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Understanding Candlestick Patterns Understanding Candlestick Patterns Candlestick patterns are one of the most fundamental tools in technical analysis. They provide valuable insight into market sentiment, showing how buyers and sellers are interacting at any given time. By understanding candlestick patterns, traders can make more informed decisions about potential price movements. In this chapter, we’ll explore the basics of candlesticks, including bullish, bearish, and neutral candles, and dive deeper into specific patterns like wickless candles, engulfing patterns, and how to interpret the open and close of a candle. --- What is a Candlestick? A candlestick represents the price action of a security within a specific time frame, such as one minute, one hour, or one day. Each candlestick provides four critical pieces of information: Open: The price at which the asset began trading during the time frame. Close: The price at which the asset finished trading during the time frame. High: The highest price reached during the time frame. Low: The lowest price reached during the time frame. The body of the candlestick represents the distance between the open and close prices, while the “wicks” or “shadows” represent the highs and lows. Bullish Candles A bullish candle forms when the closing price is higher than the opening price, signaling that buyers have control during that period. The body of the candle is typically green or white (depending on charting software), and it indicates upward momentum. Bullish Candle Characteristics: Open price is lower than the close. Buyers have pushed the price higher during the session. Longer bodies suggest stronger bullish sentiment. Example of Bullish Candle: Hammer: A bullish reversal pattern found at the bottom of a downtrend. It has a small body and a long lower wick, showing that sellers tried to push the price lower, but buyers took control by the close, driving the price higher. Bearish Candles A bearish candle forms when the closing price is lower than the opening price, signaling that sellers have control during that period. The body of the candle is typically red or black, indicating downward momentum. Bearish Candle Characteristics: Open price is higher than the close. Sellers dominated the session. Longer bodies suggest stronger bearish sentiment. Example of Bearish Candle: Shooting Star: A bearish reversal pattern found at the top of an uptrend. It has a small body and a long upper wick, indicating that buyers attempted to push the price higher, but sellers gained control, pushing the price down by the close. Neutral Candles A neutral candle forms when there is little difference between the opening and closing prices. This type of candle suggests indecision in the market, where neither buyers nor sellers are fully in control. The candle can have long wicks, showing volatility, but a small body reflects indecisiveness. Example of Neutral Candle: Doji: A Doji candle forms when the opening and closing prices are virtually identical. This pattern often indicates a potential reversal or pause in trend because of the market’s indecision. Wickless Candles A wickless candle is a candlestick that has no upper or lower shadows (wicks), which means the highest and lowest prices during the time frame are exactly at the open or close. These candles signify strong directional moves, as the price doesn’t fluctuate significantly beyond the open and close. Bullish Wickless Candle: The price opens at its low and closes at its high, indicating strong buying pressure throughout the period. Bearish Wickless Candle: The price opens at its high and closes at its low, suggesting strong selling pressure. Interpretation of Wickless Candles: Wickless candles are rare but powerful. They show clear control by one side (buyers or sellers) with little resistance from the other. Traders should watch for these candles during strong trending markets, as they can signal momentum. Wickless Candles and Liquidity In trading, liquidity refers to how easily an asset can be bought or sold without affecting its price. Liquidity is often concentrated at certain price levels, where orders from both buyers and sellers are waiting to be executed. When a wickless candle forms, it can create a liquidity void or gap, since the price hasn’t retraced or tested areas around the open or close of the candle. In simple terms, the lack of a wick suggests the market has skipped over certain price levels without sufficient trading activity. Market participants often believe that price tends to return to these levels in the future, as the market seeks out liquidity to fill these gaps. Why Price Often "Comes Back" to Create a Wick: Liquidity Pools: At untested price levels (around where wicks would normally form), large buy or sell orders may be resting. Market makers and institutional traders are incentivized to revisit these areas to fill unexecuted orders, making it likely that the price will return to this range. Market Efficiency: The market tends to move back to areas of liquidity to balance out price action. Wickless candles show where a rapid price move might have skipped over significant trading interest. Correction or Reversal: In some cases, price retracement occurs when the market "corrects" overextended moves. If a strong bullish or bearish candle lacks wicks, traders may expect a temporary pullback to balance the market. Trading Wickless Candles: Watching for Retracement When you see a wickless candle, it's a potential signal that the price may retrace to "fill" the liquidity void and form a wick. Here's how to trade these setups: 1. Monitor the Wickless Candle: After a strong bullish or bearish candle without wicks, observe the price action in the following periods. Pay attention to areas that the price didn’t test. 2. Wait for Price to Return to the Liquidity Zone: If the market retraces toward the opening or closing price of the wickless candle, it often indicates that the market is filling the liquidity gap. This retracement could provide a trading opportunity. For bullish wickless candles, watch for a retracement to the opening price (the lower end of the candle), where buyers may step in again. For bearish wickless candles, watch for a return to the closing price (the upper end of the candle), where sellers may resume control. 3. Look for Confirmation: Don’t rely solely on the wickless candle. Combine it with other signals, such as support and resistance levels or volume analysis, to confirm if the market is likely to revisit those untested areas. Wickless Candles in Context Wickless candles are not standalone signals; they should be interpreted within the context of the broader market environment. Traders should consider the following: Trend Context: Is the wickless candle part of a strong, established trend? In a powerful trend, price may push ahead without a significant retracement. However, even in trending markets, prices tend to come back and test previous levels eventually. Time Frame: The time frame of the candle matters. A wickless candle on a lower time frame (e.g., 5-minute chart) may quickly retrace, whereas a wickless candle on a higher time frame (e.g., daily or weekly chart) could take much longer to come back to its liquidity zone. Volume: Check for high volume during the wickless candle formation. If there’s a liquidity gap and low volume, it’s more likely that price will retrace to fill those levels.Wickless candles provide important clues about market momentum and liquidity gaps. While they often suggest strong directional movement in the short term, these candles can also indicate areas where price may return in the future to fill untested liquidity. Understanding how to read wickless candles in combination with other technical analysis tools can enhance your ability to identify potential retracement opportunities and anticipate future price movements. Engulfing Candles Engulfing patterns are strong reversal signals that occur when one candle completely engulfs the body of the previous candle. These patterns come in two types: bullish engulfing and bearish engulfing. Bullish Engulfing Pattern Description: A bullish engulfing candle forms when a larger bullish candle fully engulfs the body of the previous bearish candle. This pattern indicates a potential reversal from a downtrend to an uptrend, showing that buyers have overwhelmed sellers. What to Look For: The second candle (bullish) must fully cover the body of the first (bearish) candle. It’s more powerful when it occurs after a prolonged downtrend or near a support level. Bearish Engulfing Pattern Description: A bearish engulfing candle forms when a larger bearish candle fully engulfs the body of the previous bullish candle. This pattern signals a potential reversal from an uptrend to a downtrend, indicating that sellers have taken control. What to Look For: The second candle (bearish) must completely cover the body of the first (bullish) candle. This pattern is stronger when it appears after an extended uptrend or near a resistance level. How to Trade Engulfing Patterns: Entry: For bullish engulfing patterns, enter long trades when the price moves above the high of the bullish candle. For bearish engulfing patterns, enter short trades when the price moves below the low of the bearish candle. Confirmation: Engulfing patterns should be confirmed with increased volume, signaling stronger conviction by buyers or sellers. Engulfing Candles as Demand and Supply Zones Engulfing candles, especially bullish ones, often mark demand zones—areas where buying pressure overwhelmed selling pressure and caused a significant shift in price direction. These zones represent areas where traders and institutions found value and stepped in to buy aggressively, making them key areas for future price reactions. Bullish Engulfing Candles Create Demand Zones: When a bullish engulfing candle forms, the area around the candle's low and close becomes a potential demand zone. When price revisits this area in the future, it’s likely that buyers will step in again, causing the price to bounce. Bearish Engulfing Candles as Supply Zones: While bearish engulfing candles represent supply zones (where sellers dominate), the concept is similar. However, for this discussion, we'll focus on the bullish engulfing candles and their role in creating demand zones.How Engulfing Candles Become Demand Zones Engulfing candles signal strong shifts in market dynamics. Here’s why they often become areas of high demand: 1. Imbalance Between Buyers and Sellers: The large body of the engulfing candle shows that buyers stepped in strongly at that price level, overwhelming sellers. This imbalance creates a "memory" in the market, where participants remember the strength of the move. When the price retraces to this level, there’s a strong likelihood that buyers will re-enter the market, viewing it as an area of value. 2. Institutional Orders: Engulfing candles often indicate areas where institutional traders placed large buy orders. These areas tend to hold significance because institutions may place additional orders at these levels when price returns, reinforcing the demand zone. 3. Market Sentiment Shift: The price action leading to an engulfing candle reflects a sharp change in sentiment. For example, in a bullish engulfing pattern, sellers controlled the market initially, but buyers took over and drove prices up. This sharp reversal marks an area where demand is likely to outpace supply again in the future. Understanding candlesticks and their patterns is a foundational skill in technical analysis. By paying attention to key details such as the open, close, wicks, and the relationship between candles, you can better anticipate price movements and make more informed trading decisions. Candlesticks like bullish, bearish, and neutral patterns, along with specific signals like wickless and engulfing candles, provide valuable insights into the psychology of the market, helping you identify entry and exit points more effectively. In live trading, combining candlestick analysis with other technical indicators, such as moving averages or support and resistance levels, can increase your chances of success. Always remember, though, that no pattern is foolproof, and it’s crucial to use risk management techniques to protect your capital.
