Learning OpportunityTrend Following.
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Learning
I’m not optimistic for the cable…I do not think the cable can hold its position for much longer. I’m expecting a lot of choppiness whilst the cost of living crunch is in focus and inflation is such a focal point.
With an expected “EU Law Bonfire” and the Northern Ireland debacle, I don’t see any positivity anytime soon.
I appreciate you reading and please, help me increase my reputation so I can talk with you all. This is an incredibly messy chart that has some merit, but a clean chart is always preferable. The candles always speak louder than any indicator.
4️⃣ Trading habits that have to go 👋We've all done it.
At some point in your trading journeys bad habits set in.
Here is my four trading habits you've got to kick in order to stay profitable.
1. Overtrading
We all been there with this one.
We think we have to be in the market all the time.
We don't and its okay to be flat at times.
No strategy should have excessive trade volume.
More time in the markets the more chance of catching a cold.
Overtrading can happen when we also start revenge trading.
You've caught some losses and your trying to get it all back.
Don't overtrading combined with revenge trading is a no no. Take a break.
Trading with no strategy or system
Should never be in the markets with out a plan or system.
More importantly no trader should be entering markets with out a proven edge.
Back test and forward test your strategy and make sure you are entering markets with a proven plan.
Psychology wise it makes trading so much easier to deal with.
No plan will lead to nothing but stress and losses.
No stop loss
Trading with no stop loss is biggest sin of all.
It's just not worth risking huge amounts of your trading capital on the line.
One big crazy move in this uncertain world could do damage.
Plus how can you develop a proven plan if stop loss is not included.
Also moving your stop loss should not be part of your trading.
As you've just altered any strategy being trading into the unknown category.
No risk management
So I've mentioned stop loss but that is only one element of risk management and it doesn't stop there.
Risk management includes many aspects you'll need to consider.
That includes position sizing relative to your capital size.
The psychology behind losing runs and how they are factored into your trading plan.
Work to set and proven trading rules as part of your risk management.
Be sure not to add to losing positions.
Know when you are wrong and move on to the next.
Failure to follow risk management means you will essentially be gambling.
Be realistic in expected returns is a big factor in risk management.
Sticking to all of the above and not allowing these habits to enter your trading will ensure you keep that trading account growing.
Thanks for taking the time to read my idea.
Darren 👍
Candlestick Action | How Candles Are Formed🕯
❗️Japanese candlesticks as a technical analysis tool were invented earlier than others, but they were not widely used immediately. By the name, it is easy to guess that Japan became the "homeland": local rice traders used this method already in the 18th century. However, due to the geographical remoteness and closeness of the country from external "visitors", this type of chart gained popularity much later, when exchange life was already actively boiling in Europe and the USA.
✅What is hidden behind the candlestick chart?
🟢A candle is formed from 4 prices: opening, closing, high and low for a certain period of time. If we take a timeframe of a minute, then each candle will indicate the price movement within this minute, if an hour is inside an hour, if a day is inside a day. The distance between the opening and closing price is the "body" of the candle, and the tails show to what lows and highs the price reached. If the opening price was higher than the closing price, then the candle will be black; and vice versa: if the opening price is lower than the closing price, then the candle will be white. It turns out that candles are, in fact, the psychology of the market, they most accurately reflect the fears and hopes of its participants.
🟢The charts of Japanese candlesticks themselves are valuable for analysis: the resulting models are interpreted as models of reversal or continuation of the trend. It is also important to understand: each individual candle or a combination of candles is just a way of depicting the actions and moods of all bidders for the period we have chosen (day/week/ month, etc.). The fact is that human behavior is quite formulaic in the same situations, and that is why various methods of chart analysis are so popular with investors and traders.
🟢Looking at only one or several candlesticks, a "savvy" viewer can easily understand whether the market is set to rise or fall, change the current trend or its continuation, increase the momentum of movement or its attenuation.
⚠️It is important to understand that the behavior of individual bidders develops into a general market movement, which can be "read" using charts of Japanese candlesticks and their basic models. Therefore, your optimal investment decisions will be supported by the most effective moments of entry or exit from the position, which will significantly improve the financial result.
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BankNifty Intraday Trade Setup for 17th May 22The market is likely to go sideways in the First half today, Not Expecting any Big moves
The Red Zone is the supply Zone and the Green Zone is the Demand Zone, I plan to buy in the Demand Zone (But not sure), so be active on this post to see my live positions and Trades
Do Support by Liking and Commenting on our Post as it motivates us to post more such ideas
The chart is for study purposes only!!
NSE:BANKNIFTY NSE:BANKNIFTY1!
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The Rule of 72 😃📈Time for a educational post from me.
At some point as traders we have all had the thought of how long will it take to double my account.
The rule of 72 is the easiest way to work that one out.
The rule of 72 is a handy mathematical rule that helps in estimating approximately how many
years it will take for an investment to double in value at a specified rate of return.
Rule of 72: If 72 is divided by an interest rate, the result is the approximate number of years
needed to double the investment. For example, at a 1% rate of return, an investment will
double in approximately 72 years; at a 10% rate of return it will take 7.2 years.
But the example above is based on a 10% return per year.
We as traders have the chance if our strategy is consistent and profitable to return good percentages on capital in a matter of weeks.
Time for more examples.
Some traders can return 6% a month
So 72/6 = 12 months to double the invested capital in your account.
Lets say a trader returns 4% month on month
72/4 = 18 months to double your investment.
The rule of 72 servers two purposes to us as traders.
1. I personally feel it helps to keep us grounded as traders.
To many enter this game thinking they will flip 1000 into 10000 in a matter of weeks
A 4% return per month is a good return and from the equation above it would take 18 months to turn 1000 into 2000!
