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How to build a Trading Strategy?Hey, fam, welcome on another educational post! The topic is the following: step-by-step guide to building a working trading strategy The process of building a trading strategy that will lead one to the doors of consistent and profitable trading is a pretty difficult one and it takes quite some time and effort. 1) Firstly, it is crucial to identify what kind of trader you are. If you have plenty of time in your hands to to sit in front of the monitor and go through the charts 24/7, then scalping or intraday trading would be suitable for you. If you enjoy clicking “Buy” and “Sell” buttons and opening 10-15 or even more transactions per day, then two of the above listed styles would be suitable for you. On the other hand, if your timetable is packed with different activities all the time and you do not have enough time to sit in front of the charts, swing or position trading would work the best for you. If you are aiming for making big gains instead of small “quick profits”, then both swing trading and position trading can fill your needs. 2) Moving on to the next step, it is crucial to have a watchlist, or in other word, a "favourites" list. It is better to have a batch of 5-10 favourite tradeable securities, than trading random things all the time. Let’s bring a real-life example: Would you prefer having 5 pets and take care of them individually, or 40 pets? What we are trying to emphasise, it is better to make yourself familiar with a pair and be able to read it like a book. Moreover, it is much easier to monitor 10 familiar setups rather than 50 random pairs. Thus, take some time skimming through various setups, and add them into your watchlist upon “falling in love with them”. 3) Always have a clear entry and exit strategy, and always ask yourself the following questions before entering a trade: “Why am I buying/selling this security?”, “Where are my Target Profit and Stop Loss set?”, “What portion of my trading capital am I risking on this trade?”. Every trader has his or her own entry and exit plan. Try to thoroughly examine all possibilities and see what works best for you. For example: enter when a nice wick candle has been formed around the area of demand/supply that aligns with 61.8% Fibonacci retracement level, set a fixed Target Profit of 1:3 Risk-to-reward, set the Stop Loss below the formed Double Bottom . 4) Execute, journal, optimize! If a trade goes wrong, ask yourself a question: “What went wrong and could I have prevented it?”. Make some modifications in your plan if necessary. 5) Never underestimate fundamentals and heavy economic or real-life news. Some examples are NFP, Markit Manifacturing PMI, quarter/annual GDP growth news. Moreover, wars/conflicts between two countries are crucial to be aware of as well. These heavy news have it all to mess the market around. Therefore, always consider these events, make your fundamental analysis and trade accordingly. Move your Stop Loss to the Breakeven point, or even exit a trade earlier in loss if needed, in order to stay safe before the news hit. 6) Last but not least, and most importantly, always stay patient, disciplined, free of emotions, cold-blooded, and remain loyal to your trading plan! “But my plan is not working. I endured 3 losses in a row. Should I immediately change my plan?”. The answer is a big fat “NO”. Instead of changing your strategy that took you so long to put together, think of identifying the week points and optimizing the plan.
BITSTAMP:BTCUSDEducation
by Investroy
7
Pyramid of Trading: a step-by-step guide to successHey, fam! Happy Saint Valentine's Day and welcome on another educational post. The topic is the following: a step-by-step guide to success in trading. We all start somewhere, right? Something grabs our attention and builds instant interest that makes us persuade a specific thing. If you decide to interview a number of traders and ask them reasons why they had decided to become a trader, they will all give you various answers. One will tell you that his motivational driver was a random guy on Instagram that drives a Lamborghini Urus and claims that he is a day-trader. Another one will state that he has always been aiming towards building a great career and becoming financially independent and so forth. Regardless of the background, all of them had started their trading journeys having the same drive, enthusiasm, passion, hunger, and motivation. One cannot simply succeed in this sector without being ambitious and eager enough. While the above stated characteristics serve as basis of motivation, the next tier is one of the most important ones, as it sets the ground for all upcoming success and profitability. It is crucial to keep constantly learning, brainstorming, making yourself familiar with new stuff, applying the learned in practice, and adapting to the changes that take place both in your life and in the market. After the fundament has been set, it is time to move to the main part: Planning, Executing, Journaling. First of all, if we have reached this particular tier, it means that we already have e strategy that we stick to and refrain from changing every week/month. We use this strategy to plan our trades and execute them once all criteria have been met. We journal all of the taken trades, both winners and losers. Journaling helps us optimize our strategy and make some chages in it if neccessary. As market conditions change quite rapidly, our strategy and business plan should be modified as well in order to account for those changes. In addition, regardless of anything, we remain patient, cold-blooded, and trust the process. After climbing all those tiers and reaching the very top of it, we can finally say that we are profitable and consistent, and we can enjoy the fruits of our own labour. Of course, it is never as easy as it may sound, but long-term vision, patience, and ambition can take him or her to the doors of profitability. Thus, we encourage all fellow traders to keep grinding and strive for prosperity! With love, Investroy Family
BITSTAMP:BTCUSDEducation
by Investroy
27
EUR/JPY: more room to the downside?As it can be inferred from the chart, the price has been on a bullish run since the beginning of February. As per usual, after a strong impulsive move, a correctional move is highly possible. Therefore, we are patiently waiting for the price to touch the zone of resistance identified on the chart once again, before we aim towards opening SELL positions and targeting the illustrated zone of support that nicely lines up with 50% Fibonacci retracement level. Happy trading, everyone!
