotional, and you still make mistakes. The thought that "I am smarter" does not leave your head. But, in general, if you read the biographies of successful people in other areas, you will learn that they also made mistakes. Often, a person needs to make all possible mistakes only in order not to make them later. So, to speak, we learn from our mistakes. The average person believes that he is smarter than 80% of people. At the same time, there are always excuses for the question "why are you so smart, but so poor?" - something prevents you, you are too old, too young, your wife/husband prevents you, you were born in the wrong country and so on. Almost everyone thinks they are, so you don't have to worry, you are not the smartest. The Vicious Circle Of A Beginner Trader Searching for a system: you find a strategy that appeals to you. Trading: as a rule, this period lasts 1-2 days, at best a week if. First Losses: taking your first losses. It's usually down to the first few trades. Anger: naturally, there is a feeling of being cheated as the system did not deliver the promised profits; Blame: the system does not work; forex is a scam and the author of the system is a scammer. Someone is necessarily to blame, for example, the broker that closed the position a point later, but not the trader himself. And everything starts all over again. Exit From The Circle: Finding a system. Backtesting from the beginning to the end: the strategy should be either tested manually on the history or in a tester if the strategy is automatic. Absolute confidence in the strategy: when you have fully tested the strategy, know all the statistics, know all the pros and cons, you gain confidence in the chosen strategy. Good money management: further, you add a good money management. Now it is "your" trading strategy: the strategy should be completely yours. If you are not comfortable holding positions for 3-4 days, move to a smaller timeframe. Or, on the contrary, if you are too lazy to open trades often, choose a larger TF. That is, the strategy should suit your temperament and be customized for you. In general, all these pieces of the mosaic lead to the exit from the enchanted circle. You find a system, then trade, adequately perceiving losses. Accordingly, you further work with this system, solve problems with emotions, inputs and outputs, improve, tune-up and so on. A Little Bit About Our Brain The fact is that our brain compared to a computer has a very large hard disk, but a very small amount of RAM. Do you know the feeling when the brain is so overloaded that absolutely no information, even seemingly simple ones, can be stored in it? Of course, we cannot expand this memory, but we can control the number of simultaneously opened applications/programs. That is, we need to fight the so-called white noise. Remove social networks Facebook, messengers, YouTube, checking mail, and so on. This is all white noise that clogs your brain and prevents you from working adequately. There are many opponents and many supporters of meditation. Meditation is, in fact, nothing more than to lie/sit under calm music and go into a certain semi-trance state. Humans periodically need three states: being awake, sleep and a trance state. Usually after a certain mental effort, you start to get very dumb without doing any useful work. This is the brain signaling that you are lacking the trance state. 30 minutes of trance a day is quite enough. Do Not Set Goals In Trading When you set yourself a specific goal, for example, to make 1% every day it doesn't work. You start looking for non-existent trades again, clouding your brain. Therefore, you should not set profit targets. On the other hand, it is possible and even necessary to set loss limits! Sometimes, there is a sudden unreasonable desire to open a trade. Although the system did not give a signal. As a way out of this situation, you can try to open two accounts, one for adequate trading, where you will open trades clearly according to the rules of the system. Another smaller one for aggressive trading, when you have an irresistible desire to open a trade. If it really "works", you will still get profit, though not so big. Bottom Line As you can see, strategy is often not the deciding factor in trading. Psychology is what ultimately makes you act in one way or another. It takes the right approach and practice to be unstoppable in trading. The rest comes with experience over time.
Education
by Lingrid
11
TILT IN TRADINGAs it is known, a trader on the market is under constant pressure, the market is a constant process, in fact it is a river, and a trader should dive in and out of it to earn money. It is difficult to stay on the shore, when there is an endless river of money flowing nearby, hence the constant desire, well and of course stress, because the market gives unlimited opportunities at the same risk. Everyone knows that the two worst emotions for a trader are fear and greed, although it is only fear, greed is one of the types of fear (fear of losing profit). Fear breeds many related behaviors that only bring financial pain and frustration in trading. Let's look at some of the groups of emotions that fear gives rise to. TILT IN TRADING What is tilt? Tilt comes to us from poker; it means the inability to perform reasonable actions while being at the mercy of emotions. Tilt is not a one-time process. First, there must be preconditions for its occurrence. Most often, it is a series of unsuccessful trades in a short period of time (scalping), after which the trader starts to lose control and, trying to recoup losses, goes all the way, forgetting both the rules of trading strategy and money management rules. The most interesting thing is that the same thing can happen during a series of profitable trades, i.e., tilt can be earned at any time; it is only necessary to let go of some emotion for some time. The worst thing (except for the loss of money, of course) is the acquisition of bad emotional habits, from which it is very difficult to get rid. Tilt can occur even on expectations, for example, the price is about to approach the level of trade open, and suddenly it turns around. Your finger froze over the buy/sell button and then it's over! And waiting for the next approach turns into a tilt. Market factors also provoke tilt in a trader, for example, increase of volatility during news, the price flies back and forth like crazy and pushes the trader to open a trade. SO HOW DO YOU AVOID TILT? The answer to this question is always right under our noses. It is discipline, and only discipline. The rules of the trading system and the rules of money management, and as few emotions as possible. Do not trade in an agitated, tired, and painful state; wait it out; the market will not run away from you. With the emergence of the crypto market, new concepts have appeared, but they already relate to the psychological manipulation of traders, and although they are based on the same fear, we will try to describe them separately. Besides, these concepts have always been there and apply to all kinds of markets, not just the cryptocurrency market. FOMO & FUD cycle FOMO (Fear of missing out) information throwing in the bright prospects of some crypto coin or crypto market as a whole, in order to provoke the purchase, often and densely along with Pump of a particular crypto coin. FUD (fear, uncertainty, and doubt) is a negative information dump to provoke sales. All the same, only sales and DUMP (sharp sale of crypto-asset), the purpose is to reset the price of the crypto asset, again, to make it attractive to the investor. No, what a concern for potential investors! Both pump and dump are reverse actions, and the goal is the same attractiveness for investing! The only difference is the timing. The topic of psychology in trading is big; we covered only a couple of psychological aspects: one is the trader's problem, and the other is the trader's provocation by the market and information space. In general, psychology accounts for 80% of all trading. You can memorize techniques, but it is very difficult to understand and change yourself in terms of psychology. To understand how the "crowd" acts, what will be the reaction of "big money"? All this is what you should strive for in your search for profit. Therefore, the trader's "holy grail" is patience, self-discipline, and as few emotions as possible. If you feel that you are about to lose it, just leave the terminal and go to your family, to the gym, or to nature. Do not sit at the terminal on an emotional tilt. Work on your emotions and you will be profitable.
Education
by DeGRAM
1
What is Fundamental Analysis in the Forex Market?Fundamental Analysis in Forex Trading: Factors that Affect Currencies READING TIME: 11 MINUTES Estimating future price movements in the currency market is challenging for many. Globally, the foreign exchange market commands the biggest slice of the financial ‘cake’, claiming an eye-watering US$6.6 trillion in global FX market turnover. Traders will use a variety of tools to assist them in predicting the price movement, most commonly technical analysis and fundamental analysis are methods that traders use to get a gauge of potential movement in the market. Fundamental Analysis Defined Currency pair in forex refers to, two currencies are paired together and quoted through a ‘base’ and ‘quote’ currency. The euro in EUR/USD (a major currency pair) is the base currency and represents one unit; the US dollar is the quote currency and provides the value of a currency: the euro in this case. Fundamental analysis studies economic developments of a country, events influencing the supply and demand of their respective exchange rates, either positively or negatively. Analysts employing fundamental analysis tend to approach markets using a macro-driven theme. Macro analysis, or top-down approach, focuses on broad economic factors. This involves a comprehensive assessment of the economy, evaluating aspects such as economic indicators—interest rates, growth and inflation—as well as central bank policy. Fundamental analysis is composed of three core elements: • Central bank policies • Economic indicators • Geopolitical events These three components working in harmony should translate to clearer market trends and present potential trading opportunities. If one of these areas is in disorder, interpreting a fundamental picture becomes difficult. Fundamental analysis essentially informs traders and investors why the market advances and declines, and provides a trade decision: to buy, sell or trade flat. Central Banks A country’s central bank is charged with the duty of regulating banking institutions and implementing monetary and fiscal policies. Well-known central banks: • United States Federal Reserve (or ‘Fed’) • European Central Bank (ECB) • Bank of England (BoE) • Bank of Japan (BoJ) • Reserve Bank of Australia (RBA) Everything begins with the central bank and they’re assessment of economic indicators. Traders and investors attempt to anticipate a central bank’s actions by evaluating economic indicators and reacting to the outcomes from the forecast (Actual versus Variance). The market projects a forecast for an economic indicator and subsequently responds to the actual figure released. Ultimately, trading opportunities present themselves when economic data harmonises with a central bank’s sentiment. This—coupled with a well-defined technical approach to fine tune entry techniques—delivers an overall trading picture to operate with. Central Bank Announcements: Major central banks meet every 4-6 weeks. The Fed and BoE meet every six weeks (8 times per year), while the RBA meets 11 times each year. Market trend, or ‘market direction’, is derived from the sentiment within the market, with the central bank acting as a stabilizer by using monetary policy. It is therefore crucial market participants recognise the arrangement of these central bank meetings and understand the terminology used. Central bank governors are the head of their respective central banks. The head of the US Federal Reserve currently is Jerome H. Powell; Andrew Bailey heads the Bank of England and the governor of the Reserve Bank of Australia is Philip Lowe. Central Banks: Why Are They Important? Central banks assess the current market sentiment at each meeting and consider whether any changes need to be made for the near-term monetary policy. The members will review data gathered over the last 6 weeks to assess on what measures need to be taken such as changing the current interest rates or using quantitative easing. A country’s central bank raising rates can be categorised by way of a ‘hawkish bias’; what they’re essentially doing here is talking up the prospect of raising rates. The prospect of cutting rates is also an option on the table for central banks, emphasising a ‘dovish bias’. Either a hawkish or dovish tone can translate into big price moves in financial markets. If economic conditions remain unchanged, the central bank is likely to adopt a neutral stance: no bias. Typically, the central bank meeting is accompanied by a statement and, of course, the interest rate decision. These are critical to understand. The statement is the primary avenue employed to communicate with investors regarding monetary policy (actions undertaken by a central bank): the outcome of the vote on interest rates alongside other policy measures and economic commentary. In addition, here you will find what the central bank’s forward projections are. A week or so later, the ‘minutes’ are available: a more comprehensive analysis of the statement and the talking points discussed in the meeting. See here for the latest US Federal Open Market Committee (FOMC) Statement. Out of the interest rate decision and statement, you’re looking for market sentiment—the direction provided by central banks and the core overall trends in the market. The first two weeks of every month is ‘usually’ clear in terms of central bank sentiment, following a fresh statement from the bank. Economic Indicators Economic indicators, as their name implies, are statistics—often on a macroeconomic scale—designed to measure economic activity. Traders and investors use these indicators to analyse the well-being of a country’s economy. Government organisations and private groups release several economic reports on a weekly, monthly and quarterly basis, each measuring activity in a particular segment of the economy. Widely followed indicators are employment/unemployment (payrolls), inflation (consumer price index), growth (or gross domestic product), retail sales, the stock market, industrial production (Producer Price Index) and housing figures. In terms of release schedules, approximately five key economic indicators are released each week. No single indicator provides a clear picture of the economy’s health. At best, each indicator provides a ‘snapshot’ of current conditions. But when piecing the economic indicators together, you should get a clearer picture of how the economy is faring. However, it is crucial to understand that some economic indicators are more important than others at certain points in time. Inflation, as of this article, is important. Significant indicators to watch can be found on the statements from central banks in their forward guidance. Economic Calendar An Economic Calendar is widely used among independent Forex traders and investors. High-impacting economic releases are marked red. Orange represents potentially medium-impacting events and yellow indicates a low-expected impact on price levels, or price action. We also have Previous or ‘Prior’, ‘Forecast’ and ‘Actual’ figures. Forecasts are generally a collection of economists’ views which are then averaged. New Forex traders might want to note what the Q/Q and Y/Y labels refer to. Geopolitical Events Geopolitical tensions can complicate technical analysis and fundamental analysis, distorting the general flow of key fundamental drivers in the market. However, absent of disruptive geopolitical events, trending markets become visible. Geopolitics events are divided into wars and conflicts, terrorist attacks and international tensions. US-China trade is a good example and the ‘Brexit’ situation (United Kingdom exit from the European Union). The announcements surrounding geopolitical issues are usually not scheduled, unlike the central bank announcements and economic data. As you can imagine, this may cause confusion in currency markets and make them difficult to trade. Conclusion To wrap things up, fundamental market analysis in the Forex market looks at three core components: the central bank’s ‘direction’, economic indicators to provide instant bias, and the geopolitical situation. To aid timing, we use technical analysis to fine-tune entries. Like technical analysis, fundamental analysis involves broad study and is beyond the scope of an article to detail each element. For that reason, the objective of this article is to provide a foundation in which to build from.