So I would like to think the rule of 72 acts as reminder of the challenges we face when it comes to expectations.
2. Having said the above the rule of 72 also serves as a reminder that as traders who do or potentially can go on and
achieve consistent profits especially monthly we can make way more returns than what a instructional bank or establishment would
offer to you as an investor. The rule of 72 then becomes an inspiration to take control of your own money game and aim for growth
that no one else can offer you.
Thanks for taking time to look at my idea.
Darren 👍
Morning Star Pattern: how to trade?🌟
❗️The Morning Star pattern is a market reversal pattern consisting of three candlesticks that indicate bullish superiority. This pattern warns us about the weakness of the ongoing downtrend, which, in turn, suggests the beginning of an uptrend.
⚠️Traders observe the formation of the "Morning Star" pattern on the price chart, and then confirm with the help of other technical tools on the Forex currency market.
✅Morning Star pattern: Three forming candles
⏺Big Bearish Candle
⏺A small bullish or bearish candle
⏺Big Bullish Candle
The most important thing to remember is always that the market must be in a downtrend in order to trade according to the "Morning Star" pattern.
In order to confirm the downtrend, mark the lowest lows and the lowest highs.
1️⃣The big bearish candle is the first part of the Morning Star reversal pattern. This candle indicates that the bears are in full control of the market, which means that sellers continue to pressure the market.
At the moment, you should only look for sale deals, since there are no signs of a reversal yet. Here the Morning Star pattern is just beginning its formation.
2️⃣A small bullish/bearish candle is the second candle that starts with a bearish gap down. This candle indicates that sellers are unable to lower the price, despite very great efforts.
The price action ends with the formation of a rather small bullish/bearish candle (Doji candle).
If this candle is bullish, then we have an early sign of a trend reversal.
3️⃣A large bullish candle is the third candle that has the greatest significance, because here the real pressure of buyers is manifested. If the candle starts with a break, and buyers can push prices up by closing the candle even above the first red candle, this is a clear sign of a trend reversal.
✅Morning star: how to trade this pattern on Forex?
As we already know, the Morning Star pattern is a reversal pattern. As a rule, it indicates that bulls are capturing the trend, and bears are losing control.
Most beginners trade using the "Morning Star" pattern on their own, without using technical tools, or at least tips from more professional traders.
We do not recommend doing this — it is not as reliable as it may seem. Always connect this pattern with other reliable indicators, support and resistance levels, as well as trend lines.
So, in this strategy, we combined the Morning Star pattern with volume. Volume plays an important role in the formation of the model.
If the first red candle shows a low volume, then this is a good sign for us. Then, if the second candle is green and the volume is growing, this indicates buyer pressure.
After all, the volume of the third long green candle should be high. The large volume of the last candle indicates the confirmation of the upcoming trend and the entrances to purchase transactions.
If the third bullish candle has a low volume, do not pay attention to the fact that the Morning Star is forming. This volume does not indicate a bullish reversal.
To sum up: do you observe the closing of the third candle with a large volume? Open buy positions and move along with the uptrend until there are signs of a reversal.
✅Morning Star pattern: entry, take profit and stop loss
We have to open a deal when the next green candle closes. There are many ways to lock in profits.
We can close a position in any resistance zone or supply-demand zone. In this deal, we hold our positions because we have opened a deal since the beginning of a new trend.
You can also close your positions when the price approaches a significant resistance level on the higher timeframe.
⚠️Combining this pattern with volumes makes trading more reliable. Therefore, you need to place a stop loss just below the second candle.
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What is a Gap in Trading? | Different Types of Gaps Explained 📚
Hey traders,
In this article, we will discuss a very common pattern that is called gap.
In technical analysis, the gap is the difference between the closing price of the previous candlestick and the opening price of the next candlestick.
📈Gap up represents a situation when the price bounces up sharply at the moment of a transition from one candlestick to another. The price gap that appears between them is called gap up.
📉Gap down represents a situation when the price drops sharply at the moment of a transition from one candlestick to another, the price gap between the closing price of the previous candle and the opening price of the next candle is called a gap down.
From my experience, I realized that with a high probability the gap tends to be filled. For that reason, once you see a gap, consider trading opportunities around that.
Depending on the market conditions where the gap appears, there are several types of a gap to know:
1️⃣Common gap appears in a weak, calm market. When the trading volumes are low and the market participants are waiting for some trigger, or the asset reached a fair value price.
2️⃣Breakaway gap appears in a situation when the price suddenly breaks a structure (support or resistance) in a form of a gap.
Such a gap usually confirms a structure breakout.
3️⃣Runaway gap usually appears when the market is growing or falling sharply. It signifies the dominance of buyers/sellers and highly probable continuation. Usually, such gaps are not filled.
4️⃣Exhaustion gap is, in contrast, appears around major key levels and signifies a highly probable reversal. The exhaustion gap is usually confirmed by a consequent strong opposite movement that fills the gap.
Learn to recognize gaps on a chart and learn to interpret them. It will increase the accuracy of your technical analysis.
❤️If you have any questions, please, ask me in the comment section.
Please, support my work with like, thank you!❤️
Support & Resistance Levels | Trading Basis📚
❗️The concepts of support and resistance are fundamental concepts of technical analysis of financial markets. They are applicable to almost any market, be it stocks, Forex, gold or cryptocurrency.
❗️And although these concepts are easy to understand, in practice they are quite difficult to master, since the definition of levels is completely subjective, and their behavior depends on many conditions. So first of all it is important to learn to distinguish their types. To do this, you will have to familiarize yourself with a lot of graphs, and this guide will help you.
