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Fundamental Analysis

What is the Power in Buy and Sell WallsHello, dear @TradingView community! Welcome to another insightful educational topic focused on Buy and Sell Walls in the world of cryptocurrencies! Understanding buy and sell walls is critical for any trader or investor in the cryptocurrency market. It provides access to the order book and valuable insights into the market sentiment of specific cryptocurrencies. This understanding can help forecast future price movements and develop more effective trading strategies. In this article, we will delve into the concept of walls in crypto, explore how to identify and interpret buy and sell walls, and discuss their significance in the market. What is a Wall in Crypto? Understanding Buy Walls Understanding Sell Walls How to Identify Buy and Sell Walls How to Interpret Buy and Sell Walls What is a Wall in Crypto? A wall refers to a large limit order placed on a cryptocurrency trading platform, often depicted as a huge block on the order book. Market makers, institutional investors, as well as individual traders, utilize these large limit orders to buy or sell substantial quantities of a specific cryptocurrency at a predetermined price. Walls tend to have a significant market impact since they can influence the supply and demand levels of a specific cryptocurrency. These large limit orders, representing a considerable quantity of a cryptocurrency bought or sold at a specific price, have the potential to cause significant price fluctuations. Understanding Buy Walls Buy walls are substantial limit orders placed to purchase a specific amount of a cryptocurrency at a particular price or higher. They can be formed by large market makers, institutional investors, or individual traders seeking to buy a significant amount of a cryptocurrency at a specific price or lower. Buy walls can serve to profit from price movements or accumulate a large quantity of a cryptocurrency at a lower price. A buy wall indicates strong demand for a specific cryptocurrency at a certain price or higher, which can be seen as a positive sign for the market. It suggests that buyers are willing to pay the specified price or more, potentially leading to a price increase. Additionally, a buy wall may indicate that a large market maker or institutional investor has faith in the future price of a coin or a token. By investing a substantial sum, they express confidence that the cryptocurrency's price will rise in the future. Traders can utilize the presence of a buy wall to gauge market sentiment and identify potential buying opportunities. Buy walls can also serve as support levels and act as stop-loss points. Understanding Sell Walls Sell walls, on the other hand, consist of large limit orders placed to sell a specific amount of a cryptocurrency at a particular price or lower. Similar to buy walls, sell walls can be formed by market makers, institutional investors, or individual traders looking to sell a substantial amount of a cryptocurrency at a specific price or higher. These limit orders are utilized to profit from price movements or liquidate a large quantity of a cryptocurrency at a higher price. A sell wall indicates a strong supply of a specific cryptocurrency at a particular price or lower, which could suggest overvaluation. It signifies that sellers are willing to sell at the specified price or lower, potentially leading to a price decrease. Furthermore, a sell wall can indicate that a large market maker or institutional investor holds a bearish outlook on the future price of a cryptocurrency. By selling a significant sum, they imply their belief that the cryptocurrency's price will fall in the future. Traders can leverage the presence of a sell wall to assess market sentiment and identify potential selling opportunities. Sell walls can also act as resistance levels for a cryptocurrency and serve as target price points for profit-taking. How to Identify Buy and Sell Walls Buy and sell walls can typically be found in the depth chart of order book on a cryptocurrency trading platform. They are often represented as conspicuous, large blocks, easily identifiable by traders. While some trading platforms provide graphical representations of the order book, this feature is not available on all platforms. When identifying buy and sell walls, it's crucial to consider the context surrounding them, including current market conditions and the specific cryptocurrency being traded. Market conditions can change rapidly, so staying updated and understanding the current market environment is essential for making informed decisions. It's worth noting that larger buy or sell walls tend to have a greater impact on the market compared to smaller ones. A large wall could indicate the involvement of a significant market maker or institutional investor, which can potentially influence the price of a specific cryptocurrency more significantly. How to Interpret Buy and Sell Walls By examining both buy and sell walls, traders can gain insights into the supply and demand levels for a specific cryptocurrency. A large buy wall suggests strong demand, while a large sell wall indicates substantial supply. When used together, these walls provide a comprehensive view of market sentiment and the supply-demand dynamics of a cryptocurrency. Combining buy and sell walls can also help identify potential buying or selling opportunities. For example, if there is a significant sell wall and a large buy wall at the same price level, it may indicate a state of equilibrium in the market, presenting an opportunity for traders to enter or exit positions. The presence of a buy wall typically indicates a bullish sentiment, while a sell wall suggests a bearish sentiment. A market with more buy walls than sell walls tends to exhibit bullish market sentiment, while a market with more sell walls than buy walls suggests a bearish sentiment. It's important to note that the absence of buy or sell walls may indicate a lack of market activity or market uncertainty. It can also imply a period of consolidation or a lack of liquidity, which can impact trading conditions and market volatility. Buy and sell walls can serve as potential entry and exit points for trades as well. A buy wall at a specific price can be seen as an opportunity to enter a long position, while a sell wall at a particular price may indicate a suitable exit point for a short position. Conclusion Buy and sell walls represent significant limit orders placed on cryptocurrency trading platforms, offering insights into the supply and demand levels for a specific cryptocurrency. They are used by market makers, institutional investors, and individual traders to profit from price movements or accumulate/liquidate substantial amounts of a cryptocurrency. Understanding buy and sell walls is instrumental in making informed buying and selling decisions, as they display supply and demand levels and provide insights into market sentiment, which can serve as a reliable predictor of market trends. Analysing the impact of buy and sell walls on the market can help traders develop effective trading strategies, identify potential opportunities, determine entry and exit points, and assess market sentiment accurately. By mastering the concept of buy and sell walls, traders can enhance their ability to navigate the cryptocurrency market with greater precision and confidence. We put a lot of effort into researching and writing this piece, and we would love to hear your thoughts and feedback. Have you found the information in the article helpful and informative? Did it provide you with valuable insights into understanding market sentiment and trading strategies? Is there anything you would like to expand upon or clarify further? Your feedback is greatly appreciated and will help us improve future articles. Thank you in advance for taking the time to read and share your thoughts. Happy trading! @Vestinda
Education
by Vestinda
GOLD vs CRYPTOAre you an investor looking to make the best of your money? If so, you may be wondering if gold or cryptocurrency is the right investment for you. In this article, we will take a look at both gold and cryptocurrency and compare their pros and cons for investing. We will begin by defining and characterizing each asset, followed by examining the reasons to invest in them. Finally, we will provide a comparison of the pros and cons of investing in gold versus cryptocurrency, helping readers make an informed decision on which asset to invest in. So let’s get started! Definition and Characteristics of GOLD Gold is a precious metal with a yellow hue that is used for jewelry and coins. Its chemical element is Au (Aurum), and has an atomic number of 79. Gold is a soft metal, with a melting point of 1064.43 degrees Celsius, making it relatively easy to work with when crafting into jewelry or coins. It also has the distinct advantage of being chemically inert, meaning it resists corrosion and tarnishing over time, which allows it to retain its original beauty even after years of use. The price of gold can be influenced by many factors, such as supply and demand in the market, as well as geopolitical events. For example, when there are wars or political unrest in certain regions of the world, investors tend to flock to gold as a safe haven asset which drives up the price due to high demand. Conversely, when markets are stable and economies are doing well, investors may prefer other assets such as stocks or bonds since they provide higher returns than gold does during these times. Furthermore, changes in technology can influence the price of gold; if there is an advancement that makes extracting gold easier or more efficient then this may result in lower prices for consumers due to increased supply. In conclusion, gold has stood the test of time as one of the most valuable commodities on earth thanks to its characteristics such as its yellow hue, softness and resistance against corrosion and tarnishing. Additionally, its price can be influenced by various factors such as supply and demand in the market or geopolitical events. Investors should take all these factors into consideration before deciding whether or not to invest in gold. Reasons to Invest in GOLD Gold has been a reliable source of currency and value for centuries, making it a desirable option for those interested in diversifying their portfolios and protecting their wealth. With its intrinsically high liquidity, gold is also an excellent safe-haven asset that can provide stability in times of economic or political unrest. Additionally, gold often does well during periods of high inflation, providing investors with the means to safeguard themselves from financial losses in volatile markets. Moreover, gold offers diversification benefits due to its low correlation with other assets such as stocks and bonds. This allows investors to spread out their risk across different types of investments while still maintaining strong returns on investments. The convenience to buy and sell gold quickly makes it an attractive asset for those seeking rapid access to cash without having to divest from other holdings first. Furthermore, gold's accessibility makes it suitable for all kinds of investors regardless of budget size or experience level. There are many ways one can invest in gold including physical bullion coins, ETFs (exchange traded funds), or even owning stock in companies involved with mining or processing precious metals such as gold and silver. All these factors make investing in gold a viable choice for anyone looking for long-term portfolio growth and protection against market volatility. Definition and Characteristics of CRYPTO Cryptocurrency is a digital or virtual currency that is secured by cryptography, making it nearly impossible to counterfeit or double-spend. It uses decentralized control, with no central authority or government controlling it. Cryptocurrency transactions are secure and anonymous, making them attractive to investors who value privacy. The most popular cryptocurrency is Bitcoin, created in 2009. Other cryptocurrencies use blockchain technology and are often referred to as altcoins. Blockchain technology provides a secure and transparent way of storing transaction records which cannot be modified or tampered with. Transactions are also processed quickly and securely due to the distributed ledger system used by many cryptocurrencies. Cryptocurrencies have several unique characteristics that make them an attractive choice for investors. They are highly liquid assets as they can be bought, sold, and exchanged for other currencies at any time of day. They also have low transaction costs compared to traditional payment methods such as credit cards and bank transfers. Additionally, since cryptocurrencies are not tied to any country’s economic conditions or policies, they provide greater stability than fiat currencies can offer in times of economic unrest or political turmoil. However, there are some drawbacks associated with investing in cryptocurrencies that should be taken into account before investing in them. Cryptocurrencies are highly volatile assets due to their speculative nature; prices can rise and fall sharply at any time without warning as traders attempt to profit from short-term price movements rather than long-term trends. Additionally, cryptocurrency exchanges do not offer the same level of consumer protection as traditional financial institutions; if you invest in a cryptocurrency exchange you should ensure it has sufficient security measures in place before entrusting it with your money. Finally, because of their pseudonymous nature – meaning users’ identities