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Fundamental Analysis

Timing Triumph:Unraveling the Art of the Straddle Forex StrategyIntroduction In the dynamic realm of forex trading, where market movements can be as unpredictable as they are enticing, traders often seek innovative strategies to capitalize on volatility. One such strategy that has garnered attention for its ability to thrive in uncertain market conditions is the Straddle Forex Strategy. This article delves into the intricacies of the Straddle Strategy, exploring its core principles, execution, benefits, and potential drawbacks. So...Sit back, relax, and enjoy this enlightening article about the incredible Straddle Strategy. Remember to show your support by hitting the LIKE button and subscribing! Your journey into the world of the FOREXN1 Strategy is about to begin. The Essence of the Straddle Strategy The Straddle Forex Strategy is a versatile approach designed to exploit significant price movements, regardless of their direction, during times of heightened market uncertainty. It operates on the foundation that major news releases, economic data announcements, or geopolitical events can trigger substantial market fluctuations. The strategy aims to capture the potential gains from these abrupt price swings by simultaneously opening two opposing positions: a long (buy) position and a short (sell) position on the same currency pair. Execution of the Straddle Strategy Preparation: Traders must identify upcoming high-impact events or news releases that are likely to cause substantial market volatility. These events could include central bank interest rate decisions, employment reports, GDP releases, or geopolitical developments. Positioning: Just before the event, the trader places both a buy and a sell pending order above and below the current market price, effectively creating a "straddle." These orders are executed if the price moves significantly in either direction due to the news event. Activation: Once the market reacts to the news and triggers one of the pending orders, the corresponding position is opened, while the other order is canceled. This ensures that the trader is positioned to profit from the price movement in either direction. Risk Management: To safeguard against potential losses, traders often implement stop-loss and take-profit orders for both positions. The stop-loss limits potential losses, while the take-profit locks in gains if the price moves significantly. Here is an example of an advanced straddle strategy with a real-life illustration.Remember that you can customize and modify this idea and approach of your strategy, such as determining where to place pending orders, setting take profits, and establishing stop-loss levels based on your discretionary judgment or the results of your backtesting. Suppose we are nearing the announcement of a significant "Red Flag" news item concerning the US Dollar, specifically the Unemployment Claims report. This news is expected to exert a strong influence on the EUR/USD currency pair, resulting in pronounced volatility due to its nature of reflecting the count of individuals who have applied for initial unemployment benefits in the previous week. Given that such data releases strongly affect currency pairs involving the US Dollar, the EUR/USD pair is likely to experience heightened volatility, thus magnifying the significance of this news release due to its anticipated impact. One of the most effective approaches to employing the Straddle Strategy prior to a news release is by placing two pending orders in both directions of the market. This entails setting a buy stop order and a sell stop order, both positioned a few pips above a price structure. In the ideal scenario, these orders would be strategically placed just above and below key support and resistance levels. Once we have determined the optimal placement for the pending orders, it is equally crucial to establish both the stop loss and take profit levels. While leaving the take profit open to allow the news to drive the price movement is a viable option, setting a stop loss is essential for risk management, not only within the context of this strategy but also as a fundamental practice across various market tools, helping to mitigate potential significant losses. In this scenario, the news had a negative impact on the USD Dollar and subsequently positively influenced the EUR, resulting in a robust upward surge that breaches the resistance level. This development triggers the activation of the pending BUY STOP order, leading to a rapid attainment of our take profit target. Before delving further into the details of this remarkable Forex strategy, it's important to grasp certain key points: 1 ) FOREX is never as easy and straightforward as it might appear in books and articles, including ours. It's a complex endeavor that demands careful consideration. 2 ) Every strategy must undergo extensive testing in a demo account to ascertain its compatibility with our individual personality, available time, money management approach, and other relevant factors. 3 ) Backtesting is unequivocally the most accurate means of developing a suitable strategy for future use. The Straddle Strategy is undeniably intriguing and holds the potential to be an excellent approach under specific circumstances. However, it's imperative that you tailor it to your unique requirements and preferences. Benefits of the Straddle Strategy Volatility Advantage: The Straddle Strategy thrives in volatile markets, allowing traders to benefit from significant price movements resulting from news releases or unexpected events. Directional Neutrality: Unlike traditional trading approaches that require predicting price direction, the Straddle Strategy focuses on capturing market movement without bias, making it particularly appealing in uncertain times. Potential for Large Gains: When executed correctly, the strategy can lead to substantial profits in a short period, especially during high-impact news events. Drawbacks and Considerations Cost of Implementation: Straddle trades often require tighter spreads and lower trading costs due to the need for frequent entry and exit points. High transaction costs can eat into potential profits. False Breakouts: In some cases, market reactions to news events might be short-lived, leading to false breakouts that trigger positions but result in limited price movement. Timing and Liquidity: Precise timing is crucial in executing the Straddle Strategy. Entering the market too early or too late could lead to missed opportunities or unfavorable price movements. Additionally, liquidity fluctuations during news releases can affect order execution. Conclusion The Straddle Forex Strategy stands as a powerful tool in a trader's arsenal, providing a way to harness the potential of volatile markets without the need to predict price direction. By capitalizing on significant price movements triggered by high-impact news events, traders can aim to secure profits irrespective of market turbulence. However, like any trading approach, the Straddle Strategy requires a thorough understanding of market dynamics, meticulous planning, and effective risk management to maximize its benefits and minimize potential drawbacks. As with any trading strategy, it is essential for traders to practice on demo accounts and gain hands-on experience before implementing the Straddle Strategy in live trading scenarios.
Education
by FOREXN1
11
Fundamental vs Technical Analysis📊🔍 Fundamental vs Technical Analysis: Unveiling the Differences and Advantages 🔍📊 In the exciting world of trading, two distinct yet equally important methodologies dominate the landscape: Fundamental Analysis and Technical Analysis. Both approaches provide valuable insights, but they stem from different philosophies and offer unique advantages. Let's dive into the heart of this debate to explore the contrasting attributes of these two analytical powerhouses. Fundamental Analysis: Delving into the Essence Fundamental analysis revolves around the study of a company's intrinsic value by assessing its financial statements, economic indicators, and market trends. This approach examines the broader economic context that influences the asset's price, making it a staple for long-term investors. By scrutinizing earnings reports, balance sheets, and macroeconomic factors, fundamental analysis seeks to identify whether an asset is overvalued, undervalued, or fairly priced. 🔍 Advantages of Fundamental Analysis: • Provides a holistic view of the asset's health and potential future growth. • Useful for long-term investment decisions. • Helps investors understand market trends driven by economic events. Technical Analysis: Unveiling Price Patterns Technical analysis, on the other hand, is all about decoding price patterns and historical data. It relies on charts, indicators, and patterns to predict future price movements. The emphasis is on understanding market sentiment, trends, and psychological factors that impact buying and selling decisions. Technical analysts believe that historical price data can indicate potential future price direction. 🔍 Advantages of Technical Analysis: • Well-suited for short-term trading decisions. • Helps traders identify entry and exit points more precisely. • Focuses on price action, which reflects market sentiment and behavior. The Synergy of Both Approaches: A Balanced Strategy While fundamental and technical analysis may seem to belong to separate worlds, combining both can yield powerful insights. Successful traders often utilize a hybrid approach, leveraging fundamental analysis to understand the broader context and technical analysis to fine-tune entry and exit points. This combined approach can enhance decision-making and help traders navigate the complexities of the market more effectively. 🌟 Conclusion: The Path to Informed Trading Fundamental analysis and technical analysis are like two sides of the same coin, each offering distinct benefits. The choice between them often depends on your trading style, time horizon, and risk tolerance. As you delve deeper into the world of trading, consider incorporating elements of both approaches to develop a more comprehensive understanding of the market dynamics and make more informed trading decisions. Remember, understanding the nuances of both fundamental and technical analysis can be a valuable asset on your trading journey. Stay curious, stay informed, and keep refining your analytical toolkit. Happy trading! 💙💛 Feel free to share your thoughts and experiences in the comments below. Let's support and inspire each other on this exciting trading path. Your Kateryna💙💛
BITSTAMP:BTCUSDEducation
by RocketBomb