Education
by FPMarkets
BROADENING PATTERNSBroadening patterns are very unstable from a technical point of view. They are usually formed after the trend has already gained strength. It looks as if the battle between buyers and sellers is out of control, as the price starts to move in a wider and wider range. The situation is exactly the opposite of triangles, where the price shrinks to an extremely balanced state before the breakout. Broadening patterns are formed when three or more price waves expand so much that their highs and lows can be connected by two expanding trend lines. Just as there are two types of triangles, there are two types of broadening patterns. They are called the conventional (classic) pattern and the rectangular pattern. The last one can also be called an expanding pattern with a flat top or flat bottom. Conventional Broadening Patterns It consists of three trends where each high is higher than the previous high. The highs are separated by two lows, where the second is lower than the first. These patterns are more likely to indicate the completion of a rising market, rather than a breakout higher. The conventional broadening top is sometimes called an inverse triangle, because that is exactly what they are. In general, some patterns are just perfect for trading, as they mark by default the places where to place stops with low risks. A rectangular triangle broken close to the top is just a good example. But conventional broadening tops, however, alas, do not have this feature. Such patterns are extremely difficult to detect before the final top is formed. Besides, there is no obvious support line, the breakdown of which would serve as a convenient tool for us. The furious, emotional reaction of price and volumes reflects chaos and complicates the work with such patterns. Of course, it is not easy to determine the breakout in such conditions, but if the pattern is more or less symmetrical, there are options. It is a decisive movement under the descending trend line, which connects both lows or even a movement below the second low, which will serve as a warning of a future decline. Targets are not easy to determine either, however, the volatile price reaction during the extension indicates that the distribution phase is almost complete. Successful completion of such a pattern is usually followed by a proportional fall in price. But the rectangular expanding patterns, which we will talk about next, are another example.   Rectangular Broadening Patterns Most simply defined broadening patterns with a flat top or bottom are the easiest to identify. This is called a rectangular broadening pattern. Since the very concept of wild price movements implies an extreme degree of emotional involvement, it is difficult to add volume here. At market tops, though, volume is usually quite significant.These patterns also resemble a head and shoulders pattern, except that the "head" in an broadening pattern is the last element of the pattern. In this case, the bearish signal is activated with a decisive downward breakdown of the pattern. A broadening pattern with a flat top is an accumulation pattern, and it is important that the volumes grow on the breakdown. They are essentially head and shoulders in a situation so bearish (or bullish) that price simply does not have time to form a right shoulder. Psychological Perspective Of The Broadening Patterns From a psychological perspective, expanding patterns can be seen as a reflection of the changing attitudes and beliefs of market participants. As the pattern widens, it suggests that there is increasing disagreement among traders about the direction of the market. This can lead to greater volatility and larger price swings as different groups of traders try to push the market in their preferred direction. At the same time, broadening patterns can also be seen as a sign of indecision and uncertainty. Traders may be hesitant to commit to a particular direction, leading to a widening range of prices as buyers and sellers struggle to gain control. This can create a sense of tension and anxiety among traders as they try to navigate an increasingly complex and unpredictable market. Target Points To determine where the price can reach, you need to take the distance from the maximum (minimum) of the pattern and its horizontal line. Then the same distance is set aside in the direction of the breakout. Rectangular expanding patterns often show pullbacks like any other patterns. Since these patterns are very emotional and unstable, these pullbacks can be sharp and volatile. Fortunately, they don't live very long. In this case, the downside price target was reached on a downside breakout. Generally, a subsequent sharp reversal is a rare thing, as the price usually goes much farther than the price target. Failed Broadening Patterns Occasionally, such patterns fail to produce the expected result. Unfortunately, there is no super-reliable way to recognize that the pattern has failed. This will only become obvious when a small bottom or price top is formed after the breakout. However, we can protect ourselves from such situations by using the 50% rule, in which we measure half of the final price reaction in a pattern for a rise or fall. Which is shown by the dotted line, once reached, the pattern is considered a failure. Of course, sometimes there are patterns that work even after breaking through the 50% zone with a subsequent pullback. However, breaking such a line with a strong trend in most cases indicates that the pattern has failed. In any case, carefully use the patterns that predict the price movement in the direction of the trend that was previously the main one. In Summary Broadening patterns are a trading range after a trend, between two extended trend lines. At least two touches are needed. It will take imagination to draw, as the touches are not always accurate. However, this is true for many other patterns as well. The maximum depth of the pattern is put off in the direction of the breakout. Since these are very dynamic and volatile patterns, pullbacks are usually short but very fast. False breakout is difficult to detect: the signal can be a price rise above the previous low/maximum or a pullback of more than 50% against the breakout. Overall, broadening patterns can be a useful tool for traders looking to understand the psychology of the market. By analyzing these patterns and the underlying factors that are driving them, we can gain valuable insights into the attitudes and beliefs of other market participants. This can help to make more informed trading decisions and better manage their risk in a rapidly changing market environment. Traders, If you liked this educational post🎓, give it a boost 🚀 and drop a comment
Education
by Lingrid
13
5 TRADING PROTECTION LEVELS - NB*REMEMBER Every trader needs 5 protection levels. Stop loss to stop yourself from furthering losses Time stop loss to get you out of non-performing trades Adjusted stop loss to lock in profits when the market moves in your favour. Risk % per trade to only lose a certain amount of your portfolio % of Drawdown before you HALT trading - when the market is not in a favourable environment to your strategy. These are the control factors to manage your portfolio with better direction and management. What other protection levels do you apply?
TVC:SA40Education
by Timonrosso
6 Practical Tips for Futures TradingIn derivatives trading, achieving success can lead to substantial profits, but it's crucial to trade carefully to avoid costly mistakes. 💜 If you appreciate our guides, support us with boost button 💜 Here are six simple and practical tips to help develop a strategy for successful futures trading. 1. Craft a Clear Trade Plan Before jumping into the market, take the time to plan your trades thoroughly. This involves setting not only profit goals but also establishing an exit plan in case the trade doesn't go as expected. A well-thought-out trading plan, including risk-management tools like stop-loss orders, can protect you from making impulsive decisions based on emotions like fear and greed. 2. Safeguard Your Positions Protect your investments by committing to an exit strategy. Instead of relying on mental stops, use stop-loss orders to set a predetermined point at which you will exit the trade. Consider using One-Triggers-Other (OTO) orders to automate the process, triggering a protective stop when your primary order executes. 3. Focus Wisely Avoid spreading yourself too thin by trying to trade too many markets. It's essential to concentrate on a few markets and dedicate time to studying charts, reading market commentary, and staying informed. However, don't put all your eggs in one basket either—diversification in futures trading can offer advantages. 4. Take It Slow If you're new to futures trading, start with a cautious approach. Avoid trading large quantities at the beginning, as this could lead to significant losses. Begin with one or two contracts, develop your trading methodology, and only increase your order size when you feel confident. 5. Think Both Ways Be open to trading opportunities in both rising and falling markets. While it's natural to want to go long, don't overlook the potential benefits of going short. This flexibility can broaden your trading opportunities and enhance your overall strategy. 6. Learn from Margin Calls A margin call may signal that you've become emotionally attached to a losing position. Instead of adding more funds or reducing positions to meet the call, consider it a wake-up call. Cut your losses, learn from the experience, and move on to the next trading opportunity. By incorporating these practical tips into your trading approach, you can navigate the futures market more confidently and increase your chances of success. Remember, a well-thought-out strategy and disciplined execution are key to achieving profitable results in futures trading.