remain anonymous – cryptocurrencies can be used for illegal activities such as money laundering which could put off potential investors from entering the market altogether. Reasons to Invest in CRYPTO Cryptocurrency has become an increasingly sought-after investment option due to its unique properties. Decentralization of the network allows users complete control over their funds and transactions, making it more secure than traditional methods. Low transaction costs and fast processing times give cryptocurrencies an edge in terms of efficiency compared with other payments systems. By investing in crypto, investors can diversify their portfolios and reduce the risk of market volatility associated with physical commodities like gold or silver. Moreover, depending on timing and individual decisions, cryptocurrency can offer high returns; many digital coins have seen huge gains due to their limited availability and strong demand. Finally, there is potential for impressive capital appreciation in cryptocurrency due to its global acceptance and capacity for growth. Open markets around the world make price movements accessible at any given time - allowing savvy traders to capture profits from various markets if managed correctly. As a relatively new form of investment asset, those who choose to invest early are presented with greater opportunity for growth compared to other options available. In summary, investing in cryptocurrency provides investors with a range of advantages that could lead to long-term portfolio growth or protection against inflationary risks. As such, it is important that all prospective investors conduct thorough research before committing funds into this asset class as there are both risks and rewards involved in this type of investment. Comparative Pros and Cons of Investing in GOLD vs CRYPTO Weighing up the pros and cons of investing in gold or cryptocurrency is a key factor to consider when it comes to making an informed decision on which asset type would best suit one's individual needs. Gold has traditionally been seen as a reliable source of currency and value, offering stability during times of economic or political unrest. Additionally, gold provides diversification benefits due to its low correlation with other assets while also having high liquidity and accessibility for all types of investors. Conversely, crypto investments have become increasingly popular due to their unique properties such as decentralization of the network, low transaction costs, fast processing times, and potential for high returns. Investing in cryptocurrency can help diversify portfolios and reduce risk associated with market volatility; furthermore, crypto is not affected by inflationary pressures like gold is. However, it's important to be aware that both gold and cryptocurrency have their own set of drawbacks that should be factored into any investment decision. For example, gold prices are more volatile than cryptocurrencies but also more stable over long periods of time; additionally, gold has higher liquidity than crypto meaning it’s easier to liquidate investments quickly if needed. Ultimately investors should conduct thorough research into both asset types before deciding which will best meet their own personal goals when investing money. By being aware of the advantages and disadvantages outlined here they will be able to make an educated choice when selecting either gold or cryptocurrency as part of their portfolio. Traders, if you liked this idea or if you have your own opinion about it, write in the comments. I will be glad 👩‍💻
OANDA:XAUUSDEducation
by Lingrid
6
May the Fourth Be With You - And your Stop losses!Star Wars has been around since 1977 which was written and directed by George Lucas. During that time, there have been phenomenal quotes, lessons and adventures that have been shared. Instead of telling you different lessons Star Wars can teach you about trading. How about I share some quotes and how you can apply them? Here are the ones I find are the most applicable. #1: "I find your lack of faith disturbing." Use this as a reminder to stay confident in your trades, even when the market is unpredictable. Have faith in your strategy. Have faith in your commitment. Have faith in your strong mindset. #2: "Your focus determines your reality." Stay focused on your trading goals and strategy. It’s not about what others see. It’s not about what others feel. It’s about you in your own work station, planning, preparing and executing accordingly. #3: "Do or do not, there is no try." Commit fully to your trades, rather than hesitating or second-guessing. When it’s lined up, ACTION. When you see a trade setups, write them down and prepare for execution. Don’t try… DO! #4: "Fear is the path to the dark side." Stay level-headed and not let fear or panic drive your trading decisions. Fear doesn’t exist. Only danger does. We are fearful most times in our head when there is no apparent danger. Remember this when you feel fear. #5: "In my experience, there's no such thing as luck." Successful trading is based on skill, probabilities and strategy, not luck. #"6: The Force will be with you, always." Here’s a reminder that your skills and strategy will guide you through both good and bad trading times. In this case the force is your proven strategy, your will, your commitment and your strong mind. #7: "You must unlearn what you have learned." Be open-minded and flexible when it comes to adapting your trading strategy. We learn as sheeple to buy low sell high. While I have gone against the idea and instead BUY HIGH, SELL HIGHER. Also, when everyone buys, is normally where the Smart Money offloads theirs. And when retail dumb money sells, that’s where Smart money BUYS. Did you find these useful? Which one resonated the most with you?
Editors' picks
TVC:SA40Education
by Timonrosso
13
Q. Why when the FED raises interest rates does the rand weaken?A. Whenever you think about a country raising interest rates, we need to consider what happens to investors and where they are more likely to deposit their money. So, as we are expecting an increase in interest rates this month from the FED, there are a few reasons why we can expect the rand to weaken further: Here are three to consider… Reason #1: Investors flock to the US Dollar When the US Federal Reserve raises interest rates, it becomes more attractive for investors to hold or buy US-dollar denominated assets. That’s because they know they’ll receive a higher rate when they invest in it. This will also lead to a rise in the US dollar and a drop in smaller currencies (like the rand). Reason #2: US Dollar is still the fat cat of reserve currencies A rise in US interest rates may lead to higher borrowing costs globally. This is because the US dollar is still the world's primary reserve currency. When we think of gold, Bitcoin and other precious metals, we think of how it’s priced in US dollars. The problem with this, is that emerging market countries, like South Africa, will face higher debt-servicing costs as the US interest rates continue to move up. And this could continue to put pressure on their economies which will lead to a depreciation in the rand. Reason #3: South Africa is still a big exporter Also, South Africa remains one of the major exporters of commodities. And the value of the rand is linked to fluctuations in commodity prices. So, when US interest rates rise, this leads to a stronger US dollar. And can cause commodity prices to drop (as they are generally priced in US dollars). As South Africa is a major commodity exporter, the lower commodity prices would have a negative impact in SA’s export revenue – which can in turn weaken the rand further.
Education
by Timonrosso
1
Trading M's and W's in Forex: A Powerful StrategyTrading M's and W's in Forex: A Powerful Strategy Trading M's and W's is a popular strategy among Forex traders, and for good reason. It is a powerful tool for identifying potential trend reversals and can be used in any market condition. The M and W patterns are formed when price action creates a series of higher highs and higher lows or lower lows and lower highs, respectively. These patterns resemble the letters "M" and "W" when plotted on a chart. To trade these patterns, traders look for a break above or below the pattern's central point. If the price breaks above the central point of an "M" pattern, it is a signal to go long, while a break below the central point of a "W" pattern signals a short position. Traders can also use the M and W patterns in conjunction with other technical analysis tools, such as support and resistance levels, moving averages, and oscillators, to increase their chances of success. However, it is important to note that not all M and W patterns lead to trend reversals, and traders should exercise caution and use proper risk management techniques when implementing this strategy. In conclusion, trading M's and W's is a powerful strategy that can help Forex traders identify potential trend reversals and profit from market movements. By combining this strategy with other technical analysis tools and proper risk management, traders can increase their chances of success in the Forex market.
Education
by glorias3972
The Foundations of Real Estate InvestingIntroduction Real estate investing has long been an attractive method of wealth creation for both individual and institutional investors. The allure of real estate as an investment vehicle stems from its ability to generate stable cash flow, provide tax benefits, and appreciate in value over time. As such, understanding the basics of real estate investing is essential for those interested in building a robust, diversified investment portfolio. This article aims to provide an overview of the fundamental concepts and strategies associated with real estate investing, focusing on the various types of investments, sources of funding, and risk management techniques. Types of Real Estate Investments Residential Properties: These investments primarily include single-family homes, townhouses, condominiums, and multi-family properties. The primary source of income from residential properties is rent, which can offer a stable, long-term cash flow. Commercial Properties: Commercial real estate encompasses a wide range of property types, such as office buildings, retail spaces, and warehouses. These investments typically involve longer lease terms, which can provide more consistent income and reduced vacancy risk. Industrial Properties: This category consists of manufacturing facilities, distribution centers, and storage facilities. Industrial properties are characterized by their potential for higher yields and lower tenant turnover compared to other asset types. Land: Investing in land involves purchasing undeveloped or underdeveloped property with the intention of holding or developing it for future profit. This strategy can be risky but offers substantial appreciation potential. Sources of Funding Personal Savings: Many real estate investors begin by utilizing their personal savings to fund their first investment. This strategy allows for greater control and flexibility, though it may limit the investor's ability to diversify their portfolio. Bank Loans: Traditional bank loans are a common source of financing for real estate investors. These loans are typically secured by the property itself, and their terms and interest rates vary based on the borrower's creditworthiness and the property's potential for generating income. Private Lenders: Private lenders, such as hard money lenders or individuals, can provide short-term financing for real estate investments. These loans often have higher interest rates and fees but can offer faster approval and funding than traditional bank loans. Real Estate Crowdfunding: Crowdfunding platforms allow investors to pool their resources to invest in real estate projects. This method can provide access to a diverse range of investment opportunities and enables investors to participate in deals that may have been out of reach individually. Risk Management Techniques Diversification: Spreading investments across different property types, geographic locations, and tenant industries can help mitigate risks associated with market fluctuations, economic downturns, and property-specific issues. Thorough Property Analysis: Conducting a comprehensive assessment of a property's location, condition, and potential for generating income is crucial for managing risks and making informed investment decisions. Leverage Management: While leverage can amplify returns, it can also increase risk. Investors should carefully assess their ability to handle debt and maintain a sustainable debt-to-equity ratio to minimize the risk of default. Exit Strategies: Having a clear exit strategy in place, such as selling the property, refinancing, or converting it to a different use, can help investors protect their investment and maximize returns. Conclusion Understanding the basics of real estate investing is vital for those seeking to participate in this potentially lucrative market. By familiarizing oneself with the various types of investments, sources of funding, and risk management techniques, investors can make more informed decisions and position themselves for success. As with any investment, conducting thorough research and seeking professional advice is essential for maximizing returns and minimizing risks. As real estate markets continue to evolve, investors must remain adaptable and flexible to capitalize on new opportunities and navigate challenges. If you like our content, please feel free to support our page with a like, comment & subscribe for future educational ideas and trading setups.