How Bearish Bitcoin Calendar Spread Trades WorkShort BTCUSDt September futures contracts + Long BTCUSDt perpetual swaps (OKX) This trade will work the best if prices go down or sideways between now and settlement, here are the possible outcomes for this spread trade: If prices go down slightly then the spread is likely to close faster and funding rates are likely to decrease. This could result in substantial profits. If prices go down substantially, then the spread could go negative and funding rates could also be substantially negative, leading to increased profit margins. If prices go sideways then the spread will close at or before settlement time, and funding rates are likely to remain near the average for the last 90-days. This could result in modest profits. If prices increase slightly then the spread will still close at the settlement date but could temporarily increase, and funding rates may be higher than the 90-day average. This could result in either a slight gain or loss, or breakeven profits. If prices increase substantially you may lose substantially on this trade because of increased funding rates and increased time for the spread to close. Example: Short 10 BTCUSDt Sept 29th futures contracts at 29,574 + Long 10 BTCUSDt perpetual swaps at 29,330 Initial Costs & Profits: Gross profit from the spread for 10 BTC = $244 x 10 = $2,440 Trading fees = 0.04% of $587,000 = $235 (actual fees paid when exiting will depend on market price) Net profit after trading fees = $2,440 - $235 = $2,205 Breakeven funding rates: If spread = 0 in 20 days f x 293,500 × 10 × 20 = 2,205 f = 2,205/(293,500 x 20) f = 0.0375% If spread = 0 in 30 days f x 293,500 × 10 × 30 = 2,205 f = 2,205/(293,500 x 30) f = 0.0248% If spread = 0 in 46 days f x 293,500 × 10 × 46 = 2,205 f = 2,205/(293,500 x 46) f = 0.0163% (Based on these calculations, as long as the average daily funding rate is below 0.0163%, then you will breakeven or earn a profit, assuming your maker fees are 0.02% per trade) Based on the 90-day average daily funding rate of 0.01204%, your net profit (x) would be as follows: If spread = 0 in 20 days: x = 2205 - 0.01204% x 293,500 x 20 x = $1,499 (+0.255%) If spread = 0 in 30 days: x = 2205 - 0.01204% x 293,500 x 30 x = $1,146 (+0.195%) If spread = 0 in 46 days: x = 2205 - 0.01204% x 293,500 x 46 x = $573 (+0.098%) (Assuming you use 100x leverage on these trade, you would multiply your percentage profits by 100, leading to a profit of 9.8% to 25.5%. When using leverage, You must ensure that your margin does not drop below the maintenance margin requirements if the spread temporarily increases or it will result in a forced liquidation. )
BEducation
by Intuit
Boom And Bust Cycle of BitcoinGreetings, esteemed members of the @TradingView community and all Vesties out there! The financial markets is a complex and dynamic arena where investors seek to capitalize on opportunities and generate profits. One recurring phenomenon in the financial world is the "boom and bust cycle", characterized by periods of rapid asset price escalation followed by sudden and often dramatic declines. Understanding this cycle is crucial for investors to make informed decisions and navigate market volatility effectively. In this article, we will delve into the life cycle of a bubble within the context of the financial markets, using the Bitcoin price chart as a compelling example. Additionally, we will explore how Bitcoin's circulating supply contributes to its perceived value. The Anatomy of a Bubble: A bubble refers to a speculative phase during which the prices of assets, such as stocks or cryptocurrencies, soar to unsustainable levels fueled by investor euphoria, media hype, and the fear of missing out (FOMO). These bubbles are often followed by a sharp correction or crash, resulting in significant losses for those caught up in the frenzy. The cycle typically consists of four key phases: a) Stealth Phase: Prices begin to rise slowly, driven by fundamental factors or innovative breakthroughs. Initial interest is limited, and only a few astute investors take notice. b) Awareness Phase: Media coverage and public attention increase as prices gain momentum. More investors start to notice the rising prices and may begin to invest, contributing to further price appreciation. c) Mania Phase: FOMO sets in as a growing number of investors rush to buy the asset, driving prices to astronomical heights. Speculative behavior dominates, and valuations become detached from underlying fundamentals. d) Blow-Off Phase: The bubble reaches its peak, and prices begin to plummet as profit-taking and panic selling ensue. The market experiences a rapid decline, erasing gains made during the boom phase. Bitcoin's Boom and Bust Cycle Example: Bitcoin, the pioneering cryptocurrency, has experienced multiple boom-bust cycles since its inception. One particularly notable example is the bubble of 2016-2017-2018 period: a) Stealth Phase: Bitcoin's price had been steadily increasing due to growing interest and adoption within the tech and financial communities. b) Awareness Phase: Media coverage intensified, drawing mainstream attention to the soaring Bitcoin prices. Retail investors started entering the market. c) Mania Phase: The price skyrocketed to nearly $20,000 per Bitcoin, fueled by widespread FOMO. New investors poured money into the market, believing the rally would continue indefinitely. d) Blow-Off Phase: The bubble burst, and Bitcoin's price tumbled, ultimately losing over 80% of its value. Many inexperienced investors who bought at the peak faced substantial losses. The Role of Bitcoin's Circulating Supply: Bitcoin's circulating supply, the total number of coins available for trading in the market, plays a crucial role in shaping its perceived value. The scarcity of Bitcoin is often cited as a driving factor behind its price appreciation. With a fixed supply of 21 million coins, the principle of supply and demand suggests that as demand for Bitcoin increases, its price should rise over time. a) Halving Events: Approximately every four years, Bitcoin undergoes a "halving" event, where the rate at which new Bitcoins are mined is cut in half. This scarcity-inducing mechanism further accentuates the notion of limited supply, potentially driving up prices. b) Investor Perception: Investors often view Bitcoin as a store of value and a hedge against traditional financial markets. As this perception grows, demand for Bitcoin increases, putting upward pressure on its price. Understanding the life cycle of a bubble is essential for investors to make informed decisions and mitigate the risks associated with market volatility. By examining the case of Bitcoin's boom and bust cycle and considering the impact of its circulating supply, we gain valuable insights into how market dynamics and human behavior can shape asset prices. As the financial world continues to evolve, these lessons remain relevant, serving as a reminder of the importance of rational investment strategies and a clear understanding of market fundamentals.
INDEX:BTCUSDEducation
by Vestinda
6
IMPULSE AND CORRECTIVE MOVEMENT What is an impulsive price movement? This is a situation when the market moves with great force in one or another direction, passing large distances in a short period of time. What is a corrective price movement? It is a price stop. After an impulsive movement, the price needs a rest. Unlike an impulsive movement, a corrective movement lasts long enough and is often just in consolidation (sideways movement). There are exceptions, when the price after a strong movement is not in a sideways, but rather in a microtrend against the main movement with a weak price impulse and goes a short distance up\down (depends on the trend direction). On the chart you can see the descending price channel, I have marked the important places. Next, I will describe everything in order. First, I will tell you how to determine a true or false breakout of a level in the trend and how to work from these levels using impulses (these levels are called mirror levels (swing) that change their level from resistance to support). A: there was a break of the support level with good momentum, up to this point there was a bullish movement and sideways movement. The break of level A broke the rising highs and we can already say that there was a trend reversal. Where we will proceed from the mirror levels of the trend. A mirror level is a level that from support became resistance and vice versa. After breaking the level, a corrective movement to the same broken level began. Do you remember what I was talking about in the beginning? About the fact that the price does not always go sideways after the breakout, it can also go against the general movement, but with less impulse. But in this case as you can see price went sideways after it broke through the level, then slowed down and started to roll back to the broken level, this is exactly the place where we can look for an entry into the trade. B : As I said, there was an impulsive break of the level and then a corrective movement against the main downward movement, after which the price approached the broken support level and broke it again. Most likely, the breakout was due to some news, most often the price makes a reversal without such sharp movements. This is the place where all candlesticks are filtered and decisions are made. Pay special attention to what candles are formed at such levels. Ideally, it should be like this: candles decrease in size and form dojis (i.e. candles of uncertainty). You can expect a pinbar or maribose in such places. Now remember the 2 types of corrective movements: - price moves against the main direction, but with less momentum - price is in consolidation after the breakout In this example the price is just in a sideways movement and does not make impulsive movements, it is simply resting after breaking another support level in place. In this case we also have 2 moments to enter. 1. When approaching the broken support level, which is now a resistance level. We have all the right conditions for entry: the price has no momentum, respectively, it will most likely bounce off the resistance level and continue moving downwards; uncertainty candlesticks have appeared (in this case they were dojis); and the last criterion is the appeared Outside bar setup (B point). 2. In the second case, the entry is made on the breakout of the support C Unlike the place where the price goes against the movement, in our case (sideways) the price after the breakout can go further without correction to the broken level, but there are also criteria for this: the candle that breaks through the C level should be without big spikes; the price must breakout with good momentum (notice how the price stopped out at the support level, so we should expect a true breakout with good momentum, as was the case in this example) Next example when the price rolled back immediately after breaking out of a level without sideways move at the D point. Pay attention to how the price gives signals that it has no strength to move further. These are small candles that were then engulfed by one big red candle and the price made an impulsive movement downward. Impulse and corrective moves: conclusions Impulse movement • Candlesticks have large bodies. • Price moves a long distance in a short period of time. • Each subsequent candle closes higher/below the previous one (a clear sign of a good impulse). • Candlesticks have the same color and sentiment (In a bullish trend is green/blue candlesticks. In a bearish trend is red/black. Well, or any other colors that you use). A corrective movement • Candlesticks have small bodies. • Candles of uncertainty are formed (dojis, haramis). • Price moves small distances over a long period of time. • Candlesticks have a combined color (different colors). When the price approaches the support and resistance levels or trend line borders, you should pay attention to these factors and, if they are met, you can enter the trade.