✅What is support and resistance?
🟢At the most basic level, support and resistance are simple concepts. To determine them, the maximum and minimum price indicators are displayed, acting as a kind of barrier. At the same time, the lower values of the chart represent the support level, and the upper values represent the resistance level. In fact, the level of support can be viewed from the point of view of demand, and the level of resistance – from the point of view of supply.
🟢Despite the fact that support and resistance levels are usually denoted by lines, in reality they usually look different. It should be borne in mind that markets are not governed by any physical law that does not allow indicators to go beyond a certain level. Therefore, it is more appropriate to consider support and resistance levels as areas. You can imagine these areas as ranges on the price chart, the approach to which is likely to cause increased activity of traders.
✅How Traders Use Support and Resistance levels
🟢Technical analysts use support and resistance levels to identify areas of interest on the price chart. At these levels, the main trend is likely to change its direction.
🟢Market psychology plays an important role in the formation of support and resistance levels. Traders and investors are guided by price levels that previously caused increased interest and trading activity. These areas will contribute to increased liquidity as many traders will be tracking the same price levels. Often, support and resistance zones create ideal conditions for entry or exit from a position for large traders.
🟢The concepts of support and resistance levels are key to effective risk management. Your trading opportunities may depend on your ability to consistently identify these zones. Usually, after the price reaches the support or resistance area, two possible events are possible. It either bounces off this area, or breaks through it and continues moving in the direction of the trend to the next potential support or resistance area.
🟢It is best to enter a trade when the price is near the support or resistance level, mainly because of its relative proximity to the cancellation point, where a stop loss order is usually placed. In case of a breakthrough of the area and invalidation of the transaction, traders will be able to reduce their losses, because the further the entry is from the supply or demand zone, the further the point of invalidation of the transaction.
🟢At the same time, you need to understand how these levels will change depending on changes in the situation on the chart. As a rule, a breakdown in the support area can turn it into a resistance area. Conversely, a broken resistance area may turn into a support area when it is retested. This pattern is called the support-resistance flip.
⚠️How to draw support levels correctly?
⏺Reduce the timeframe of your charts so that you can see the bigger picture.
⏺Draw the most obvious levels that tend to have the strongest price bounces.
⏺Adjust your levels to get the maximum number of touches.
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Four trading fears you will have to overcome 😱The stats for retail traders are not pretty.
It's no secret around 80% of all retails traders lose money.
The reason most fail is the four fears not being overcome.
Fear of being wrong!
We are emotional creatures and lets be honest none of us like being wrong.
This trait shows in some more than others but there is no place in trading for this trait.
It's impossible to 100% right all the time it's not even possible being 90% or 80% right all the time.
Once the reality sets in your not going to be right all the time we then as traders have fear of being wrong when seeking our trades or strategies.
Fear of losing money
We all suffer this fear at some point.
What we need to understand is all accounts suffer periods of drawdown.
I firmly believe the 80% of all retail traders stat is so high due to people losing money and quitting.
The reason money is lost is due to poor strategy or no strategy.
Once in a whole the fear of losing more will push people away from trading.
Fear of missing out
It's probably the fear of missing out that led you here in the first place.
You see all the lambo's on social media and the life style and fear of missing out is already in play.
Then comes seeing what everyone else has profit wise.
Then comes paying attention to everyone else and full blown FOMO instead of sticking to your own game.
Fear of leaving money on the table.
No better feeling than seeing your trades run in profit.
The screen is lit up blue and your loving it.
But now comes the fear of letting them trades play out.
Your leaving money on the table and it's now a fear you'll lose that money.
It's one of the biggest mistakes a trader makes!
Cutting winning trades to soon and letting losers run for to long.
So how to overcome these fears?
There's many elements to overcoming the four fears .
There's so may and then even sub elements of those.
Hence why this idea had the two brainstorm bubbles on the chart of what fears haunt us as traders.
Followed by the bubble of all the thoughts you need to take in to consideration as a trader.
It's imperative as traders we build a robust tested plan.
Sticking to your own plan and lane is crucial.
Just avoid others that blur your plan.
Losses are a part of trading quicker you accept this as a cost of business quicker that fear of losing money disappears.
There is many more on the chart drawing but quicker these behaviours are followed as a trader the quicker the four fears will disappear.
Here's to a good rest of the week🥂
Thanks for looking at my Idea
Darren 👍
How to win over greed?🎃1. Greed is the problem
Many beginners and even experienced traders face greed. It's a feeling that makes you believe in your superiority over the market:
• Opening a lot of trades, breaking risk management
• Continuing to trade after incurring a loss
• Refusing to take profits, hoping to earn more
• Averaging losing trades, because everything is about to change.
• Believing in the reliability of your pattern, although no pattern or indicator always works out 100%.
2. Why does greed take over?
We all have our own desires and goals. Society teaches us that we shouldn't deny ourselves comfort. This leads the vast majority to take out loans for new clothes, iPhones, Cars.. This is how people get used to greed's superiority and put it before discipline, getting accustomed to being able to live beyond their means.
What do you think happens to such people when they come into trading?
God forbid, such a person immediately learns about futures, then he will lose everything in a month at most. This is exactly the 95% who lose money in the market.
They suddenly see an opportunity to make a million out of $10,000 in a month, and, inspired by the stories of dogecoin millionaires from YouTube and Reddit, start to long bitcoin with x125 leverage.
There is another type. They do not rush to make money, they act more cautiously. They set themselves up right away that "trading is a long game and there is no hurry". They develop steadily and study pattern after pattern. However, their game pays off very slowly, and under the influence of their expertise they allow themselves more and more "experiments". They are like King Theoden from Lord of the Rings, who was slowly losing his mind under the watchful eye of Wormtongue.