CBOE:SIXREEducation
by financialflagship
RISK less with Drawdowns and more with Winning StreaksA drawdown is a period of decline in the value of a portfolio. This is where you take a number of trades, and the losses drop the portfolio at a marginal level (if you know what you’re doing). During these times, the market is typically more volatile (jumpy) and unpredictable. And so you have a higher chance to risk money in unfavourable times. Risk less with drawdowns When your portfolio drops 6%, 8% or even 11% – This is where you’re not sure when the market will become more favourable. This is the time where you decide to risk less money per trade. You would drop the risk from 3%, 2% to 1.5% or even 1%. Then keep trading until the markets pick up and start to favour your portfolio… Once you’re out of the drawdown then… Risk more money with the winning streak During the winning streaks, the market is typically more stable and predictable, and the chances of making a profit are higher. You can then pump up the risk back to 2% or 3% (if you’re a risky biscuit). When do you do this? When your portfolio is either BACK to an all-time-high. Or when you can see the market has broken out of the sideways consolidation and volatile period. Risk management is an important aspect of successful investing, and adjusting the amount of money being invested based on market conditions is one strategy that can help investors achieve their financial goals. By risking less money during drawdowns and more money during winning streaks, you as the trader can lower your potential losses and maximize your potential gains.
TVC:SA40Education
by Timonrosso
CONFLUENCE IN TRADINGHave you ever wondered what confluence in trading is? How can you combine several elements into one to increase your chances of making significant profits? Regardless of what type of trader you are or what your trading goals are, a confluence is always a great choice for many reasons, which we will discuss below in this post. A definition of confluence in trading is the combination of more than one trading technique or analysis to increase the chances of winning a trade when you use multiple trading indicators that give the same "signal" as the best way to confirm the validity of a likely buy or sell signal. This applies to any situation where you see multiple trading signals lining up on a chart and signaling you to take a trade. ✳️ WHEN DOES THIS HAPPEN? It occurs when several technical analysis methods give the same trading signal. Often, these are technical indicators. They can also, however, be combined with the following things: Price action Chart patterns Indicators or oscillators ✳️ A BRIEF EXAMPLE OF CONFLUENCE IN TRADING Suppose you use one technical analysis tool that provides 40% accuracy in predicting the correct price movement. In addition, you use a second, correlating technical analysis tool to better filter your decision. In this way, you increase your chances of making a profit. In this way, you use the concept of synthesis to find a trading setup using multiple technical analysis methods. Keep in mind that all of these analyses signal the same price direction. This can occur when support and resistance levels are closely related to expansion levels and Fibonacci retracements. The following things can also act as areas of interest: Dynamic support and resistance levels such as Moving average Bollinger bands Previous highs and lows Psychological levels When these levels follow each other, they form more significant resistance and support levels. All of these can be used as take profit levels or entry points. ✳️ FOUR METHODS OF PRICE ACTION FOR TRADING The main four levels or areas in which a confluence can occur are as follows: Resistance levels Support levels Fibonacci levels Trend Lines In short, price action confluence trading is a technical analysis method for observing. To trade on price action, it is important to have the ability to detect price "confluence" as soon as resistance levels, support levels, trend lines, Fibonacci lines, etc. bring the price to a confluence point. So, what are some of the most effective confluence trading strategies that every trader should know about? ✳️ BASIC STRATEGIES FOR CONFLUENCE Here are some of the most valuable confluence strategies in trading that you can consider for your trading goals and objectives: ▶️ Market Structure (Support and Resistance) Market structure is a collective reference to support and resistance. These areas in the market act as walls, especially ceilings and floors, that try to prevent price swings up and down. ▶️ Areas of supply and demand Supply and demand areas are another useful example of trading. They represent a more prominent form of resistance and support and act as a solid barrier to price. In most cases, these are reversals or complete trend reversals. ▶️ Direction of the primary trend One of the most favorable variables for this type of trade is the direction of the main trend. ▶️ Price action patterns If you, as a Forex trader, know the different price action patterns, this will allow you to predict and assess the trend reversal. Keep in mind that this is a crucial variable in the confluence list in trading. ▶️ Candlestick Patterns When it comes to candlestick patterns, it is important to understand that they are important as patterns of price action or even more. If you understand what price is doing and the fundamental philosophy behind the various candlesticks, you can gain an advantage over the market. Thus, this is one of the basic methods of the confluence trading strategy. ▶️ Trend Lines The trend line and moving averages are also defined as "market structure." The reason for adding market structures to the list is the same as for adding trend lines and/or moving averages. Remember, the main reason for all of this is the underlying market structures, which are horizontal. However, they can also be diagonal in the form of a trend line or dynamic in the form of a moving average. ▶️ Price reversal zones with Fibonacci retracement Fibonacci retracement zones represent the most important confluence of trading variables that traders should consider, especially when the trading structure has 61.8%, 50%, and 38.2% levels. ▶️ Price rejection A price rejection indicates that the market is having difficulty breaking through one particular structure. In this case, the price is likely to rebound from the structure, while all price rejection candlesticks come in different shapes. ▶️ Indicators Nevertheless, the list of confluence trading strategies is complemented by forex indicators, which are generalized graphical representations of past candle data. Traders mostly use these indicators to help themselves understand exactly what the market is doing. ✳️ How can you use confluence to place a good trade in forex? Suppose you use price patterns formed by candles on your chart, and then you see a pattern that is a buy signal. You may have found that pattern confirmation and confluence may help you be right 70% of the time. Also, if you have tested and found that Fibonacci retracement levels can help you in the right context, you can expect the following. If your price pattern signals to buy and coincides with a Fibonacci level, this is a great example of an "A" trade. All you can see are price patterns. You only overlay an indicator when you want to check for the right context around a price pattern. If you notice that the pullback level confluences with the pivot point you have been following, keep in mind that this is another form of confluence and that there are numerous other examples of confluences that result in great forex trades. ✳️ Some examples: USD/CHF 1H AUD/JPY 4H UKOIL D NZD/JPY 4H GBP/AUD 4H EUR/NZD 4H
Education
by DeGRAM
6
My secret to being a profitable Swing Trader: The TPIA Quick Reminder! It's important to have a good list of alt coins with good fundamentals, when you want to pivot over to hold altcoins like I show here! The Trend Probability Indicator (TPI) is a powerful tool utilized in modern portfolio theory to assess whether a market is experiencing a bullish or bearish trend. By integrating multiple systems, including machine learning algorithms, the TPI provides valuable insights into market conditions and helps investors make informed decisions. The TPI integrates eight systems, including a machine learning algorithm based on a kernel regression model. It analyzes market trends and determines the overall market structure (bullish, bearish, or neutral). The TPI value ranges from -1 to +1, with -0.2 to +0.2 indicating a neutral or ranging market. Positive TPI values indicate bullishness, negative values suggest bearishness. The TPI incorporates machine learning to predict future market movements. Investors can use the TPI to evaluate trend probability and make informed portfolio decisions. By using the TPI to compare the strength of cryptocurrency pairs, investors can gain valuable insights to make strategic investment decisions and optimize their portfolio performance while managing risk effectively. It gives you these additional super-powers to scan the market: The TPI helps gauge the relative strength between two cryptocurrencies, indicating which one has a stronger bullish or bearish trend. By comparing the TPI values of different cryptocurrency pairs, investors can identify favorable trading opportunities where one crypto is likely to outperform the other. Based on the TPI analysis, investors can allocate their portfolio in a way that maximizes returns by favoring the crypto with a stronger trend while minimizing risk. Timing Entry and Exit Points: The TPI assists in determining optimal entry and exit points for trading a particular crypto pair, improving the timing of transactions and potentially enhancing profitability. By considering the TPI values of different crypto pairs, investors can make more informed decisions regarding risk management, such as adjusting position sizes or diversifying holdings. The Based Algo The Based Algo is a mean-reversion tool that uses funding, adaptive moving average lines and funding + volume to detect tops and bottoms. Let me know if you have any questions! I linked a video that explains how we allocate between BINANCE:BTCUSDT and $BINANCE:ETHUSDT. Give it a look!
Education
by IkkeOmar
10
How to SPOT a TRENDTrend trading strategies are very valuable as a trader. The term the trend is your friend is fitting when trading stocks. Knowing how to identify the trend is very important because it gives important clues for entries and exits when trading. "Whatever method you use to enter trades, the most critical thing is that if there is a major trend, your approach should assure that you get in that trend." -Richard Dennis. “Fundamentals that you read about are typically useless as the market has already discounted the price, and I call them “funny-mentals”. I am primarily a trend trader with touches of hunches based on about twenty years of experience. In order of importance to me are: (1) the long-term trend, (2) the current chart pattern, and (3) picking a good spot to buy or sell. Those are the three primary components of my trading. Way down in a very distant fourth place are my fundamental ideas and, quite likely, on balance, they have cost me money.” – Ed Seykota “I’ve learned many things from him , but perhaps the most significant is that it’s not whether you’re right or wrong that’s important, but how much money you make when you’re right and how much you lose when you’re wrong.” – Stanley Druckenmiller “I just wait until there is money lying in the corner, and all I have to do is go over there and pick it up. I do nothing in the meantime. Even people who lose money in the market say, “I just lost my money, now I have to do something to make it back.” No, you don’t. You should sit there until you find something.” – Jim Rogers “Play the market only when all factors are in your favor. No person can play the market all the time and win. There are times when you should be completely out of the market, for emotional as well as economic reasons.” – Jesse Livermore “Whenever I enter a position, I have a predetermined stop. That is the only way I can sleep. I know where I’m getting out before I get in. The position size on a trade is determined by the stop, and the stop is determined on a technical basis.” – Bruce Kovner "Amateurs think about how much money they can make. Professionals think about how much money they could lose." –Jack Schwager. "The price of a commodity will never go to zero. When you invest in commodities futures, you are not buying a piece of paper that says you own an intangible of the company that can go bankrupt." –Jim Rogers. "It's not always easy to do what's not popular, but that's where you make your money. Buy stocks that look bad to less careful investors and hang on until their real value is recognized." -John Neff. "We don't care about 'why'. Real traders only have the time and interest to care about 'what' and 'when' and 'if' and 'then'. 'Why' is for pretenders." -JC Parets. "You only have to do very few things right in your life so long as you don't do too many things wrong." -Warren Buffett. "The goal of a successful trader is to make the best trades. Money is secondary." -Alexander Elder. "Do not anticipate and move without market confirmation—being a little late in your trade is your insurance that you are right or wrong."