Education
by Lingrid
16
The Power of Trading Tunnel VisionAs humans. It’s tough. In this day and age, it feels impossible to just focus on one task at a time. You’re already shifting your attention. As you read this! You’re thinking about: What to eat, what you’re missing on Facebook, how boring this article is going to be, what’s on TV tonight, bills you have to pay, how else can you make bread for your financial future. Right? You can’t help it. It’s a disease. It’s affecting most people. It affected me for most of my life. And I think it’s one of these reasons why people are: NOT happy, NOT succeeding with their goals and NOT building their lives the way they want to. It needs to stop TODAY! Just do me one favour… Try and focus on one goal at a time. Get through this article first, move onto the next thing. Think of a racehorse. For them to be focused, avoid danger, remain undistracted and see the goal… They need to wear blinkers. So let’s put on our blinkers and let’s see why tunnel vision is the very skill you need to succeed. Not just with trading. But with every endeavour you embark to achieve and succeed. #1: Sharper Focus Tunnel vision allows you to concentrate and direct your attention to one thing at a time. Your analysis. Your setups. Your execution. Your modifications. Your reporting and reviewing. #2: Less distractions When you cut out your distractions, you will make more better decisions as a trader. It’s a skill. Put your phone away. Close your social media windows right now. Clear your desk and cupboards. Take the dog or cat out. Switch off the TV. Focus on your trading each day or when you do trade. #3: Better Risk Management When you are just about to take the trade. Make sure you double check your maths, volume trading size – according to what your portfolio is currently valued at. You don’t understand how many people make mistakes with: Wrong sizes, miscalculated levels and incorrect risk and reward. Protect and safeguard your trades with careful risk management consideration. #4: Speed up results and optimise your tasks: When you focus on one task at a time, this might be surprising but. You will finish sooner than you thought. When you put in your full – time, capital, and mental energy – you’ll be more efficient, productive and more laser focused. #5: Reduced Stress Of course when there are less distractions, less worry and less things to deal with at a time – this drops your stress. And I know you have stress right now. It’s the state of the world with the fast-paced connectivity and exponential developments. But when you narrow your life down to one thing at a time, I promise your stress will drop which will help with your trading decisions. #6: Superior strategy understanding By concentrating on a particular strategy or system, you will find that you’ll build a more profound understanding to where, why and how you’re putting your money. Master the strategy and only that one and you’ll see how far you’ll go. #7: Consistency and perseverance When you adopt tunnel vision in your life, you will begin to be more disciplined with your approach. This will lead to more consistency in your trading results. And you’ll find it will promote a stable growth of your portfolio. #8: Clearer Goals to achieve Like the horse sees the goal ahead. When you focus your attention on your goals and what you need to do to achieve them, one step at a time. You can track your progress more effectively. You can steer your trading in a better direction. You can take control of your trading with lightning focus. #9: Keeps you in the Now Time is fleeting. Before you know it, you’re in bed ready to wake up and repeat the routine. But what if, because you’re living so much in your head, that’s why time is going so quickly. I mean, right now I am only focusing on writing this article. And I’m putting in all my heart, energy and soul. And because there are no distractions, I FEEL the present. I feel time going slowly with each typing. So maybe you should to. Do everything in the present. Do it with full focus. Do it with heart. Do it with optimism and care. And this will have a positive effect on your trading.
TVC:SA40Education
by Timonrosso
U.S. Economy Less Interest Rate SensitiveDespite the fastest rise in interest rates since 1981, and an inverted yield curve where short-term rates are much higher than long-term bond yields, the United States has not (at least yet) experienced the recession forecast by the vast majority of market pundits and economists. Why not? The relatively few contrarians that did not forecast a recession, including myself, had many reasons for a more optimistic view. However, the most critical reason appears to have been an appreciation of how the U.S. economy has changed over decades and become much less sensitive to interest rates. In the 1950s, 1960s and 1970s, the U.S. economy was driven by housing and manufacturing. The only choice to finance a home was the 30-year fixed rate mortgage, provided by a savings and loan institution, that deliberately borrowed short-term from savers and lent long-term, taking considerable interest rate and yield curve risk. Further, there was no such thing as financial futures or interest rate swaps to allow for the efficient hedging of interest rate risk. Fast forward to the modern economy of the 2020s. The U.S. is an economy driven by the service sector, and services are considerably less sensitive to interest rate swings than housing and automobiles. Home mortgages come in every size and flavor, from floating rates to fixed rates. Mortgages are originated by specialists and then packaged and sold to pensions, endowments and investors willing to take the risk. There are no savings and loan institutions. Financial futures, swaps and options are available for efficient hedging and management of interest rate risk. In short, the U.S. economy does not dance to interest rates like it once did. Make no mistake, though; interest rate shifts have a profound impact on asset values, from equities to bonds, to housing. It is just that the impact on the real economy is much more subdued than it once was, and a rise in rates does not automatically mean a recession is around the corner. 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 By Bluford Putnam, Managing Director & Chief Economist, CME Group *Various CME Group affiliates are regulated entities with corresponding obligations and rights pursuant to financial services regulations in a number of jurisdictions. Further details of CME Group's regulatory status and full disclaimer of liability in accordance with applicable law are available here: www.cmegroup.com **All examples in this report are hypothetical interpretations of situations and are used for explanation purposes only. The views in this report reflect solely those of the author and not necessarily those of CME Group or its affiliated institutions. This report and the information herein should not be considered investment advice or the results of actual market experience.
CBOT:ZN1!Education
by CME_Group
EUR, GBP Rebound Against Dollar as Inflation Trends DivergeEuropean currencies have been rebounding strongly versus the U.S. dollar since hitting bottom in late September 2022 during the Gilt crisis when yields on U.K. government bonds surged. The rally in European currencies accelerated in July 2023 following the release of the U.S. inflation statistics (Figure 1). Figure 1: EUR and GBP have rebounded strongly in recent weeks and months Recent U.S. and European inflation data are highly divergent. U.K. core inflation has climbed to above 7%. Eurozone core inflation has risen towards 5.4% while the U.S. core consumer price index (CPI) has been falling towards 4.8%, down from a peak of 6.6% last year. What’s even more remarkable is that the divergence between U.S. and European inflation rates is much stronger when one measures it in a consistent fashion. The U.K. and European Union (EU) use a “harmonized” measure that is consistent across Europe. The harmonized measure includes rents of actual rental properties but, unlike the standard U.S. numbers, does not assume that homeowners rent properties from themselves. Excluding the so-called owners’ equivalent rent (OER) from the U.S. numbers makes a huge difference. At the moment, the assumption that homeowners rent properties from themselves has exaggerated U.S. core inflation to the tune of 2.5%. The U.S. Bureau of Labor Statistics produces what they term an “experimental” harmonized measure of core-CPI that gauges inflation the same way as in Europe and therefore excludes the OER component. This shows core inflation in the U.S. to be 2.3%, far below European levels and trending lower rather than higher (Figure 2). Figure 2: Measured consistently, U.S. core inflation is half to one-third European levels This suggests that the U.S. Federal Reserve (Fed), which appears to be preparing a 25-basis-point (bps) rate hike on July 26, could soon have its policy rate at more than 3% above the level of harmonized core inflation (Figure 3). Meanwhile, the Bank of England (BoE), which just raised rates to 5%, still has rates more than 2% below its rate of harmonized core inflation (Figure 4). The European Central Bank (ECB) has its main refinancing rate at 4%, 1.4% below the level of the eurozone’s harmonized core inflation (Figure 5). Figure 3: Fed Funds now exceed harmonized U.S. Core CPI by 3%, the most since 2007 Figure 4: The BoE’s policy rate is still 2% below inflation Figure 5: The ECB has its policy rate 1.4% below Eurozone core inflation The differences in the level of real rates (policy rates minus harmonized core inflation) suggests that the Fed may have overtightened policy and may need to reduce rates sooner than expected by market participants. By contrast, those same measures suggest that the European central banks may still be behind their inflation curve and may need to tighten policy even more substantially. Indeed, forward curves have moved significantly in the direction of this thinking in recent weeks and now price just 25 bps more in rate hikes for the Fed compared to 75 bps for the eurozone and 125-150 bps in the U.K. Elsewhere, the U.S. yield curve is much more sharply inverted than yield curves in the eurozone or the U.K. This may also lead currency traders to look past the Fed’s last expected rate hike and towards possible rate cuts if monetary overtightening produces a downturn in the U.S. sooner than it does in Europe. 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 By Erik Norland, Executive Director and Senior Economist, CME Group *Various CME Group affiliates are regulated entities with corresponding obligations and rights pursuant to financial services regulations in a number of jurisdictions. Further details of CME Group's regulatory status and full disclaimer of liability in accordance with applicable law are available here: www.cmegroup.com **All examples in this report are hypothetical interpretations of situations and are used for explanation purposes only. The views in this report reflect solely those of the author and not necessarily those of CME Group or its affiliated institutions. This report and the information herein should not be considered investment advice or the results of actual market experience.