Education
by Vestinda
1
GBP Is Stronger than USD: Understanding the ReasonsGBP/USD is the third most actively traded currency pair on the foreign exchange market, after EUR/USD and USD/JPY. It is also one of the oldest pairs traded on forex. The British pound continues to cost more than the US dollar, despite the dollar overtaking it as the global reserve currency. Why is the British pound stronger than the US dollar? In this FXOpen article, we look at the GBP/USD pair and the factors that keep the British pound strong to help you understand how to trade it. What Is the GBP/USD Pair? Currencies are always traded in pairs on foreign exchange markets. GBP/USD refers to the value of the British pound sterling against the US dollar – specifically, how many US dollars traders need to buy one pound. For example, if the GBP/USD exchange rate is 1.28, a trader would need $1.28 to buy £1. How come the British pound is always stronger than the US dollar? The answer is rooted in history. A Brief History of the GBP/USD Pair Until World War I, the British pound was the global reserve currency, accounting for over 60% of the world’s debt holdings. It was valued at just under $5. After the war, the US dollar began to strengthen, and by 1944, when the Bretton Woods system was introduced, the pound was pegged at $4.03. The Bretton Woods system fixed the US dollar to the gold price and established it as the unofficial global reserve currency. After World War II, the value of the USD began to rise, and it overtook GBP as the primary currency used in international trade. The Bretton Woods system began to slowly collapse after 1971, and both the GBP and USD became free-floating, with the US dropping the gold standard. This has resulted in the value of the GBP gradually sliding over the following decades. The free-float rate made the GBP/USD pair highly volatile. The pound sterling reached a high of 2.08 against the dollar in 2007 during the global financial crisis, as higher UK inflation raised expectations that the Bank of England would raise interest rates. In June 2016, the UK’s vote to leave the European Union drove the value of the pound down to the 1.20–1.25 area overnight. That was its lowest level since the collapse of the exchange rate mechanism in 1985 and the largest one-day decline since the end of Bretton Woods. The GBP/USD pair has since largely traded between 1.20-1.40. A notable exception was the start of the COVID-19 pandemic, when investors flocked to the safe haven US dollar amid uncertainty about the economic impact, and the pound fell to 1.16 against the USD. COVID-19 shutdowns and the loss of European trade following Brexit have weighed on the prospects for the UK economy. At the same time, geopolitical tensions such as the US-China trade war and the Russia-Ukraine conflict have lifted the value of the dollar, as have rising interest rates. In 2022, the Bank of England was forced to intervene as the value of sterling fell close to a record low of 1.035 against the dollar in response to a crisis of confidence in the UK government, high inflation and unemployment rates, and concerns regarding the domestic economy. However, by April 2023, the pound had recovered and became the best-performing G-10 currency of the year. According to Forbes, the British pound is the world’s fifth strongest currency, while the US dollar is the 10th strongest. The GBP/USD pair has primarily been trading around 1.20-1.30 so far in 2023. Why is the pound still stronger than the dollar? Is GBP Stronger than USD? Why is the pound more expensive than the dollar? The value of the GBP against the USD in forex doesn’t solely determine the strength of the US and UK economies. Analysts consider other factors that can question the strength of the pound. Nominal Value A currency’s nominal value refers to its value against another currency in forex. As was mentioned above, the nominal value of both currencies changed significantly over time. Although GBP was always more expensive than the US dollar, this conclusion is relatively arbitrary. Also, it’s worth considering the lower number of British pounds in circulation, which is worth £81 billion, compared to $2.33 trillion US dollars, which contributes to the higher value of GBP as of May 2023. Relative Strength The strength of a particular currency against another at any point in time is also relative, as it could actually be weaker against other currencies. For example, GBP could rise in value against USD but fall against EUR, AUD and JPY, which would suggest that the relative value of the pound is weaker – just not as weak as the USD. This is because the relative strength is determined not only by the value of one currency against another but by economic data, including inflation, economic growth, and the trade balance, which determine the strength of the overall economy. To gauge a currency’s real strength, analysts track its value in relation to multiple currencies over time. For instance, the Dollar Index (DXY) measures the value of the USD against a basket of currencies from its key trading partners and competitors, as this is a more accurate measure of its value than a single pair. Quoting Conventions The use of GBP/USD as the quoting convention reflects the pound’s strength. For instance, a GBP/USD quote of 1.25 signifies that $1.25 is needed to buy £1. This quoting convention originated in the late 1900s during the British Empire when the UK had a larger economy than the US. Despite the subsequent shift in economic power, this convention has endured. Since World War I, the US economy has surpassed the UK economy in terms of size. Modifying quoting conventions is challenging, given how entrenched they are in the financial industry. However, the tradition of quoting GBP/USD in itself does not determine the value of the pound and the dollar. Purchasing Power Parity (PPP) While the GBP/USD trading value suggests the pound is stronger, the purchasing power parity (PPP) fluctuates. PPP indicates how much a currency is worth based on the value of a basket of goods. In these terms, the dollar can be stronger than the pound. The concept underlying PPP is that the exchange rate should equalise the purchasing power of each currency within its respective country. For instance, if a basket of items costs £100 in the UK with a GBP/USD exchange rate of 1.15, the PPP would suggest that the equivalent cost of the same basket in US dollars should be $115. In practice, exchange rates frequently diverge from their PPP levels. The degree to which a currency such as GBP or USD deviates from its PPP indicates its relative strength or weakness against another currency. Global Economy Although the US economy is stronger than that of Great Britain, sterling’s history as the former global reserve currency and political and economic power have contributed to its strength. The pound is one of the world’s oldest currencies, having been introduced in the 1400s. The UK remains a major global financial centre, and the Bank of England continues to participate in international economic developments. What Factors Affect GBP/USD There are several factors that affect the value of the British pound and US dollar: US Federal Reserve monetary policy Bank of England monetary policy Inflation rate, which has a strong impact on the interest rates Employment data, which influences government fiscal policy Geopolitical events Other economic indicators, including retail sales and industrial production Does It Matter If GBP/USD Falls Below Parity? A weaker sterling could support UK exports, but it would also increase the cost of imported goods and drive up inflation. The Bank of England would be forced to intervene to contain inflation. As seen in 2022, there is also a risk that a sharp drop in the pound’s value could become disorderly, which could create political and economic turmoil. However, if the value of the pound fell below the dollar, it would be a psychological milestone for the UK, but it would not have a major impact on the forex market. Conclusion The British pound sterling has traditionally maintained a higher value against the US dollar because of historical convention. However, the US dollar is stronger overall as it is the world's reserve currency and has larger trading volumes. The GBP/USD exchange rate has been in a long downtrend. Therefore, there are risks that GBP will soon lose its nominal premium. Understanding how the British pound is stronger than the US dollar can help you to form strategies to trade the GBP/USD forex pair. By observing economic indicators, you can take a view on how you expect the market to move. If you are looking to trade forex markets, you can open an FXOpen account. The TickTrader platform allows you to analyse live price charts and trade a range of currency pairs. This article represents the opinion of the Companies operating under the FXOpen brand only. It is not to be construed as an offer, solicitation, or recommendation with respect to products and services provided by the Companies operating under the FXOpen brand, nor is it to be considered financial advice.
Education
by FXOpen
2
TIMING IS EVERYTHINGWhat is timing in simple words? Timing is the time when you SHOULD trade the market. It is very desirable to trade on the market when the market is active, i.e. there is increased volatility, which in turn is associated with any time factors affecting the activity of traders. Timing must be taken into account by almost any trading system, starting from scalping and ending with positional trading, meaning that timing is not the main period of displaying your chart, but the most effective for trading time that you spend in front of the screen. Even if you trade on a weekly chart, your timing will be Friday evening which is the closing time of the weekly candle. 🕕 TYPES OF TIMINGS So, the basic timings: • Intraday • By type of trading instrument • News • On days of the week • Periods (month / quarter / season) 📊 INTRADAY TIMINGS Intraday timings on Forex are related to the inclusion of the work of exchanges (sessions) in different parts of the world due to time zones. So-called European session, American and Asian, so in the language of traders denotes trading during the work of exchanges located in different time zones. European: from 07:00 - 16:00 (GMT). American: from 13:00 - 21:00 (GMT). Pacific: from 20:00 - 05:00(GMT). Asian: 00:00 -09:00(GMT). Although there are 4 sessions, but only 3 of them are taken into account, as the Pacific Exchange has a very small influence on the market due to small volumes. The most active are Europe and America, often going in opposition to each other, so intraday traders should take into account the time of inclusion of America, as it can confuse all the cards and turn intraday trends. Well, at night the harsh Japanese samurai come and make their own contribution and confusion. A lot of intraday systems are built precisely on turning on or off this or that stock exchange in the work, picking up the nuances of their influence. Intraday timings are also present on stock markets, the calmest time is the so-called evening session. But the mass introduction of trading bots even here can try to shake up the market and lure many traders into it. 📊 BY TYPE OF TRADING INSTRUMENT There are timings by type of trading instruments. For example, gold and oil are better to trade on the American session, and the main volatile pairs EURUSD and GBPUSD are better to trade in the European session. Of course, it is all rather conditional, but nevertheless, it is necessary to take into account. 📰 NEWS TIMINGS Everything is simple here. If it is scalping or intraday trading, then hands off the keyboard because the market shakes during the release of important news. But if you like to trade specifically on the news, then it's time, the most timing. 📅 TIMING BY DAYS OF THE WEEK It has long been noted that the market is volatile differently on different days of the week: Monday is sluggish and unclear, often markets open with gaps. Tuesday all are awake, pumped up and the market goes and runs. Wednesday and Thursday are active too, but on Thursday there are bank reports and, you can say, the banks, having made money, start to aim somewhere. Friday is the day of losing trades. Very often unpredictable in terms of the previous week's movement, on Friday short-term traders close their positions, which also brings its own turmoil. 📆 TIMING THAT OCCURS DURING A SPECIFIC PERIOD OF THE MONTH For example, this overlaps with news timing, non-farm peyrols (NFP), the economic news released every first Friday of the month. It is the second most important news after GDP. Be sure to watch the economic news release calendar. The impact of this news may well be spread out over the long term. 💼 QUARTERLY TIMINGS Directly related to the quarterly closings of futures contracts in stock markets such as the CME. Futures and currency pairs with the same name are considered to influence each other. This can also include the release of quarterly reports of various companies that have their shares on stock exchanges. 🍂 SEASONAL TIMINGS This is, for example, the New Year and Christmas. Also, the financial new year in Japan, which for some reason occurs in March, and in the U.S. in October. And futures on the same coffee, cotton and sugar should be considered taking into account the time of the year. In general, timing is one of the most important factors that must be taken into account in your trading system, starting from the stage of its development. When tracking trading statistics, be sure to look at what time your trading system is most effective and whether it is possible, for example, to increase risk at that time or not to trade at other ineffective times at all.