CAPITALCOM:OIL_CRUDEEducation
by DaveBrascoFX
Advantages of Trading with Prop FirmsProprietary (prop) trading firms offer traders the opportunity to trade with the firm's capital, rather than their own, in exchange for a share of the profits. Here are some of the advantages and benefits of trading a prop fund account: Access to More Capital: Prop trading firms typically provide traders with access to significantly more capital than they would have if they were trading with their own funds. This allows traders to take larger positions and potentially earn greater profits. Lower Costs: Prop firms often provide their traders with access to discounted commissions, lower borrowing costs, and other benefits that can help reduce trading costs. Training and Support: Many prop trading firms offer training and support to their traders, which can be especially beneficial for those who are new to trading or who want to improve their skills. Shared Risk: Because prop trading firms are providing the capital, they share in the risk of the trades. This can be beneficial for traders who want to take larger positions but don't want to risk losing all of their own capital. Performance-Based Compensation: Prop firms typically offer traders performance-based compensation, meaning that traders are only paid a portion of the profits they generate. This incentivizes traders to focus on making profitable trades and can help align their interests with those of the firm. Overall, trading a prop fund account can offer traders access to more capital, lower costs, training and support, shared risk, and performance-based compensation. To find out about my favourite prop firms, comment below
COINBASE:BTCUSDEducation
by opes_trading_group
8
10 Rules for successful tradingHere are 10 rules for successful trading: 1.Develop a Trading Plan - A trading plan should outline your objectives, risk management strategy, and trading approach. It should be tailored to your individual goals and risk tolerance. 2.Manage Your Risk - Risk management should be a key component of your trading plan. Always use stop-loss orders and never risk more than you can afford to lose. 3.Stay Disciplined - Stick to your trading plan and avoid emotional trading decisions. Don't let fear, greed, or ego influence your trades. 4. Practice Patience - Successful traders know that patience is key. Wait for high-probability trading opportunities and avoid chasing trades. 5.Use Technical Analysis - Use technical analysis tools to help identify potential entry and exit points. This includes chart patterns, indicators, and trend analysis. 6.Keep Up With Market News - Stay up-to-date on economic and political news that may impact your trades. This will help you anticipate potential market moves. 7. Manage Your Emotions - Avoid getting caught up in the emotions of trading. Practice self-control and avoid impulsive decisions. 8.Maintain a Trading Journal - Keep a record of your trades and analyze your performance. This will help you identify areas for improvement and refine your trading strategy. 9.Learn from Your Mistakes - Mistakes are a natural part of trading. Use them as an opportunity to learn and grow as a trader. 10.Continuously Educate Yourself - The markets are constantly evolving, so it's important to stay up-to-date on trading techniques and strategies. Attend seminars, read trading books, and follow industry experts. Following these rules can help increase your chances of success as a trader. Remember that trading is a learning process and requires patience, discipline, and continuous education.
UEducation
by glorias3972
The Laws of cryopto markets.Law #1 All markets are inherently Fractal. Markets have many patterns. Fractals are similar in different instruments, different timeframes, and even in different time periods. Whether you look at a monthly chart or a 1-minute chart, the same principles and patterns work everywhere. If you remove the ticker or symbol of an asset and the time frame from the chart, you will hardly be able to determine the chart of which instrument you are analyzing. All markets move according to the "Russian Matryoshka" principle: balances within balances, ranges within ranges, transitions from one pattern to another. Law #2. At a certain point in time, markets are either in balance or moving in a trend. Markets can only be in one of these two states. So what is balance, or as I sometimes call it, range? Financial Markets have long been designed to create a "bargain." In a balance sheet, buyers and sellers determine some kind of value for a commodity or trading instrument. It is in the balance that buyers and sellers come to a common denominator or agree on the valuation of the commodity they are trading. In a trend, on the contrary, both buyers and sellers disagree on the price and move away from the previously agreed value of the commodity. The reason for this can be anything: supply and demand, news background, some rumors, fundamental changes or whatever. Something has caused the price to get out of a certain balance. The value of the goods has changed, and if it has risen, it means that the buyers have become much more aggressive than the sellers, or vice versa. More aggressive means that buyers, for whatever reason, are willing to pay more than sellers offer. These "transactions" and aggressive transitions move the world markets until both buyers and sellers agree on the value of the commodity again. Then the "flat"/balance starts again, then the trend, and then the stop and balance again. It is very important to understand that getting out of a Grand Balance creates a big trend. Understanding this can bring you either big profits or big losses if you start trading against such a trend. Trends and balances move in the dynamics of the markets and the matryoshka structure. This is what creates the context of the market. Law #3. Price moves in a series of impulses and corrections. It never flies up in a rocket (except for dumps on crypto or low-liquid assets), and it never rocks down (dumps on crypto). The move starts with a directional move and then stops at a point called a swing high on an upward momentum. After that, the price begins to move in the opposite direction. This is called a correction or "balancing" if price corrects against the trend. Often price also corrects over time or horizontally when the momentum "cools down," creating a horizontal balance or rerun, but not giving any correction to keep traders out of the trap Even if sometimes it seems that on a large timeframe price is moving in a straight line upward, when you approach the 15-minute timeframe, you can see that price is going impulses and corrections. Law #4. Price takes all information into account effectively, but not perfectly. This "law" is one of the most controversial in trading, and the least understood. As a rule, market participants cannot find a common denominator in explanation of this rule. On the one hand there are supporters of the hypothesis of the market rationality, according to which the price instantly includes all information, news and rumors. They say that the price instantly reflects everything that is happening in the world from details to global fundamental changes. But if it were true, then it would be impossible to be a profitable trader in the market. From my experience I am willing to argue with this, and there are so many traders who are making huge money in the market contrary to the rationality of the markets. In reality, markets are actually rational, price does include all information very quickly, but market participants are quite far from being rational. Very often the emotional characteristics of market participants cause the price to move too high or too low in the trend direction contrary to the real price of a particular asset. Greed and fear (FOMO-fear of missing out) can often be to blame. Of course, sooner or later the price of the asset will come back to its real value, but the fact is that markets are not entirely rational. That is sometimes the best opportunity to raise good money in a trade against the "crowd."
BITSTAMP:BTCUSDEducation
by Artem_Dishel
7
Price/Earnings: amazing interpretation #2In my previous post , we started to analyze the most popular financial ratio in the world – Price / Earnings or P/E (particularly one of the options for interpreting it). I said that P/E can be defined as the amount of money that must be paid once in order to receive 1 monetary unit of diluted net income per year. For American companies, it will be in US dollars, for Indian companies it will be in rupees, etc. In this post, I would like to analyze another interpretation of this financial ratio, which will allow you to look at P/E differently. To do this, let's look at the formula for calculating P/E again: P/E = Capitalization / Diluted earnings Now let's add some refinements to the formula: P/E = Current capitalization / Diluted earnings for the last year (*) (*) In my case, by year I mean the last 12 months. Next, let's see what the Current capitalization and Diluted earnings for the last year are expressed in, for example, in an American company: - Current capitalization is in $; - Diluted earnings for the last year are in $/year. As a result, we can write the following formula: P/E = Current capitalization / Diluted earnings for the last year = $ / $ / year = N years (*) (*) According to the basic rules of math, $ will be reduced by $, and we will be left with only the number of years. It's very unusual, isn't it? It turns out that P/E can also be the number of years! Yes, indeed, we can say that P/E is the number of years that a shareholder (investor) will need to wait in order to recoup their investments at the current price from the earnings flow, provided that the level of profit does not change . Of course, the condition of an unchangeable level of profit is very unrealistic. It is rare to find a company that shows the same profit from year to year. Nevertheless, we have nothing more real than the current capitalization of the company and its latest profit. Everything else is just predictions and probable estimates. It is also important to understand that during the purchase of shares, the investor fixates one of the P/E components - the price (P). Therefore, they only need to keep an eye on the earnings (E) and calculate their own P/E without paying attention to the current capitalization. If the level of earnings increases since the purchase of shares, the investor's personal P/E will decrease, and, consequently, the number of years to wait for recoupment. Another thing is when the earnings level, on the contrary, decreases – then an investor will face an increase in their P/E level and, consequently, an increase in the payback period of their own investments. In this case, of course, you have to think about the prospects of such an investment. You can also argue that not all 100% of earnings are spent paying dividends, and therefore you can’t use the level of earnings to calculate the payback period of an investment. Yes, indeed: it is rare for a company to give all of its earnings to dividends. However, the lack of a proper dividend level is not a reason to change anything in the formula or this interpretation at all, because retained earnings are the main fundamental driver of a company's capitalization growth. And whatever the investor misses out on in terms of dividends, they can get it in the form of an increase in the value of the shares they bought. Now, let's discuss how to interpret the obtained P/E value. Intuitively, the lower it is, the better. For example, if an investor bought shares at P/E = 100, it means that they will have to wait 100 years for their investment to pay off. That seems like a risky investment, doesn't it? Of course, one can hope for future earnings growth and, consequently, for a decrease in their personal P/E value. But what if it doesn’t happen? Let me give you an example. For instance, you have bought a country house, and so now you have to get to work via country roads. You have an inexpensive off-road vehicle to do this task. It does its job well and takes you to work via a road that has nothing but potholes. Thus, you get the necessary positive effect this inexpensive thing provides. However, later you learn that they will build a high-speed highway in place of the rural road. And that is exactly what you have dreamed of! After hearing the news, you buy a Ferrari. Now, you will be able to get to work in 5 minutes instead of 30 minutes (and in such a nice car!) However, you have to leave your new sports car in the yard to wait until the road is built. A month later, the news came out that, due to the structure of the road, the highway would be built in a completely different location. A year later your off-road vehicle breaks down. Oh well, now you have to get into your Ferrari and swerve around the potholes. It is not hard to guess what is going to happen to your expensive car after a while. This way, your high expectations for the future road project turned out to be a disaster for your investment in the expensive car. It works the same way with stock investments. If you only consider the company's future earnings forecast, you run the risk of being left alone with just the forecast instead of the earnings. Thus, P/E can serve as a measure of your risk. The higher the P/E value at the time you buy a stock, the more risk you take. But what is the acceptable level of P/E ? Oddly enough, I think the answer to this question depends on your age. When you are just beginning your journey, life gives you an absolutely priceless resource, known as time. You can try, take risks, make mistakes, and then try again. That's what children do as they explore the world around them. Or when young people try out different jobs to find exactly what they like. You can use your time in the stock market in the same manner - by looking at companies with a P/E that suits your age. The younger you are, the higher P/E level you can afford when selecting companies. Conversely, in my opinion, the older you are, the lower P/E level you can afford. To put it simply, you just don’t have as much time to wait for a return on your investment. So, my point is, the stock market perception of a 20-year-old investor should differ from the perception of a 50-year-old investor. If the former can afford to invest with a high payback period, it may be too risky for the latter. Now let's try to translate this reasoning into a specific algorithm. First, let's see how many companies we are able to find in different P/E ranges. As an example, let's take the companies that are traded on the NYSE (April 2023). As you can see from the table, the larger the P/E range, the more companies we can consider. The investor's task comes down to figuring out what P/E range is relevant to them in their current age. To do this, we need data on life expectancy in different countries. As an example, let's take the World Bank Group's 2020 data for several countries: Japan, India, China, Russia, Germany, Spain, the United States, and Brazil. To understand which range of P/E values to choose, you need to subtract your current age from your life expectancy: Life Expectancy - Your Current Age I recommend focusing on the country where you expect to live most of your life. Thus, for a 25-year-old male from the United States, the difference would be: 74,50 - 25 = 49,50 Which corresponds with a P/E range of 0 to 50. For a 60-year-old woman from Japan, the difference would be: 87,74 - 60 = 27,74 Which corresponds with a P/E range of 0 to 30. For a 70-year-old man from Russia, the difference would be: 66,49 - 70 = -3,51 In the case of a negative difference, the P/E range of 0 to 10 should be used. It doesn’t matter which country's stocks you invest in if you expect to live most of your life in Japan, Russia, or the United States. P/E indicates time, and time flows the same for any company and for you. So, this algorithm will allow you to easily calculate your acceptable range of P/E values. However, I want to caution you against making investment decisions based on this ratio alone. A low P/E value does not guarantee that you are free of risks . For example, sometimes the P/E level can drop significantly due to a decline in P (capitalization) because of extraordinary events, whose impact can only be seen in a future income statement (where we would learn the actual value of E - earnings). Nevertheless, the P/E value is a good indicator of the payback period of your investment, which answers the question: when should you consider buying a company's stock? When the P/E value is in an acceptable range of values for you. But the P/E level doesn’t tell you what company to consider and what price to take. I will tell you about this in the next posts. See you soon!