Education
by CME_Group
Three Driving Forces Behind the Ether-Bitcoin Exchange RateAt a glance: Higher tech stocks tend to boost ETHBTC, while a higher USD tends to depress it Bitcoin supply is perfectly inelastic, which contributes to its high volatility Together, ether and bitcoin account for over 60% of the total value of the world’s cryptocurrencies, but the exchange rate between the two has varied widely over time. So, what drives the Ether-Bitcoin exchange rate? The ETHBTC cross rate responds to many factors, but here are three of them. Technology Stocks On days when the tech heavy Nasdaq 100 index rallies, ether tends to rise versus bitcoin. This may be because ether, which is the currency of the Ethereum smart contract network, has more practical applications in the technology space than bitcoin, which is mainly held as a store of value and a medium of exchange. U.S. Dollar On days when the U.S. dollar is higher, ether tends to underperform versus bitcoin. Bitcoin Supply While ether can be supplied up to 18 million coins per year, bitcoin supply is limited to a maximum of 21 million coins ever, of which about 19 million already exist. Every four years, the supply of new bitcoin drops in half. In the past, halvings have often been preceded by large runups in bitcoin prices and tremendous increases in the amount of revenue that bitcoin miners are paid for matching transactions. Ether is both more volatile than bitcoin and highly correlated to bitcoin. As such, when bitcoin rises or falls versus the U.S. dollar, ether often moves to an even greater degree. 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 By Erik Norland, Executive Director and Senior Economist, CME Group *Various CME Group affiliates are regulated entities with corresponding obligations and rights pursuant to financial services regulations in a number of jurisdictions. Further details of CME Group's regulatory status and full disclaimer of liability in accordance with applicable law are available here: www.cmegroup.com **All examples in this report are hypothetical interpretations of situations and are used for explanation purposes only. The views in this report reflect solely those of the author and not necessarily those of CME Group or its affiliated institutions. This report and the information herein should not be considered investment advice or the results of actual market experience.
CME:BTC1!Education
by CME_Group
HIGHEST OPEN / LOWEST OPEN TRADE✴️ Hello, ladies and gentlemen! Today we are going to talk about a popular strategy called Highest open Lowest open. This strategy was first published on forexfactory forum. The strategy is based on following the natural movements of the market, which you may consider unpredictable. Here, we will make money on those very movements. In this strategy, you will have to wait, you will have to be disciplined. The idea behind this strategy is as follows: There are two assumptions. First, during the day there are always seemingly chaotic zigzag movements of the price. Secondly, any candle, be it bearish/bullish, will have tails. Third, someone needs to be taken out of the market. As we remember, there are bulls, bears and there are pigs as described in many famous trading books. 1) So, let's mark the High/Low points of the current day and the previous day on the chart. 2) After that, on the current day, let's mark the highest and lowest points of the H1 candle opening. It is the opening price of the candle that is meant. These opening points can and will shift during the day, and this is normal. The entries of the strategy are quite short, and such a shift of the markup during the day can occur. This (for the moment) is the end of our markup. ✴️ Strategy Rules When do we buy or sell? So, we buy when the price goes below the lower line and comes back. That is, when the price is behind the line (for example, the lower line), we place a Buy Stop order on the line to enter on its breakout. To sell, we enter on the same principle: the price goes above the upper line, set an order on the border, inside the channel. It is not necessary to use a pending order for this, if you want, you can enter the market. But, how can we understand that the price has really been below the lower level or above the upper level? After all, it may well be that the price will break the level by only one pip, which, of course, will not be a signal to enter. But, for this reason, we have the concept of "entry timeframe", which can be M5, M15 or M1. So, when the M5 candle closes above the signal line and, accordingly, a new M5 candle opens we can enter to sell when the level is reached. The same is true for buying. M5 candle should close below the signal level, and at the opening of a new candle we set a pending order. Or, we wait until the level is reached and enter the market. At the same time, the opening price should not exceed the maximum and minimum of the day! ✴️ Trade details: TP and SL, Money Management The start time of trading is 8 am New York time. But in general, you can trade practically at any time. Since everyone has different time zones, you can choose a trading time that suits you, and the strategy will still work. We set the stop loss for the daily high, or for the daily low. The method of profit taking can be different. First, there is a basic rule: when the trade is in profit +5 pips, we move the stop to breakeven +1 pips of profit. Secondly, you can exit with a profit of 10 pips, or when a profit of 10 pips or more is reached, move the stop to breakeven +5 pips. Also, you can exit the position in partial portions, it is already from personal preferences. But it is better to follow the rule of putting the stop at breakeven. So, why did we mark the High-Low of the previous day? If the high or low of the previous day is broken, it means that there was a breakout and you should be careful here. It is quite possible that the price will run far beyond the marked level after the breakout. Also, the situation with several entries within one hour is quite possible. If the price on M5 constantly breaks the level and returns, you can enter at every suitable signal. Since the profit is small in most cases, it is better to use pairs with low spread in trading. This way you will be able to move the stop to breakeven faster. There can be a lot of entries on the strategy during the day. Especially if you use several pairs. Therefore, there is no sense to risk more than 1% of your capital per trade. Moreover, it is better to use 0.5%. ✴️ Examples Now let's look at a few examples. On the H1 chart, we mark the highest opening point, and move to the M5 chart. Here, we can see how the price closed beyond the level, below the high of the current day. On the breakout of the level, we enter to sell. We set the stop loss slightly above the maximum of the day. When the profit of 5 pips is reached, we turn on the trailing stop. In this trade we would have earned about 50 pips, with an initial stop of 10 pips. We move the level again to the opening of the next candle, and wait for the crossing on M5. This, in fact, is the process of trading. Once again, we are talking about the current daily highs and lows. Thus, if the highest or lowest opening price changes, we move the line accordingly. Also, when setting a stop, we take into account the current High and Low. If there is a breakout of the previous day's High or Low, enter with caution, as the price may well rush towards the breakout. ✴️ Conclusion This strategy requires attention, the ability to wait, discipline, calm and accurate calculation. Nevertheless, it is a powerful weapon in skillful hands. That proves the popularity of the strategy on the forexfactory forum. The strategy itself is quite simple.
Education
by DeGRAM
7
Using the Research Method in TradingGreetings, fellow traders! Trading is both an art and a science, and the research method is your secret weapon to unraveling market intricacies. It's about adopting a systematic approach, making informed decisions, and refining your strategies based on solid data. Applying a analytic mindset in trading can offer a valuable edge. Let's explore the basics of the research method and how you can integrate it into your trading practices. Start with Observation: Just like scientists, traders begin by carefully observing the markets, noting patterns, and identifying repeat occurrences or random incidents. This process helps build a comprehensive understanding of market factors, that influence price action. Formulate Hypotheses: Based on your observations, create hypotheses or assumptions to explain market behavior. These hypotheses act as initial theories that can be tested for validity. Test Your Hypotheses: Conduct empirical tests by taking trades, that align with your hypotheses. Record the results and analyze how price action unfolds. Keep a detailed trade journal to document your observations. Embrace Open-Mindedness: Remain open to new data and market complexities. The markets are ever-changing, and no hypothesis is an absolute truth. Be prepared to adjust your trading strategies based on new information and shifts in market sentiment. Fine-Tune Your Trading Plan: Use the insights gained from testing your hypotheses to fine-tune your trading plan. Continuously refine your strategies based on new observations, and be flexible in adapting to changing market conditions. Treat Each Trade as a Learning Opportunity: View each trade as a source of valuable information, regardless of the outcome. Learn from both winning and losing trades to enhance your understanding of the markets and improve your trading approach. By integrating the research method into your trading routine, you can enhance your decision-making process, manage risks more effectively, and avoid overconfidence. Stay curious, keep learning. Happy trading!