3. How do you get around greed and start using it to your advantage?
Change your perspective. Instead of being greedy for money, become greedy for your professional growth . Ironically, if you stop focusing on money, they will come.
Create a journal and start analyzing your trades:
• What were your reasons for entering?
• Did you need to open that trade or was it suboptimal?
• Did you act under the influence of emotions, and if so, which one and why?
Develop, grow, and reward yourself when you get better, even if your trading results are unchanged. Your brain needs to get used to the fact that the most important thing now is discipline and small improvements. Step by step, you will become a profitable trader and, when you do, withdraw your honestly earned profits into fiat to reward yourself for your fortitude and persistence. You will succeed, because unlike all casino players, you will have the backbone and endurance!
Good luck on your journey! If you have any questions, feel free to ask them in the comments, I always check and answer them.
Leave a like so you can enjoy the trader psychology posts in the future as well, and thanks for reading to the end. You are the best!
10 Trading Commandments of a Successful Trader 📜
Hey traders,
In this post, we will discuss 10 divine rules that every trader must obey:
1️⃣ - Accept that risk and losses are a necessary part of trading.
Even though most of the traders are looking for a holy grail, for a system that produces 100% win rate, in fact, losses are inevitable, they are part of the game.
No matter how good you are as a trader, occasionally, the market will outsmart you.
2️⃣ - Have a proven trading system.
Trade only with a trading strategy that you backtested, that proved its accuracy and efficiency.
3️⃣ - Concentrate on the risk, not the reward.
Cut losses, and control your risk. Remember about risk management and never neglect that.
4️⃣ - Never trade without stop loss.
Some traders say that they can easily control losses without stop loss. Don't listen to them. Always set a stop loss once you are in a trade.
5️⃣ - Have an attainable target.
Setting a stop loss remember to know where to close your trade in profit. Follow strict rules and do not let your greed take you under control.
6️⃣ - Take your emotions under control.
No matter whether you are losing, winning, or do not see any trading setups to trade, your emotions will always try to distract you.
Be cold-hearted.
7️⃣ - Always stick to your trading plan.
Never break your rules, follow your system, and do not deviate.
Your trading plan is your only map.
8️⃣ - Limit your losses, never limit your profits.
While your gains can be scalable, your risks and losses must be fixed.
9️⃣ - Treat your trading as a business.
Trading should be treated with the same discipline as a business.
Every business has a solid business plan which entails how the day-to-day running of the business is done, and this also guides the decision-making process.
🔟 - Always journal your trades.
Always keep a trading journal. Record your winners and losers, entry reasons, mistakes, failures etc. Revise and learn from your mistakes.
Of course, that list can be extended and more commandments and rules can be added. However, these 10 in my view are the most important. Print this list and let it guide you in your trading journey.
What would you add to that list?
❤️If you have any questions, please, ask me in the comment section.
Please, support my work with like, thank you!❤️
The myth of risk management - Hack it :) I speak to a lot of traders, new and veteran.
It's surprising to see how so many are not sure how risk is calculated and what the exposure really means in terms of P&L.
This obviously is a major block in the road on the way to gaining confidence necessary to avoid losses.
So let's break it down -
*P&L is calculated by lot size * movement.
Example: If you have 100 ounces of Gold (1 lot) - That's $100 in P&L (Profit/loss) for each $1 Gold moves in value, so if the price 1890 and you are buying 1 lot , price moves by $5 higher - That's a $500 profit ($100*$) , same thing in reverse, if it would drop by $5 that's a negative of -$500 in open P&L.
Leverage decides what you are technically able to open in terms of margin used.
So if your leverage on Gold is 1:100 - The value of a 1 lot trade is the price of Gold multiplied by the amount of ounces , so let's say 1890*100 = $189,000 value trade, but your leverage is 1:100, so you would only need $1,890 of used margin (189,000:100) to open the trade.
But if you have 1:20 as leverage, you would need 5 times more used margin to open the trade.
So a common misconception is that your risk is your leverage.
That's not true.
Your risk is your lot size.
But if you have very high leverage , than you can open very high lot size with a small account - Which is extremely dangerous and not advised.
So what does an experienced , smart trader do? No matter what his leverage is, he understands the short-term and the long-term range of movement, and opens a lot size that fits the size of his account considering the range of movement.
If the account size is $100,000 , and you are buying 1 lot of Gold:
The weekly range is 1840-2,000 , the short-term range is 1880-1910 - Price is 1890
So the exposure is ~$1,000 in the short-term (1%) back to the short-term support 1880 , compared to $2,000 on the short-term resistance (2%) of 1910.
The long-term exposure is to 1840, meaning a $5,000 exposure 5% ($100*$50) from 1890 - but 2,000 is the top of the weekly range, meaning - $110 up ($110*100) = $11,000 (11%).
So didn't really matter what the leverage is 1:20 or 1:100, what matters here is the range and the lot size.
Thank you for reading!
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I promise to answer all comments/questions - I encourage you to communicate :)
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Keep your trading charts clean!🧹
✅Keeping Charts Clean: Since a trader's charting platform is his or her portal to the markets, it is important that charts improve rather than hinder a trader's market analysis. Easy-to-read charts and workspaces (the entire screen, including charts, news feeds, order entry windows, etc.) can improve a trader's situational awareness, allowing him to quickly decipher market activity and react to it. Most trading platforms allow you to largely customize the color and design of the chart, from the background color, style and color of the moving average to the size, color and font of the words that appear on the chart. Setting up clean and visually appealing charts and workspaces helps traders use indicators effectively.