NASDAQ:AMZNEducation
by Be_Capy
2
Why YOU NEED a Slice of Humble PieAs a trader, you must approach the market with humility and an understanding that you are at its mercy. And so you need to remember that the market, doesn’t know you, doesn’t care about you, and doesn’t work to reward you. Let’s break that down. The Market Doesn’t Know You The financial market (Mr. Market) is a complex and dynamic system that is influenced by a multitude of factors. These factors are beyond our control and are pretty much impossible to predict. As a trader, you need to remember that the market doesn’t know you, isn’t out to get you and that your success or failure is not a personal reflection of your worth. The Market Doesn’t Care About You It can be tempting to think that the market is out to get us and that every loss is a direct result of our own mistakes. However, the market doesn’t care about us as individual. They don’t have some personal vendetta against us. Every trade is simply a result of supply and demand dynamics along with risk, reward and probabilities. We must accept that sometimes the market will work against us, no matter how skilled or experienced we are. The Market Doesn’t Work to Reward You There is such high competition with trading. This environment is very high-pressured. It sometimes feels like we are in some race to make as much money as possible. However, it is important to remember that the market doesn’t work to reward us. As a trader, you must be humble and understand that success in the markets takes time, patience, and you must be willing to learn from your mistakes. Also need to approach each and every trade with a level-headed and open-minded perspective. Focus on this, and you you’ll make which will help us to make better decisions and increase our chances of success.
TVC:SA40Education
by Timonrosso
1
Wealth Unleashed: Wedge Pattern Power - Hidden Gem Revealed!Introduction: Are you looking to skyrocket your trading profits? Look no further! Today, we will uncover the hidden gem of trading patterns: the Wedge Pattern. This powerful tool has the potential to transform your trading strategy and help you achieve financial success. Let's dive into the world of wedge patterns and explore how you can capitalize on their power. What are Wedge Patterns? Wedge patterns are popular among traders due to their high probability of forecasting trend reversals. These patterns appear when the price of an asset consolidates between converging support and resistance lines. There are two primary types of wedge patterns: the rising wedge and the falling wedge. Rising Wedge: In an upward trend, the rising wedge is considered a bearish pattern. It forms when the price consolidates between an upward-sloping support line and an upward-sloping resistance line that are converging. As the price approaches the apex of the wedge, the upward momentum weakens, signaling a potential trend reversal to the downside. Falling Wedge: Contrary to the rising wedge, the falling wedge is a bullish pattern. It appears in a downward trend when the price consolidates between a downward-sloping support line and a downward-sloping resistance line that are converging. As the price nears the apex of the wedge, the downward momentum loses strength, indicating a possible trend reversal to the upside. Trading Strategies: To capitalize on the power of wedge patterns, follow these steps: ✅Identify the pattern: Observe the chart for converging support and resistance lines to spot a rising or falling wedge pattern. ✅Confirmation: Wait for a breakout from the wedge pattern, either above the resistance line (for falling wedges) or below the support line (for rising wedges). ✅Entry point: Open a long position after a breakout above the resistance line in a falling wedge, or a short position after a breakout below the support line in a rising wedge. ✅Stop-loss and take-profit: Set your stop-loss order below the breakout level (for falling wedges) or above the breakout level (for rising wedges). Establish your take-profit target at a level that aligns with your risk-reward ratio and trading plan. Conclusion: The wedge pattern is a hidden gem that can potentially boost your trading profits when used correctly. By mastering the art of identifying and trading wedge patterns, you can strengthen your technical analysis skills and increase your chances of success in the market. Remember, no single tool guarantees success, so always use additional technical indicators and maintain a disciplined approach to risk management. Happy trading!
Education
by Yaroslav_Krasko
CBOT Soybean Complex: An IntroductionCBOT: Soybean ( CBOT:ZS1! ), Soybean Meal ( CBOT:ZM1! ), Soybean Oil ( CBOT:ZL1! ) Today, I am starting a new series on CBOT soybeans, one of the most liquid commodities contracts in the world. In March 2023, Soybean, Soybean Meal, and Soybean Oil together traded 14.0 million lots, contributing to 42.6% of CME Group agricultural futures and options volume, and 2.0% of overall Exchange monthly volume. Soybean Market Fundamentals Soybeans are the world’s largest source of animal protein feed and the second largest source of vegetable oil. Soybeans are the most-traded agricultural commodities, comprising more than 10% of the total value of global agriculture trade. According to the World Agricultural Supply and Demand Estimates (WASDE), global soybean production for 2022/2023 crop year is 369.6 million metric tons. Let’s visualize this: If we were to distribute the entire crops to the world population evenly, each person would get approximately 46 kilograms of soybeans. The U.S., Brazil and Argentina are the largest soybean producers, accounting for 80% of the global production. The U.S. is the single largest soybean producer and exporter, harvesting 4.3 billion bushels a year and exporting 47% of it, according to the WASDE. The heart of U.S. soybean production is the Midwest. In the main part of the soybean belt, planting takes place from late April through June, with harvest beginning in late September and ending in late November. About two thirds of the total soybean crop is processed, or crushed, into soybean oil and soybean meal. The term “crush” refers to the physical process of converting soybeans into its oil and meal byproducts. The crush spread refers to the difference between the value of soybean meal and oil and the price of soybeans. It represents the gross processing margin from crushing soybeans. When a bushel of soybeans weighing 60 pounds is crushed, the typical results are: • 11 pounds of soybean oil (18%) • 44 pounds of soybean meal (73%) • 4 pounds of hulls (6%) • 1 pound of waste (2%) Soybean meal is used by feed manufacturers as a prime ingredient in high-protein animal feed for poultry and livestock. It is further processed into human foods, such as soy grits and flour, and is a key component in meat or dairy substitutes, like soymilk and tofu. After initial processing, soybean oil is further refined and used in cooking oils, margarines, mayonnaise and salad dressings and industrial chemicals. Soybean oil may also be left unprocessed and used in the production of biodiesel fuels. Exports are big business for U.S. soybean farmers. According to the data from U.S. Bureau of Economic Analysis, soybean exports totaled $6.9 billion in the first two months of 2023, contributing to 1.4% of all U.S. exports of goods and services. Soybean exports have increased dramatically since 2000 as the demand for meat and poultry grew in Europe and Asia, particularly in China. CBOT Soybeans Futures and Options Soybean futures began trading at the Chicago Board of Trade in 1932, followed by futures on its byproducts: Soybean Oil in 1946 and Soybean Meal in 1947. Soybean (ZS) futures are physically delivered contracts based on No. 2 yellow soybeans. Each contract has a notional value of 5,000 bushels, equivalent to 136 metric tons. Soybean contracts are listed for the months of Nov., Jan., Mar., May, Jul., Aug., and Sep., projecting out about 3.5 years in the future. You may have heard of the terms “New Crop” and “Old Crop”. The former refers to crops that have not been harvested. For soybeans, it’s Nov. contract (ZSX3), which coincides with the harvest season. For contract months May, Jul., Aug., and Sep. 2023, soybeans available for sales are from the previous crop year, hence the name “Old Crop”. Soybean options (OZS) have a contract unit of 1 ZS futures contract. It is deliverable by the corresponding futures contract, with the last trading day set at one month prior to futures expiration month. Soybean Meal (ZM) futures are also physically delivered contracts. Each contract has a notional value of 100 short tons, equivalent to 91 metric tons. Soybean Meal contracts are listed for the months of Jan., Mar., May., Jul., Aug., Sep., Oct., and Dec. A total of 25 contracts are listed simultaneously. Because of the use of soybean meal for animal feed, its demand is closely aligned with the livestock and poultry industry. For the export market, instead of soybean meal, buyers usually buy soybeans and process them in their home country. Soybean Meal options (OZM) have a contract unit of 1 ZM futures contract and are deliverable by the corresponding futures contract. Soybean Oil (ZL) futures are physically delivered contracts. Each contract has a notional value of 60,000 pounds, equivalent to 27.2 metric tons. Soybean Oil contracts are listed for the months of Jan., Mar., May., Jul., Aug., Sep., Oct., and Dec. A total of 27 contracts are listed simultaneously. While soybean oil is a leading ingredient for edible oil, oilseeds also include rapeseed, sunflower, sesame, groundnut, mustard, coconut, cotton seeds and palm oil. Whenever one of them becomes too expensive, food companies would substitute it with a cheaper ingredient. Hence, soybean oil price is highly correlated with the other oilseed products. Use Cases for CBOT Soybeans Contracts At every stage of the soybean production chain, from planting, growing and harvest, to exporting and processing, market participants face the risk of adverse price movements. Prices of soybean and its byproducts continuously fluctuate, largely determined by crop production cycles, weather, livestock production cycles, and ongoing shifts in global market demand. In this section, I will illustrate how producer, storer, processor and soybean user could use CBOT soybeans futures and options to hedge market risks. Soybean Farmer (Producer) When a US soybean farmer plants the crops in April, he is said to have a Long Cash position. The farmer is exposed to the risk of falling soybean price during the November harvest season. To hedge the price risk, our farmer could enter a Short Futures position now, and buy back and offset the futures when he is ready to sell the crops. Since the cash market and futures market are highly correlated, loss or gain in the cash market will be largely offset by the gain or loss in the futures market. The farmer is left with basis risk, which is adverse changes of the cash-futures spread. It is usually much smaller than the outright price risk. In the context of futures trading, notably commodities, basis refers to the difference between the spot (cash) price of a commodity and the price of a futures contract for that same commodity. Grain Elevator (Storer) After the crop is harvested, farmer or merchandiser would usually store the soybeans in a grain elevator and wait for the right time and price to sell. Soybeans could be stored for a year but would incur monthly storage costs. The decision to store depends on whether expected future price gains outweigh the storage costs. The merchandizer is exposed to the risk of falling soybean price, which would cause his soybean inventory (old crop) to decline in value. To hedge the price risks, he could establish a Short Futures position for the expected period of storage and buy it back when he is ready to sell. Oilseed Processor For soybean processing mill, crush spread represents the gross processing margin from crushing soybeans. It is exposed to the risk of rising soybean price where meal and oil prices fail to catch up. Soybeans trade in bushels, soybean meal trades in short tons and soybean oil trades in pounds. The prices of the three commodities need to be converted to a common unit for an accurate calculation. A bushel of soybeans produces about 44 pounds of soybean meal. Since Soybean Meal futures are priced per ton, multiplying the meal price by 0.022 represents the meal price per 44 pounds. That same bushel of soybeans also produces 11 pounds of soybean oil. Since Soybean Oil futures are priced per pound, multiplying the soybean oil price by 0.11 represents the oil price per 11 pounds. (www.cmegroup.com) Processor could lock in the crush margin by a crush spread trade. To ease the difficulty of constructing and executing the spread, CME Group facilitates the board crush that consists of a total of 30 contracts; 10 Soybean, 11 Soybean Meal, and 9 Soybean Oil. Livestock Farmer (User) Large-scale farms usually buy corn, soybean meal and other ingredients to produce their own feed. Farmers are exposed to the risk of rising ingredient costs. They could hedge the price risk by establishing long positions in CBOT corn and soybean meal futures. For hog farmers, gross production profit is represented by the Hog Crush Margin. It is defined by the value of lean hog (LH) less the cost of weaned pig (WP), corn (C) and soybean meal (SBM). In the futures market, traders could replicate the economic hog crush margin with a Hog Feeding Spread involving CME lean hog (HE), CBOT Corn (ZC) and CBOT Soybean Meal (ZM). There is no futures contract for weaned pig (piglet). If you expect hog margin to grow, Long the feeding spread: Buy lean hog, sell corn and soybean meal. For a shrinking margin, Short the spread: Sell hog, buy corn and meal. This concludes Part 1 of our introduction to CBOT Soybean complex. In Part 2, I plan to discuss major reports that move the soybean markets: • World Agricultural Supply and Demand Estimates (WASDE) • USDA Prospective Plantings Report • USDA Grain Stocks Report • CFTC Commitment of Traders Report Happy Trading. (To be continued) Disclaimers *Trade ideas cited above are for illustration only, as an integral part of a case study to demonstrate the fundamental concepts in risk management under the market scenarios being discussed. They shall not be construed as investment recommendations or advice. Nor are they used to promote any specific products, or services. CME Real-time Market Data help identify trading set-ups 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