INDEX:ETHUSDEducation
by Vestinda
Trading Lesson 👨‍💻#1 - Never buy At the peak high.Not worth it I tell you. Never buy at the peak high. Always buy at the peak low. When ever you see a peak in the day of trading and you had a major rise in price due to things such as rallies or market seasonal up trends, or 🐳 it's moving up and you don't want to miss it. However; you buy in on the rush up-word believing it's safe to assume things will be greater tomorrow, so you wait to see this awesome rally to the top to make it rich. The day closes and the reopens, with a rise and then sudden fall in the crypto market - all that hype only to be disappointed when you notice somethings off; your funds are 💸floating away in mere moments. So naturally you panic believing that you are in a complete crash - and assume it's the fault of the stock you purchased, but more over it was the fault of the bad call - with bad timing, so you panic sell thinking it will only get worse, and in some cases it does get worse but in others cases that sell you just made would be a mistake in judgement as the price goes back up from where you sold leaving you behind with the lost funds to ponder over. This is what I call "fools gold" Never buy at the peak on after a closing day. reason being you may on the next day after a rally up-word, you notice the price move up higher for like a moment prompting you to buy, thinking that the rally is still going, however; not realizing that was the last call before the fall. So the best thing to do in these type of situations is to: _______________________ Don't Buy In Safer to study your target market before you buy and wait for the closing day, so that it can either adjust the price to where it really is vs where it currently is. if it drops wait till the closing day again until you feel you have the best price to turn a profit. Note - pay attention for market trends it could be going up which is good or falling down which is still good for you because you didn't lose any money, so best to study before you buy on a hype. _______________________ Hold Wait until the next closing day to see where it might lead - this will keep your shares you already purchased and if you need to add more funds to regain what you lost when the price is lower than expected, it will likely turn what was a lost to a gain when the price returns to where you originally purchased. _______________________ Sell The worse thing you can do is Sell unless you can catch the drop in price before it takes too much profit to recover from, you will likely try again losing more money and again, and again, and again - creating what is known as panic buying and selling, if you had deep pockets it might cause the market to completely drop based off the factor of you panic selling, no need to do so you have a day to find out where the market for your crypto is headed before you sell, so best to work fast or lose more funds wasting time. Focus and don't risk what you are not willing to lose, and for your own sake if you are a panic seller, never day trade, you'll lose more money that way. _______________________ Best Tools to use Notice the market trends on the charts before you buy, was it going up throughout a one month process if so then it's a likelihood it's in a seasonal high, it's sometimes hard to tell if it's moving up or down just by looking at charts, so you will definitely need proper indicators to help identify your next move. Indicators like: Volume to price or trend activity Not chart savvy, then find a predictor of your current crypto you purchased. Look for people on places like trading view who have the tools and or knowledge to tell you the trading trends - note not all of them are accurate - not even some websites that offer predictions for your favorite stock or crypto are accurate either, they are usually 40% accurate 60% inaccurate and 99% bias. That's just my opinion - however; they can not predict Rallies - Whaling activity - or - the entire stock market fallout/rise - anything can happen so be prepared it can take months if not years to recover or it could take a few weeks if you know what the future may bring. But remember: Don't try to buy in at the tip of a peak. It's guaranteed to drop instantly the next trading day. Hope this helps. Happy trading. CRYPTOCAP:BTC BINANCE:BTCUSDT BITSTAMP:BTCUSD CRYPTOCAP:ETH BINANCE:ETHUSDT CRYPTOCAP:SHIB BINANCE:SHIBUSDT COINBASE:SHIBUSD #CRYPTO #ALTCOIN #EVERYCOIN #RALLIES-WE-LOVE-THEM #HELP-WITH-A-RALLY #NEED-WHALE-SUPPORT #STOP-THE-DIP
COINBASE:SHIBUSDEducation
by Grandmaster_Oz
The 4 Tips Often Overlooked by BeginnersGreetings, esteemed members of the @TradingView community and all Vesties out there! Let's explore four timeless pieces of advice that beginners tend to overlook and why we should give them closer attention. 1. Manage your expectations. Some newcomers fall into the trap of unrealistic expectations, drawn in by "get rich quick" schemes that initially sparked their interest in trading. Beginner traders may anticipate similar returns to those promised in trendy strategies or TikTok videos, often without fully grasping the methods to achieve those profits. Consistently profitable traders understand that success in trading requires more than just blindly following "profitable" traders on social media. It takes time, discipline, and dedication to develop a trading system that suits your personality and the ability to adapt it to varying market conditions. 2. Simplicity is key. Discovering a multitude of user-friendly education websites (with none better than TradingView, of course) can be enticing, especially when they offer a variety of indicators and trading systems. Novice traders may find comfort in using fancy indicators and systems, ones that seem to be favored by the "pros," but without proper testing or practice, these technical tools can lead to mixed signals and confusion. A wise approach is to start with price action and gradually incorporate indicators as you become more comfortable with their functionality. 3. Prioritize risk management. Both beginners and experienced traders might envy those who achieve substantial gains, often overlooking the complexities behind their success. While certain trading techniques can yield significant profits, they also carry the risk of wiping out an account in an instant. Remember, even a good trade idea can turn sour if risk and trade management are neglected. Proper risk management is crucial for maintaining longevity in the trading game and acquiring the skills needed to become consistently profitable. 4. Stick to your plan. Trading novices are particularly susceptible to the psychological stresses of the market. Without trading confidence, they are more likely to deviate from their trading plans, even if the odds seem favorable. Consistency is key in this aspect. After all, what you don't measure, you can't manage or improve upon. Without consistency: • The trader won't learn how to adapt their system to changing market conditions. • The trader won't cultivate the right mindset to handle losses, stay focused, and prevent emotional reactions. • Inconsistent execution can skew the system's expected outcomes, leading to potentially worse results. Don't hesitate to seek help and learn from a community of traders to avoid repeating the mistakes made by those who have walked your path before. We would greatly appreciate your feedback on the article! Please feel free to share your thoughts and opinions in the comments section below.
INDEX:ETHUSDEducation
by Vestinda
8
SUPPLY AND DEMAND LEVELS How do we determine the levels of supply and demand on a chart? To find supply, we will look at the highs of price movements, and to find demand, we will look at the lows. We need to note highs and lows with fast and strong price movements. Fast rises for demand and troughs for supply. The less the price stays at a level the better for us. The first thing we need to do, just like when marking support and resistance levels, is to look at the highs and lows on the charts. Note that the closest area to the current price has been tested on the chart below. And the lower one has not been tested yet. It has only been touched by price once, so this area is stronger than the one that has already been tested. At the marked levels, we observe that the price was at them for a short time. It reversed almost immediately and went down with large candles. The important factor here is the time that the price "did not stay" at the level. The less time the price was on the level, the more significant this level is. And it is worth keeping in mind the size of the candles. The bigger these candles are, the stronger the reaction. In addition, supply and demand levels become mirrored. Just like support and resistance. If we pay attention to the highlighted area on the UKOIL chart below, we can see that there was first supply and then a strong breakout. The price overcame the supply, took its remain orders and went higher. And now this area has become a demand area: As you can see, there was a quick bounce from it here. Our goal is to determine the demand at the low levels and the supply at the peaks. We find strong and fast price movements on the chart. A rise for demand and a fall for supply. These should be big candles and the price should not crowd in one place for a very long time. There should not be a long retracement. The less the price spends on the level, the better. In addition, pay attention to round levels. Such as 1,100; 1,500; 1,300 and so on.... Do not go back too far on the chart, because what happened on it earlier is not so important for the methodology of supply and demand levels. These are not support and resistance levels after all. And once again I want to repeat to you that the most important thing is that these levels should be visible not only to you, but also to other players. In order for them to work them out. What happens at these levels and why do they work? At these demand levels, large players place limit buy orders, and at supply levels they place sell orders. Why does this happen? Because at these levels it is easier for the large players to execute the order by collecting the positions of smaller players. Every time the price reaches the supply area, we have sell orders executed by the big players. They take the buy orders that other players open and use them to execute their sell orders. When the buy orders run out, the price falls again. When it rises to the same level again, many sell orders of the big players are executed again with the help of stops and buy orders of smaller traders. When the opposite orders run out, the price falls again. The point is that a large position cannot be opened simply without a significant change in price. That is why big players, banks, market makers have to play around and set some kind of traps for other traders in order to open larger positions at their expense. Now let's look at this area of the supply: It was a supply level, but on two occasions many sell orders of big players were executed on it. On the third time, as you can see, there were no big players left, so the price decided to break this level and went higher. From this we conclude that supply tends to run out, just like demand. Once it is over, there is nothing to stop the price from breaking this level and going higher. Therefore, it is considered that for profitable trading the supply and demand levels are suitable only for the first time, when the price has just touched the level. Then we can sell or buy on the retest of the level. But when the price comes back to it again (for the third time), we should not enter the trade it, as the breakout is very likely. I should note that a higher candlestick maximum does not always mean that a new supply area has been created. And a lower low does not mean that a new area of demand has been created. It can be just a spike, a trace from the execution of a large number of orders. In this trade, it is worth paying attention to higher time frames. If you trade on H4, look at daily and weekly charts. So that your buying on H4 does not fall into the supply area on the weekly charts. Use multiple timeframes in your trading and don't forget to look at the level on the higher timeframes.
Education
by Lingrid
14
Why Impulse Trading is DANGEROUS – 19 ReasonsJust to get you up to scratch. An impulse trader in the financial markets is someone who makes trading decisions based on sudden emotional reactions rather than structured and informed strategies. They often buy or sell markets due to fear, greed, or other emotions, disregarding systematic analysis and rational judgment. Being an impulse trader can be dangerous for the following reasons: Neglect of thorough research: Impulsive traders often disregard the need for comprehensive market analysis. Emotional trading Decisions are often driven by emotions like fear or greed. Increased risk Impulsive actions often lead to unnecessary risk-taking. Loss of capital Quick decisions can lead to significant financial losses. Overtrading Impulse trading often leads to overtrading, resulting in higher transaction costs. Lack of discipline Impulsive trading discourages the development of disciplined trading habits. Neglect of risk management Impulsive traders often disregard the importance of risk management. Increased stress The anxiety of impulsive decisions can lead to physical and mental stress. Unstable performance Results can fluctuate wildly due to inconsistent decision-making. No strategic planning Impulse trading contradicts the idea of having a clear, consistent trading strategy. Short-term focus Impulsive trading often focuses on short-term gains, neglecting long-term profitability. Dependency on luck Impulsive trading can become akin to gambling, relying more on luck than skill. Failure to learn Impulse trading does not encourage learning from mistakes or experiences. Neglecting stop loss orders Impulsive traders often neglect to place stop loss orders to limit their losses. Fear of missing out (FOMO) This emotional reaction can lead to poor trading decisions. Revenge trading Trying to recover losses quickly can lead to more losses. Market timing Trying to time the market perfectly is nearly impossible and can lead to losses. Ignoring the broader economic context Impulsive traders often neglect broader market conditions. Potential for addiction The thrill of impulse trading can become addictive, leading to a dangerous cycle.