✅Information overload: Many modern traders use multiple monitors to display multiple charts and order entry windows. Even if six monitors are used, you should not consider every square inch of the screen as technical indicators. Information overload occurs when a trader tries to interpret so much data that in fact they are all lost. Some people call this analytical paralysis; if too much information is presented, the trader will most likely not be able to respond. One way to avoid information overload is to exclude any extraneous indicators from the workspace; if you don't use it, lose it – this will help reduce clutter. Traders can also view charts to make sure they are not burdened with multicollinearity; if multiple indicators of the same type are present on the same chart, one or more indicators can be deleted.
✅Tips for organizing: Creating a well–organized workspace using only relevant analysis tools is a process. The set of technical indicators that a trader uses may change from time to time depending on market conditions, strategies used and trading style.
❗️On the other hand, charts can be saved if they are configured in a user-friendly form. There is no need to reformat the charts every time the trading platform closes and reopens. Trading symbols can be changed together with any technical indicators without disturbing the color scheme and layout of the workspace.
✅Recommendations for creating easy-to-read diagrams and workspaces include:
⏺Colors. The colors should be easy to view and provide great contrast so that all data can be easily viewed. In addition, one background color can be used for order entry charts (the chart that is used to enter and exit a trade), and a different background color can be used for all other charts of the same symbol. If more than one symbol is traded, you can use a different background color for each symbol to simplify data isolation.
⏺Layout. Having more than one monitor helps to create a comfortable workspace. One monitor can be used for entering orders, and the other for price charts. If the same indicator is used on several charts, it is recommended to place similar indicators in one place on each chart using the same colors. This makes it easier to find and interpret market activity on individual charts.
⏺Sizes and fonts. Bold and clear font makes it easier for traders to read numbers and words. Like colors and layout, font style is a preference, and traders can experiment with different styles and sizes to find a combination that creates the most visually pleasing result. Once convenient labels are found, fonts of the same style and size can be used on all diagrams to ensure continuity.
⚠️It is important to note that technical analysis deals with probabilities, not certainty. There is no combination of indicators that accurately predicts market movements in 100% of cases. While too many indicators or improper use of indicators can blur a trader's view of the markets, traders who use technical indicators carefully and effectively can more accurately determine trading attitudes with high probability, increasing their chances of success in the markets.
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Why do traders mostly lose? Point of viewFor 3-5 minutes while going through this forget what you know about trading.
First thing is : Let's remember our goal, every successful action/plan started with a clear goal that led the way:
In our case it's profit
When starting to trade seeing the numbers go up and down plays with your head and emotion quickly tempting you with the unlimited potential at your fingertips.
Even experienced traders that had some lucky streaks forget that the wanted end result is simple - to be in the money, meaning, making profits consistently.
In order to secure our goal of making profit we need to first start with remembering this is not a 'get rich quick' scheme and there is no magic - A big bunch of money won't fall on your head out of nowhere, at least not consistently.
Now - remember this : It's a lot better to be consistently profitable than to have a series of a few winning streaks .
With this in mind, it's great if you would put up a sticky note on your screen reminding this - As at times it gets hard keeping sight when numbers run wild.
I see many traders look at between 5-10 crypto currencies, 3 commodities and 10 currency pairs - Deciding based on a variety of different things what to trade on every time.
This way of action has no structure at all - Which makes it very hard to reach a certain target: profit.
It is necessary to have focus, structure and a plan with a single minded mission: PROFIT.
But not just any profit - smart profit, a profit that was a result of planned action.
So how do you make a plan?
The easiest way to effectively craft a well thought out plan is to focus on between 2 to max 3 instruments
Learning the range, price action and tendencies of 2-3 instruments can be done within a few weeks going through 1h, 4h and weekly time-frames and determining the short-term and long-term projections of each of the 2-3 instruments.
Once you start seeing the patterns and understanding the price action continue by implementing what you learned on the instruments on a demo account testing a possible strategy that relies on clear idea of what to do with every possible scenario.
You may not get it right with the first strategy, so try others until you find one that shows consistent results - while mastering the 2-3 instruments you have chosen and continuing to following up on a daily basis on relevant news, changes in trends on short-term and long-term projections.
For me - Because I've dedicated years trading and following Gold and WTI , learning how and why it moves - I prefer trading a swing trading strategy, keeping trades open between 3 days to 2 weeks usually, this puts my bigger picture understanding of the instruments into true effect
The difficulties you will find while searching for your strategy are -
*Greed
*Fear
*Lack of patience
*Lack of discipline in plan
Don't let them in - Remember your plan and one and only goal : consistent profit!
Thank you for reading,
Let me know what you think and what you would like to hear more about :D
MAIN ELEMENTS OF YOUR TRADING PLAN | Trading Basics 📝
Hey traders,
One month ago I wrote an article about the importance of a trading plan. Now it is time to discuss what should be inside your trading plan.
Before we start let me note that a trading plan is a very personal thing and depending on your personality you may have some other elements. In this article, we discuss key elements that must be in every trading plan.
🔰Trading Strategy.
I want you to realize that a trading strategy is not a trading plan. A trading strategy is simply one of its main elements.
A trading strategy defines a set of rules and market conditions that one is looking for to open a trade and then manage that.
🔰Trading Time.
Relying on your trading strategy you should know exactly when you trade. The time range must be precise and fixed. If you think that today you can trade the opening of the London session, tomorrow the Asian one, and then the US opening, I have very bad news for you.
Your trading hours must be fixed and objective.
🔰Trading Instruments.
As with your trading time, you should have a fixed trading list. A set of financial instruments that you monitor on a daily basis.
🔰Trading Journal.
You should learn to journal your trades. Just a single performance is not enough. You should note the exact market conditions that made you open the trade and many other factors that you consider to be important.