OANDA:XAUUSDEducation
by samstoobad
Trading Near the Bells Part 2: The CloseIn this second part of our series, we shift focus from the market open to the close—the final hour of the trading session. The dynamics of the close are different from the open because the time to act is much shorter. Unlike the open, where you have the whole trading day ahead of you, the close compresses decisions into a much tighter window. This makes the strategies and the mindset for trading the close unique. In this section, we'll cover two core strategies for trading the close—one momentum-based and one focused on mean reversion. Whether you're riding the final burst of a trend or capitalising on an overextended market move, these setups can help you navigate this high-stakes period effectively. The Significance of the Close The final hour of trading—the "Power Hour" —is dominated by institutional traders and large funds rebalancing their portfolios, closing positions, or placing large end-of-day orders. Retail traders often close out positions as well, creating an environment where liquidity spikes and volatility increases. This surge in activity can lead to significant price swings, especially in individual stocks with strong intraday trends or overextended moves. What happens during this period can set the stage for the next day’s market action. If the close is strong, closing at or near the high of the day, it suggests that buyers were in control and may continue pushing prices higher the following day. Conversely, a weak close at the low could signal selling pressure carrying over into the next session. Two Key Strategies for Trading the Close We’ll explore two strategies tailored for this critical time frame. These setups are designed to take advantage of the distinct characteristics of the close: heightened volatility, fast price action, and end-of-day positioning. Strategy 1: Run into the Close (Momentum) The "Run into the Close" strategy tends to work well on days where the market has been trending strongly. This strategy takes advantage of the final surge in momentum as large traders and funds push prices even further in the direction of the trend. This is particularly effective if the market is breaking out from several days of price compression. The idea is to enter on a pullback in the final hour and ride the momentum into the close. Setup: • Look for an established trend during the trading session, with price ideally breaking out of multi-day consolidation. • Watch for a small pullback in the last hour, ideally to the 9-EMA on the 5-minute chart. • Wait for price to break back above the 9-EMA after the pullback. Entry: • Enter following the break back above the 9-EMA on the 5-minute candle chart. Stop-Loss: • Place your stop below the low of the pullback. Trade Management: • Use the 9-EMA for dynamic risk management—if price closes below it, consider exiting early. Target: • Hold the position until just before the close, capturing the final push of momentum. Example: The S&P 500 had been trending up all day, breaking out from a tight multi-day consolidation. During the last hour of trading, the market pulls back briefly, touches the 9-EMA, and then breaks back above it. This is your entry signal, allowing you to ride the trend into the final minutes of the session. S&P 500 5min Candle Chart Past performance is not a reliable indicator of future results Strategy 2: Revert to VWAP (Mean Reversion) The "Revert to VWAP" strategy is a mean-reversion play that tends to work well when the market is overextended going into the last hour of trading. Often, prices can move too far from the day's volume-weighted average price (VWAP), and late in the session, there is a tendency for price to revert back toward it. This strategy uses the Relative Strength Index (RSI) to identify overbought or oversold conditions and then waits for a break of recent swing highs or lows on a 5-minute chart to trigger the entry. Setup: • Look for an overextended market going into the final hour of trading. The price should be far away from VWAP. • Check RSI on a 5-minute chart for overbought (above 70) or oversold (below 30) conditions. • Wait for price to break above a recent swing high (for a reversal from oversold) or below a swing low (for a reversal from overbought). Entry: • Enter a long position if the price breaks above a swing high (from oversold conditions). • Enter a short position if the price breaks below a swing low (from overbought conditions). Stop-Loss: • Place your stop just below the recent swing low (for long positions) or above the recent swing high (for short positions). Target: • Target VWAP as the price reverts back toward the average. Example: As we approached the final hour of the day, the S&P 500 index had moved into an oversold position on the RSI when it tested a key level of swing support. This was followed by a break above a small swing high – triggering a move back towards the true average price for the day – VWAP. S&P 500 5min Candle Chart Past performance is not a reliable indicator of future results Conclusion Whether you’re aiming to ride the trend with a "Run into the Close" or seeking to capitalise on an overextended market with a "Revert to VWAP" strategy, trading the final hour requires sharp execution and discipline. Even if you don’t trade the close directly, understanding how the market finishes the day can provide valuable insights for the next session. Watch how the price closes in relation to the day’s range, as this can set the tone for the following day’s market sentiment. Disclaimer: This is for information and learning purposes only. The information provided does not constitute investment advice nor take into account the individual financial circumstances or objectives of any investor. Any information that may be provided relating to past performance is not a reliable indicator of future results or performance. Social media channels are not relevant for UK residents. Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 83.51% of retail investor accounts lose money when trading spread bets and CFDs with this provider. You should consider whether you understand how spread bets and CFDs work and whether you can afford to take the high risk of losing your money.
CAPITALCOM:US500Education
by Capitalcom
Chart Patterns and Key Signals in Live TradingChart Patterns and Key Signals in Live Trading Chart patterns are powerful tools used by traders to predict future price movements. These patterns emerge from the price action on a chart and provide visual signals that help traders make informed decisions. Understanding and recognizing these patterns in live trading can significantly improve your ability to forecast potential price trends and execute successful trades. What are Chart Patterns? Chart patterns form when price movements of a security, such as a stock or currency pair, follow a recognizable formation or trend on a price chart. These patterns represent the collective sentiment of buyers and sellers, indicating periods of consolidation, continuation, or reversal. Traders use these patterns to anticipate where prices may move next and to identify high-probability trading opportunities. Key Types of Chart Patterns Chart patterns can be categorized into two main types: 1. Reversal Patterns: These indicate that the current trend is likely to reverse. 2. Continuation Patterns: These suggest that the current trend will continue after a brief pause. Common Reversal Patterns Head and Shoulders Description: The head and shoulders pattern signals a trend reversal. It has three peaks: a higher peak (the head) between two lower peaks (the shoulders). The neckline connects the lows between the two shoulders. What to Look For: Uptrend before formation: This pattern is more reliable if it follows a strong uptrend. Break of the neckline: The trend reversal is confirmed when the price breaks below the neckline, indicating a bearish move. Live Trading Tip: Wait for the price to break the neckline and retest it before entering a short position to reduce false signals. Double Top: Description: A bearish reversal pattern that forms after an uptrend, consisting of two peaks at roughly the same level. What to Look For: Resistance level: The two peaks touch a resistance level but fail to break through. Neckline break: The trend reversal is confirmed when the price breaks below the support level (neckline) between the two peaks. Live Trading Tip: Enter a short trade after the price breaks below the neckline and possibly retests the support as resistance. Double Bottom: Description: A bullish reversal pattern that forms after a downtrend, consisting of two troughs at roughly the same level. What to Look For: Support level: The two bottoms touch a support level but fail to break below. Neckline break: The reversal is confirmed when the price breaks above the resistance level (neckline) between the two troughs. Live Trading Tip: Enter a long trade after the price breaks above the neckline and retests it as support. Common Continuation Patterns Triangles Symmetrical Triangle: Description: A continuation pattern characterized by converging trendlines, where the highs and lows converge toward each other. What to Look For: Breakout: The pattern is confirmed when the price breaks out of the triangle, either upward or downward, signaling a continuation of the previous trend. Live Trading Tip: Watch for increased volume during the breakout to confirm its validity. Enter the trade in the direction of the breakout. Ascending Triangle: Description: A bullish continuation pattern with a horizontal resistance line and an upward-sloping support line. What to Look For: Resistance breakout: The pattern is confirmed when the price breaks above the resistance level, signaling a continuation of the upward trend. Live Trading Tip: Enter a long trade once the price breaks the resistance and volume spikes, indicating strong buying interest. Flags and Pennants Flag: Description: A continuation pattern that looks like a small rectangular consolidation phase after a strong price movement. What to Look For: Strong trend: The flag forms after a sharp price move, followed by a consolidation phase. Breakout: A breakout from the flag pattern confirms the continuation of the previous trend. Live Trading Tip: Enter the trade in the direction of the breakout, especially if accompanied by an increase in volume. Pennant: Description: Similar to the flag, but the consolidation phase forms a small symmetrical triangle instead of a rectangle. What to Look For: Strong trend: A pennant forms after a sharp move, followed by price consolidation. Breakout: The breakout signals a continuation of the previous trend. Live Trading Tip: Trade in the direction of the breakout and ensure there’s an uptick in volume for confirmation. Wedges Rising Wedge: Description: A bearish continuation or reversal pattern where the price forms higher highs and higher lows, but the slope of the highs is steeper than the slope of the lows. What to Look For: Trendlines converging: The wedge narrows as the highs and lows converge. Breakdown: The pattern is confirmed when the price breaks below the lower trendline, signaling a bearish move. Live Trading Tip: Short the trade once the price breaks below the wedge, especially if volume increases. Key Signals to Look for in Live Trading 1. Volume Confirmation Description: Volume plays a critical role in confirming the validity of chart patterns. A breakout or breakdown on low volume can be a false signal, whereas high volume supports the strength of the price movement. What to Look For: Volume Spike on Breakout: Look for a significant increase in volume during breakouts from chart patterns. This indicates that more traders are participating in the move and that it has momentum. Divergence between Price and Volume: If price is moving in one direction but volume is decreasing, it may indicate a weakening trend. 2. False Breakouts Description: A false breakout occurs when the price appears to break out of a pattern but quickly reverses, trapping traders who acted on the breakout. What to Look For: Lack of Follow-Through: After the breakout, if the price doesn’t continue in the breakout direction and instead reverses quickly, this could be a false breakout. Live Trading Tip: To avoid false breakouts, wait for a retest of the breakout level or look for confirmation in volume before entering a trade. 3. Divergence with Indicators Description: Divergence occurs when the price of an asset moves in one direction while an indicator (such as the RSI or MACD) moves in the opposite direction. What to Look For: Bullish Divergence: When price makes lower lows, but the indicator forms higher lows, signaling a potential reversal to the upside. Bearish Divergence: When price makes higher highs, but the indicator forms lower highs, indicating a potential reversal to the downside. Live Trading Tip: Use divergence as a signal to prepare for a trend reversal, especially when combined with chart patterns like double tops or bottoms. Chart patterns are essential for predicting price movements, but they work best when combined with other tools like volume analysis and indicators. As you gain experience in live trading, you'll develop the ability to spot these patterns more easily and understand how to trade them effectively. Always remain patient and look for confirmation signals before entering trades based on chart patterns.