Short
by Investroy
2
How Much Can You Make Trading Forex?Mark Twain once said: “There are lies, damn lies and statistics”. People lie, numbers usually don’t, unless manipulated by liars. If you ask somebody trying to sell you a course or some other products related to the market, they’ll promise you 3x of your money in a week and convince you can start in couple days. Sounds too good to be true? Because it is. One way to return to reality in the industry where everybody is showing off their gains and concealing loses is to look at other financial aspects of life (not in a self-diminishing way, but rather self-awaking). Average General Doctors make 41.000$/year in UK. What makes you think you can make that much in a month with even a 100.000$ account? Banks deposit interests are currently at low of 0.1-0.25%/year. This is self-explanatory as banks are perceived as one of the most conservative ways of keeping your money. S&P500 averages around 9.4%/year. 47% of Americans have invested one way or another (pension funds and 401k’s) into S&P500 as a good balance between security and profitability. What do you think is the risk should be to make 25x of that in a year? Answer: 3.5-5% per trade. Most of the market participants don't risk more than 1%/trade. Why wouldn’t they risk 5% per trade for more gains? Answer: you’ll get wiped out in couple trades :/ Becoming a lawyer takes 7 years on average. Why would somebody think that watching 2 videos on YouTube or reading 7 articles is enough to place a trade? Answer: Here, unfortunately, some brokers and traders try to convince newbies, in order to take advantage of them quickly. However, trust us, trading is no different than other full-time skills you have to acquire over long periods of time. Leading investment funds experience ROI drops every 3.4 months. Would you still think profitability 12/12 months a year is realistic? Answer: It is not. Bottom Line: Trading Forex is an interesting and rewarding way of making money, but the truth is even the best traders don’t usually make more than 5-15% a month on average. On the other hand, %s don’t matter. What matters is your personal demands! If you need to make 1000$ as a side income to add more comfortability to your life a 10.000-20.000$ account with a proper trading plan should do the job. If you’re trying to become financially independent do the math accordingly 😊 Oh and also, if somebody tries to tell you something marked red in the Myths section, respectfully, stay away from them! (RUN!)
BITSTAMP:BTCUSDEducation
by Investroy
19
EUR/USD: detailed breakdown and next possible targetsAs it can be inferred from the chart, the price opened lower this week as the market digested the US job reports over the course of the weekend. Moreover, technical analysis backs up a possible SELL opportunity as well. The price was super bullish last week and possible correctional moves are definitely needed. In addition, it can be observed that the price is forming a top at a crucial zone of resistance. We are eyeing two targets and waiting for the price to drop and hit at least the first one. The first target is pretty straightforward as it is set at the 0.382 Fibonacci retracement level. The second target is placed on the area of previous resistance now turned support that nicely aligns with 50% Fibonacci retracement level. Have a great trading week, everyone!