Then learn from your mistakes and improve your trading strategy based on your journal.
🔰Risk Management.
Having the best trading strategy in the world one can fail simply because of neglecting the rules of risk management.
Define your risk per trade, maximum drawdown, and biggest losing streak you can take.
Optimize your trading to keep your losses under control.
Of course, that list can be extended. We can add, for example, trading psychology into that.
As I said, a trading plan is a very personal thing and while you mature in trading it will become more and more sophisticated.
The elements that we discussed in this article are crucial for your success in trading. In my view, their absence will lead you to a failure.
What do you want to learn in the next article?
❤️If you have any questions, please, ask me in the comment section.
Please, support my work with like, thank you!❤️
Why do I need a stop loss and how to set it?📈
❗️A stop loss is a limit order that protects you from further losses when the price moves against your position.
Correctly used stop loss:
🟢Allows you not to lose the entire deposit in one transaction.
🟢Liquidates losses and frees margin for new transactions.
🟢Minimizes possible losses.
✅Trading with a stop loss limits your losses and saves your trading deposit from a sudden price movement that is not in your favor. You can perceive a stop loss as a kind of insurance. You have to constantly pay small premiums, but insurance will protect you from large monetary losses in case of sudden market movements against your position.
✅The rules for setting a stop loss are often misunderstood in conventional retail. However, it should be clear that you can never enter a trade without a stop loss. Not only because you risk losing too much on one trade, but you also easily fall victim to emotional trading mistakes.
✅When you know where your stop loss is (and why you are placing it there), you will feel less tempted to break your stop loss rules and are more likely to stick to your original plan.
🟡What are the ways of setting stops?
There are three ways to set stop losses that can be used in trading:
1️⃣Volatility based stop loss.
2️⃣Time based stop loss.
3️⃣Structure based stop loss.
1️⃣Volatility based stop loss.
The volatility stop loss takes into account the current price volatility in the market. The indicator that measures volatility is the average true range or the ATR indicator.
You need to determine the current ATR value and multiply it by the coefficient of your choice.
2️⃣Time based stop loss
The time stop determines when to exit the trade depending on the time that has passed since the start of the position opening. Instead of exiting the market depending on the value of the price, you exit after a certain amount of time has passed.
3️⃣Structure based stop loss.
The structural stop loss takes into account the current state of the market relative to the levels. For example, the price usually reverses from the support level and goes up. Therefore, the stop loss can be placed under the support level.
In this method, you know exactly when you will be wrong if the market structure is broken. On the other hand, if the levels are far apart, you will need a fairly large stop loss. Therefore, you will have to reduce the position size in order to maintain the current level of risk.
⚠️Stop losses should not be used in situations where the reasons for the transaction are exclusively fundamental. The price should have the opportunity to "take a walk" before the idea is implemented. Risk management is carried out by selecting the optimal share of the portfolio allocated to the transaction. Often, stop-losses are not used in long-term portfolio investment based on an unambiguous fundamental approach.
❗️Stop losses should be used in transactions where there are clear technical grounds for its placement. In such strategies, many adhere to the tactic that the potential profit exceeds the possible loss in a ratio of at least 2 to 1 or 3 to 1 (this is individual). Stop-losses are necessary for speculative trades with large "shoulders" and/or trades with a small movement potential, where the filigree execution of entry and exit is important.
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Trader comfort zone journey 🥴➡️😊Let's end the week on a thoughtful note.
On the chart is a visual I see the other day that I feel relates to trading massively.
It's called the comfort zone map.
This can be applied to many situations in a person's life as a generic visual map.
But I really do think it represents the journey every trader must take in order to become successful.
COMFORT ZONE
It's where we all start any journey
Sat in the comfort zone not wanting to leave as we dont want to fail or get hurt.
Some will stay in this zone forever but will never progress.
If you are on TradingView looking at this idea then chances are leaving this zone is already being explored.
We all like this zone put you have to take the leap of faith in order to progress.
As traders we all have to leave our comfort zone in order to start our trading journey.
FEAR ZONE
This is the worse zone for any human on any sort of journey but more so for traders.
Things are really uncomfortable in this zone and pain will be felt.
Mistakes will made, as traders money well be lost but key bit is learn from those mistakes.
Plenty of people will turn their backs at this point and jump back into the comfort zone.
Those who carry on trying to achieve will have other people questioning what are they doing.
Don't let opinions sway you and find a way to find your feet in this zone.
You will lack knowledge, You will lack skills at the start but traction comes with hard work and persistence.
LEARNING ZONE
The traction gained and hurdles overcome in the fear zone leads you to this zone.
Once in this zone it's now all in the eye of the beholder.
This is now the new comfort zone but don't drop the ball you can end up dropping back in this zone.
Now's the time in this zone to really kick on but it can take time.
You are now laying the foundations of an exciting future.
Take the base knowledge gained and gain even more in this zone.
Problems are no longer holding you back as you are able to overcome.
You enjoy the challenges and tackle them head on while still learning.
Putting the time in here takes you to the next step but also stands you in good stead for rest of lives hurdles.
GROWTH ZONE
This where the fruits of your labour are felt but not just in trading profits.
Mindset and contentment are on point.
Due to the above continued learning never stops.
Objectives are now smashed.
Purpose and fresh identic is now found within yourself.
Continued Personal growth as well as financial growth is now a element of life.
In this zone the end game is infinite but shouldn't be taken for granted.
Hard work has got you here but don't get complacent.
Treat everyday as an opportunity to fulfil your life even more in many ways not just money.
You earnt the right to be in this zone so enjoy.
But be grateful in this zone and take nothing for granted.