Education
by DeGRAM
1
The 12 Dangers of Trading DoubtDoubt is danger. It’s a big enemy for trading. And it’s something that is innate, which is hard to escape from. It leads to you to miss opportunities, destroys confidence, clouds judgement and keeps you stuck in a rut. When you are infected with doubt, this can infiltrate even the most experienced traders. This article delves into the various dangers of trading doubt and how to overcome its destructive effects. Missed Opportunities When doubt creeps in, traders often find themselves hesitating or second-guessing their decisions. Once you feel hesitation, you’ll miss great opportunities. Winners will be left on the table. All because you doubt it’ll go your way and that the markets are conducive. If you want to stop the doubt you need to act swift and make decisions within three second. 1, 2, 3 – ACT! Loss in Confidence Without confidence, you’re going to doubt. You’re going to question your skills, strategies, and abilities. As confidence dwindles, you’re going to feel strong fear, panic and worry. This will lead to irrational decisions driven by emotions rather than logic, rationality and sound analysis. Change Your System Even if you have a winning system. Doubt could cause you to abandon it. You might already be thinking of finding another. Looking for better parameters. Adding extra elements and variables. This constant tinkering will prevent you from fully realizing the potential of their proven trading strategy and approach. This is a time game. Not a week, not a month. Noth even three years. Your trading success will come from being consistent, persistent and consistently applying a well-defined strategy over time. Search for “Better” You might even doubt trading all together. You might have lost a bit of money and now you have this desire to make it back. So you’ll look into gambling, sports betting, Amway or any other scheme instead. But you’ll most likely be disappointed. Because everything worth doing well for reward, consists of elements of risk and time. Don’t Take the Trade Your finger could be between three stone walls. Or your finger could be 1 mm from the button. If you have doubt with your trades, this will paralyse you to enter a trade. This hesitation will lead you to: Miss trades Miss profits Interfere with the system Lose confidence Exacerbate panic and fear This will only set a precedent for you to do it again. It’s a bad habit that can destroy you as a trader. Don’t Follow Criteria Doubt can lead to a disregard your essential rules. You might: Get in at different levels Move your stop loss further away Close prematurely for tiny profits or Take a trade that does NOT match the criteria. If you question the trading validity of your criteria, this will turn you into an undisciplined and unsuccessful trader. Overtrading Once doubt sets in – so will mania. And to break away from doubt, you take on a dangerous path. In an attempt to overcome doubt, you might start overtrading or revenge trading. This is where you’ll enter too many trades in quick succession, without following any criteria. Emotional Roller Coaster Doubt is not just feeling lazy. It actually comes with feelings of frustration, anxiety, and self-doubt dominating their thought process. This emotional turmoil can cloud judgment and lead to reactive rather than rational decision-making. Analysis Paralysis When doubt takes hold, this is where you might go all out with indicators, parameters and price action elements. This will lead you to excessive analysis. You’ll continuously seek more information before making a decision. This analysis paralysis can cause a couple of issues. It can overcomplicate trading It makes back and forward testing almost impossible The variables can cause conflict with each other. Your charts will look like Christmas trees This can lead you to miss trading opportunities and an inability to take action. Inconsistent Results Consistency is key in trading success. Doubt-driven decisions can lead you to inconsistent results. You’ll have your journal with how the trades were SUPPOSED to go. Versus how you made them go. And this will make it challenging to gauge the effectiveness of a trading strategy over the long term. Psychological Toll Doubt is a constant battle. If you have this, it will infect your mind it will take a toll on your mental well-being. It can lead to stress, burnout, and even health issues if you don’t fix them. Loss Aversion Doubt can cause a psychological bias known as loss aversion. This is where traders become will focus to avoid losses rather than maximise their gains. This mindset can hinder traders from taking necessary risks to achieve substantial profits. Focus on cutting small losses and banking small profits and you’ll have a recipe for disaster. It’s time to build your confidence This will come from working on a trading journal, risking less and building a track record. Over time, the doubt will creep away and the certainty will override. Let’s some up the elements of doubt for a trader… Missed Opportunities Loss in Confidence Change Your System Search for “Better” Don’t Take the Trade Don’t Follow Criteria Overtrading Emotional Roller Coaster Analysis Paralysis Inconsistent Results Psychological Toll Loss Aversion
TVC:SA40Education
by Timonrosso
Forex: The Impact of (Geo)Political Factors.In the vast expanse of the currency market, where fortunes are made and lost in the blink of an eye, understanding the multifaceted risks is crucial. Beyond the charts and technical indicators lies a force often underestimated — geopolitical risk. In this exploration, we unravel the intricacies of geopolitical risks and delve into the political factors that cast a profound shadow over the forex market. I. Decoding Geopolitics: To comprehend the significance of geopolitical risk, one must first grasp the term "geopolitical." It involves the intricate study of how geography, political systems, and international relations intersect to mold global politics. Geopolitics explores the strategic importance of geographic spaces, resource distribution, and the influence of political power on a global scale. In essence, it is the lens through which we examine the interplay between geography and political dynamics to fathom how nations behave on the world stage. II. The Unseen Forces: Geopolitical Risks in Forex Geopolitical risks are potent influencers in the currency market, steering exchange rates and market sentiment. Several factors contribute to this influence: Political Instability and Unrest: Civil unrest and regime changes breed uncertainty, impacting investor confidence and currency values. Trade Tensions: Disputes between major economies create market uncertainty, affecting trade flows and currency values. Military Conflicts: Armed conflicts or geopolitical tensions can prompt currency depreciation as investors perceive heightened risk. Terrorism: Acts of terrorism introduce fear, potentially leading to currency depreciation in affected countries. Economic Sanctions: Imposing sanctions disrupts trade and financial transactions, influencing a country's currency value. Political Leadership and Policy Changes: Shifts in political leadership or policy direction induce currency volatility by impacting investor confidence. Natural Disasters: While not strictly geopolitical, natural disasters can disrupt economies and influence currency values. Global Health Crises: Pandemics impact global trade and currencies through measures like lockdowns and travel restrictions. Brexit-Like Events: Instances where countries contemplate leaving unions create uncertainty with repercussions for currency markets. III. The Forex Symphony: How Geopolitical Risks Conduct the Orchestra Geopolitical risks impact the forex market through a complex interplay of economic and political factors. Heightened geopolitical risk injects uncertainty, prompting investors to seek safe-haven assets. Currencies such as the US dollar, Japanese yen, and Swiss franc often benefit as investors flock to stability during times of crisis. Political dynamics play a pivotal role in shaping the forex market: Government Stability and Policies: Political stability and policy implementation influence investor confidence and currency values. Economic Policies and Reforms: Political decisions on economic policies impact a country's economic outlook and currency values. Political Events and Elections: Elections inject uncertainty, affecting market sentiment as traders anticipate political changes. Trade Policies and Agreements: Political decisions on trade policies influence currency values, introducing volatility to the forex market. Central Bank Actions: Central banks' decisions, influenced by politics, impact currency values as traders monitor monetary policy shifts. Government Debt and Budget Deficits: Political decisions on fiscal policies influence a country's debt levels and fiscal health, impacting the currency. Corruption and Governance Issues: High levels of corruption erode investor confidence, influencing currency values. Social and Political Stability: Broader stability in social and political realms influences the forex market and investor perceptions. Public Perception and Confidence: Political factors shape public confidence, impacting economic activities and currency values. In the sea of the forex market, geopolitical risks and political factors are the unseen currents shaping its course. Traders and investors must master the art of navigating these turbulent waters, understanding that beyond charts and algorithms, the geopolitical landscape and political dynamics are the true captains of the ship. In this ever-evolving arena, adaptability, foresight, and a keen understanding of geopolitics are the compasses guiding traders to success in the unpredictable world of currency trading. The geopolitical events stand as formidable forces capable of reshaping exchange rates and creating market volatility. From Brexit to trade wars and geopolitical tensions, understanding the historical impact of these events on currency markets is crucial for traders seeking to navigate the tumultuous seas of forex. This article explores notable geopolitical events that have left an indelible mark on exchange rates and provides strategic insights on mitigating the associated risks. Geopolitical Events and Their Impact: Brexit (2016): The UK's decision to exit the EU led to a sharp decline in the British pound, reflecting uncertainty about the economic consequences of the separation. GBP/USD sharp drop in 2016 US-China Trade War (2018-2019): Trade tensions between the US and China influenced exchange rates, with the Chinese yuan being particularly sensitive to developments in the trade dispute. European Debt Crisis (2010-2012): The sovereign debt crisis in the Eurozone led to fluctuations in the euro as concerns about the stability of the currency and the future of the EU affected exchange rates. EUR/USD fluctuations throughout 2010-2012 Russian Annexation of Crimea (2014): Geopolitical tensions and sanctions imposed by Western countries led to a significant depreciation of the Russian ruble. Arab Spring (2010-2012): Political uprisings across Arab countries caused volatility in currencies like the Egyptian pound and the Tunisian dinar. North Korean Nuclear Tests (2017): Geopolitical tensions resulting from North Korea's nuclear tests impacted currencies in the Asia-Pacific region, including the Japanese yen and the South Korean won. 9/11 Attacks (2001): The terrorist attacks had far-reaching consequences on global financial markets, influencing the US dollar over the longer term. Dollar Index after 9/11 US Invasion of Iraq (2003): Geopolitical events surrounding the invasion led to increased uncertainty and affected currencies in the Middle East, notably the Iraqi dinar. Mitigating Geopolitical Risks: Strategies for Forex Traders Stay Informed: Regularly follow reputable news sources to stay informed about political events, economic indicators, and policy decisions that could impact the forex market. Diversify Your Portfolio: Avoid overconcentration in a single currency or region. Diversification spreads risk and minimizes the impact of adverse geopolitical events on specific positions. Use Risk Management Tools: Implement tools such as Stop Loss and Take Profit orders to limit potential losses and secure gains. Setting appropriate risk-reward ratios enhances effective trade management. Monitor Economic Indicators: Keep an eye on economic indicators affected by geopolitical events. Understanding the economic fundamentals of traded currencies helps anticipate market reactions. Understand Correlations: Be aware of correlations between currencies and other assets, helping gauge potential spillover effects from other markets during times of geopolitical uncertainty. Utilize Safe-Haven Currencies: Allocate a portion of your portfolio to safe-haven currencies, such as the US dollar, Japanese yen, or Swiss franc, during heightened geopolitical uncertainty. Stay Flexible: Be prepared to adapt your trading strategy based on changing geopolitical conditions. Flexibility is key to adjusting your approach in response to evolving circumstances. Regularly Review and Reassess: Periodically review and reassess your trading strategy in light of changing geopolitical conditions. Markets can shift, and adjusting your strategy is crucial to remain relevant. Conclusion: In the dynamic world of forex trading, geopolitical risks are inherent, and their impact on exchange rates is undeniable. Traders armed with historical insights and proactive risk management strategies can navigate these uncertainties with confidence. While eliminating all risks is impossible, staying informed, diversifying portfolios, and employing risk management tools empower traders to weather the storms and emerge resilient in the face of geopolitical challenges. Embracing these approaches not only limits potential losses but also positions traders to seize opportunities in the ever-changing forex landscape.