Editors' picks
CBOT:ZS1!Education
by JimHuangChicago
5
Wall Street Cheat Sheet Psychology of a Market Cycle on BitcoinWall Street Cheat Sheet Psychology of a Market Cycle is a very famous one among traders and investors. While this sheet was made with the intention of Stock Market, I see it's been used much in Crypto world as well. In this chart I try to plot the respective psychological stages in the chart it self based on my interaction with local traders/investors. This is not an accurate as it's only reflects my personal view. Anyone can interpret this differently based on their social sentiment. Something additional I have added are; Line of Disbelief: This line indicates a price point where many people will have a disbelief of the price action Line of Hope: This line indicates a price point where many people will move from Disbelief to Hope Credits: wallstcheatsheet for building Hope you liked it, as always share your views and criticism.
BNC:BLXEducation
by cryptochi1986
1
MASTER THE MARKET WITH CONFIDENCE & DISCIPLINEIf you asked me to distill trading down to its simplest form, I would say that it is a pattern recognition numbers game. We use market analysis to identify the patterns, define the risk, and determine when to take profits. The trade either works or it doesn't. In any case, we go on to die next trade. It's that simple, but it's certainly not easy. In fact, trading is probably the hardest thing you'll ever attempt to be successful at. That's not because it requires intellect; quite the contrary! But because the more you think you know, the less successful you'll be. Trading is hard because you have to operate in a state of not having to know, even though your analysis may turn out at times to be "perfectly" correct. To operate in a state of not having to know, you have to properly manage your expectations. To properly manage your expectations, you must realign your mental environment so that you believe without a shadow of a doubt in the five fundamental truths. Today, I am going to give you a trading exercise that will integrate these truths about the market at a functional level in your mental environment. In the process, I'll take you through the three stages of development of a trader. The first stage is the mechanical stage. In this stage, you: 1. Build the self-trust necessary to operate in an unlimited environment. 2. Learn to flawlessly execute a trading system. 3. Train your mind to think in probabilities (the five fundamental truths). 4. Create a strong, unshakeable belief in your consistency as a trader Once you have completed this first stage, you can then advance to the subjective stage of trading. In this stage, you use anything you have ever learned about the nature of market movement to do whatever it is you want to do. There's a lot of freedom in this stage, so you will have to learn how to monitor your susceptibility to make the kind of trading errors that are the result of any unresolved self-valuation issues I referred to in the last chapter. The third stage is the intuitive stage. Trading intuitively is the most advanced stage of development. It is the trading equivalent of earning a black belt in the martial arts. The difference is that you can't try to be intuitive, because intuition is spontaneous. It doesn't come from what we know at a rational level. The rational part of our mind seems to be inherently mistrustful of information received from a source that it doesn't understand. Sensing that something is about to happen is a form of knowing that is very different from anything we know rationally. I've worked with many traders who frequently had a very strong intuitive sense of what was going to happen next, only to be confronted with the rational part of themselves that consistently, argued for another course of action. Of course, if they had followed their intuition, they would have experienced a very satisfying outcome. Instead, what they ended up with was usually very unsatisfactory, especially when compared with what they otherwise perceived as possible. The only way I know of that you can try to be intuitive is to work at setting up a state of mind most conducive to receiving and acting on your intuitive impulses. The mechanical stage of trading is specifically designed to build the kind of trading skills (trust,confidence, and thinking in probabilities) that will virtually compel you to create consistent results. I define consistent results as a steadily rising equity curve with only minor draw downs that are the natural consequence of edges that didn't work. Other than finding a pattern that puts the odds of a winning trade in your favor, achieving a steadily rising equity curve is a function of systematically eliminating any susceptibility you may have to making the kind of fear, euphoric or self-valuation based trading errors I have described throughout this book. Eliminating the errors and expanding your sense of self-valuation will require the acquisition of skills that are all psychological in nature. The skills are psychological because each one, in its purest form, is simply a belief. Remember that the beliefs we operate out of will determine our state of mind and shape our experiences in ways that constantly reinforce what we already believe to be true. How truthful a belief is (relative to the environmental conditions) can be determined by how well it serves us; that is, the degree to which it helps us satisfy our objectives. If producing consistent results is your primary objective as a trader, then creating a belief (a conscious, energized concept that resists change and demands expression) that "I am a consistently successful trader" will act as a primaiy source of energy that will manage your perceptions, interpretations, expectations, and actions in ways that satisfy the belief and, consequently, the objective. Creating a dominant belief that "I am a consistently successful trader" requires adherence to several principles of consistent success. Some of these principles will undoubtedly be in direct conflict with some of the beliefs you've already acquired about trading. If this is the case, then what you have is a classic example of beliefs that are in direct conflict with desire. The energy dynamic here is no different from what it was for the boy who wanted to be like the other children who were not afraid to play with dogs. He desired to express himself in a way that he found, at least initially, virtually impossible. To satisfy his desire, he had to step into an active process of transformation. His technique was simple: He tried as hard as he could to stay focused on what he was trying to accomplish and, little by little, he de-activated the conflicting belief and strengthened the belief that was consistent with his desire. At some point, if that is your desire, then you will have to step into the process of transforming yourself into a consistent winner. When it comes to personal transformation, the most important ingredients are your willingness to change, the clarity of your intent, and the strength of your desire. Ultimately, for this process to work, you must choose consistency over eveiy other reason or justification you have for trading. If all of these ingredients are sufficiently present, then regardless of the internal obstacles you find yourself up against, what you desire will eventually prevail. The first step in the process of creating consistency is to start noticing what you're thinking, saying, and doing. Why? Because everything we think, say, or do as a trader contributes to and, therefore, reinforces some belief in our mental system. Because the process of becoming consistent is psychological in nature, it shouldn't come as a surprise that you'll have to start paying attention to your various psychological processes. The idea is eventually to learn to become an objective observer of your own thoughts, words, and deeds. Your first line of defense against committing a trading error is to catch yourself thinking about it. Of course, the last line of defense is to catch yourself in the act. If you don't commit yourself to becoming an observer to these processes, your realizations will always come after the experience, usually when you are in a state of deep regret and frustration.Observing yourself objectively implies doing it without judging about yourself. This might not be so easy for some of you to do considering the harsh, judgmental treatment you may have received from other people throughout your life. As a result, one quickly learns to associate any mistake with emotional pain. No one likes to be in a state of emotional pain, so we typically avoid acknowledging what we have learned to define as a mistake for as long as possible. Not confronting mistakes in our everyday lives usually doesn't have the same disastrous consequences it can have if we avoid confronting our mistakes as traders. For example, when I am working with floor traders, the analogy I use to illustrate how precarious a situation they are in is to ask them to imagine themselves walking across a bridge over the Grand Canyon. The width of the bridge is directly related to the number of contracts they trade. So, for example, for a one-contract trader the bridge is very wide, say 20 feet. A bridge 20 feet wide allows you a great deal of tolerance for error, so you don't have to be inordinately careful or focused on each step you take. Still, if you do happen to stumble and trip over the edge, the drop to the canyon floor is one mile. I don't know how many people would walk across a narrow bridge with no guardrails, where the ground is a mile down, but my guess is relatively few. Similarly, few people will take the kinds of risks associated with trading on the floor of the futures exchanges. Certainly a one-contract floor trader can do a great deal of damage to himself, not unlike falling off a mile-high bridge. But a one-contract trader also can give himself a wide tolerance for errors, miscalculations, or unusually violent market moves where he could find himself on the wrong side. 1. all our beliefs are in absolute harmony with our desires, and 2. all our beliefs are structured in such a way that they are completely consistent with what works from the environment's perspective. Obviously, if our beliefs are not consistent with what works from the environments perspective, the potential for making a mistake is high, if not inevitable. We won't be able to perceive the appropriate set of steps to our objective. Worse, we won't be able to perceive that what we want may not be available, or available in the quantity we desire or at the time when we want it. On the other hand, mistakes that are the result of beliefs that are in conflict with our objectives aren't always apparent or obvious. We know they will act as opposing forces, expressing their versions of the truth on our consciousness, and they can do that in many ways. The most difficult to detect is a distracting thought that causes a momentary lapse in focus or concentration. On the surface this may not sound significant. But, as in the analogy of the bridge over the canyon, when there's a lot at stake, even a slightly diminished capacity to stay focused can result in an error of disastrous proportions. This principle applies whether it's trading, sporting events, or computer programming. When our intent is clear and undiminished by any opposing energy, then our capacity to stay focused is greater, and the more likely it is that we will accomplish our objective. You have to be able to monitor yourself to some degree, and that will be difficult to do if you have the potential to experience emotional pain if and when you find yourself in the process of making an error. If this potential exists, you have two choices: 1. You can work on acquiring a new set of positively charged beliefs about what it means to make a mistake, along with de-activating any negatively charged beliefs that would argue otherwise or cause you to think less of yourself for making a mistake. 2. If you find this first choice undesirable, you can compensate for the potential to make errors by the way you set up your trading regime.