Editors' picks
TVC:SILVEREducation
by samstoobad
1
Triple Your Trade Accuracy with This Simple Trick Like a PROGood Morning Tradingview, Apologies for the delay in my recent posts over the past two days. Unfortunately, this was due to an oversight on my part. I missed a key detail in the trading platform's rules and mistakenly included my watermark on the charts. As a result, several of my posts were removed, and I was temporarily unable to post for 24 hours. I completely understand and respect the platform's guidelines, but I wanted to keep you informed and ensure you're not left wondering about my absence. Here’s a breakdown of potential entry points and trade management based on the chart I've shared, aligned with multi-touch confirmation and The Trinity Rule. We'll focus on how to approach both the bullish and bearish scenarios with structured decision-making: 1. Bullish Scenario (Green Path): The price currently appears to be testing a weekly trendline (third touch), which often signals a potential bullish continuation after the third touch confirms a reversal or trend continuation. Here's how to structure the trade: Entry Point: Wait for a Breakout: If the price breaks and closes above the upper consolidation zone, look for a confirmed breakout with momentum. Avoid entering prematurely, as false breakouts can occur. Confirm with Retest (Higher Probability Entry): After the breakout, wait for a potential retest of the consolidation zone or the top of the ascending wedge. A retest that holds (with rejection wicks or bullish engulfing patterns) adds confirmation for a long position. Reduced Risk Entry: You can enter with a smaller position on the breakout and add to the position on the retest, increasing exposure as the price confirms your bias​​. Stop-Loss Placement: Place the stop-loss just below the consolidation zone or below the retested area. This level serves as your risk threshold, accounting for potential fakeouts. If you are entering after the third touch of the trendline, the stop-loss can be placed below this key level to minimize risk​. Take-Profit Targets: First Target: Aim for the next key resistance zone at around 2,576 based on historical price action. Second Target: If momentum is strong, hold a portion of the trade for a larger move toward 2,592 (upper resistance). Trail the stop as price continues to move upward​. 2. Bearish Scenario (Yellow Path): If the price fails to break above the current consolidation and rejects the trendline, it indicates a potential bearish reversal. The descending path might target the 1-hour liquidity zone around 2,541, where you can expect the price to react. Entry Point: Breakout of Consolidation: If the price breaks below the consolidation, this signals a bearish continuation. Enter on a confirmed breakout, with a strong bearish candle close below support. Aggressive Entry: You may consider entering on the third rejection at the top of the consolidation, especially if there's a clear bearish reversal pattern (e.g., shooting star or bearish engulfing)​​. Reduced Risk Entry: Wait for the price to break below the consolidation and enter on a retest of the broken support, confirming the bearish momentum. This provides a lower-risk entry with better confirmation​. Stop-Loss Placement: Above the consolidation or the most recent swing high where rejection occurred, giving enough room for market fluctuations. Ensure that the stop isn’t too tight, as you could get caught in price noise​. Take-Profit Targets: First Target: The 15-minute liquidity zone around 2,560 is a reasonable first target, where you may partially close your position. Final Target: The key 1-hour liquidity zone at 2,541 is the more substantial target for a full bearish continuation. Be mindful of how price reacts near this zone; you may want to take profits before a reversal happens​​. Management Tips: Scaling In and Out: Whether bullish or bearish, consider splitting your position into smaller entries. This allows you to enter part of the trade with confirmation and add more as price action continues in your favor. Use of Flags for Re-entries: After the initial breakout in either direction, look for flags or continuation patterns to re-enter the trade or add to an existing position. For example, after a bullish breakout, wait for a flag and enter on the next wave up​​. Regular Monitoring and Adjustments: As the price moves in your favor, trail your stop-loss to lock in profits. This is especially important during strong momentum moves to avoid giving back profits to the market. Psychological Considerations: Avoid FOMO: Don’t rush into trades if you're unsure about the breakout or failure of a level. Let the price action confirm your bias. Avoid Overtrading: Stick to your Rule of Three guidelines. Ensure at least three confirming factors align with your analysis before entering​.
OANDA:XAUUSDEducation
by Adlercon333
Best Lot Size For Scalping, Day Trading, Swing Trading GOLD What is the best lot size for scalping, day trading, swing trading Gold XAUUSD? In the today's article, I will explain to you how to calculate a lot size for trading Gold for any trading strategy and trading style. As the example, I will measure lot sizes for 500$, 1000$, 10000$ XAUUSD trading accounts. Scalping Gold For scalping Gold, traders commonly apply 5m/15m time frames. In order to calculate the lot size for 5 minutes time frame trading, you will need to back test your trading strategy and find at least 5 trades that meet the rules of your trading strategy. But remember that the more trades you will back test, the better and the safer lot size you will calculate. You will need to underline the entry point and a stop loss for each trade. Then you will need to measure stop loss value of every trade in pips. Then, find the trade with the biggest stop loss in pips. In our example, the biggest stop loss is 353 pips. Open a position size calculator for Gold. As an example, we will apply some free position size calculator. Fill all the inputs. As a risk ratio, input 2%. Our best lot size for scalping Gold on 5 minutes time frame will be: 0.03 lot with 500$ trading account. 0.06 lot with 1000$ trading account. 0.57 lot with 10000$ trading account. With such a lot size, your potential risk will not exceed 2% of your trading account balance and the average risk will be close to 1%. For scalping Gold on 15 minutes time frame, find at least 5 trades based on your trading strategy rules. The biggest stop loss in 600 pips. Please, note that the higher is the time frame, the bigger are the stop losses in pips. It means that higher time frame trading requires bigger account balance than lower time frame trading. Apply XAUUSD position size calculator to measure a lot size for 15m trading. Our best lot size for scalping Gold on 15 minutes time frame will be: 0.02 lot with 500$ trading account. 0.03 lot with 1000$ trading account. 0.33 lot with 10000$ trading account. Day Trading Gold Common time frame for day trading Gold are 30M and 1H. Find at least 5 trading setups on 30 minutes time frame and measure stop loss in pips. The biggest stop loss in our example is 997 pips. According to XAUUSD position size calculator, best lot size for day trading Gold on 30 minutes time frame will be: 0.01 lot with 500$ trading account. 0.02 lot with 1000$ trading account. 0.2 lot with 10000$ trading account. The same logic will be applied on an hourly time frame. Among 5 trading setups in the example above, the biggest stop loss is 1500 pips. 500$ trading account will not be enough to control risks below 2%. You will need at least 1000$ for day trading Gold on an hourly time frame with such stop losses. Using Gold position size calculator, here are the best lot sizes for trading on 1H: 0.01 lot with 1000$ trading account. 0.13 lot with 10000$ trading account. Swing Trading Gold The main time frames for swing trading gold are 4H and Daily. In our example, the biggest stop loss is 2800 pips. 1000$ account will not be enough for taking such a trade with 2% risk. Taking the trade with minimal 0.01 lot, the risk will be 28$ or 2.8% of 1000. Using XAUUSD lot size calculator, the best lot size for swing trading on a 4H will be: 0.07 lot with 10000$ trading account. Before you start trading on a real account, you should know exactly your risks in pips. Knowing the biggest stop loss will help you to carefully measure the safest lot size for your trading style. Make sure that you have sufficient balance to not exceed 2% risk per trade and analyze as many past trading setups as possible. ❤️Please, support my work with like, thank you!❤️
OANDA:XAUUSDEducation
by VasilyTrader
1
Adapting Your Strategies to Stay AheadThis is how I embrace market adaptability and recognize (and navigate) changing market conditions! As a trader, I've learned the art of adapting my strategies to stay ahead and here's how: 1️⃣ Market Awareness: I continuously monitor market trends, economic data, and global events to stay informed. Recognizing shifts in volatility, sentiment, and liquidity (if not trading FX) is key to adapting. I make sure to have a baseline short and mid term outlook, so I can spot deviations which could signal changes (particularly useful when it comes to monetary policy shifts). 2️⃣ Flexible Strategies: I avoid rigid approaches and embrace flexibility in my trading strategies. Being open to different approaches within my methodology helps me capitalize on diverse market environments. I have an arsenal full of trading weapons... and I am not afraid to use any of them. 3️⃣ Indicators & Patterns: I incorporate a wide range of technical indicators and chart patterns to gauge changing market dynamics and correlate what I see to fundamentals and sentiment. This allows me to spot emerging trends and reversals. 4️⃣ Review & Adapt: I regularly review my trading performance and identify periods of success and struggle. Adapting my strategies based on these insights enhances my edge. 5️⃣ Patience & Observation: During market shifts, I exercise patience and observe new patterns before making significant adjustments. Rushing to adapt can lead to hasty decisions. I follow the market and ride its waves so I like to see certain signs/clues before making decisions about changing a longer standing bias. 6️⃣ Risk Management: In times of uncertainty, I prioritize risk management to protect my capital. Adjusting position sizes and setting appropriate damage control or stop-loss levels is crucial. 7️⃣ Learn from Peers: Engaging with the trading community and learning from experienced traders enriches my understanding of market adaptations. Collaboration is valuable. You still have to separate the value from the mainstream influencer-regurgitated cliches, but hey, it's still free advice. Embracing adaptability has been a game-changer in my trading journey. Recognizing changing markets and adjusting my strategies accordingly enhances my ability to thrive in any conditions.I always tell my students that we can all make money no matter what the environment is like as long as you can adapt to it. 🚀📊✨
FX:BUNDEducation
by AlexSoro
1
Unveiling Market Sentiment in Trading Unveiling Market Sentiment in Trading Understanding the market's pulse can offer traders a significant edge. The market is driven by human psychology, and by grasping the prevailing mood, traders can position themselves more effectively. This article will delve into various methods and indicators that offer insights into market sentiment analysis trading, from media scanning and expert opinions to economic and market-specific indicators. What Is Market Sentiment? Market sentiment refers to the prevailing mood or emotional tone that traders and investors exhibit toward a specific financial asset or the market as a whole. It serves as a qualitative measure that captures collective attitudes toward market conditions — optimistic, pessimistic, or neutral. This sentiment is often influenced by various factors such as economic indicators, news, and trader psychology. Understanding market sentiment is crucial because it can help anticipate market trends, offering insights that purely quantitative indicators sometimes overlook. Of course, traders can’t just rely on sentiment analysis; price charts and trading tools are also key. FXOpen’s native TickTrader platform offers just that and more. Head over there to get started in minutes. Media Scanning In forex, commodity, crypto*, and stock market sentiment analysis, media scanning is one of the most straightforward techniques. News reports from reputable financial news outlets like Bloomberg, Reuters, and the Financial Times often provide timely updates on market conditions, geopolitical events, and economic data releases. These reports offer a snapshot of the current market health. Expert opinions offer another layer of depth to understanding market sentiment. Analyst statements from established financial firms (banks, hedge funds, venture capital firms, etc.), expert blogs, and whitepapers can deliver nuanced viewpoints. For example, if multiple analysts from various firms are consistently bullish about a specific asset, it can indicate positive sentiment surrounding it. While these shouldn't be your sole resource, they often provide valuable insights that quantitative metrics may overlook. Remember to consider the source and its reliability, as not all opinions carry the same weight in influencing market sentiment. Market Sentiment Indicators Moving beyond the qualitative aspects of media, there are several quantitative indicators that can measure market sentiment directly. The Commitment of Traders Report (COT), particularly relevant in commodity markets, reveals large traders' positions. A skew