Education
by FOREXN1
1
Decoding the NFP Report: Trading Strategies.In the dynamic world of forex trading, strategies that cater to the ever-changing market conditions are invaluable. While fundamental analysis is widely embraced in stock trading, its effectiveness in the forex market is often questioned. Unlike the stock market, where financial statements can significantly impact individual stocks, the forex market is influenced by a myriad of factors, including central bank policies and political leadership. In this article, we explore the limitations of fundamental analysis in the forex market and delve into an intriguing momentum trading strategy centered around a key macroeconomic indicator—the Non-Farm Payrolls (NFP). This strategy harnesses the unpredictable yet powerful market reactions triggered by the release of NFP data, offering traders a unique opportunity to capitalize on momentum. Fundamental Analysis in Forex: Fundamental analysis, a staple in stock trading, faces challenges in the forex market due to its limited impact on currency exchange rates. Forex stability relies not only on economic indicators but also on the nuanced decisions of central banks and political leadership. Despite these challenges, successful forex trading doesn't necessitate rigid adherence to a specific scenario. Traders can leverage price momentum and increased liquidity to execute effective impulse trading strategies. Non-Farm Payrolls Trading Strategy: The Non-Farm Payrolls (NFP) trading strategy capitalizes on the release of crucial U.S. economic data—the Non-Farm Payrolls report. This multicurrency strategy is applicable to all currency pairs involving the U.S. dollar, allowing traders to explore numerous assets simultaneously. The primary objective of this strategy is to capture price momentum, making it adaptable to various time frames. Non-Farm Payrolls: Predictable Unpredictability: The NFP report, published every first Friday of the month, serves as a linchpin for speculative traders. It provides insights into the strength and growth of the U.S. economy, consequently influencing the value of the U.S. dollar. The report focuses on the non-agricultural sector, which contributes significantly to the nation's GDP. The sheer importance of the NFP report lies in its ability to reflect the health of the U.S. economy. The release of this data sparks maximum market volatility, with prices witnessing rapid fluctuations, often ranging from 100-200 points in a short period. However, interpreting the aftermath of the news poses a unique challenge due to the simultaneous release of unemployment statistics, which can sometimes contradict each other. Despite the inherent unpredictability, the NFP trading strategy capitalizes on the strong price spikes triggered by the news release. While predicting post-news price behavior may be challenging, the strategy offers a systematic approach to navigate and profit from the volatile market conditions that follow the NFP announcement. Rules of Non-Farm Payrolls (NFP) Trading Strategy: Stay Informed with an Economic Calendar: Use a reliable economic calendar to stay informed about upcoming NFP releases. The economic calendar will help you track the scheduled date and time of the NFP report. Check for News Release Postponements: Understand that postponements of data releases are common in economic calendars. Monitor the calendar regularly to stay updated on any changes to the scheduled release time of the NFP report. Utilize a Trusted Economic Calendar: Choose a reputable economic calendar platform to ensure accurate and timely information. The provided link www.tradingview.com can be a valuable resource for tracking economic events. Prepare for High Volatility: Recognize that the release of the NFP report triggers significant market volatility. Prepare for rapid price movements and be cautious about entering trades during the initial moments following the release. Focus on the Non-Agricultural Sector Employment Data: Prioritize the non-agricultural sector employment data within the NFP report. This indicator is crucial for gauging the strength of the U.S. economy and can have a substantial impact on currency pairs involving the U.S. dollar. Monitor Unemployment Statistics: Simultaneously track unemployment statistics released alongside the NFP report. While the primary focus is on non-agricultural employment, an understanding of unemployment trends can provide additional context for market reactions. Be Cautious of Contradictory Data: Acknowledge that data within the NFP report, especially non-agricultural employment and unemployment figures, may occasionally present contradictory signals. Exercise caution during such instances, as market predictability diminishes. Wait for Initial Volatility to Subside: Post NFP release, wait for the initial surge in volatility to subside before considering trade entries. Initial reactions can be impulsive, and waiting allows for a more informed decision-making process. Consider Multiple Currency Pairs: Since the NFP report influences the U.S. dollar, the strategy can be applied to various currency pairs involving the dollar. Explore multiple pairs simultaneously to identify the most favorable trading opportunities. Implement Risk Management: Prioritize risk management strategies to protect your trading capital. Set stop-loss orders and determine the appropriate position size based on your risk tolerance and account size. Practice on Demo Accounts: Before implementing the NFP trading strategy in live markets, practice on demo accounts to familiarize yourself with the dynamics of the strategy and refine your execution. Continuous Learning and Adaptation: Stay informed about changes in market conditions and continuously adapt your strategy. The forex market evolves, and traders need to adjust their approaches based on ongoing developments. By adhering to these rules, traders can enhance their effectiveness when employing the Non-Farm Payrolls trading strategy and navigate the unique challenges posed by this high-impact economic event. Traders often seek strategies to capitalize on this volatility, and one popular approach is the Pending Orders strategy. In this article, we'll explore the intricacies of the Pending Orders strategy , shedding light on its advanced nature and its application by both novice and experienced traders. 1 ) Pending Orders Strategy: Set Buy Stop and Sell Stop Orders: Minutes before the NFP publication, set two pending orders: Buy Stop and Sell Stop. These orders are strategically placed 25-30 points away from the current price to avoid simultaneous triggering due to heightened volatility. Manage Triggered Orders: When the price reacts to the news release, triggering one of the pending orders, promptly delete the other as a non-operational scenario. This prevents both orders from activating simultaneously. As observed in this image, during the latest NFP event on Friday, December 8, 2023, the price exhibited a robust bearish impulse immediately after the report release at 5:30 pm. This triggered our sell stop pending order, shifting our trade into a profitable position. Following the bearish movement, the strategy aims to close the buy stop position (the opposite direction). At this juncture, traders should take proactive measures to manage the open position. Stop Loss Considerations: Place a Stop Loss in the opposite order or opt not to set it at all, provided the second pending order remains intact to limit potential losses. This ensures that the remaining order acts as a safeguard against adverse market movements. Trailing Stop for Profit Maximization: Implement a Trailing Stop to secure profits. Continuously adjust the Trailing Stop as the price advances, allowing you to capitalize on the maximum price momentum. This dynamic approach helps lock in gains while navigating the evolving market conditions. As depicted in the image, the price, after experiencing a bearish movement, rebounds upward. What could be the reason behind this? The Non-Farm Payroll (NFP) report assesses the percentage of the total workforce that is unemployed and actively seeking employment in the previous month. For this specific event, the forecasted unemployment rate was 3.9%. However, the actual percentage revealed in the report was 3.7%, indicating a lower number of individuals unemployed and actively seeking employment in the preceding month. This positive deviation from the forecast serves as a favorable signal for the USD, prompting an upward movement in its value following the event. In currency markets, an 'actual' percentage lower than the 'forecast' is generally considered beneficial for the respective currency. By the way, Short-term trades had the opportunity to secure a few pips in gains after the activation of the Sell Stop order. Strategy N.2 Meanwhile, in this other image, I have marked a vertical line at the recent NFP event. Additionally, I've incorporated a 20-period Simple Moving Average (SMA) to illustrate the short-term trend. After the release of this significant economic news, you can observe an increase in volatility. This could serve as a component of a monthly strategy where the release of such news acts as a trigger. This second scenario or strategy, especially for beginners, is considered much safer. By analyzing the NFP report results, understanding economic dynamics, and gaining insights into the potential continuation of the trend or a possible pause for a reversal, traders can make informed decisions. In conclusion, it's essential to backtest the presented strategies and conduct a forward backtest in a demo account. Your thorough understanding and application of these strategies are crucial. Thank you for taking the time to read my article.
Education
by FOREXN1
3
HOW TO TRADE GAPSA gap is a seemingly simple thing. It is such a period when the price minimum in a certain trading period is higher than the maximum in the previous period or vice versa - the maximum is lower than the minimum from the previous period. Gaps are not displayed on line charts or charts with closing prices, so they can only be seen on charts with bars or Japanese candlesticks. There they will look like an empty vertical space between trading periods, and this is the zone of extremely heightened emotions. They are usually formed after the trading session, during the overnight period, when the market is digesting fresh negative or positive news. On daily charts gaps are much more common than on weekly charts, because on a weekly chart a gap can appear only between Fridays. Monthly gaps are rare and such gaps on the chart can be formed only between monthly price ranges. The easiest way to find a gap on an intraday chart is to open a trading session. Gaps are an important emotional zone Where gaps form on a chart is an important, potential reversal zone because emotions are running high. As charts are a reflection of the psychological state of market participants. Consequently, when price returns to the area of the previous gap, its upper and lower points become important support and resistance zones where short-term trends can briefly reverse. Why most gaps close from a psychological perspective A gap close is filled when price reverses and rolls back to the full range of the gap, thus "closing" it. On a daily chart it sometimes takes several days, sometimes it takes weeks or even months. And in some rare cases this process may not be completed at all. "The market does not tolerate a void" In other words, gaps are filled, sooner or later, almost always. Of course, there are exceptions, but they are quite rare. The psychology of this process is quite simple. It can take months and sometimes years to fill the gap in the market. That is why you should not create a trading system only on the assumption that the gap will be filled tomorrow. In most cases, the market will try to close the gap, but it often ends up with a partial closing attempt. Why do gaps close at all? Simply, like any emotional phenomenon, they reflect the psychology of market participants: excessive fear or greed, for example, depending on the direction of the trend. The decision to buy or sell at any price by itself is not objective or rational. Consequently, when the market cools down, people will begin to retroactively reconsider their decisions. Which will lead to either closing the gap or trying to close it at least partially. Gaps should be treated with respect, but do not overestimate their importance. If a gap appeared on the formation of a price pattern, it is a general or gap zone. They close quickly and are not particularly important from the technical point of view. Therefore, we are much more interested in three other types of gaps, strong ones, which we will consider: Breakout gaps Continuation gaps Exhaustion gaps Breakout Gaps A breakout gap is created when price breaks a price pattern or any other trading range. In general, if a gap appears, it emphasizes the bearish or bullish nature of the breakout, depending on its direction. Nevertheless, it is highly desirable that an upward breakout be accompanied by higher volumes. However, if the gap breaks down, it usually does not require high volumes. Not every gap on a breakout is important, because as we know there is no such thing as a "sure thing" in technical analysis. However, a gap that is formed on a breakout is more important than one that appears by itself somewhere on the chart. There is a danger of buying on a breakout gap because you will get right into the epicenter of the market storm. The desire to buy at any price will in most cases end in disappointment when the price inevitably rolls back down after the emotions have subsided. Breakout gaps that are formed in the early stages of a major bullish trend are much more reliable than those that are formed after a long rise in price. If a breakout gap is formed at the end of a bull market, the chances of emotional burnout increase. Bulls sell out everything and do not buy back the asset on pullbacks, they are not interested in a low price anymore. Continuation gaps Continuation gaps occur when the price is falling or rising in a straight line, when the price is flying fast and emotions are running high. Sometimes such gaps are closed very quickly, literally within a day. Sometimes they are open much longer and do not close until the market shows a strong or intermediate reversal in the opposite direction from the main trend. The same trend that created such a gap. Such a gap is usually formed between the previous breakout, in the middle of the price movement that follows it. That is why such gaps are also called measuring gaps. It is not uncommon for one trend to have several such gaps at once. Continuation gaps are much more common in weak stocks or markets than in active and strong ones. The reason for this is that the window of opportunity is quite narrow and if everyone tries to get into it at the same time, only a few participants will get what they are looking for at the desired price. In the end, the demand to buy or sell will only be met by a much higher or lower price. Exhaustion Gaps If you see several continuation gaps in a trend, it means that the trend is being influenced by powerful forces. A second or third gap will also hint to a good technical analyst that the trend is stabilizing quickly. Therefore, there is a chance that the second or third continuation gap will be the last one. Accordingly, an exhaustion gap is the final stage of a rapid rise or fall in price, which will be the last of the continuation gaps. And there are cases when the exhaustion gap can develop after a long and extended trend. In the end we have a breakout gap, this is the beginning of the price movement. A continuation/measurement gap is usually in the middle of a new move. And the exhaustion gap is the final gap in a price movement. Therefore, exhaustion gaps are associated with rapid and prolonged price movement. They indicate that buyers gradually give up and stop believing in a new buying opportunity in the form of a pullback. In a downtrend, the opposite is true - sellers are losing at the top into a pullback higher for downside purchases. Intraday Gaps Generally, there are two types of opening gaps on intraday charts. The first one is formed after the price opens below the trading prices of the previous session. The second, much more widespread type of gap is formed exclusively on intraday charts, where the opening price of a new day jumps far away from the closing candle of the previous trading session. Intraday traders should avoid trades when the market opens sharply up or down. In the stock market, this happens due to extreme imbalances, where liquidity providers are forced to open down positions to meet the demand from open orders. Therefore, the ideal situation for them is when the price bounces slightly at the opening and then declines, allowing the liquidity providers to close all or part of the down positions. This process will be exactly the opposite if the price opens with a fall. Therefore, it is critical to observe what happens to the price after the opening range. As a rule, if after a gap up, the price goes further and opens a new trading range, it sets the sentiment for the whole market for at least a few hours, and sometimes even longer. Island reversals An island reversal is a small trading range that is formed at the end of a long price movement and is separated from the previous price by an exhaustion gap and a breakout gap. Remember that islands do not occur very often on charts, and when they do, they do not last long. However, they are a frequent guest at the end of an intermediate or even major trend and are formed as part of a price pattern. Such as the top/bottom of a head and shoulders (or inverse head and shoulders). In addition, islands are often a one-day phenomenon. Summary Gap on the chart that was formed due to excessive emotions in the market. Gaps are closed almost always. They also act as potential support and resistance zones. The high volume on the gap confirms its importance. A breakout gap is formed at the beginning of the price movement, continuation gaps in the middle of the movement, and exhaustion gaps at the end of the trend. An island reversal is a small price pattern on a 1-day chart, isolated from the main price by two gaps. They often indicate the end of an intermediate trend. Traders, If you liked this educational post🎓, give it a boost 🚀 and drop a comment
Education
by Lingrid
7
AGIX COIN tutorialAGIX, formerly known as AGI, is the native cryptocurrency token of SingularityNET, a blockchain-based platform designed to create, share, and monetize artificial intelligence (AI) services at scale. SingularityNET aims to be a decentralized, open market for AI services, accessible to anyone. The platform uses blockchain technology to ensure transparency and security while facilitating AI service transactions. Key Features of SingularityNET: 1. Decentralization: SingularityNET operates on a decentralized network, which means there is no central control over the AI services. This decentralization promotes a democratic and open ecosystem for AI development and utilization. 2. Marketplace for AI Services : It provides a marketplace where developers can offer their AI services, and users or businesses can purchase these services. This model aims to democratize access to AI technology. 3. Interoperability of AI Services: The platform is designed to support various AI services to interact and collaborate, potentially leading to more advanced and integrated AI solutions. 4. Token Use: The AGIX token is used as a medium of exchange on the platform. It is used to buy and sell AI services within the SingularityNET ecosystem. As for the future outlook of AGIX, it largely depends on several factors: 1. Adoption and Growth of the Platform : The more widespread the adoption of SingularityNET's marketplace for AI services, the more demand there might be for the AGIX token. 2. Advancements in AI Technology: As AI technology continues to advance and becomes more integral in various sectors, platforms like SingularityNET could see increased interest. 3. Competition : The AI and blockchain space is highly competitive and rapidly evolving. The success of AGIX will depend on how well SingularityNET can innovate and differentiate itself from other players in the market. 4. Regulatory Environment : The regulatory landscape for cryptocurrencies and AI technologies is still evolving, and changes in regulations can significantly impact the adoption and use of platforms like SingularityNET. 5. Community and Developer Support: The strength and engagement of the community, as well as the number and quality of developers building on the platform, are crucial for the long-term success of AGIX. 6. Partnerships and Collaborations: Strategic partnerships and collaborations can enhance the utility and adoption of the SingularityNET platform, thereby potentially increasing the value of AGIX. It's important to note that cryptocurrency markets are highly volatile and speculative. Therefore, predictions about the future of AGIX, like any other cryptocurrency, should be approached with caution and based on thorough research and analysis.