Short
by Investroy
27
EUR/GBP: correctional move is needed!As it can be inferred from the chart, last week's heavy GBP fundamentals managed to push the price up by almost 200 pips. After an impulsive move, a correctional move is definitely needed. We are patiently waiting for the price to tap the area of 0.84700 resistance once again, before it can start pushing to the downside. When a valid top is formed, we will be opening short positions and aiming for the area of 0.838, which is a previous zone of resistance now turned support that lines up with 50% Fibonacci retracement level.
Short
by Investroy
14
Traders vs Gamblers: Know the main differences!Hey, fam! Happy Friday and welcome on another educational post. The topic is the following: differences between a trader and a gambler. We are gonna go through 6 crucial points and elaborate how traders are different from gamblers. 1) As a trader, one’s aim is to focus on the next 100 trades instead of the next 10. Long-term success, profitability, and consistency are two of the main things traders should target. However, a gambler’s wish and desire is to make quick money. 2) A successful trader/investor has a backtested trading plan that he sticks to and optimizes along the way, adapting to changing market conditions. On the other hand, gamblers like to trade based off what other people think and tweet, or by simply opening a random Buy/Sell position and hoping it plays out successfully. 3) Profitable traders always diversify their portfolio and risk no more than 1-2% per trade. On the contrary, gamblers go “full margin mode” on a single trade without setting a Stop Loss and end up blowing their accounts and blaming the markets. 4) Chasing markets and rushing the process is not what real traders do. Instead, they follow their plan and wait for the price to play out and match their entry criteria before executing. Nonetheless, gamblers like to overtrade, open positions based on nothing, make biased decisions. 5) When enduring a loss or two (or three), traders neither get emotional nor try to revenge the markets. They know that if they obey risk management principles and open high risk-to-reward positions, they will cover all their previous losses and get back to making profits. Gamblers, on the other hand, get angry and start attempting to revenge the market by making foolish decisions and entering many illogical trades. 6) Last but not least, if you want to be successful and profitable in this field, you have to treat trading as a business and take things seriously. Those that think markets are a playground or a casino machine will never succeed in this space.
Editors' picks
BITSTAMP:BTCUSDEducation
by Investroy
255
USD/JPY: growth is imminentTo start, the overall sentiment of the market is bullish. Narrowing down to 8H and 4H timeframes, it can be inferred that a nice uptrending channel has been formed and the price has rejected the lower boundary of it. The previous H4 candle has penetrated through a local zone of previous support turned resistance and closed above it. It is now expected that the price will re-test the same area again and complete the formation of an Inverse Head and Shoulders pattern. From there on, we will be aiming towards opening BUY positions and targeting the 115.8 area of the upper boundary of the formed ascending channel.
Long
by Investroy
6
The Complete Guide Into The World of IndicatorsGood time of the day, traders! As you can tell from a pretty self-explanatory name, this is our last and full review on all of the most useful indicators available for public use. The first two parts are linked to this post and now we’re going to take a look at our last 3 indicators. The Williams Percent Range, commonly known as the Williams Percent R, is a momentum indicator that displays where the most recent closing price is in relation to the highest and lowest prices during a specified time period. William’s percent R is an oscillator that notifies you whether a currency pair is "overbought" or "oversold." Consider it a more sensitive and less popular form of Stochastic. It has RSI-like characteristics as a momentum indicator since it evaluates the strength of a current trend. Traders, on the other hand, utilize percent R's extreme values (-20 and -80) for clues, whereas RSI employs its mid-point number (50) to gauge trend strength. It might be useful to judge the strength of a trend, independent of its direction, while trading. When it comes to determining the strength of a trend, the Average Directional Index is a widely used technical indicator. Another type of oscillator is the Average Directional Index, or ADX for short. The ADX is a trend indicator that ranges from 0 to 100, with values below 20 suggesting a weak trend and readings above 50 indicating a strong trend. The ADX formula is complex, but in a word, the greater the ADX, the stronger the trend. When the ADX is low, it signals that the price is likely to move laterally or trade in a range. When the ADX rises above 50, it means that the price is gaining momentum in one direction. In contrast to Stochastic, ADX does not indicate whether a trend is bullish or bearish. Rather, it only assesses the present trend's strength. As a result, ADX is frequently used to determine if the market is range or beginning a new trend. The ADX is a "non-directional" indicator. It is based on comparing the highs and lows of bars, rather than the bar's closure. Regardless of whether the trend is up or down, the greater the reading, the stronger the trend. Ichimoku Kinko Hyo (IKH) is a price momentum indicator that forecasts future levels of support and resistance. Ichimoku may be used to any tradeable asset in any time frame. (Originally, it was used to exchange rice) In both rising and declining markets, Ichimoku can be utilised. Do not use Ichimoku where is not an obvious trend and market is choppy. Pro-tip: Ichimoku works the best for JPY pairs. Honestly, while writing about Ichimoku (which I used every day couple years ago), I realized that it’s a very large topic by itself. So, leave a comment, if you guys want more details on how to set it up and use it. As per usual, have a great trading week, fam!