TVC:SA40Education
by Timonrosso
1
Understanding the Learning CurveWelcome to @Vestinda new article about Learning Curve! We are delighted to share this insightful piece with our valued community on @TradingView ! At Vestinda, we believe in empowering traders with knowledge and tools to navigate the cryptocurrencies and futures trading. In this article, we will explore the concept of the learning curve and its relevance to the trading journey. Whether you are a novice trader or a seasoned professional, understanding the learning curve can be instrumental in your path to success. If you focus and invest time into a subject, you will eventually reach a level of mastery. The actual level clearly depends on the amount of invested time and to a significant extent on your inherent abilities to acquire the specific knowledge. I could probably spend a decade on quantum physics and not progress beyond the level of ‘enthusiastic beginner'. However, attaining mastery is seldom a smooth and linear journey. It is more like a curve in the mathematical sense, characterized by uneven ups and downs, reflecting the usual 'bumps in the road' that we all experience when dealing with challenging topics. There is a pattern in the process of learning something new (knowledge, skills, etc.), which was formulated by the American psychologist Albert Bandura. This pattern is depicted in the form of a graph known as the Bandura curve. The graph demonstrates the relationship between time (number of attempts), the level of human competence in what they are studying, and their expectations. If you have ever enthusiastically started a new training, holding high hopes for it, and then quietly gave up, blaming others or anything else, then you are not alone. To avoid repeating this in the future, it's important to understand how human psychology and the system work, and that each of us is part of this system. Below, we will provide recommendations on what to pay attention to. So, the Bandura curve shows the stages a person goes through when beginning to learn something new. 1. Clueless (You don't know what you don't know) When you first venture into trading cryptocurrencies and futures, you are essentially clueless about the intricacies of the market. The concepts, strategies, and tools may seem foreign and overwhelming. It's like staring at a vast landscape without a map, unsure of where to even begin. 2. Naively confident (You think you know, but still don't know what you don't know) As you begin your learning journey, you might gain some basic knowledge and techniques. This newfound understanding might lead to a sense of naively confident. You believe you have a handle on things, but in reality, there's a lot you're still unaware of, and the market can surprise you with unexpected turns. 3. Discouragingly realistic (You know what you don't know) With more experience, you come to a point of realization that there is much more to learn. The challenges and complexities of trading become evident, and you may face setbacks that test your resolve. It can be a discouraging phase as you grapple with the reality of how much you still need to learn. 4. Mastery achieved (You know it) Through persistence and a commitment to learning, you gradually achieve mastery in trading cryptocurrencies and futures. You've gained a comprehensive understanding of the market dynamics, developed effective strategies, and learned how to manage risks. You can now navigate the market with confidence and consistently make informed decisions. Remember: The learning curve in trading is a natural part of the process, and each stage brings its own valuable lessons. Don't be disheartened by challenges or setbacks; they are opportunities to grow and improve your trading skills. WHAT TO DO? ✅ Embrace the journey of learning and growth, recognizing that mastery takes time. ✅ Stay humble and open-minded, acknowledging that there is always more to learn. ✅ Be patient with yourself during the challenging phases and use them as motivation to improve. ✅ Keep refining your strategies and adapting to the ever-changing market conditions. Can you identify which stage you are currently in your cryptocurrency and futures trading journey? Remember, each stage brings you closer to becoming a proficient trader. We hope you found this article on understanding the learning curve in trading cryptocurrencies and futures helpful! If you have any thoughts, questions, or personal experiences related to the topic, we'd love to hear from you. Please share your feedback in the comments below. Your input is valuable to us and can help us create more content that resonates with your interests and needs. Thank you for being part of our community!
INDEX:ETHUSDEducation
by Vestinda
3
Volume price Volume price is my term meaning the average price for a certain traded volume in a certain period of time. As an example, I took the BTCUSD chart To find out at what level the largest volume is traded, there is a tool called "Fixed Volume Profile" FRVP (located on the sidebar, in the Tools for Measurement and Forecasting cell). Here I stretched it for the period from November 14, 2020 to August 03, 2023 POC the orange line in my case (it's so convenient for me) shows the same maximum volume, and if you put a horizontal line with a price display in its place, we will see the price of 16752.88 - this is the price of volume. That is, the largest volume was traded at this price. A fixed volume profile can be applied on any segments of the chart, for example, from high to low, or from low to low, or from high to high, or in the sideways. What does this give us? Firstly, we understand at what price large capital gained or gave away its position. Secondly, it forms the most powerful level for a certain time period (time frame). And finally, the volume has a price.
COINBASE:BTCUSDEducation
by InHoldOut
3
WHAT IS EXPECTATION IN TRADING✴️ What is expectation in trading? Every trader should be familiar with the concept of mathematical expectation, we will briefly discuss this aspect again. Take a look at the figure above. In the end, the total net profit (or loss) comes from both the frequency of profitable and losing positions (however many there are) and their average size. The goal of any market analysis, any strategy, is to try to have more profitable trades (and therefore fewer losing trades). And while entry point analysis can have its advantages, at the end of the day, we can't predict the future. The average size of profitable and losing positions, on the other hand, gives us much more information and, in fact, a very large degree of control. For if we take a risk in our position of, say, three percent, our average loss will not exceed minus three percent. And the only thing we have to do for that is to close positions when the risk gets to three percent or less. No forecasting or analysis is needed at all. Similarly, we can also increase the average size of our profitable positions by simply holding them (i.e., not closing them) and adding to them (i.e., opening more positions in that direction) as they bring us large profits. So, in the end, it's all about minimizing losses and maximizing profits. Going back to the figure above, this means we should focus on the mass of weights. Being profitable in trading over the long term, comes down to minimizing losses and allowing profits to grow. It's not about whether you act right or wrong - it's about how you manage your profits and losses. ✴️ Problems with mathematical expectation Mathematical expectation isn't hard to understand. And to help understand it, very simple analogies are often used, such as gambling: dice, roulette, or even the lottery. Thanks to expectation, it is easy to prove that all such games are ultimately losers if played for quite a long time. And here we come to the heart of the problem. The concept, or you could say the myth of "expectation of one's system". A more popular term for traders is "edge". Legend has it that you should have positive expectations of your trading system. But this is a futile endeavor because, unlike gambling, the system may not have, and probably does not have, a consistent percentage of profitable positions. After all, markets do not move randomly. Thus, in financial markets, we only know our historical frequency of profitable and losing positions, unlike in a dice game where we also know the upcoming expectation. The myth that we need to have positive expectations of our system before trusting it with our money has dire consequences. It feeds the belief that you need to have an edge (in terms of math expectation) to be profitable in the long run. It also feeds the unhelpful need for backtesting. Any system that has negative expectations and is naturally backed up by backtesting is discarded. Good systems are criticized because they may be out of sync with the markets for a while, i.e. not profitable for a while. And it comes down to adjusting the yield curve on historical data, i.e. over-optimization. What do traders do in search of a system with positive expectations? The same thing: they do not take into account the probability distribution in the measurement domain. And if Nassim Nicholas Taleb's Black Swan has taught us anything, it's that we simply can't do that. We can't apply measurements beyond the interval in which those measurements were made. And we certainly have to realize that we have to look at expectations as a whole. It is precisely not the probabilities that are killing us, it is the outcomes. And once again, even probabilities (and perhaps similar distributions) are not stable in financial markets. Markets are chaotic, fractal in nature, with exponentially changing behavior (and not always). ✴️ What can we do to improve our mathematical expectation? The good news is that when a trader starts thinking with his head instead of relying on expectations, he/she doesn't have to do anything to his "system". Trading expectations (as opposed to expectations of one's system) is simply using the knowledge that we have much more control over the size of our profit/loss (average size of profitable and losing positions) than we have over probability (frequency of profitable and losing positions). And, because we don't focus on historical expectations, trading expectations can work for us. By keeping losses small and increasing our profits (and adding to profitable positions), we gain true advantages. The following experiment was conducted: the simulator opened random positions, from which the expectation and net profit were calculated. This model averaged several million sets of 30 long positions during a bear market. The average net loss was -12 percent; only about one-third of all positions were profitable. Now, by simply opening the same positions, cutting the losses to minus three percent (using a stop loss) and at the same time adding to the profitable positions, we achieved an average net result for the same positions of 1.8 percent profit (on average in a falling market). So, by using expectations in our favor, we actually changed the values of expectations! Traders who believed that initially negative expectations were useless would never have been able to do this because they had abandoned the system from the start. This doesn't mean that losses can be turned into profits exactly, but in the long run expectation works by closing out losing positions and adding to profitable positions. But when looking at the possible history of trades on the chart in the past, traders are often fooling themselves. Thus, none of the trading systems are either profitable or unprofitable, they look that way only in relation to the method of position size management and money management applied. ✴️ Conclusion To summarize, it is one thing to see how a forex strategy has behaved in history, but to expect it to behave the same way in the future is another. Traders should focus less on testing on history and more on the current situation: to cut losses and even more on maximizing their profits and adding to profitable positions. Follow this rule long enough and you will experience the true power of mathematical expectation in Forex trading.