AEducation
by Aibullz
LIQUIDITY GRAB IN TRADINGLet's talk about liquidity grab and why the market moves against you the moment you open a trade. At Smart Money, liquidity grab is at the heart of the trading systems, because without it, there can't be a market. ✴️ Market Liquidity No matter how long you have been trading, at some point you must have questioned the depth in the market you are trading. In other words, its liquidity. Liquidity is the #1 element that makes a market work and competitive. For a market to be rich in liquidity, there must be broad participation from both buyers and sellers. That's why it makes sense for smart money or market makers to extract liquidity from the market. Liquidity hunting is a very common practice. It is nothing but the art of forcing losing players out of the market who are known to be weak long and short holders. ✴️ Liquidity Grab Often Occurs Against The Underlying Trend The bigger and brighter the liquidity zone, the more likely it is that Smart Money will target that particular zone, especially if it is located against the underlying trend. For example, in a bearish trend structure, you can often see clear liquidity picking up from below, against the trend, and reversing the price up. This is more common in very liquid markets with high trading volume (e.g. Forex, stock market). Why does it happen? Big players know that most of us use various indicators, moving averages, candlestick and chart patterns and other popular tools for our day trading, scalper trading. The big players can easily lure retail traders to enter the market at bad points and act against their positions. Many traders use significant levels to place stop losses and buy or sell stops for exits and entries respectively. It is these price levels that are used by smart money to provide their needs with the right liquidity. Institutional players cannot trade the same way as retail traders because in low liquidity price zones, they can up/down too much on large orders. So, they use high liquidity zones to place their own large orders in the market without having too much impact on the price. Liquidity grab is actively used mainly in the forex and cryptocurrency markets, as these markets are quite volatile and attract inexperienced traders. Besides, it is easy to use margin trading on them. Inexperienced (and even experienced) traders don't know, and those who do, don't believe that a market maker uses their stops to "make a market" on a regular basis. ✴️ More is Better The more liquidity that accumulates above a significant price level, the more likely that liquidity will be harvested. Where price consistently bounces off a demand (support) or resistance (supply) level several times, there is a huge concentration of stops by some players and orders in the other direction by others. It is important to focus on finding these spots, as you can find great entries after liquidity is collected. The more bounces, the better. The key factor for a major player is time. The more time passes, the more liquidity there will be. And if price cannot break through areas with multiple highs or lows, it is likely that liquidity around those price levels will increase over time. The more time that passes, the more liquidity will increase (unless major highs/lows are broken). Because of this factor, if you want to trade a liquidity seeking pattern, you should be aware of how time plays a role in consolidating orders above/below key liquidity zones. ✴️ Grabing Liquidity And Finding Stop Losses A liquidity grab is a liquidation event in which buyers' or sellers' stop losses are removed and traders who took a trade on a breakout are trapped. ✴️ Stop Loss Grab By A Major Player Stop loss finding and liquidity grab are similar concepts. Finding a stop loss is when price drops or rises behind the structural elements of the chart, or just goes to a round value. The smart money knows there aren't many stops and liquidity accordingly. These places are visible to almost all traders, everyone sees some "key" level, where the price hits the same place a hundred times. A big player realizes that half of the players will play on the rebound, putting their stops above or below the zone, while the other half will play on the breakout, jumping in after the breakout of this zone. As long as stop losses of the former and pending (buy/sell stops) or market orders of the latter are triggered, smart money will absorb all these orders. ✴️ Look For A Quick Price Reversal After A Breakdown The goal of the Smart Money trading system is very simple - retail traders, should avoid falling into the trap of the market maker and just follow the market maker. A liquidity grab should always be accompanied by a quick, strong reversal move after reaching a critical low/maximum essentially a quick turn in price back to structural support or resistance. How quickly the price will come back, we do not know, but the time of being outside the demand or supply zone will depend on the liquidity of the market itself and the volume of big players. ✴️ Monitor The Lowest Low And The Highest High Of The Structure When you do not see areas with the same lows or highs on the chart (consolidation), the main area to monitor is the lowest minimum or the highest maximum of the structure, i.e. where the highs or lows are connected by the trend line. ✴️ Maximum And Minimum Of The Market Structure Most traders' stop losses will be located exactly where the high or low of the trend is visible. When the price falls below/below the start of the move, then stops will be triggered and new orders will be opened in the hope that the trend has finally changed. Liquidity will also be under other lows, traders will also jump in there to update the nearby structure, but the very beginning of the move will be the key level. This can be attributed to the time frame or simply fractality. There is a difference between targeted and non-targeted liquidity, i.e. caused by a market maker or caused by general market action. On the left side we have targeted and on the right side we have untargeted. The difference between the two is that the targeted liquidity grab is initiated by smart money and the non-targeted one by general market action. In the former case the targeted attempt to take out stops will start from the middle of the previous move where there are not many stops and liquidity, in the latter case there is a move under general market action.
Education
by DeGRAM
1
Technical vs. Fundamental Analysis: Finding a BalanceLooking to make more holistic investment decisions, but not sure how? Understanding the difference between technical and fundamental analysis and how to incorporate both is an essential step to accomplishing holistic investing. Today we will explore how finding a balance between these pillars of trading can help you navigate the complex world of investing. The Importance of Finding a Balance Finding the right balance between technical and fundamental analysis can be the key to successful investing. By combining the two approaches, traders gain a comprehensive understanding of a stock's potential, taking into consideration both the short-term market trends and the long-term value. When it comes to investing, it's important to have a complete view of the market. Relying solely on technical analysis may leave you susceptible to missing out on crucial information about a company's financial health and growth prospects. Similarly, relying purely on fundamental analysis may cause you to overlook short-term market trends that could impact the stock's price in the near future, potentially leading to poor entries and exits. A balanced approach allows you to leverage the strengths of both technical and fundamental analysis, providing you with a more complete picture of the investment opportunity at hand. So, whether you're a short-term trader or a long-term investor, finding the sweet spot between technical and fundamental analysis can help maximize your chances of making a profitable investment. Understanding Technical Analysis Technical analysis focuses on analyzing historical price and volume data to predict future price movements. Traders using this approach often rely on chart patterns, indicators, and trendlines to identify buy and sell signals. Chart patterns, such as triangles, head and shoulders, and double tops/bottoms, provide insights into potential price reversals or continuations. These patterns are formed as a result of the collective actions of market participants and can signal impending price movements. However, when using price patterns it is critical to understand the statistical odds of success for completion of the pattern. Price patterns can be subjective to the trader's skill and overall directional bias, so traders should combine price patterns with other forms of technical analysis. Indicators, such as moving averages, Relative Strength Index (RSI), and Bollinger Bands, help traders identify overbought or oversold conditions, measure the strength of a trend, and spot potential entry or exit points. When indicators are combined to form a robust and complementary system traders gain a wealth of information about the near-term health of an underlying asset. It is critical to note that no indicator system is perfect and will not guarantee you a 100% success rate. However, when paired with proper risk mitigation, psychology, and supporting forms of technical analysis, using indicators can lead to long-term success. Trendlines are used to analyze the direction and strength of a stock's price movement. Drawing trend lines connecting the highs or lows of a stock's price can help identify support and resistance levels, price channels, and potential trend reversal areas. Support and resistance zones are price levels on a chart that indicates where trends are likely to pause or reverse. Support is a zone where a downtrend pauses due to demand, while resistance is a zone where an uptrend pauses due to supply. These zones are based on market sentiment and human psychology, shaped by emotions such as fear, greed, and herd instinct. Traders tend to congregate near these zones, strengthening them. Support levels indicate a surplus of buyers, while resistance levels indicate a surplus of sellers. It's important to note that these levels are not exact numbers but rather "zones" that can be tested by the market. Understanding how these tools work and how to interpret their signals is crucial for technical analysis. It allows traders to make intuitive decisions based on historical price patterns and market dynamics. However, it's important to note that technical analysis has its limitations. Limitations of Technical Analysis While technical analysis can provide valuable insights into a stock's potential price movements, it's important to recognize its limitations. Technical analysis is primarily focused on historical data and patterns, which may not always accurately predict future price movements. Market sentiment, news events, and other external factors can significantly impact a stock's price, often rendering technical analysis less effective. If you don't believe me, just look at the price charts for the last four years. Try to pinpoint major world or domestic events such as the start of the pandemic or the Fed's hawkish shift. Additionally, technical analysis does not take into account the intrinsic value of a company, which is a key consideration in fundamental analysis. Therefore, relying solely on technical analysis to make investment decisions may leave you vulnerable to market uncertainties and potential pitfalls. This is where fundamental analysis comes into play. Understanding Fundamental Analysis Fundamental analysis involves examining a company's financials, industry trends, and market conditions to determine its intrinsic value. Investors who lean towards fundamental analysis believe that a company's true worth is reflected in its financial strength and growth potential. Key factors considered in fundamental analysis include a company's revenue and earnings growth, profit margins, debt levels, competitive positioning, and management team. By analyzing these factors, investors can assess whether a company is undervalued or overvalued, and make investment decisions accordingly. Most, if not all of this information is readily available on the internet, but it can take some digging to find all the information one would need. There is also a wide range of financial-related indicators readily available on TradingView. Fundamental analysis also takes into account macroeconomic factors, such as interest rates, inflation, and government policies, which can impact the overall market and the performance of individual stocks. How to Conduct Fundamental Analysis Conducting fundamental analysis involves a thorough examination of a company's financial statements, such as its income statement, balance sheet, and cash flow statement. These statements provide insights into a company's revenue, expenses, assets, liabilities, and cash flows. Analyzing financial ratios, such as the price-to-earnings (P/E) ratio, return on equity (ROE), and debt-to-equity ratio, helps investors assess a company's financial health and profitability. Much of this information is available on TradingView under the financials tab. TradingView has done an excellent job of making a majority of the aforementioned financial data available, right at your fingertips. Industry analysis is another important aspect of fundamental analysis. Understanding the industry dynamics, competitive landscape, and market trends can provide insights into a company's growth potential and its ability to outperform its peers. There is a plethora of this information online, and diligence in your research will make a world of difference. By combining financial analysis with industry analysis, investors can gain a deeper understanding of a company's overall prospects and make more informed investment decisions. Finding a Balance Between Technical and Fundamental Analysis Finding the right balance between technical and fundamental analysis requires a thoughtful approach. Here are some strategies to help you integrate the two approaches: Start with fundamental analysis: Begin by analyzing a company's financials and industry trends to assess its long-term growth potential. This will provide you with a solid foundation for your investment decisions. Use technical analysis for timing: Once you've identified a promising investment opportunity based on fundamental analysis, use technical analysis to refine your entry and exit points. Technical indicators and chart patterns can help you identify optimal times to buy or sell a stock. Consider the bigger picture: While technical analysis focuses on short-term market trends, it's important to consider the long-term value of a company. Evaluate the fundamental factors that can impact a company's growth potential and use technical analysis as a tool to validate your investment thesis. Keep an eye on market sentiment: Market sentiment can influence stock prices in the short term. By staying informed about news events, economic indicators, and market trends, you can better understand the context in which technical and fundamental analysis are operating. By finding a balance between technical and fundamental analysis, you can better manage your investment decisions that take into account both short-term market dynamics and long-term value. This balanced approach can help you navigate the complex world of investing and maximize your chances of success. In conclusion, understanding the difference between technical and fundamental analysis is crucial for making theoretically sound investment decisions. By finding a balance between the two approaches, you can gain a comprehensive understanding of a stock's potential, considering both the short-term market trends and the long-term value. So, whether you're a short-term trader or a long-term investor, incorporating both technical and fundamental analysis can help provide a better view and maximize your chances of making profitable investment decisions. Happy Trading!