Education
by moonypto
HOW TO INCREASE TRADING EDGETrading in the financial markets is a highly competitive and ever-changing landscape, where the difference between success and failure can be razor-thin. To succeed as a trader, you need to have a trading edge, which is essentially an advantage that gives you a higher probability of success in the markets. In this post, we will discuss three ways to increase your trading edge. ✳️ Define Your Trading Strategy If you want to up your trading game, there are a few things you can do to improve your approach. First off, make sure you take the time to define your trading strategy. This means getting a clear understanding of the markets you'll be trading in, the timeframes you'll be working with, and the trading styles you'll be using. By doing this, you can focus on the markets that work best for your approach and avoid making rash trades based on emotions or incomplete information. But that's not all. Having a solid trading strategy is just one part of the equation. You also need to have a solid risk management plan in place to help you manage your risk and protect your capital. This can include setting stop-loss orders to limit your downside, keeping tabs on your trades to catch any potential issues early, and adjusting your position size based on market volatility to stay on top of market movements. There are also some other things you can do to give your trading edge a boost. For example, doing some in-depth market research can help you stay up-to-date on the latest trends and developments. You could also invest in some advanced trading tools and software to help you make better decisions. And don't forget about tapping into the knowledge of other traders and industry experts by networking, attending trading seminars or workshops, or getting some guidance from a professional trading coach or mentor. In the end, there are loads of ways you can improve your trading edge. By taking a comprehensive approach that includes strategy, risk management, research, and ongoing learning and development, you can set yourself up for long-term success in the markets. ✳️ Stay Informed and Educated The second way to increase your trading edge is to stay informed and educated about the markets. You need to have a deep understanding of the factors that affect the markets you trade, such as economic data, geopolitical events, and market sentiment. Keeping up to date with financial news and events will help you to make informed trading decisions and adjust your strategy accordingly. Moreover, you need to invest in your education and continuously improve your trading skills. Read trading books, and follow trading blogs and maybe forums. By doing so, you will learn from experienced traders, gain insights into market trends, and develop new trading strategies. ✳️ Keep a Trading Journal There are several ways you can improve your trading edge, and one of the most effective is to keep a trading journal. By maintaining a record of your trades, including the reasons for entering and exiting each trade, the market conditions at the time, and the outcome of each trade, you can gain valuable insights into your trading patterns and behavior. In addition to helping you identify patterns and learn from your mistakes; a trading journal can also help you develop discipline and consistency in your trading. By reviewing your journal on a regular basis, you can identify areas where you need to improve and adjust your strategy accordingly, ultimately leading to better trading results. But the benefits of a trading journal don't stop there. By keeping a detailed record of your trades, you can also track your progress over time and monitor your overall performance. This can be especially helpful when evaluating the effectiveness of a new strategy or approach to trading. In short, if you're serious about improving your trading edge, keeping a trading journal is a must. It's a simple yet powerful tool that can help you gain a deeper understanding of your trading habits and ultimately make better, more informed trading decisions. ✅ Conclusion To succeed as a trader, you need to have a trading edge, which is essentially an advantage that gives you a higher probability of success in the markets. In this post, we have discussed three ways to increase your trading edge. By defining your trading strategy, staying informed and educated about the markets, and keeping a trading journal, you can improve your chances of success in the financial markets. Remember, trading is a journey, and the key to success is to keep learning, adapting, and improving your skills.
Education
by DeGRAM
4
Mastering Trading Psychology: Overcoming Emotional BiasesWelcome to another edition of our educational articles that should help the TradingView newbies find an edge over the market and help strengthen the existing mentality for already successful traders. Trading is not just about having a winning strategy and implementing it correctly. Trading psychology plays a crucial role in trading performance. Emotional biases, such as fear, greed, and overconfidence, can lead to impulsive decisions that can hurt trading results. In this article, we will explore the most common emotional biases that traders face and provide strategies to overcome them (of course, we’ll do it step by step, so it is easier to follow). Step 1: Understanding Forex Trading Psychology Trading can be an emotional roller coaster ride, with traders experiencing a wide range of emotions, from elation to despair, in the course of a single trading day. In this section, we will take a closer look at the impact of emotions on trading performance, as well as the most common emotional biases that traders face. Now, I know some of you might be thinking, "Emotions? In trading? Ha! I'm a robot, I don't feel anything." Well, I hate to break it to you, but even the coldest and calculating traders out there have emotions. Unless you're literally a robot, in which case, congratulations on achieving self-awareness! But in all seriousness, emotions can have a significant impact on trading performance. Fear can cause traders to hesitate and miss out on profitable opportunities, while greed can lead to impulsive and reckless trades. And let's not forget about good old-fashioned FOMO (fear of missing out), which can drive traders to chase after trades that have already run their course. So, what are some of the most common emotional biases that traders face? Let's take a look: 1. Confirmation bias - the tendency to seek out information that confirms our preconceived notions, while ignoring evidence that contradicts them. This can lead to overconfidence and blind spots in our trading analysis. 2. Loss aversion - the fear of losing money, which can cause traders to hold onto losing positions for too long or exit profitable trades too early. 3. Anchoring bias - the tendency to rely too heavily on the first piece of information we receive, even if it's not the most accurate or relevant. This can lead to inaccurate price predictions and poor trading decisions. Now, don't worry if you see yourself in some of these biases. We all have them to some extent. The important thing is to recognize them and develop strategies to overcome them. In the next section, we'll explore some techniques for managing emotions and developing a strong trading mindset. But first, let's take a moment to appreciate the fact that even in the world of finance, emotions play a big role. Who knew we traders had feelings too? Step 2: Overcoming Emotional Biases Now that we've explored the impact of emotions on trading performance, it's time to look at some strategies for managing those emotions and overcoming the biases that come with them. Because let's face it, we traders may be good with numbers, but we're not always the most emotionally stable bunch. One effective way to overcome emotional biases is to develop a solid trading plan. Now, I know what you're thinking, "A plan? That's it? Where's the magic bullet? The secret sauce?" Sorry to disappoint, folks, but there's no magic formula for success in trading. It's all about good old-fashioned discipline and consistency. Another technique for managing emotions is mindfulness. Now, before you roll your eyes and start chanting "Om," hear me out. Mindfulness is simply the practice of being present and aware of your thoughts and feelings without judgment. By practicing mindfulness, we can become more self-aware and better able to recognize and manage our emotional biases. Of course, sometimes it's not just a matter of managing our emotions but overcoming them altogether. For example, fear can be a powerful emotion that can cause us to miss out on profitable trades. One strategy for managing fear is to set up a stop loss order. This will automatically exit a trade if it reaches a certain price point, helping to limit our losses and alleviate our fears. Finally, building discipline and consistency in our trading decisions is essential for overcoming emotional biases. As the saying goes, "Plan your trade, and trade your plan." Stick to your trading plan and strategy, even in the face of strong emotions like fear or greed. And remember, discipline is not just about making good trading decisions, it's also about being disciplined in other areas of your life, like getting enough sleep and exercise. Now, I know it's not always easy to overcome emotional biases, especially when there's money on the line. But with a little practice and discipline, we can become more effective traders and achieve better trading results. And hey, if all else fails, there's always therapy, right? Just kidding...kind of. Step 3: Staying Mentally Fit for Trading Success In this section, we'll take a closer look at developing a strong trading mindset, which is essential for long-term success in the forex market. One key aspect of developing a strong trading mindset is to approach trading as a business, rather than a hobby or a game. This means setting clear goals and objectives, developing a trading plan and strategy, and keeping detailed records of your trades and performance. And if you're serious about trading, it also means investing in the right tools and resources, like a reliable trading platform and access to up-to-date market news and analysis. Another important aspect of a strong trading mindset is the ability to stay disciplined and patient in the face of adversity. As traders, we all face losing trades and setbacks from time to time. But it's how we respond to those challenges that makes all the difference. It's important to stay focused on the long-term goals, rather than getting caught up in short-term fluctuations and emotions. Of course, maintaining a strong trading mindset is easier said than done. It's easy to get caught up in the excitement of the market and make impulsive trading decisions. That's why it's important to take breaks, practice self-care, and maintain a healthy work-life balance. As the saying goes, "All work and no play makes Jack a dull boy." And let's be honest, no one wants to be a dull trader. If you have any particular exercise you find useful for yourself, make sure to drop them in the comments below, so we can all try them out! Have an awesome weekend, family!