Stay level headed and with the right mindset this becomes your new comfort zone to enjoy forever.
Enjoy the weekend folks and see you next week 👍
Darren✌️
Not having a position is also a position - When trading is bad?Every day we start by choosing between long and short.
Sometimes you wake up, look at the btc chart - and clearly see your setup.
And sometimes you don't see it. But you still saw how many of your friends traded shorts successfully and decide to enter a hostile market.
Bottom line: Lost profit, exhausted nerves, stress, a blow to self-esteem.
Most traders forget that there is a third option - to stand aside.
Let's discuss when such position can be useful and why most people use it so rarely.
Pro traders can be split into 2 types:
Bulls and bears. They trade for profit only in one direction, because they have a trained eye to see only their kind of setups.
When a bull finds himself in a bear market, he either trades in the red or breakeven. The same true for the bear.
And yet, even knowing this, the trader continues to trade unfriendly setups. Fueled by success that he carries from his market, he is sure that just a little more, a LITTLE LITTLE more, and he will be able to trade profitably in this market as well. "And if I can trade for profit in both directions, then I will become an absolute terminator and even Warren Buffett himself will personally beg me to share my market forecast with him!" I don’t know if you woke up with such thoughts in the morning, but I definitely had a couple of times.
The answer to this phenomenon is GREED (for money or fame). And the easiest way to get rid of such incidents is to write the following rule in your trading algorithm (I hope you have it):
• Trading during correction is prohibited.
Just one sentence will save you a huge amount of money and help you increase your capital much faster.
Instead of losing money trading corrections, it is better to:
• Relax and spend part of your honestly earned profit on yourself and your loved ones.
• Patiently wait for your market and return to the game.
Do this - and trading will bring you much more pleasure, and you will earn even more and enjoy your life!
If this article was useful to you, please like and leave a comment so that I understand that it has value to you and will continue to write educational material in the future✌️
1-year special: Indexes and oscillatorsDear readers and TradingView, today, it has been one year since our first publication. Therefore, we would like to express our gratitude for your immense support. Additionally, we prepared an education topic on indexes and oscillators for you.
Indexes
Indexes are cumulative sums of data, like price, volume, etc., continuously measured over time. Indexes are not limited to the boundaries like oscillators are, showing absolute changes. The relationship between price trend and index trend is more relevant than the value of the index itself. Indexes' forecasting strength lies in spotting the divergence between price and index trends. Therefore, the use of indexes is suitable for analyzing trending markets.
Oscillators
Oscillators are limited to specific past periods, and unlike indexes, they tend to oscillate within certain boundaries. Although, oscillators without boundaries also exist. The opposing limits usually represent contrary conditions in the market. Therefore, an oscillator's value is relevant for technical analysis as it has interpretative meaning. As oscillators oscillate, they tend to reach upper and lower bound extremes, called overbought and oversold zones. These extremes are implied by the value of 70 for overbought and 30 for oversold conditions. Although, oscillators do not always have to reach extremes near their boundaries. The study of trendlines, channels and patterns is applicable to oscillators. In addition, oscillators can be used to spot the divergence between price trend and oscillator trend. Furthermore, oscillators can be used in both trending and non-trending markets. However, oscillators also tend to perform well in the trading range as they can indicate potential reversals.
Illustration 1.01
The picture above shows the daily chart of PepsiCo stock. Additionally, the chart shows the Relative Strength Index (RSI), which is probably one of the most famous momentum oscillators. The general area between 30 and 70 has a purple background. Absolute extremes below 30 and beyond 70 have a white background.
Overbought
Overbought is the market condition when it, or a security, is being expensive to its relative past time. On a graph, it is illustrated as an upper zone.
Oversold
Oversold is the condition of a market or particular security when it is being cheap to its relative past period. In other words, it is the opposite of the overbought condition. On a chart, it is depicted as the lower zone.
Overbought and oversold level readjustments
Overbought and oversold levels should be readjusted according to the strength of a prevalent trend. In an unusually strong uptrend, the overbought zone can be readjusted from 70 to 80 as the oscillator tends to peak at a higher value in such instances. Similarly, the oversold zone can be readjusted from 30 to 40 because an oscillator tends to bottom at a lower value in a strong uptrend. In a powerful downtrend, the overbought level can be readjusted from 70 to 60 as the oscillator tends to reverse sooner. Again similarly, the oversold level can be readjusted from 30 to 20 because an oscillator tends to bottom out at a lower value.
Illustration 1.02
Illustration 1.02 depicts the daily chart of American Airlines stock and 21-day Kaufman's Adaptive Moving Average.
Leading and lagging indicators
The latest era of advanced computerized technology allowed easy usage of indexes and oscillators. These tools are also often called indicators. Technical analysis differentiates between leading and lagging indicators. Leading indicators are observable variables that predict a change in another variable, like price, volatility, etc., with which they are correlated. Leading indicators are used for forecasting purposes. In contrast to leading indicators, lagging indicators exhibit change only after the change in another correlated variable has already occurred. In other words, they trail change in another variable with some latency. Therefore, lagging indicators are good to confirm the prevailing trend.
Divergence
When a trend is prevalent, and two indexes (or an index and price) are going simultaneously either up or down, they exhibit a positive correlation. However, when this correlation breaks and one index (or the price) keeps going up while another index reverses down, the divergence is said to occur. Technical analysts should pay attention to this instance as it can sometimes foreshadow an upcoming trend reversal. However, there are many instances when divergence occurs, and the reversal in price trend fails to materialize. For this reason, some analysts like to implement the concept of double divergence.
Illustration 1.03
The illustration above depicts the daily chart of Coca-Cola stock in a weekly time frame. The divergence between the direction of price movement and the RSI movement is observable.