Editors' picks
NASDAQ:TSLAEducation
by LeafAlgo
16
What Traders and Boxers Have in Common 📊🥊 Hello TradingView Family, I've been doing some thinking lately about trading and how it surprisingly shares quite a few parallels with the sport of boxing. It might sound a bit unconventional, but bear with me - there's more to it than meets the eye. 🥋 Strategy is Key: In both trading and boxing, success is heavily dependent on strategy. Boxers carefully plan their moves, anticipating their opponent's actions, and traders meticulously analyze the market, foreseeing trends and patterns. It's all about staying one step ahead. 🥊 Discipline Matters: Just like a boxer adheres to a strict training regimen, successful traders maintain discipline in their approach. Emotional control, adherence to a trading plan, and the ability to stick to a strategy even when the going gets tough are crucial. 🛡 Risk Management: Boxers can't afford to leave themselves exposed to too many punches, and traders can't afford to expose their entire capital to a single trade. Both require calculated risk management to survive and thrive in their respective arenas. 🔄 Adaptability: No boxing match goes exactly as planned, and the market is just as unpredictable. The ability to adapt to changing circumstances, whether it's a shift in the opponent's strategy or a sudden market twist, is a shared trait. 🥅 Resilience in the Face of Loss: Both traders and boxers experience losses. It's not about avoiding them altogether but about how you bounce back. Resilience, the ability to learn from mistakes, and the determination to get back in the game are keys to long-term success. 🔄 Continuous Improvement: Just as boxers are always refining their techniques, traders are constantly honing their skills. Learning from experiences, staying updated on market trends, and seeking out new strategies are essential for growth. 🧠 Mental Toughness: Boxing requires mental fortitude to withstand the physical and psychological challenges. Similarly, trading demands a strong mindset to navigate the ups and downs without succumbing to panic or overconfidence. So, what do you think? I find these connections fascinating, and it makes me appreciate both the art of trading and the sport of boxing in a new light. 🌟 Let me know your thoughts! Cheers! 📚 Always follow your trading plan regarding entry, risk management, and trade management. Good luck! All Strategies Are Good; If Managed Properly! ~Richard Nasr
Education
by TheSignalyst
16
Essential Tips for Newbie Day Traders: Forex and Gold Trading Entering the world of day trading can be both exciting and daunting, especially for those who are new to the game. This article aims to provide simple yet valuable recommendations for beginner day traders specifically focusing on forex and gold trading. 💼💰🚀 1. Educate Yourself: Before diving into day trading, it is crucial to understand the intricacies of the forex and gold markets. Take the time to learn about the basic terminology, technical analysis, fundamental analysis, and different trading strategies. Knowledge is your best weapon in this realm. 📚✍️📈 Start by reading books, attending webinars or courses, or even joining online trading communities to gain insight into successful day trading techniques. 2. Practice with a Demo Account: To avoid unnecessary losses, it is highly recommended to practice trading using a demo account. This allows you to gain hands-on experience without the risk of losing real money. Take the time to experiment with different strategies and understand how the market works. 📊📝💡 Tradingview paper trading offers demo accounts where you can simulate real trading scenarios and test your skills. 3. Develop a Trading Plan: A well-defined trading plan is essential for any day trader. Specify your goals, risk tolerance, and trading style. Determine the maximum amount you are willing to risk per trade and set realistic profit targets. Stick to your plan and avoid impulsive decisions. 📝🎯💼 Example: Decide on a risk-to-reward ratio, such as 1:2, which means you are willing to risk $1 to potentially earn $2, and only take trades that meet this criteria. 4. Manage Your Risks: Risk management is a crucial aspect of day trading. Never risk more than you can afford to lose and always set stop-loss orders to limit potential losses. It is important to maintain a disciplined approach to preserve your capital. 💪💸📉 Example: Let's say you have $10,000 as your trading capital. Set a maximum loss limit per trade, such as $200, and ensure your stop-loss order reflects this limit. 5. Keep Up with Market News: Stay informed about global events, economic indicators, and market news that can impact the forex and gold markets. Develop a routine of reading relevant financial news and reports to stay ahead of market trends. 🌍📰💼 Important events like central bank announcements, political developments, or changes in commodity prices can significantly affect currency and gold prices. Tradingview nicely displays the coming news on the horizontal scale of a price shart. Just click on a circle and you will see the coming related events. In conclusion, starting out as a newbie day trader in the forex and gold markets requires a combination of knowledge, practice, discipline, and risk management. By following these simple recommendations, you will be better equipped to navigate the markets and enhance your chances of success in day trading. 💪📊✨
Education
by AnabelSignals
1
HOW TO RECOGNIZE A SCAM SIGNAL PROVIDER WEBSITEForex signal providers can be a good resource for traders looking to access the markets. However, not all signal providers are created equal, and some of them act as scammers, preying on unsuspecting novice traders. In this article, we will look at how to recognize a fraudulent signal provider's website and how not to fall victim to their machinations. The provider's website can be a great indicator of professionalism or, on the contrary, a desire to deceive you. 1. Bad website design One of the easiest ways to recognize a fraudulent signal provider website is to check its design. Fraudulent sites often have poor design with low-resolution images and poor grammar. You won't find any information about the provider itself on such sites. Non-working buttons or links are also a reason to be cautious. The sites of legal signal providers are usually well designed, have professional images and clear language. 2. Lack of contact information The websites of fraudulent signal providers often lack contact information or provide fake contact information. In many cases there are icons of almost all social networks, but when you click on the link there is nothing there. If there is even an account in social networks, they are mostly completely anonymous. On the other hand, legitimate signal providers should have a physical address, phone number and e-mail address on their website. Traders should check the contact information provided and make sure it is legitimate. 3. Unverified performance Fraudulent signal providers may provide unverified results or manipulate performance metrics to appear more profitable than they actually are. It can be easy to show fake trading results on a website. You should treat such results with caution. You should always check the accuracy of the performance results before using services from any signal provider. Legitimate signal providers should provide verified performance results from third-party sources. Our team has already checked a huge number of them and found out who is working correctly and who is falsifying the trading results. 4. Lack of social proof Social media is a staple of business these days. Social buttons can lead to the homepage of a website, to an empty profile, or to nowhere at all. Social media proof is a powerful tool that can help traders identify fake signal providers. The websites of fraudulent signal providers often have no reviews or they usually have fake reviews. There are always satisfied customers on their website and social media pages with no way to read the comments. Providers using a well-known consumer review system is usually a good sign. But you still should also check third-party review websites to see what other traders are saying about the provider. If there are a lot of short positive reviews you should also be wary as they may be fake. 5. Check the domain name Domain names registered for a short period of time, say a year, can be suspicious because scammers don't invest a lot of money in their sites. They purchase domain names with short expiration dates to minimize their costs. Websites that are newly created and have a short lifespan are more likely to be fraudulent. In conclusion, recognizing scam signal provider websites is crucial for traders to avoid falling victim to scammers and achieve their trading goals. By checking for poor website design, lack of contact information, unverified performance, lack of social proof, traders can identify legitimate signal providers and avoid being scammed. Be safe.