toward long positions among these traders often indicates bullish sentiment for a commodity, while a skew toward short positions suggests a bearish sentiment. The Fear & Greed Index is another essential tool, often associated with stock markets but also applicable to other asset classes like cryptocurrencies* and even some commodities. For stocks, CNN’s Fear & Greed Index is commonly cited, while Alternative.me’s version is often used for crypto*. This market sentiment index uses multiple factors, including market momentum and safe-haven demand, to calculate a score ranging from zero to 100. Lower scores signify fear, suggesting a bearish outlook, whereas higher scores indicate greed, signalling a bullish market environment. Consumer Surveys Consumer surveys offer another valuable avenue for determining market sentiment, particularly in sectors like retail, real estate, and commodities. One widely used metric is the Consumer Confidence Index. This index is based on household survey data and measures their optimism or pessimism about current and future economic conditions. A high Consumer Confidence Index typically suggests that people are willing to spend, often driving up asset values in the retail and real estate sectors. Manufacturing surveys also provide useful data, especially for forex and commodity markets. These surveys, such as the Purchasing Managers' Index (PMI), gauge the health of a country's manufacturing sector. Positive manufacturing data often strengthens a country's currency and can also be an indicator of rising commodity prices. Social Media & Forums In the age of digital communication, social media platforms and online forums have become indispensable tools for assessing market sentiment. Trending topics like Twitter can offer a quick pulse on what assets or market events garner attention. Specialised analytical tools can even quantify this chatter into actionable data, highlighting potential market moves. Online forums are another rich source of sentiment indicators. Places like Reddit and niche trading forums often host passionate discussions where traders share opinions, strategies, and forecasts. While the quality of this information can vary, a consensus view often emerges that can be invaluable in gauging sentiment. For example, an uptick in positive posts about a specific cryptocurrency* on a forum could indicate bullish sentiment, whereas an increase in sceptical posts would suggest the opposite. Economic Indicators Economic indicators like interest rates and Gross Domestic Product (GDP) reports provide a macro-level view of market sentiment, affecting everything from currencies to commodities. Interest rates, set by central banks, can indicate the market's sentiment toward a country’s economic prospects. A rise in interest rates often boosts the country's currency as higher yields attract foreign investment. Conversely, a rate cut can indicate economic caution, potentially weakening the currency. Quarterly GDP reports are another crucial metric, offering a comprehensive picture of a country's economic health. Strong GDP growth is generally seen as a positive indicator affecting multiple asset classes, from equities to currencies, that relate to that country. If a country reports better-than-expected GDP figures, it's often interpreted as bullish, leading to increased investor confidence and higher asset prices. While these indicators aren’t direct measures of sentiment, they both influence market sentiment and reflect current sentiment. For instance, rising interest rates may send the Consumer Confidence Index lower, resulting in reduced spending and a lower GDP reading. Lower GDP might damage sentiment further, and so on. Market Indicators In sentiment analysis for the stock market, the Volatility Index, or the VIX, is particularly informative. Often referred to as the "fear gauge," the VIX measures the market's expectation of 30-day forward-looking volatility based on S&P 500 index options. When the VIX rises, it indicates that traders expect increased volatility, often corresponding to bearish market conditions. Conversely, a low VIX suggests a more stable, often bullish market sentiment. Trading volume is another key metric that provides clues about market sentiment in a specific asset. High trading volumes often point to strong sentiment, be it bullish or bearish, as it represents active participation and conviction among traders. In contrast, low trading volumes might suggest indecision or lack of interest, signalling a market that could move sideways or reverse. The Bottom Line In the ever-changing world of trading, understanding market sentiment is invaluable. From economic indicators to social media trends, these tools provide a multi-dimensional view of market moods. To put these insights into practice and gain a competitive edge in your trading endeavours, consider opening an FXOpen account. Once you do, you’ll gain access to hundreds of assets to deploy your sentiment analysis skills. Happy trading! *At FXOpen UK and FXOpen AU, Cryptocurrency CFDs are only available for trading by those clients categorised as Professional clients under FCA Rules and Professional clients under ASIC Rules, respectively. They are not available for trading by Retail clients. This article represents the opinion of the Companies operating under the FXOpen brand only. It is not to be construed as an offer, solicitation, or recommendation with respect to products and services provided by the Companies operating under the FXOpen brand, nor is it to be considered financial advice.
FXOPEN:SPXMEducation
by FXOpen
2
A+ Trade Set ups All From Respecting Simple Levels! We identify high-quality trade opportunities by focusing on key support and resistance levels. By respecting these fundamental price points, traders can enhance their decision-making process. Support levels act as a floor where buying interest tends to emerge, while resistance levels serve as a ceiling where selling pressure usually mounts. Recognizing and adhering to these simple levels helps traders pinpoint entry and exit points more effectively, increasing the probability of successful trades and improving overall trading performance. AMEX:SPY
Editors' picks
AMEX:SPYEducation
by ThePrintingRoom
4
Why is Macro driving the markets ? The attached chart shows just how important macro analysis is on the financial markets, and just how much it can move prices. It is important to understand that the markets are nothing more than a huge game of anticipation, which is why macro analysis is so important. In particular, it is important to understand the phenomenon of pricing: the market incorporates all the information available to it into prices at a given moment. For example, if a new regulation is announced that will restrict the automotive sector in 2 years‘ time, the market will react immediately and shares will fall immediately, not in two years’ time, because the market will immediately take this information into account and pass it on. This is where macro analysis comes in: it is used to construct and understand the market narrative. What are the current issues and constraints, what element could act as a catalyst for a further rise, what element is likely to lead to a fall, what is the market sensitive to, where is the focus? It is by building this context that we can make the right trading decisions. Simply following a technical indicator will not be enough in the long term. An indicator doesn't give you any real anticipation, any understanding of the movement in front of you, or any rationalisation of the levels to exploit (you avoid certain Supports/Resistances, for example, depending on the macro flow, because you know that it is too likely that you will break through these levels). The whole market, all the assets, all the prices are simply a reflection of market expectations (pricing) on the outlook for the asset. You've probably already heard that the markets are out of touch with reality, that they're too expensive, that fund managers are 🌰 idiots who buy overpriced stocks (this analysis is often based on the price/earnings ratio). It's a misleading reading that doesn't look far enough ahead to provide a true understanding of the market... The market never buys the asset at time T, it buys the asset's perspectives! Let's take the GLT share at a given moment Taking into account its current price and earnings, it is trading at a P/E of 26, which may seem expensive. But if I look at the longer-term outlook : Over a 3-year horizon, if the company achieves the results it expects to do, the P/E will actually be 14.97, a much more acceptable and bearable figure than the 26.04 we saw earlier. That's what the market will pay! Not the share price at the moment, but its growth potential. The market is counting on these expectations. If they deteriorate, this will lead to sell-offs, and vice versa. And macro events drive the market because they can upset these expectations and market scenarios. Many market players are looking to invest in what will yield the highest returns. Once again, macro is the key to finding what will yield the highest returns. We know that certain companies/sectors react better to certain parts of the economic cycle, to a context of inflation, high growth, low growth, rising rates, an environment of long rates over an extended period, etc... So when the macro outlook changes, or is disrupted by recent data, market players will review their positioning and seek to allocate to new assets that are likely to benefit most from the current/forecasted contex & environment. What sectors are players pulling out of, what do they seem to be reallocating to? This is incredible information and a good barometer of the market's perception of its current macro environment and its appetite for risk. And unsurprisingly, these flows only come into play when new macro/economic data upsets, downgrades or improves the outlook for certain assets, upsetting market expectations. MANAGING means forecasting TRADING: means anticipating REACTING: means losing If you want to do what great traders, fund managers and trading desk operators do, macro-reading is essential to understand your trading environment and what the market will be sensitive to. Being a trader is not about reacting, because we need to limit surprises as much as possible through our macro reading, which is a prerequisite for anticipating and forecasting 😉
CME_MINI:ES1!Education
by Gold-Lion-Trading
A New President's Potential Impact on Oil Prices1. Introduction The U.S. presidential election in 2024 is set to bring new leadership, with a new president guaranteed to take office. As history has shown, political transitions often have a profound effect on financial markets, and crude oil is no exception. Traders, investors and hedgers are now asking the critical question: how will WTI Crude Oil futures react to this change in leadership? While there is much speculation about how a Democrat versus a Republican might shape oil policy, data-driven insights provide a more concrete outlook. Using a machine learning model based on key U.S. economic indicators, we’ve identified potential movements in crude oil prices, spanning short, medium, and long-term timeframes. 2. Key Machine Learning Predictions for Crude Oil Prices Short-Term (1 Week to 1 Month): Based on the machine learning model, the immediate market reaction within the first week following the election is expected to be minimal, with predicted price changes below 2% for both a Republican and Democratic win. The one-month outlook also suggests additional opportunity. Medium-Term (1 Quarter to 1 Year): The model shows a significant divergence in crude oil prices over the medium term, with a potential sharp upward movement one year after the election. Regardless of which party claims the presidency, WTI crude oil prices could potentially rise by over 40%. This is in line with historical trends where significant price shifts occurred one year post-election, driven by economic recovery, fiscal policies, and broader market sentiment. Long-Term (4 Years): Over the course of the full four-year presidential term, the model predicts more moderate growth, averaging around 15%. The data suggests that, while short-term market movements may seem reactive, the long-term outlook is more balanced and less influenced by the winning party. Instead, economic conditions, such as interest rates and industrial activity, will have a more sustained impact on crude oil prices. 3. Feature Importance: The Drivers Behind Crude Oil Price Movements The machine learning model's analysis highlights that crude oil price movements, especially one year after the election, are primarily driven by economic indicators, rather than the political party in power. Below are the top features influencing crude oil prices: Top Economic Indicators Influencing Crude Oil: Fed Funds Rate: The most significant driver of crude oil prices, as interest rate policies affect everything from borrowing costs to overall economic growth. Changes in the Fed Funds Rate can signal shifts in economic activity that directly impact oil demand apart from the US Dollar itself. Labor Force Participation Rate: A critical indicator of economic health, a higher participation rate suggests a stronger labor market, which supports increased industrial activity and energy consumption, including crude oil. Producer Price Index (PPI): The PPI reflects inflation at the producer level, impacting the cost of goods and services, including oil-related industries. Consumer Sentiment Index: A measure of the general public's outlook on the economy, which indirectly influences energy demand as consumer confidence affects spending patterns. Unit Labor Costs: An increase in labor costs can signal inflationary pressures, which could lead to changes in oil prices as businesses pass on higher costs to consumers. This study exclusively uses U.S. economic data, excluding oil-related fundamentals such as OPEC+ supply and demand information, in order to focus on the election’s direct impact through domestic economic channels. Minimal Influence of Political Party on Price Movements: Interestingly, the machine learning model suggests that the political party of the newly elected president has a relatively low impact on crude oil prices. The performance of WTI crude oil appears to be more closely tied to macroeconomic factors, such as employment data and inflation, than the specific party in power. These findings emphasize the importance of focusing on economic fundamentals when analyzing crude oil price movements for longer term exposures, rather than solely relying on political outcomes. 