Education
by DeGRAM
6
My Trading Routine - Not that you care It’s no holy grain, but routine is crucial. You need to find what works vest for you. This way you’ll be able to streamline your trading activities. Here, I lift the curtain to reveal my daily trading routine — a blend of ritual, strategy, and discipline that helps me navigate the markets with confidence. My routine is not a magical formula for instant success, but a systematized approach that helps me get up and just get to it. Make Coffee First, the trading day starts with a good cup of coffee, lemon water and yoghurt and muesli. It’s not just about the caffeine kick, but also the ritual involved. Brewing coffee and the other bits, gives me time to mentally prepare for the day, clear my mind from distractions, and focus on the tasks ahead. The lemon water, kickstarts the stomach and neutralises the acids. Try it. It’s my simple, personal ritual that sets the tone for the rest of the day. Open My Charting Platform Once I’m caffeinated and alert, I log into my preferred charting platform. I use TradingView for the charts and a few trading platforms with the brokers. It’s essential to have a reliable, intuitive platform that aligns with your trading style and strategy. Over the years, I’ve customized my platform with specific tools and indicators that I regularly use, enabling efficient and focused analysis. As you’ve seen I have my customised indicators and setups ready to go. Analyse the Main Market Trends Trading bias is what sets the mood. Go onto your daily or weekly charts with different main indices. And jot down, on your trading platform whether you are. Long biased (Only looking for longs) Short biased (Only looking for sells) Neutral biased (Waiting for a breakout) This high-level analysis helps me understand the market’s overall mood and possible influencing factors. Also, I make a note of any significant events or releases scheduled for the day that might impact my trades. You can go to the TradingView Economic Calendar and check. Look for Trading Setups Next, I start scanning for potential trading setups. I use my pre-defined criteria and I look for opportunities that align with my trading strategy. Plug in Trading Levels After I’ve found potential setups and high probability trades. I determine my entry, stop-loss, take-profit levels and quantity to buy or sell for each trade. These levels are guided by my risk management rules and are non-negotiable. I use my pattern trading strategy accompanied with Smart Money Concepts. Execute Trades Finally, with all the analysis done and trading levels set. I just take the trade/s. This is where discipline really comes into play. Regardless of the market noise or sudden fluctuations, I stick to my plan. After all, successful trading is not about making impulsive decisions but about consistently following a well-thought-out strategy. So that’s it. There are a couple of other things, like analysing and re-evaluating the portfolio once a week and when to prepare for paying tax and possible withdraws and deposits. But this is more subjective and is determined in sporadic parts of the year, that changes each time. This is just a taste. Remember, a good trading routine is one that suits your personal style, strategy, and goals. So feel free to tweak, adjust, and make it your own.
TVC:SA40Education
by Timonrosso
Guard Your Funds: Only risk what you can afford to lose.🎉 Risk Management tip for Vesties and @TradingView community! 🚀 😲 We all know the saying "only risk what you can afford to lose," but do you know the powerful impact it can have on your trading journey? 🤔 In the ever-evolving world of cryptocurrency and futures trading, one fundamental principle stands as the cornerstone of profitable and sustainable trading journeys: Only risk what you can afford to lose. Embracing this essential concept is crucial for preserving capital, maintaining emotional stability, and cultivating a disciplined approach to risk management. In this article, we will delve into the significance of operating money and risk within the confines of one's financial capacity and explore the key pillars that underpin this approach. Understanding Risk Tolerance and Capital Allocation: 1. Assessing Individual Risk Tolerance: To truly understand one's risk tolerance and establish a robust risk management strategy, traders are encouraged to engage in a thought exercise that involves imagining potential losses in tangible terms. Visualize throwing money into the bin or burning it completely, purely to experience the feeling of losing money. This exercise may seem unconventional, but it serves a crucial purpose: it helps traders gauge their emotional response to monetary losses. During this exercise, consider the two extreme scenarios: the first being the largest amount of money you can lose without causing significant distress, and the second being the maximum amount of loss that would completely devastate you financially and emotionally. These two amounts represent your Fine Risk and Critical Risk , which reflects the sum you are willing and able to lose over a specific period of time without compromising your financial well-being. 👉 The next step involves breaking down the Fine Risk into smaller, manageable parts. 🔑 Divide the Fine Risk into 10 or even 20 equal parts, each representing the risk amount for every individual trade. This approach is designed to create a safety net for traders, especially when they encounter unfavorable market conditions. For instance, imagine a scenario where you face five consecutive losing trades. With each trade representing only a fraction of your Fine Risk, the cumulative loss remains relatively small compared to your risk capability, providing emotional resilience and the ability to continue trading with confidence. By splitting the Fine Risk into smaller portions, we can safeguard their capital and ensure that a string of losses does not result in irreversible damage to our trading accounts or emotional well-being. Additionally, this approach promotes a disciplined and structured trading mindset, encouraging us to adhere to their predefined risk management rules and avoid impulsive decisions based on emotions. Remember, risk management is not solely about avoiding losses but also about preserving the means to participate in the market over the long term. 2. Establishing a Risk-to-Reward Ratio: The risk-to-reward ratio is a critical metric that every trader must comprehend to develop a successful trading system. It is a representation of the potential risk taken in a trade relative to the potential reward. For a well-balanced and sustainable approach to trading, it is essential to ensure that the risk-to-reward ratio is greater than 1:1.10. A risk-to-reward ratio of 1:1.10 implies that for every unit of risk taken, the trader expects a potential reward of 1.10 units. This ratio serves as a safety measure, ensuring that over time, the profits generated from winning trades will outweigh the losses incurred from losing trades. While there is a popular notion that the risk-to-reward ratio should ideally be 1:3, what truly matters is that the ratio remains above the 1:1.10 mark. Maintaining a risk-to-reward ratio of at least 1:1.10 is beneficial for several reasons. Firstly, it allows traders to cover their losses in the long term. Even with a series of losing trades, the accumulated profits from winning trades will offset the losses, allowing traders to continue trading without significant setbacks. Secondly, a risk-to-reward ratio higher than 1:1.10, combined with proper risk management and a well-executed trading system, enables traders to accumulate profits over time. Consistently achieving a slightly better reward than the risk taken can lead to substantial gains in the long run. 3. Determining Appropriate Position Sizes: Once you have a clear understanding of your risk amount and risk-to-reward ratio, you can proceed to calculate appropriate position sizes for each trade. To do this, you can use a simple formula: Position Size = (Risk Amount per Trade / Stop Loss) * 100% Let's take an example to illustrate this calculation: Example: Risk Amount per Trade: $100 Risk-to-Reward Ratio: 1:2 Stop Loss: -4.12% Take Profit: +8.26% Using the formula: Position Size = ($100 / -4.12%) * 100% Position Size ≈ $2427.18 In this example, your calculated position size is approximately $2427.18. This means that for this particular trade, you would allocate a position size of approximately $2427.18 to ensure that your risk exposure remains at $100. After executing the trade, let's say the trade turned out to be profitable, and you achieved a profit of $200. This outcome is a result of adhering to a well-calculated position size that aligns with your risk management strategy. By determining appropriate position sizes based on your risk tolerance and risk-to-reward ratio, you can effectively control your exposure to the market. This approach helps you maintain consistency in risk management and enhances your ability to manage potential losses while allowing your profits to compound over time. Emotions and Psychology in Risk Management: A. The Impact of Emotions on Trading Decisions: Emotions can significantly influence trading decisions, often leading to suboptimal outcomes. Traders must recognize the impact of emotions such as fear, greed, and excitement on their decision-making processes. Emotional biases can cloud judgment and result in impulsive actions, which can be detrimental to overall trading performance. B. Recognizing and Managing Fear and Greed: Fear and greed are two dominant emotions that can disrupt a trader's ability to make rational choices. By developing self-awareness and recognizing emotional triggers, traders can gain better control over their reactions. Implementing techniques to manage fear and greed, such as setting predefined entry and exit points, can help traders navigate turbulent market conditions. C. Developing a Disciplined Trading Mindset: A disciplined trading mindset is the bedrock of successful risk management. This involves adhering to a well-defined trading plan that outlines risk management rules and strategies. By staying committed to the plan and maintaining a long-term perspective, traders can resist impulsive actions and maintain discipline during times of market volatility. D. Techniques for Avoiding Impulsive and Emotional Trading: To avoid impulsive and emotional trading, traders can employ various techniques. Implementing cooling-off periods before making trade decisions allows traders to gain clarity before acting. Seeking support from trading communities or mentors provides valuable insights and helps traders stay grounded. Utilizing automated trading systems can reduce emotional interference and ensure trades are executed based on predefined criteria. In the world of cryptocurrency and futures trading, the fundamental principle of "only risk what you can afford to lose" remains the cornerstone of successful trading. Embracing this concept is essential for preserving capital, maintaining emotional stability, and cultivating a disciplined approach to risk management. Understanding individual risk tolerance and breaking down total risk into smaller portions allows traders to navigate unfavorable market conditions with resilience. Maintaining a risk-to-reward ratio above 1:1.10 ensures that profits outweigh losses over time, while determining appropriate position sizes enables effective risk control. Emotions play a significant role in trading decisions, and managing fear and greed empowers traders to make rational choices. Employing techniques to avoid impulsive trading, like cooling-off periods and seeking support, reinforces a disciplined trading mindset. In conclusion, adhering to the principle of only risking what you can afford to lose leads to sustainable success in the dynamic trading world. By implementing effective risk management practices, traders enhance their chances of achieving profitability and longevity in their trading journeys. 📝👋 Feedback is super important to us! 😊 We would absolutely love to hear your thoughts and comments about the article. 🧐 Did you find the information helpful and well-explained? 🤔 Your feedback means a lot to us and will help us improve our content to provide better insights in the future. 😇 Thank you so much for taking the time to share your thoughts! 🙏 We're excited to hear from you! 💬