Education
by UnknownUnicorn15614419
4
Buy the Breakout✅ Or Have a Hard time Buying Dips❌Hello Traders! 👋 Excited to bring you another insightful post on Tradingview, highlighting a smarter approach to trading cryptocurrencies. This time, we're focusing on the effectiveness of 'Buying the Breakout' ✅ over the uncertainty of 'Buying the Dip' ❌. 🔑 Strategic Analysis: 1️⃣ Bitcoin (BTC): We begin with Bitcoin, showcasing how choosing breakout points over dips can provide more reliable and timely entry points. 2️⃣ Matic (MATIC): Next, we look at Matic, illustrating how its breakout points, when combined with simple technical analysis, offers a clear strategy for market entry. 3️⃣ Fantom (FTM): Lastly, we explore Fantom, a prime example of how a classic crypto breakout strategy can outperform dip-buying, leading to more significant gains. 🧠 Trading Psychology: It's crucial to understand the psychological aspect. Consistently buying dips may lead to missing breakout opportunities, potentially resulting in shorting at the wrong moment... or endlessly like Borat at the end of this post 💡 Smart Profit-Taking: Remember, taking profits partially is key. Secure your gains and keep some positions open for further potential growth, balancing risk and reward effectively. I personally usually set 4 targets for spot at 25% each. The first 2 get me some profit and the last 25% is for my retirement; so i never touch that 25%, ever. 🚦 Managing Fake Breakouts: A vital part of trading breakouts is dealing with the possibility of a fake breakout. Here's where your skills truly shine. By having a calculated exit strategy, you can minimize risks even if the breakout turns out to be false. This approach ensures that your trading decisions are not only proactive but also protective of your capital. This post is crafted to enhance your understanding and application of these strategies, whether you're a veteran trader or new to the game. 📚 It's all about making informed, strategic decisions in the dynamic world of crypto trading. 🌟 When it comes to crypto, it all starts with the fundamentals: selecting assets with solid backing, innovative teams, and a clear, strategic plan. This foundational step ensures that you're investing in cryptocurrencies that not only have potential for technical breakouts but also possess the intrinsic value and growth prospects backed by strong fundamentals. 🔍Join me in this journey as we continue to explore and attempt to conquer the markets. Your thoughts, experiences, and insights are always welcome in the comments section below. Let's keep pushing the boundaries of what we can achieve together in trading! Just remember that Trading should be fun thus we must play with funds we can afford to sacrifice. ❌❌❌Don't be like Borat: ❌❌❌ One Love, The FXPROFESSOR ✅
Education
by FX_Professor
3
Can Bitcoin Hedge Against a Falling Dollar?Global inflation often signifies a weakening of global currencies. The question of whether Bitcoin can serve as a hedge against a depreciating dollar has gained significant interest among investors. Or should it still be the Gold? In this study, we will analyse the top 8 cryptocurrencies to determine which one is a more reliable currency hedge. Bitcoin & Its Minimum Fluctuation $5.00 per bitcoin = $25.00 BTIC: $1.00 per bitcoin = $5.00 Code: BTC Micro Bitcoin & Its Minimum Fluctuation $5.00 per bitcoin = $0.50 BTIC: $1.00 per bitcoin = $0.10 Code: MBT Disclaimer: • What presented here is not a recommendation, please consult your licensed broker. • Our mission is to create lateral thinking skills for every investor and trader, knowing when to take a calculated risk with market uncertainty and a bolder risk when opportunity arises. CME Real-time Market Data help identify trading set-ups in real-time and express my market views. If you have futures in your trading portfolio, you can check out on CME Group data plans available that suit your trading needs www.tradingview.com
CME:BTC1!Education
by konhow
1
New Traders Ask, Experienced Traders Answer: Q&AHello TradingView Community! 🔸We're excited to launch a unique Q&A session right here! If you're new to trading and have questions, this is your chance to get them answered by seasoned or just other traders. Whether it's about technical analysis, trading psychology, or managing risks, feel free to ask anything related to trading. 🔸Experienced traders, we invite you to share your wisdom and insights. Your knowledge is invaluable, and this is a great way to give back to the community. Guidelines:👇 - Please keep questions and answers respectful and constructive. How It Works:👇 - New traders: Post your questions in the comments. - Experienced traders: Reply to these comments with your answers. - Let's make this a rich learning experience for everyone involved. We're looking forward to your questions and the insightful discussions they spark! P.S.: All the information shared here will be based on personal knowledge and the personal experience of traders! This is just an opinion, not financial advice! Happy Trading!
COINBASE:BTCUSDEducation
by SwallowPremium
16
The only constant with trading the markets is...The only thing constant about financial markets is that they change. And since 2007 or so, with the higher availability of trading different instruments and markets world-wide. And not to mention, the ability to go long (buy) and go short (sell). Yes, these everyday possibilities were difficult to find and trade back then. Now I’m speaking my age in the markets. But it’s important to know, the algorithms are changing the game every single year. As long as you’re a trader you need to be able to learn, grow, adapt and evolve with every changing markets. Let’s go into details about WHY the markets are changing… Since around 2007, the landscape has undergone significant transformations, driven by several key factors that shape the dynamic nature of these markets. 1. Globalisation and Technological Advancements Traders now are able to gain access to enhanced connectivity, facilitating participation in markets worldwide. They also have amazing trading and charting platforms like TradingView. This increased speed of information dissemination and transactions has a profound impact on market dynamics. And this helps contribute to the perpetual state of change. 2. Diversification of Instruments and Markets The availability of diverse financial instruments, ranging from stocks and bonds to commodities and cryptocurrencies, has expanded trading possibilities. Each year we seem to have more assets, markets, instruments, structured products and choices. It's building into a trading universe in a way. And each market possesses unique characteristics influenced by distinct factors. This diversity introduces complexity to trading strategies. And this requires traders to navigate a broad spectrum of instruments with different behaviors. As long as there are new and improved assets, the markets will always change. 3. Long and Short Positions Unlike in the past, where shorting certain markets proved challenging, the ability to go long (buy) and short (sell) has become more prevalent. This flexibility allows traders to capitalize on both upward and downward market movements. With the ability to go long and short a variety of markets, this is changing the financial landscape of the markets. Price action no longer moves in a Zig Zag 45 degree motion. There are more dips and rallies without strong trends, like in the past. All because of the intrciacies of long and short positions also adds intricacy to risk management strategies. talking about algorithms. 4. Rise of Algorithmic Trading Algorithmic trading has emerged as a game-changer in financial markets. This involves using computer programs to execute trades based on predefined criteria. The influence of algorithmic trading is profound, contributing to increased liquidity, faster execution, and the development of innovative trading strategies. As algorithms evolve each year, they continually reshape the dynamics of the trading landscape. 5. Market Participants and Strategies The composition of market participants has evolved, with institutional investors, hedge funds, high-frequency traders, and retail traders all playing pivotal roles. All of a sudden we've seen a spike in the new trend of trading with Smart Money Concepts and Inner Circle Trading, in the last two years. These changes in the behavior and strategies of these participants can swiftly impact market trends and volatility. The influx of retail traders, facilitated by online platforms, further adds new dynamics to the markets. So once again, the only constant for traders is the change that is taking place in the financial landscape and market universe. Traders who evolve, adapt, acknowledge and respond effectively to the perpetual state of change are better positioned for success in this dynamic and challenging environment.
JSE:J200Education
by Timonrosso
9 Elements to Master Algo-TradingThere are two types of trading. Discretionary where you buy and sell based on variable factors. Mechanical where you buy and sell on fixed factors. If you want a strong edge with the markets, then you’ll need to consider the latter. And hence we have algorithmic, or algo trading. Algo trading, or algorithmic trading, is the use of computer programs to automate the process of trading financial assets. These programs, or algorithms, execute trades based on predefined rules and criteria. Now when you dissect algo trading to its core, you’ll realise there are important elements you’ll need to consider to master it. Element #1. Database Management & Analysis Algo trading simply begins with a whole bunch of comprehensive and organised data management. You’ll use the financial markets to generate vast amounts of data, including historical price movements, trading volumes, and momentum indicators. Basically, you’ll need this database to create a strong back tested analysis. That way you’ll be able to get the accurate data to tell you how it’s performed, the expectations and the best and worst case scenarios. Element #2: Statistical Analysis Once you have the database of tested information. You’ll be able to work on your statistical analysis to see the inner workings of the system in action. Win & loss rate Best & average winners and losers Drawdown averages Average trade Expectancy formula Biggest and smallest winner & loser Average week, month, quarter and year Basically, all the stats you need that forms the bedrock of successful algo trading strategies. When you have this data you’ll be able to spot trends, correlations, and anomalies within financial data. Element #3. Pattern Recognition Skills Pattern recognition is a core competency in algo trading. We aren’t fully there yet with AI, Machine Learning and Deep Learning. But we’re getting there. With trading expertise combined with algorithmic precision – this will allow computers to find recurring chart patterns, candlestick formations, and technical indicators. These patterns often help give trends, reversals, potential market movements, and opportunities to enter or exit a trade. E lement #4. Machine Learning Machine learning, a subset of artificial intelligence. By using historical data, machine learning algorithms can adapt and improve trading strategies over time. So whether you have a moving average, chart patterns, Smart Money Concepts, Fibonacci or any other trading system. With Machine Learning, it will input more data and will be able to change, add, remove and optimise elements in your strategy to make it MORE successful. In just no time at all, these algorithms will learn from past successes and failures, fine-tuning trading parameters and strategies to optimise your trading performance. E lement #5. Trading EA Strategies Expert Advisors (EAs) are your everyday trading robots. These are algorithmic programs that are developed for trading platforms like MetaTrader and soon TradingView. These EAs help you to execute trades based on your pre-defined rules and criteria. You’ll then be able to design and backtest these strategies to make sure they are viable and profitable in REAL market conditions. And when it’s time to take trades, EAs do it for you. They will be able to automate the execution process – with no emotions or hesitance. This will allow you to capitalise on opportunities 24/7 without any human intervention. And you no what that means. It’s going to do the job! Element #6. Problem-Solving Skills You are going to hit a bunch of obstacles in the way. There are major challenges when it comes to algo-trading. And you’ll need to have strong problem-solving skills to overcome them and succeed. Just like programmers deal with bugs, glitches and problems with code. You’ll also find problems with paramaters, markets, rules, criteria and risk management calculations. If you have strong problem-solving skills you’ll be able to quickly identify and sort out the issues, diagnose causes, and find and implement solutions to maintain consistent performance. Element #7. Attention to Detail You need to have an eye for algo-trading. When the smallest discrepancies or inaccuracy can have major consequences for your portfolios performance. You’ll need to consistently review your strategies, parameters, and data inputs. That way it’ll help to make sure your system is accurate, reliable and trustworthy. Element #8. Risk Management It’s not just about creating a solid trading strategy and system. You’ll need to have effective risk management too. With Algo trading, you’ll need to employ a couple of money management techniques like: Position sizing Stop-loss orders and criteria Portfolio diversification When to close based on over time When to adjust your positions When to risk a certain percentage based on different market environments This will help you to protect, preserve and prosper with your portfolios. Element #9. Market adaptability Markets are dynamic. Markets trend. Markets move sideways. Markets jump in irrational circumstances. As an algo trader, you’ll need to find a way to adapt your system into the programme to identify these market environments. E.g. When the main market is above the 200MA only look for longs When the main market is below the 200MA only look for shorts. When the market is within a box range – Don’t look for any trades. As you can see, there are many elements to being a successful algo-trader. It also takes a ton of innovation. But have this article with you, for when technology and developments improve – You’ll have certain ideas and steps to take to improve your algo trading. Let’s sum up the important elements to algo-trading… Element #1. Database Management & Analysis Element #2: Statistical Analysis Element #3. Pattern Recognition Skills Element #4. Machine Learning Element #5. Trading EA Strategies Element #6. Problem-Solving Skills Element #7. Attention to Detail Element #8. Risk Management Element #9. Market adaptability Do you use Algo-Trading with the markets?
JSE:J200Education
by Timonrosso