4. Historical Analysis of Crude Oil Price Reactions to U.S. Elections Looking back over the last two decades, the performance of crude oil post-election has varied, depending on global conditions and the economic policies of the newly elected president. Notable Historical Movements: George W. Bush (Republican): In his 2000 election, crude oil dropped nearly 50% within a year, reflecting the broader economic fallout from the bursting of the dot-com bubble and the events of 9/11. In contrast, his 2004 re-election saw oil prices climb 21.5% within a year, driven by the Iraq War and increasing global demand for energy. Barack Obama (Democratic): After his 2008 election, crude oil prices surged by 33.8% within one year, partly due to economic recovery efforts following the global financial crisis. His 2012 re-election saw more modest growth, with an 8.3% rise over the same period. Donald Trump (Republican): His election in 2016 coincided with a moderate 23.8% increase in crude oil prices over one year, as the U.S. ramped up energy production through fracking, contributing to global supply increases. Joe Biden (Democratic): Most recently, crude oil prices skyrocketed by over 100% in the year following Biden’s 2020 victory, driven by post-pandemic economic recovery and supply chain disruptions that affected global energy markets. 5. WTI Crude Oil Contracts: CL and MCL Explained When trading crude oil futures, the two most popular contracts offered by the CME Group are WTI Crude Oil Futures (CL) and Micro WTI Crude Oil Futures (MCL). Both contracts offer traders a way to speculate or hedge on the price movements of crude oil, but they differ in size, margin requirements, and ideal use cases. WTI Crude Oil Futures (CL): Price Fluctuations: The contract moves in increments of $0.01 per barrel, meaning a $10 change for one contract. Margin Requirements: As of recent estimates, the margin requirement for trading a CL contract is around $6,000, though this can fluctuate depending on market volatility. Micro WTI Crude Oil Futures (MCL): Price Fluctuations: 10 times less. The contract moves in increments of $0.01 per barrel, meaning a $1 change for one contract. Margin Requirements: 10 times less, around $600 per contract. Practical Application: During periods of heightened market volatility—such as the lead-up to and aftermath of a U.S. presidential election—traders can use both CL and MCL contracts to navigate expected price fluctuations. Larger traders might use CL to hedge against or capitalize on significant price movements, while retail traders may prefer MCL for smaller, controlled exposure. 6. Conclusion As the 2024 U.S. presidential election approaches, crude oil traders are watching closely for market signals. While political outcomes can cause short-term volatility, the machine learning model’s predictions emphasize that broader economic factors will drive crude oil prices more significantly over the medium and long term. Whether a Democrat or Republican wins, crude oil prices are expected to see a potential increase, particularly one year after the election. This surge, driven by factors such as interest rates, labor market health, and inflation, suggests that traders should focus on these economic indicators rather than placing too much weight on which party claims the presidency. 7. Risk Management Reminder Navigating market volatility, especially during a presidential election period, requires careful risk management. Crude oil traders, whether trading standard WTI Crude Oil futures (CL) or Micro WTI Crude Oil futures (MCL), should be mindful of the following strategies to mitigate potential risks: Use of Stop-Loss Orders: Setting predefined exit points, traders can avoid significant drawdowns if the market moves against their position. Leverage and Margin Control: Overexposure can lead to margin calls and forced liquidation of positions in volatile markets. Position Sizing: Adjusting position sizes according to risk tolerance is vital especially during uncertain periods like elections. Hedging Strategies: Traders might consider hedging their crude oil positions with other instruments, such as options or spreads, to protect against unexpected market moves. Monitoring Economic Indicators: Keeping a close watch on key U.S. economic data can provide valuable clues to future crude oil futures price movements. By using these risk management tools effectively, traders can better navigate the expected volatility surrounding the 2024 U.S. election and protect themselves from significant market swings. When charting futures, the data provided could be delayed. Traders working with the ticker symbols discussed in this idea may prefer to use CME Group real-time data plan on TradingView: www.tradingview.com - This consideration is particularly important for shorter-term traders, whereas it may be less critical for those focused on longer-term trading strategies. General Disclaimer: The trade ideas presented herein are solely for illustrative purposes forming a part of a case study intended to demonstrate key principles in risk management within the context of the specific market scenarios discussed. These ideas are not to be interpreted as investment recommendations or financial advice. They do not endorse or promote any specific trading strategies, financial products, or services. The information provided is based on data believed to be reliable; however, its accuracy or completeness cannot be guaranteed. Trading in financial markets involves risks, including the potential loss of principal. Each individual should conduct their own research and consult with professional financial advisors before making any investment decisions. The author or publisher of this content bears no responsibility for any actions taken based on the information provided or for any resultant financial or other losses.
Editors' picks
NYMEX:CL1!Education
by traddictiv
5
Understanding risk to reward and risk management Risk Management In trading, understanding how to manage risk is just as important as understanding how to identify profitable opportunities. Regardless of your skill level or strategy, no trader can predict the market with 100% certainty. Therefore, managing risk is essential to protect your capital and ensure long-term success. In this chapter, we will explore the fundamentals of risk management, including the importance of setting stop-loss and take-profit levels, and how to determine appropriate position sizing. Importance of Risk Management The first rule of trading is to protect your capital. Without proper risk management, even a string of profitable trades can be wiped out by a few bad decisions. Traders who neglect risk management often find themselves caught in emotional trading, leading to unnecessary losses. Here’s why risk management is critical: Minimizes Losses: Every trade carries a risk. By managing risk properly, you can limit the size of your losses and protect your capital from large drawdowns. Consistency: Effective risk management allows you to trade consistently over the long term, even if you encounter a few losing trades. Successful traders understand that losing trades are inevitable, but with sound risk management, they ensure that losses are small and manageable. Preserves Psychological Capital: Emotional decision-making often leads to overtrading, panic, and revenge trading. By following a risk management plan, you reduce the emotional impact of losing trades and maintain the discipline needed to follow your strategy. Setting Stop-Loss and Take-Profit Levels One of the most practical ways to manage risk is by setting stop-loss and take-profit levels for every trade. These levels help automate your exit strategy, ensuring that you stick to your plan and avoid emotional reactions to price fluctuations. Stop-Loss Levels A stop-loss order is an instruction to exit a trade if the price moves against you by a certain amount. This ensures that you do not hold onto a losing trade for too long, minimizing potential losses. How to Set a Stop-Loss: Based on Technical Levels: Identify support and resistance levels on the chart. For example, if you are buying a stock, place the stop-loss below a significant support level. If the price breaks this level, it signals that the market is likely to continue downward. Percentage-Based: Many traders set their stop-loss at a fixed percentage of the entry price (e.g., 1% or 2%). This method ensures that you risk only a small portion of your capital on each trade. Volatility-Based: Some traders adjust their stop-loss levels based on market volatility. In a more volatile market, you might set a wider stop-loss to avoid being prematurely stopped out by normal price swings. Example: You enter a long position in a stock at £50 per share and identify strong support at £48. You set a stop-loss at £47.50 to limit your downside risk. If the price drops to £47.50, the stop-loss order is triggered, and you exit the trade automatically. Take-Profit Levels A take-profit order is used to lock in gains by exiting the trade once the price reaches a predefined profit target. This helps you avoid the temptation to hold onto a winning trade for too long and risk losing the profits you've already made. How to Set a Take-Profit: Risk-to-Reward Ratio: A common approach is to set a take-profit level that provides a favorable risk-to-reward ratio. For instance, if you risk $1 per trade, you might aim to make £2 or £3 in profit (a 2:1 or 3:1 risk-to-reward ratio). This ensures that your winners are larger than your losers. Technical Targets: Take-profit levels can be based on technical factors such as resistance levels, Fibonacci retracement levels, or trendline projections. For example, if a stock is trading within a channel, you might set your take-profit near the upper boundary of the channel. Example: You enter a trade with a risk-to-reward ratio of 1:2, meaning you’re risking £100 to potentially make £200. If your stop-loss is set 2% below your entry price, you’ll place your take-profit order at a level where the price is 4% higher. Trailing Stop-Loss A trailing stop-loss is a dynamic stop that moves with the price as it moves in your favor, locking in profits while allowing the trade to continue if the trend is strong. If the price reverses by a specified amount, the trailing stop will close the trade. Example: You enter a long position in a stock at £100 with a trailing stop set at £5. As the price rises to £110, your stop-loss moves to £105, locking in at least £5 in profit. If the price drops to £105, the trailing stop closes the trade. Position Sizing Position sizing is the process of determining how much capital to allocate to each trade. Proper position sizing ensures that you do not overexpose your account to a single trade, helping to protect your portfolio from excessive losses. Calculating Position Size To calculate the appropriate position size, follow these steps: 1. Determine Your Risk per Trade: Decide how much of your total trading capital you are willing to risk on any single trade. A common rule is to risk no more than 1% to 2% of your total account balance on each trade. Example: If you have a $10,000 trading account and you are comfortable risking 1%, you should only risk $100 per trade. 2. Identify Your Stop-Loss Level: Determine where you will place your stop-loss, as this defines how much you could potentially lose on the trade. For instance, if your stop-loss is 2% below your entry price, you will risk 2% of the position’s value. Risk-to-Reward Ratio Every time you enter a trade, you should consider the risk-to-reward ratio, which compares the potential loss (risk) to the potential gain (reward). A favorable risk-to-reward ratio helps ensure that even if you lose more trades than you win, you can still be profitable. Ideal Ratios: Most traders aim for a minimum risk-to-reward ratio of 1:2 or 1:3. This means that for every $1 risked, you aim to gain $2 or $3. A higher ratio increases your chances of maintaining profitability even with some losing trades. Example: If you set a stop-loss that limits your potential loss to £50, and your take-profit level is set to gain £150, your risk-to-reward ratio is 1:3. Even if you only win one out of every three trades, you will still break even or potentially make a profit. Risk management is the foundation of successful trading. By setting proper stop-loss and take-profit levels, using appropriate position sizing, and maintaining a favorable risk-to-reward ratio, you can protect your capital while maximizing your chances for long-term profitability. Remember, successful trading is not about winning every trade—it’s about managing risk effectively so that your winners outweigh your losers.