BITSTAMP:BTCUSD
by Investroy
25
BITCOIN (BTC/USD): $33k en routeBitcoin keeps dropping like a needle and there is definitely more room to the downside. Golden rule states that after an impulsive move, a correctional move is needed. If we use the Fibonacci retracement tool, we can clearly observe that the price has been rejecting the area of 50% Fibonacci retracement and forming a top before another drop. As multiple confluences line up nicely, we are expecting for the price to continue dropping and reach the area of the $33k current Low.
BITSTAMP:BTCUSDShort
by Investroy
30
GOLD (XAU/USD): correction timeAs it can be inferred from the chart, the price dropped massively last week. As a rule of thumb, after a massive impulsive move, a correctional move is needed. The price is currently sitting on a major zone of support and a valid bottom is being formed. Our overall bias remains bearish for this pair, but a short-term BUY opportunity is what we are eyeing. We are expecting for the price to keep rising and reach the area identified on the graphical illustration to complete the correctional move. 61.8% Fibonacci retracement level also lines up with the area of resistance that we are targeting. Happy new trading week, everyone!
OANDA:XAUUSDLong
by Investroy
36
Success is a one big IcebergJust like real life, trading life is full of ups and downs. You know those days when you wake up with an absolutely awful mood and you can't figure out possible reasons? Well, there could be several factors influencing it: negative energy of the outside world, bad weather, personal problems and so forth. It is very similar to checking the markets and noticing that everything is so choppy that there is nothing to trade. Several determinants here as well, such as heavy economic news, holidays, or just a bay day with no opportunities (after all, not every day is a trading day). One thing that gets us through these challenges faced is patience, because, after all, time heals all pain wounds and fixes most of our problems. I quote Shakespeare: “The evil that men do lives after them; The good is oft interred with their bones". To reverse-engineer and interpret it into the trading language: "People only see the end goal, the glory, the monumental win. They don’t see the dedication, hard work, persistence, discipline, disappointment, sacrifices, and many failures it takes to reach success". In more simple terms, people only see the tip of the Iceberg (success, amazing profits, consistency), and not the bottom of it (sleepless nights, hard work, dedication, failure, pain). Not a single skill is learnt over the course of a night. Just like it takes several years of practice, hard work and expertise to become a successful lawyer, a famous actor, and an exceptional doctor, it takes years of hard work, passion, and dedication to become a consistently profitable trader/investor.
Editors' picks
BITSTAMP:BTCUSDEducation
by Investroy
107
EUR/USD: detailed analysis and next target After not being able to remain above the sideways moving range after a massive bullish breakout, the price dropped below the crucial level of resistance and retested it. As it can be inferred, 50% Fibonacci retracement level acts as a confluence as well. A downtrending trendline has been formed on the lower timeframes and the price is nicely rejecting it. We are expecting for the price to keep dropping and reach the area of 1.118 support. Happy trading, everyone!
Short
by Investroy
26
USC/CAD: re-test almost over, time to keep growingThe price had been downtrending for the past couple of weeks before finally breaking out of the descending trendline and making its way to the 1.27 area. After an impulsive move, a correctional move is much needed. Therefore, we targeted the 1.256 zone of previous resistance now turned support that aligns with the golden Fibonacci ratio zone (0.5-0.618). Now that the price has reached the initially targeted zone, we are waiting for it to form a nice bottom and bounce off the area of demand before continuing its upside movements and reaching the zone illustrated on the graph.
Long
by Investroy
25