Relationship between the price and the indicator
Technical tools are often used to predict the next move in price. However, there are instances when this relationship reverses and price starts to precede the movement of a particular indicator. This phenomenon is called reversal (not to be interchanged with the reversal in trend).
Crossover
Crossover occurs when the oscillator crosses over a significant level or crosses another oscillator. Important values are often represented by numbers such as 0, 30, 50, and 70. Other significant values can be either in the middle of the scale or near the boundaries of an oscillator. A trend is typically bullish when the oscillator moves above 0. When the oscillator moves below 0, it is generally considered to be bearish. Mechanical traders favor crossovers because they are easily observed, and their implementation helps avoid emotions that could potentially interfere with the trader's decision-making.
Illustration 1.04
The picture above shows the daily chart of Glencore stock and MACD. Bullish crossovers occurred when MACD passed through the midpoint indicated by the number 0. This was followed by the beginning of the rally.
Utility of indexes and oscillators
Technical tools such as indexes and oscillators can be used to analyze a large spectrum of assets. They apply to stocks, commodities, ETFs, futures, currencies, and even cryptocurrencies.
DISCLAIMER: This analysis is not intended to encourage any buying or selling of any particular securities. Furthermore, it should not serve as a basis for taking any trade action by an individual investor. Therefore, your own due diligence is highly advised before entering a trade.
What is Rising Wedge pattern and how to trade with that?The Rising Wedge (also known as the ascending wedge) pattern is a powerful consolidation price pattern formed when price is bound between two rising trend lines. It is considered a bearish chart formation which can indicate both reversal and continuation patterns – depending on location and trend bias. Regardless of where the rising wedge appears, traders should always maintain the guideline that this pattern is inherently bearish in nature (see image).
HOW TO IDENTIFY A RISING WEDGE PATTERN ON CHARTS
The rising wedge pattern is interpreted as both a bearish continuation and bearish reversal pattern which gives rise to some confusion in the identification of the pattern. Both scenarios contain a different set of observation dynamics which must be taken into consideration.
Reversal Pattern:
Established uptrend
Rising wedge consolidation formation
Linking higher highs and higher lows using a trend line assembling towards a narrowing point
Look for break below support for short entry
Continuation Pattern:
Established downtrend
Rising wedge consolidation formation
Linking higher highs and higher lows using a trend line assembling towards a narrowing point
Look for break below support for short entry
How to trade with this:
*Entry Point: Right after the candlestick breakout of the support.
*Stop-Loss: At the highest resistance level of the Wedge pattern.
*Take-Profit: From the entry point, the distance is equal to the maximum width ( H ) of the rising wedge pattern.
This is the academic shape of this pattern, in the future we will publish Falling Wedge pattern 📚 . Please follow our page to be informed as soon as the materials are published.
Thank you all for supporting our activity with Likes 👍 and Comments ❤️
Triangle Play that I missed...This was on a watchlist I created for triangle breakouts, but I forgot to set an ALERT. I got busy watching other things and making other lists. This would have paid nicely after the break.
Lesson Learned... The alerts are there to help you! SET AN ALERT & make money.
Lesson Learned.. If your working on a new strategy then commit to it. Follow it. Track it. Watch It. Work it!
Pay offs like this can make your year.
Classic Trend Reversal Patterns📚
✅It is difficult to overestimate the importance of the classic continuation and reversal patterns. For a real trader trading on the Forex market, it is huge, because these patterns make it possible to predict the behaviour of the price.
⚠️If one of the trend continuation patterns appears in front of us on the chart, it means that the usual correction (rollback) is taking place. After its completion, it becomes possible to profitably enter the market at the existing rate.
📈📉Head & Shoulders
🟢The Head and shoulders pattern is a reversal pattern that is usually formed during a bullish trend and creates a top — the first shoulder. After the correction, the price creates a higher top — the head. After the next correction, the price creates a third top, which is below the head — the second shoulder. So, we have two shoulders and a head in the middle.
🟢Of course, the head and shoulders reversal pattern has its inverse equivalent, which turns bearish trends into bullish ones. This pattern is called the Inverted Head and Shoulders pattern.
🟢Confirmation of the pattern occurs when the price breaks the line that runs through two bases on either side of the head. This line is called the neckline. When the price overcomes the neck line, we get a reversal signal.
📊Double Top and Double Bottom
🟢A double top consists of two peaks on the chart. These peaks are either at the same resistance level, or the second peak is slightly lower. A sample of a double top usually looks like the letter "M".
🟢A double top has its opposite, which is called a double bottom. This model consists of two bases, which are either located at the same support level, or the second base is slightly higher. The double bottom pattern usually looks like the letter "W".
🟢Confirmation of the Double top pattern comes at the moment when the price breaks through the minimum between the two tops. This level is marked by a line on the chart and is called a signal line.
🟢The stop loss order should be placed directly above the second top. The minimum profit target is equal to the distance between the neck and the center line that connects the two tops.
❗️The double bottom looks and works exactly the same.
💎Diamond
🟢It is quite difficult to see this pattern on a real chart – it looks like a standard flat, but with unstable volatility. A diamond means, at least, medium-term market uncertainty, when the probability of movement in any direction is almost the same. But the longer it takes to form, the stronger the breakdown and the subsequent trend will be.
☕️Cup with Handle
🟢The cup with handle pattern is considered a bullish continuation pattern, so it is necessary to determine the previous uptrend. This can be done by analyzing price dynamics or technical indicators, such as moving averages.
The cup should be more U-shaped, not V-shaped, and the upper points on both sides of the cup should be approximately at the same level.
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