SP:SPXEducation
by samstoobad
Riding The Wave - The Importance of Top-Down AnalysisIn this video I explain why a top-down analysis is important when it comes to increasing the odds of price moving in your favour. I know it is extra work, but it isn't much, especially in terms of being a part of the most lucrative industry in the world. Trading from the higher timeframe simply allows you to "ride the wave" by going down to trade on the lower timeframe. Now, this is all relative to the timeframes you are on and not based on what is considered high or low timeframes. But simply put, if the higher timeframe is trending or being drawn to a specific price or level, then the displacements in price towards that direction will outweigh any displacements via retracements in the opposite direction. So, I hope this video gives some insight into this topic if you were wondering if it is really something you should do. If you desire higher win-rates, then the answer is yes. - R2F
Education
by Road_2_Funded
Improve Trading Discipline and FocusMindfulness has emerged as a powerful tool for improving performance in high-pressure fields, and trading is no exception. In the world of trading, where discipline, focus, and emotional control are paramount, the application of mindfulness techniques can help traders stay grounded and make more objective decisions. The combination of mindfulness with trading discipline allows for greater self-awareness, improved concentration, and the ability to detach from market noise and emotional triggers. 1️⃣ The Foundation of Mindfulness: Awareness of the Present Moment: Mindfulness starts with developing an awareness of the present moment—an invaluable skill for traders who often face information overload. In trading, being fully present means focusing on the data and market conditions as they are right now, not letting past mistakes or future anxieties cloud judgment. For example, when analyzing market trends, the ability to focus solely on current price action without allowing external distractions can improve execution timing. I’ve found that setting aside 10-15 minutes each morning for mindfulness practice, such as focusing on breathing or meditating, helps prepare my mind for the trading day ahead. This small act can cultivate a state of calm that carries into my trading. 2️⃣ Enhancing Emotional Regulation to Overcome Impulse Decisions: One of the most valuable aspects of mindfulness for trading is its capacity to regulate emotions. Emotional decisions—whether driven by greed or fear—often lead to suboptimal outcomes. Mindfulness trains traders to observe their emotional states without reacting impulsively. This detachment from emotional highs and lows prevents “revenge trading” or the urge to chase losses, which I have personally witnessed derail several trading plans. For example, a trader might see a sudden market drop and feel compelled to exit a position prematurely. However, practicing mindfulness during such events enables the trader to observe the fear, recognize it, and stick to the original strategy. 3️⃣ Reducing Overtrading Through Increased Discipline: Mindfulness helps curb the tendency to overtrade. Overtrading often stems from the need to be constantly active in the market, which can result in poor trade setups and increased order clusters. Mindful traders learn to wait patiently for high-probability setups by cultivating awareness of their own trading behaviors. Personally, I’ve reduced my trading frequency by becoming more mindful of whether my trading actions are rooted in well-thought-out plans or simply in a need to “do something.” Waiting for the right moment rather than reacting to every market tick has yielded better risk-adjusted returns over time. 4️⃣ The Role of Focus: Strengthening Attention and Reducing Market Noise: Mindfulness practices also enhance focus, helping traders concentrate on key aspects of their strategy while blocking out irrelevant market noise. This is especially important in today’s markets, where social media and constant news updates can easily distract traders from their core strategy. I’ve found that short mindfulness exercises, such as concentrating solely on breathing for a few minutes between trades, help clear my mind and reset my focus. This mental reset makes it easier to refocus on technical analysis or strategy execution, avoiding the temptation to deviate based on irrelevant news. 5️⃣ Improving Decision-Making Under Stress: Trading is inherently stressful, especially during periods of volatility or uncertainty. Mindfulness equips traders with the tools to make clear, objective decisions even under pressure. By increasing awareness of physical and emotional stress responses, you can recognize when stress is clouding your judgment. I’ve learned to spot signs of physical tension, such as shallow breathing, that occur when I feel rushed to execute a trade. Recognizing these stress signals helps me pause, reassess, and make more rational decisions. This simple pause can make a significant difference in trade outcomes. 6️⃣ Creating a Consistent Trading Routine with Mindful Breaks: Integrating mindful moments into a daily trading routine builds consistency, which is vital for long-term success. Just as athletes incorporate rest days to maintain peak performance, traders can benefit from taking mindful breaks throughout the day. These breaks reduce mental fatigue and allow for clearer thinking. For example, after a morning trading session, stepping away for five minutes to practice a mindfulness exercise—such as focusing on sensations or a brief body scan—helps reset my mind. This habit has made a tangible difference in my ability to stay disciplined during afternoon trading sessions, maintaining my edge and remaining in the zone. 7️⃣ Detachment from Outcome: Embracing Losses Mindfully: Lastly, mindfulness helps traders detach from specific trade outcomes and accept losses with grace. Losses are inevitable in trading, but how traders handle them determines long-term success. Mindfulness encourages acceptance of both wins and losses without emotional attachment, focusing instead on the process. This mindset shift allows traders to learn from losing trades without falling into a downward emotional spiral. I’ve found that by reviewing my damage control assets in a calm, mindful state—rather than reacting with frustration—I can extract valuable lessons that improve future performance. Mindfulness techniques offer traders a way to navigate the complexities of the financial markets with greater focus, emotional regulation, and discipline. By incorporating mindfulness into a trading routine, traders can maintain clarity even during volatile market conditions, leading to improved decision-making and long-term success.