INDEX:BTCUSDEducation
by Vestinda
The Importance of Understanding the financial statements Introduction: Investing in the stock market can be an exciting venture, but it also comes with inherent risks. As a beginner investor, it's crucial to arm yourself with the right knowledge and tools to make informed decisions. One of the fundamental aspects of analyzing a company's financial health is understanding its balance sheet and income statement. These two financial statements offer a glimpse into the company's financial position, performance, and overall stability. In this article, we will explore why understanding the balance sheet and income statement is essential before diving into the world of investing. Assessing Financial Health: The balance sheet provides an overview of a company's assets, liabilities, and shareholders' equity. By understanding this statement, investors can assess the financial health and stability of a company. A strong balance sheet, with healthy assets and manageable liabilities, indicates a stable and well-managed company. On the other hand, a weak balance sheet with high debt levels may signal financial instability and higher risk for investors. Evaluating Profitability: The income statement offers insights into a company's revenue, expenses, and net income or profit. Analyzing the income statement helps investors understand how profitable the company is over a specific period. Consistent and growing profits are positive indicators of a company's ability to generate returns for shareholders. On the contrary, persistent losses or declining profits might raise concerns and influence investment decisions. Identifying Trends and Patterns: Regularly analyzing the balance sheet and income statement over multiple periods allows investors to identify trends and patterns in a company's financial performance. Patterns of consistent growth or steady improvements in key financial metrics can instill confidence in investors. Conversely, erratic or downward trends might serve as cautionary flags, prompting further investigation before making investment choices. Assessing Investment Risk: Understanding the balance sheet and income statement helps investors gauge the level of risk associated with investing in a particular company. A company with low levels of debt and stable revenue streams may offer a more secure investment compared to a company with high debt and fluctuating earnings. By understanding the financial statements, investors can better match their risk tolerance with suitable investment opportunities. Making Informed Investment Decisions: Investing without understanding the company's financial health is akin to taking a shot in the dark. A thorough analysis of the balance sheet and income statement empowers investors to make informed decisions based on objective data rather than emotions or speculative rumors. It provides a solid foundation for evaluating a company's potential for growth and long-term sustainability. Identifying Red Flags: Misinterpreting or overlooking crucial information in the financial statements can lead to costly mistakes. Understanding these statements helps investors spot red flags such as declining revenues, rising expenses, increasing debt levels, or unusual accounting practices. Recognizing these warning signs early can prevent investing in companies with underlying financial troubles. Conclusion: In conclusion, understanding the balance sheet and income statement is a fundamental skill that every investor should possess. These financial statements provide valuable insights into a company's financial health, profitability, and overall stability. By analyzing these statements, investors can make informed decisions, assess investment risks, and identify potential investment opportunities. Armed with this knowledge, beginner investors can navigate the complex world of the stock market with greater confidence and increase their chances of achieving their financial goals. Remember, successful investing is a journey of continuous learning and diligent analysis.
HKEX:3333Education
by thesharkke
1
The Mindset of a Market SpeculatorThe Mindset of a Market Speculator: Nurturing a Resilient, Adaptable, and Knowledge-Driven Approach Trading in the stock market is akin to walking a tightrope between risk and reward, where success is contingent on the mindset of the speculator. In this comprehensive exploration, we delve deeper into the multifaceted mindset that defines triumphant stock market speculators. By emphasizing the pivotal qualities of resilience, adaptability, continuous learning, discipline, and emotional intelligence, we uncover the intricacies of their journey towards consistent profitability and enduring success. Resilience: Thriving Amidst Adversity Resilience is the bedrock of a successful speculator's mindset. In the tempestuous world of trading, losses are an inevitable part of the journey. However, resilient speculators view setbacks as valuable learning experiences and stepping stones towards improvement. They maintain an unwavering determination to bounce back from losses, rather than being deterred by them. Furthermore, a resilient mindset enables speculators to persevere through the emotionally taxing periods of uncertainty and volatility. By embracing challenges with a positive outlook, they maintain their focus and motivation to achieve their long-term trading objectives. Adaptability: Mastering the Ever-Changing Landscape The stock market is a dynamic ecosystem, influenced by a myriad of internal and external factors. A successful speculator understands that strategies that proved fruitful in the past may not guarantee future success. Hence, adaptability is a cornerstone of their approach. Adaptable speculators continuously monitor the market landscape, staying abreast of economic indicators, technological advancements, and geopolitical developments. They are quick to identify shifts in market sentiment and trends, enabling them to modify their trading strategies accordingly. This ability to pivot and embrace change fosters resilience in the face of evolving market conditions. Continuous Learning: A Lifelong Pursuit of Mastery A commitment to continuous learning is a distinguishing characteristic of top-performing speculators. They recognize that the stock market is an ever-evolving arena and strive to enhance their analytical and decision-making skills continually. Successful speculators engage in rigorous market research, study historical data, and analyze various market indicators. They embrace various forms of analysis, including technical, fundamental, and sentiment analysis, to make informed trading decisions. Additionally, they attend seminars, participate in trading forums, and seek guidance from experienced mentors to glean valuable insights. Discipline: The Guardian of Consistent Performance Discipline is the guardian of success in the world of stock market speculation. A disciplined approach ensures that speculators adhere to their trading plans, follow predefined risk management strategies, and resist the allure of impulsive decisions. Disciplined speculators set clear entry and exit points, employ stop-loss orders, and maintain a prudent position sizing strategy. They avoid emotional trading and detach themselves from market noise, instead relying on their well-researched analysis and trading rules. This steadfast discipline fortifies their decision-making process and helps them weather the emotional highs and lows of trading. Emotional Intelligence: Mastering the Mind Games The stock market is not merely a test of analytical prowess but a battleground of emotions. Successful speculators master the art of emotional intelligence, understanding that emotions can cloud judgment and lead to irrational decisions. By cultivating self-awareness, speculators recognize their emotional triggers and develop coping mechanisms to manage stress and anxiety. They practice mindfulness techniques, meditation, or engage in physical activities to maintain a clear and composed mindset. Emotional intelligence empowers speculators to maintain a level-headed approach even in the face of unexpected market movements. Summarising, the mindset of a triumphant stock market speculator is a multi-faceted tapestry of resilience, adaptability, continuous learning, discipline, and emotional intelligence. Armed with unwavering resilience, speculators embrace challenges as learning opportunities, enabling them to endure through market fluctuations. Adaptability empowers speculators to evolve with changing market dynamics, ensuring their strategies remain relevant and effective. Continuous learning fuels their quest for mastery, equipping them with a profound understanding of market intricacies. Discipline is the backbone of consistent performance, shielding speculators from emotional impulses and maintaining their focus on long-term objectives. Emotional intelligence serves as a guiding compass, allowing speculators to navigate the emotional highs and lows of trading with composure. By intertwining these qualities, successful speculators cultivate a mindset that fosters adaptability, rationality, and resilience. Armed with this holistic approach, they stand poised to navigate the ever-changing seas of the stock market, capitalizing on opportunities and achieving sustainable success. Remember, the stock market is not merely about predicting prices but embracing the journey of self-improvement and honing the art of speculation. 🚀 If you appreciate my work and effort put into this post, I encourage you to leave a like and follow on my profile 🚀
OANDA:XAUUSDEducation
by InvestMate
1