BITSTAMP:BTCUSDEducation
by Investroy
24
HOW WILL AI AFFECT FINANCIAL MARKETS?Artificial Intelligence (AI) is revolutionizing the financial markets, with its algorithms and automated systems allowing for faster and more accurate trading decisions. AI technology has already seen success in stock market trading, but it is now being used to analyze data from all areas of finance, including banking and investments. In this article, we will explore the advantages and challenges posed by AI-based trading systems, as well as potential opportunities for AI in the future of financial markets. Finally, we will provide guidance on how to prepare for the impact of AI on financial markets. 1. Understanding AI and its Impact on the Financial Market Artificial Intelligence (AI) is an advanced technology that has been used in a variety of industries to automate tasks and make decisions. In the financial markets, AI can be used to analyze large amounts of data quickly and accurately. It can recognize patterns, identify trends, and even predict outcomes in order to generate trading signals for investors. The potential implications of AI in the financial markets are vast. AI-based systems can be used to streamline trading processes, reduce risk, and increase profitability. However, there are also drawbacks associated with using AI in finance that must be considered. For example, AI systems may lack the human intuition needed to make sound decisions during volatile market conditions or when dealing with complex security types. AI-based systems have already demonstrated their ability to recognize certain trends and patterns in financial data. For instance, AI has been used successfully by traders to detect price movements before they occur and capitalize on them accordingly. Similarly, these systems can also identify correlations between different asset classes or sectors over time, allowing investors to diversify their portfolios more efficiently. Finally, there are a number of examples of successful applications of AI in finance already taking place around the world. Hedge funds have adopted machine learning algorithms for portfolio optimization; banks have leveraged natural language processing (NLP) technologies for customer service; and stock exchanges have implemented automated surveillance solutions for fraud detection. All of these examples demonstrate how powerful AI can be when it comes to making decisions within the financial markets. 2. Advantages of AI in Trading AI has the potential to revolutionize how trading is conducted in financial markets. By leveraging the power of AI, traders can gain an edge in the markets and improve their chances of success. Here are some of the main advantages of using AI in trading: 1. Quick and Accurate Analysis: AI-based systems are capable of quickly analyzing large amounts of data and providing accurate market insights. This helps traders make faster, more informed decisions about when to buy or sell a particular asset. It also reduces the risk associated with manual analysis, as there is less chance for human error to enter into decision making processes. 2. Identifying Profitable Opportunities: AI-based systems are able to identify profitable opportunities that may otherwise be overlooked by manual analysis. This allows traders to capitalize on positive trends and maximize returns from their investments. 3. Identifying Risks: AI-based systems can also help identify risks associated with certain trades or investments, allowing traders to mitigate these risks before acting on them. This helps reduce losses and improves overall profitability for investors and traders alike. 4. Automated Decision Making: AI-based systems can automate certain aspects of trading decisions, eliminating the need for manual input or assistance from a human trader/investor. This reduces errors associated with manual decision making processes, while increasing efficiency and accuracy when it comes time to execute trades or invest in assets. 5. Lower Overall Costs: Finally, using an AI-based system helps reduce overall costs associated with trading due to its ability to automate certain processes and eliminate errors associated with manual decision making processes. This can help improve profitability for investors/traders over time by reducing expenses related to trading activities such as commissions, fees, etcetera 3. Future Opportunities for AI in Financial Markets The potential of Artificial Intelligence (AI) in the financial markets is immense. It has the power to revolutionize how traders and investors make decisions, identify new opportunities, and reduce risk. AI-based systems are able to automate processes and improve accuracy in decision making - providing a competitive advantage to those who utilize it. Additionally, algorithmic trading can give an extra edge by increasing efficiency when predicting market trends and stock prices. Synthetic assets are another way that AI is being employed in the financial sector. These products can provide investors with exposure to investments not typically offered on traditional markets or products. Furthermore, AI helps organizations create effective risk management strategies by recognizing potential risks quickly and offering guidance on how to prevent them from occurring. AI has already been utilized by some of the world's largest banks as a way to gain insight into the complexities of financial markets; giving businesses access to innovative investment strategies and new growth prospects within their organization. As this technology develops further, now is the perfect time for corporate entities to prepare for its impact on their operations so they can take full advantage of its many advantages when they arise. In summary, AI offers a great opportunity for traders and investors alike in terms of achieving higher returns while minimizing losses through improved decision making processes, enhanced analysis effectiveness, and more precise predictions about stock prices and market trends. With its rapid evolution continuing apace, it’s essential for companies operating in the financial industry to start preparing now for what lies ahead so they can capitalize on all that this powerful technology has to offer them in future years! 4. Challenges Faced by AI in Financial Markets AI is a powerful tool for understanding and predicting financial markets, but it does come with certain challenges that must be addressed in order for it to become a viable tool. Below, we will explore the five main challenges facing AI when applied to financial markets. Developing Reliable Algorithms: Developing reliable algorithms is essential for successful AI trading systems. It is important to ensure that investors are not exposed to unnecessary risks due to inaccurate predictions or unreliable models. In order to minimise such risks, developers need to carefully tweak existing AI algorithms and develop new ones that can accurately predict market outcomes. This requires complex mathematical models as well as an in-depth understanding of the data being analyzed. Ensuring System Security: Financial markets involve sensitive information which needs to be kept secure at all times. As such, security should be one of the top priorities for any organization utilizing AI in finance. Strong passwords and authentication protocols should be implemented and regularly tested, while any vulnerabilities should be actively monitored and patched immediately. Additionally, organizations should use encryption techniques such as Secure Socket Layer (SSL) or Transport Layer Security (TLS) whenever possible when transmitting or storing data on their servers or networks. Predicting Ethical Implications: The ethical implications of using AI in finance also need to be considered before integrating these technologies into existing systems and processes. This includes analyzing how decisions made by these systems could affect individuals or groups of people – both positively and negatively – as well as exploring potential legal ramifications of using AI-based trading systems. Organizations must consider these issues carefully before deploying any new technology in their operations and ensure they have the necessary safeguards in place if needed. Responding To Unstructured Data: Another challenge associated with using AI in finance is its ability to handle unstructured data accurately in real-time. Unstructured data can come from sources such as news stories, social media posts, customer feedback surveys etc., all of which can offer valuable insights into current market trends and conditions that may not otherwise be apparent from structured numerical data alone. As such, developing algorithms which can effectively interpret this type of data is an important area of research for financial institutions looking to utilize the power of AI in their operations. Exploring Long-Term Implications: Finally, organizations must consider the long-term implications of utilizing AI technologies when making decisions related to their financial operations. This includes considering whether there will be any unintended consequences associated with relying too heavily on automated decision making processes; whether there are sufficient safeguards against manipulation by malicious actors; and whether there are strategies in place which enable companies to remain competitive over time without sacrificing customer privacy or other ethical considerations.. Ultimately, organizations need to think carefully about how they integrate AI into their existing infrastructure before taking action so they can make informed decisions about how best utilize this technology going forward 5. How to Prepare for the Impact of AI on Financial Markets As AI continues to gain prominence in financial markets, companies must be proactive in understanding the risks and benefits of incorporating it into their trading strategies. To get ready for the impact of AI on financial markets, a strategic approach is necessary that includes comprehending how regulatory bodies interact with this technology, identifying potential partners who can help navigate its complexities, and remaining aware of advancements with AI. Here are several tips to prepare: 1. Assess Risks & Benefits: Investigate current trends in AI to detect both possibilities and drawbacks. Additionally, familiarize yourself with rules or laws related to using AI in finance industries so you can ensure following regulations while still gaining from its benefits. 2. Design Strategies: Develop tactics that maximize advantages while minimizing risks. This may include automating processes or creating algorithms that enable you to recognize opportunities quickly and make wise decisions faster than before. Consider partnering up with experts who understand integrating AI into existing infrastructure and procedures. 3. Stay Updated: Companies running finance businesses must be cognizant of new technologies like artificial intelligence so they remain competitive without compromising customer privacy or other ethical standards--this entails subscribing to industry news sources, attending conferences such as FinTech Connect Live!, reading industry blogs such as FintechToday or TechCrunch’s Fintech section among other options! 4. Analyze Regulatory Bodies: Organizations operating within the finance sector should have an idea on how regulatory bodies view machine learning applications when it comes to making decisions within the organization--this data will help them stay compliant without sacrificing customer confidentiality or other moral considerations by providing guidance on acceptable usage policies or suggesting alternate options if one is disapproved by a certain body plus researching various jurisdictions' regulations depending where services need be offered globally.. 5. Find Partnerships: Experienced partners may be essential when introducing artificial intelligence into your operations--not only they provide technical support but also share advice on merging machine learning applications into existing infrastructure and processes as well as helping produce suitable usage policies meeting all applicable regulation standards across global locations.. Cooperating allows leveraging resources more efficiently plus benefiting from shared experiences thus increasing success chances! By taking these steps, companies operating within financial sectors can benefit from any opportunities presented by artificial intelligence while avoiding associated risks—ensuring their compliance is met without endangering customer confidentiality or other ethical issues along the way! Traders, if you liked this idea or if you have your own opinion about it, write in the comments. I will be glad 👩‍💻
SP:SPXEducation
by Lingrid
14