FX:UK100Education
by AlexSoro
1
Market Analysis Techniques for TradersMarket Analysis Techniques for Traders Navigating the financial markets demands a strong toolkit of analysis techniques. This comprehensive article introduces traders to key market analysis methods, ranging from fundamental and technical analysis to more specialised approaches like price action and quantitative methods. You can pair your learning with FXOpen’s free TickTrader platform to gain the deepest understanding of these techniques. There, you will find the price charts, drawing tools, and indicators necessary for many of these market analysis methods. Fundamental Analysis Fundamental analysis involves the scrutiny of economic indicators, company financials, and geopolitical factors to assess an asset's intrinsic value. Economic indicators like GDP, employment rates, and interest rates offer a macroeconomic view, while company financials such as earnings, debt ratios, and future projections are microeconomic factors. Fundamental analysts also pay close attention to geopolitical events, like elections or trade wars, which can shift market sentiment. The strength of this approach lies in its thorough, long-term outlook, making it particularly useful for investors in equities and commodities. However, it is time-consuming and often requires a deep understanding of economic theory. For example, Warren Buffet's value-based approach leans heavily on fundamental analysis, emphasising the importance of understanding the intrinsic value of stocks. Technical Analysis Technical analysis diverges from the fundamental approach by focusing solely on past and current price movements and trading volumes. Traders employ various indicators, such as moving averages, Relative Strength Index (RSI), and Moving Average Convergence Divergence (MACD), to predict future price behaviour. Trend lines and support and resistance levels further supplement these indicators, offering visual aids for decision-making. A famous case is Paul Tudor Jones, who successfully predicted the 1987 market crash using technical indicators. He compared the market’s top in 1987 with the previous peak of 1929 and found notable similarities, demonstrating the power of learning technical analysis. The advantage of technical analysis in trading is its applicability across different time frames, from intraday to multi-year trends. However, it can sometimes give false signals, known as "whipsaws," leading to potential losses. Price Action Analysis Price action analysis, while related to technical analysis, is a more focused method that relies on the interpretation of raw price movements instead of using additional indicators. Traders primarily use chart patterns like head and shoulders, double tops and bottoms, and candlestick patterns such as bullish or bearish engulfing to make trading decisions. Like technical analysis, support and resistance levels are also crucial here. One of the advantages of price action analysis is its simplicity: no need for dozens of indicators. On the flip side, it can be subjective and open to interpretation, making it less straightforward for some traders. Munehisa Homma, a 17th-century Japanese rice trader, is often cited as an early pioneer of price action analysis. Utilising candlestick charts, he achieved great success and laid the foundation for modern technical analysis. Quantitative Methods Quantitative analysis employs mathematical and statistical models to evaluate financial assets and markets. Algorithmic trading, a method that automatically executes trades based on pre-set criteria, is a prime example of the use of quantitative techniques. Traders also use backtesting to validate the effectiveness of a trading strategy by applying it to historical data. The quantitative approach offers the benefit of speed and precision, but it also carries risks such as model overfitting, where a strategy works well on past data but fails in real-time trading. One notable firm that has achieved exceptional success through quantitative methods is Renaissance Technologies, a hedge fund that’s achieved annual returns of 30%+ through its sophisticated mathematical models. Sentiment Analysis Sentiment analysis focuses on gauging market psychology by monitoring news, social media, and sentiment indicators. It seeks to understand how collective emotions are driving market trends. Methods for sentiment analysis include text mining of news articles and tweets, as well as tracking investor sentiment indexes like the Fear & Greed Index. While sentiment analysis offers a real-time pulse of market psychology, it is also prone to rapid changes, making it less reliable for long-term trading decisions. Notably, traders during the GameStop short squeeze phenomenon in early 2021 relied on sentiment analysis from online forums, turning what seemed like an undervalued stock into a trading frenzy. Intermarket Analysis Intermarket analysis extends the analytical lens to the relationships between different asset classes, such as equities, commodities, currencies, and bonds. By identifying these correlations, traders can gain insights into how a movement in one market could influence another. The advantage of intermarket analysis is its holistic view of market dynamics, but it also requires a strong grasp of global economics. For instance, in the chart above, we can see the price of crude oil with the price of Exxon Mobil (XOM) and BP (BP) overlaid. There is a strong correlation between crude oil’s trend and the trend of these companies’ share prices. Traders could evaluate the bullishness or bearishness of crude oil to set a bias for XOM and BP’s future direction. Seasonal Analysis Seasonal analysis examines recurring patterns in markets, often influenced by factors like weather, holidays, and fiscal calendars. For example, retail stocks often rise before the holiday shopping season, and energy commodities can be influenced by demand for transport fuel in summer and heating fuel in winter. Tools like seasonal charts help traders identify these trends. However, a major challenge lies in the changing dynamics of markets, which may render some seasonal patterns less reliable over time. Investors who had historically profited from buying stock in winter and selling in summer found this strategy less effective in recent years due to evolving market conditions. The Bottom Line In summary, a well-rounded understanding of diverse market analysis techniques is key to trading success. Whether focused on long-term investments or intraday trades, incorporating these methods can substantially enhance your trading strategy. For those ready to apply these insights in a live trading environment, opening an FXOpen account can serve as the next logical step in your trading journey. This article represents the opinion of the Companies operating under the FXOpen brand only. It is not to be construed as an offer, solicitation, or recommendation with respect to products and services provided by the Companies operating under the FXOpen brand, nor is it to be considered financial advice.
Editors' picks
Education
by FXOpen
5
e-Learning with the TradingMasteryHub - Growth is "simple"🚀 Welcome to the TradingMasteryHub Education Series! 📚 Looking to unlock consistent growth in your trading? Today, we’re diving into a powerful yet straightforward formula that many overlook. Growth isn’t magic; it’s a process that involves discipline, patience, and following a few key principles. Let’s explore seven strategies that can lead you to consistent success. 1. Get Rid of the Idea that You Can Calculate Profit It’s time to rethink profit calculation. Many traders rely on risk/reward (R/R) ratios to estimate their potential profits, but the truth is, you can’t predict how far the market will go or how volatile it’ll be on the way. Setting a profit target can actually work against you. Your brain becomes fixated on that goal, which can cause you to make irrational decisions, like holding on too long when the market is telling you to exit. It’s more likely that you’ll lose out by not taking profits before reaching your target than by missing an extended move. Instead of trying to calculate profit, focus on managing your trades as they unfold. No one knows where the market will go, but you can follow the price action and let it lead you to bigger gains than you initially expected. 2. Always Use a Stop Loss The stop-loss order is your best friend in trading because it’s the only thing you can control. A stop loss does more than protect your capital—it measures your discipline and ability to stick to a plan. It helps you stay aligned with your risk tolerance (what I like to call your “bud meter”). Set your stop loss at significant areas in the market. The best place to put it? Where you’d place the opposite trade. For example, if you’re buying, put the stop loss where a sell order would make sense in the current market context. This prevents you from being stopped out prematurely and ensures you stay on the right side of the momentum. 3. Add to Your Winners, Cut the Losers Adding to winners is a game-changer. Most traders fade out of winning trades too quickly because they fear giving back profits. But by adding to positions that are moving in your favor, you’re compounding your success. Don’t worry about getting in at a higher price—if the market is showing strength, it’s a sign to follow. Let’s look at how most traders handle a winning trade: - They take small profits at 1:1 R/R ratio, move their stop loss, and try to let the rest run. - But in doing so, they lock in limited gains and miss out on the bigger move. Now, here’s what the top 10% of traders do: - Instead of scaling out, they add to their winners at each significant level. - By adding small positions as the market runs, they compound their gains, allowing the trade to grow much larger than initially estimated. This approach not only maximizes your gains but also lowers your risk on each successive entry. 4. Only Trade in Trend Direction Trading with the trend is like surfing—catching the wave takes you much farther than paddling against it. In bull markets, overhead resistance zones are often broken, just like support levels in bear markets. These trends are driven by large institutional players, like hedge funds and banks. Retail traders only make up a small fraction of the market, so swimming against these currents is a losing game. About 20% of trading days in major indices are strong trending days where the market moves in one direction all day long. To take full advantage of these days, you need to add to your winning trades as the trend progresses. 5. Seek the "Brain Pain"—It’s a Sign of Growth Your brain is wired to avoid pain at all costs, and this can be detrimental to your trading. Most traders scale out of winning positions too soon because their subconscious is trying to protect them from the fear of losing profits. On the flip side, they’ll add to losing positions, convincing themselves that they’re getting a “discount,” even when the market shows otherwise. To become a winning trader, you need to train yourself to embrace discomfort. This means adding to your winning trades, using stop losses that you can stomach, and cutting losses as soon as your brain starts to rationalize bad decisions. Losing should never bother you—it’s part of the game. What matters is your overall growth and consistency, not avoiding pain in individual trades. 6. Don’t Do What 90% of Traders Do—Be the 10% Want to be in the top 10%? It’s simple: avoid the mistakes of the 90%. Here’s how: - Always set a stop loss. - Add to your winners, don’t fade out. - Cut losses before they snowball. - Trade the market, not your account—don’t take revenge trades to “get even.” Focus on what the market is showing you, not what your account balance says. The market doesn’t care about your profit target. It only cares about price movement, so align yourself with it. 7. Analyze Your Trades, Not Just Your Results The best way to grow as a trader is through post-trade analysis. Screenshot your charts, mark your entries, stop losses, and exits, and review them daily. This helps you identify both technical and psychological weaknesses in your trading. Think of it this way: if you had a business partner who consistently made poor decisions, you’d fire them eventually. Be your own business partner, and change your behavior if it’s not delivering results. 🔚 Conclusion and Recommendation Growth in trading is a simple formula: get rid of fixed profit targets, control your risk with stop losses, add to winners, and cut your losers. Follow the trend, embrace discomfort, and don’t fall into the traps that 90% of traders do. Analyze your trades with an honest eye, and over time, you’ll see steady growth. Success in trading isn’t about perfection—it’s about discipline, consistency, and continual learning. --- 🔥 Can’t Get Enough? Don’t Miss Out! Subscribe, share, and engage with us in the comments. This is the start of a supportive trading community—built by traders, for traders! 🚀 Join us on the journey to market mastery, where we grow, learn, and succeed together. 💪 💡 What You'll Learn: - Essential growth strategies in trading - The psychological edge to outperform others - Practical tools for trading success - And much more!... Best wishes, TradingMasteryHub
EURONEXT:RMSEducation
by TradingMasteryHub
1
THE SILENT EXODUS: EXPLORING WHY TRADERS ABANDON THE MARKETSMarketing serves as a powerful catalyst, attracting millions of newcomers to trading each year, many of whom quickly incur losses, much to the delight of brokers. In most instances, these losses can be attributed to the traders themselves. Regulators make efforts to warn those seeking quick profits, often highlighting disclaimers on the home pages of nearly every broker's website. However, this doesn’t deter many individuals from entering the market. While it is true that after a few weeks or months, many traders abandon trading entirely, only a small percentage of those who leave ever return. Many are familiar with the statistic that suggests 90% of traders lose 90% of their money within just 90 days. This striking figure underscores the challenges and risks associated with trading. 📍 TRADING OR EMPLOYMENT "Start working for yourself" This rallying cry echoes through countless videos, books, and articles focused on financial independence, self-motivation, and personal development. The benefits of self-employment are numerous: You’re free from the pressures of management, which often comes with constant demands and can dampen your spirit with their dissatisfaction. You’re not bound by a rigid work schedule, allowing you to take breaks whenever you need without the hassle of requesting time off. There’s no obligation to adhere to corporate dress codes or behavioral standards. You can prioritize your health by taking breaks as needed, rather than pushing yourself to the limit. You save precious time by eliminating lengthy commutes, rather than spending two hours traveling to and from work. You can enjoy peace of mind without the constant worry of being fired at any moment. You have the freedom to manage your own time and control your income. A self-employed individual tends to be optimistic about the future, believing that they can shape it to perfection. Trading is one pathway to achieving financial independence, and one of its main advantages is that you can start with just $1000 and a few hours of dedicated practice after work. However, in reality, many experience disappointment as the challenges of trading become apparent. 📍 1. FREEDOM COMES WITH RESPONSIBILITY After experiencing initial setbacks, a trader soon realizes: 🔹 There is no guarantee of a consistent income in trading; instead, there's a significant risk of loss. In a traditional job, a paycheck is typically guaranteed. 🔹 Achieving a stable income through trading requires hard work and dedication—it relies entirely on your own efforts. Contrast this with a job where you could occasionally slack off or take smoke breaks without any impact on your salary. 🔹 The cost of a mistake in trading is your own money. In a job, salary cuts are rare, and while management might voice their frustrations, you can often tolerate the pressure. 🔹 Financial discipline becomes paramount. While it’s possible to ask for time off, arrive late, or take it easy in a corporate job and still receive your salary, in trading, laziness directly correlates with diminished returns. The more you slack off, the less you earn. 📍 2. SELF-MOTIVATION One of the greatest challenges of being self-employed, particularly in trading, is the imperative to motivate oneself consistently. It requires discipline to wake up at a set time instead of indulging in the comfort of staying in bed until late morning. The allure of self-employment often leads to a false sense of freedom, allowing procrastination to seep in with thoughts like, “I’ll sleep just one more day and start fresh tomorrow.” This mentality can be tempting, especially when there are no immediate consequences to breaking your own schedule. In a traditional job, the structure is clear—if you fail to adhere to a timetable, you risk disciplinary action or even losing your job. In contrast, self-employment can foster a more relaxed approach, where late starts and distractions like binge-watching TV shows can take precedence over important tasks. However, this path can lead the self-employed individual back to where they started—feeling subdued by the very freedom they sought. Without external accountability, the trader might find themselves floundering, lacking the motivation to push through challenging days. Ultimately, the responsibility falls solely on them to create a routine, set goals, and maintain the drive necessary to succeed. In this realm, it becomes essential to cultivate self-discipline, transforming the vibrant freedom of self-employment into a powerful engine for productivity rather than a pathway back to the constraints of traditional employment. 📍 3. FAILURE TO STOP IN TIME Another extreme in self-employment occurs when individuals become so absorbed in their work that they risk burnout. The overwhelming workload can render the structured environment of a previous job seem like a utopia, where the stress was lower and work hours were clearly defined. In this state, income becomes the sole motivation to continue. If the financial rewards from trading are only slightly above a previous salary—especially when weighed against the stress and exhaustion—many traders may find themselves reconsidering a return to traditional employment. This highlights the necessity of establishing boundaries and prioritizing self-care. Striking a balance between professional ambitions and personal well-being is critical for sustained success and happiness in self-employment. 📍 4. EMOTIONAL BREAKDOWNS Emotional breakdowns can arise as a consequence of stress, heavily influenced by an individual’s previous work experiences. For someone coming from a job filled with constant stress and pressure, trading may initially feel like a liberating and fulfilling pursuit. However, if their prior role was calm and unchallenging, the high-stakes nature of trading—marked by significant risks and rapid decision-making—can lead to overwhelming emotional strain. The stark contrast between their past work environment and the volatility of trading may trigger anxiety and emotional instability. This highlights the importance of understanding one's emotional resilience and stress tolerance before diving into a high-pressure endeavor like trading. Acknowledging these differences is crucial to managing stress and preventing emotional breakdowns in the pursuit of success. 📍 IS THERE A WAY OUT? Many traders leave the field due to their inability to acknowledge mistakes, manage time effectively, and take personal accountability. The pressure of sole responsibility can be overwhelming, causing their trading endeavors to falter. In a traditional job, it’s easy to attribute failures to external factors such as a boss, colleagues, or economic conditions. Similarly, in trading, one might blame brokers or market fluctuations. However, losses are inevitable, and without self-reflection, traders often label the profession a “scam” and revert to their previous roles. The core issue lies in the perception of comfort. In trading, comfort is subjective and often equates to a personal sense of responsibility. If you are willing to own your decisions and embrace the challenges, then trading can be rewarding. Conversely, if comfort for you means avoiding responsibility and sticking to a structured environment, trading may not be the right choice. Ultimately, understanding your own expectations and readiness for accountability is crucial for success in trading. 📍 CONCLUSION Many insights seem self-evident, yet traders often overlook them until they face these realities firsthand. The information presented in this post may appear straightforward, but beginners frequently dismiss these truths, clinging to the hope that the challenges of trading will somehow lessen over time. If you are embarking on your trading journey, it's essential to recognize that trading is hard work. Be prepared to invest significant time and effort into learning and gaining experience. It is crucial to set realistic expectations and understand that, especially in the initial stages, your focus should be on education and skill development rather than seeking immediate profits. Allow yourself at least the first six months of intensive study before considering trading with real money. Embracing this approach will not only equip you with the necessary knowledge but also help build a sustainable foundation for your trading career. Traders, If you liked this educational post🎓, give it a boost 🚀 and drop a comment 📣
Education
by Lingrid
2
Forex Portfolio Selection Using Currency Strength Index (CSI)Hello Traders, Today, I’ll share my portfolio selection approach in forex trading. This method helps identify the best forex pairs to trade based on their relative strength. The simplest and most effective strategy is to use the Currency Strength Index (CSI), combining the H4, Daily (D1), and Weekly (W1) cumulative strength. By analyzing this data, we can identify the strongest and weakest currencies at any given time. Once we have this information, the next step is to pair the strongest currencies with the weakest. Here are today’s portfolio selections: BUY Pairs: GBPUSD, GBPCAD, GBPNZD SELL Pairs: USDJPY, CADJPY, NZDJPY, USDCHF, CADCHF, NZDCHF The key benefits of this portfolio selection process are: A focused view on the most profitable currency pairs An objective approach to trading decisions Clear direction on which way to trade (buy or sell) Like, comment by letting me know what you think and follow me for more trading education. Happy trading!
Education
by Charts247TradingAcademy
The key to starting a trade is support and resistance points Hello, traders. If you "Follow", you can always get new information quickly. Please also click "Boost". Have a nice day today. ------------------------------------- As you study candles, you will learn about trend reversal sections. Therefore, rather than learning the shapes or patterns of candles, when you study them, you will be able to see the support and resistance points and sections made up of the selling area and trend reversal sections in a big picture. Therefore, rather than trying to memorize the shapes or arrangements of candles, it is important to see whether support and resistance points and sections are formed when such shapes, arrangements, and patterns appear. The same goes for other studies related to charts. - As you study candles, you will find that what you have studied appears in the sections where candles are gathered. These areas are drawn as horizontal lines to indicate support and resistance points. However, objective information is needed to conduct trading on the horizontal lines drawn like this. Otherwise, even the support and resistance points you drew will likely become useless lines if you conduct barrack trading because you don't trust them. Be careful because your psychological state will interfere with analyzing the chart. - The easiest way to obtain this objective information is the Heikin Ashi chart and the Renko chart. The Heikin Ashi chart and the Renko chart help you check the trend because they show fewer fakes and sweeps. (Heikin Ashi chart) (Renko chart) Among these, you can immediately see that the Renko chart is a bit easier to find support and resistance points. - You can think of the points near the end of the blocks on the Renko chart as having strong support and resistance points. Therefore, among the horizontal lines drawn on the chart above, the 2800.0 and 4000.0 points are the end points of three blocks, so they can be seen as strong support and resistance points. If you change the Renko chart to a regular candle chart, you can clearly see that it will form support and resistance points or sections. However, since the Renko chart changes the price in blocks, it is difficult to trade at this point. Therefore, the Heikin Ashi chart or Renko chart is good to use when analyzing the chart, but it is difficult to trade. - To compensate for this, we created a horizontal line at the price position using indicators (StochRSI, OBV, CCI, RSI) that have been used for a long time. The horizontal line connected to the current candle position plays the role of the current support and resistance point. And, since the longer the horizontal line, the stronger the support and resistance role, you can see that it plays the role of support and resistance even if it is not connected to the current candle. - The support and resistance points drawn on the Heikin Ashi chart or Renko chart are difficult to use for trading, but you can easily check the support and resistance section by looking at only the 1D chart. However, in order to display support and resistance points with a general candle chart, support and resistance points must be displayed on the 1M, 1W, and 1D charts. And, the order of charts with strong support and resistance is 1M > 1W > 1D charts. - When you look at the 1M, 1W, and 1D charts using the HA-MS indicator, horizontal lines like the above are displayed. You can display them by changing the line type or line thickness to make them easier to see and then proceed with trading. ---------------------------------------------------------------- The above content corresponds to the method of finding support and resistance points included in general chart-related books. Of course, it is different from the explanation in the chart-related book, but I explained how to use indicators to more clearly indicate support and resistance points. - Even if you trade with the support and resistance points above, it will not work well when you actually trade. This is because you are not familiar with the most important trading strategy in trading. In conclusion, the most important thing is to create a trading strategy, rather than finding the support and resistance points explained above, looking at the trend line, or looking at indicators. However, it is very difficult to create a trading strategy that fits your investment style from the beginning. So, you should practice creating a trading strategy that suits you while trading based on the information of the objective chart. In order to trade, you need to decide on the following three things: 1. Investment period 2. Investment size 3. Trading method and profit realization method The above three things must be determined. No. 1 and 2 are determined according to your investment style. Therefore, it is recommended not to change No. 1 and 2 after you start trading. 3. Based on the information of the actual chart, the buy section, sell section, and stop loss point are determined. In addition, the profit realization method can be determined according to the investment period. The profit realization method is: 1. How to get cash profit 2. How to increase the coin (token) corresponding to the profit There are methods 1 and 2 above. - In order to create a trading strategy, it is important to display all the information you want on the chart before starting the transaction. If you do not, and then display lines on the chart after starting the transaction, psychological factors will be added and displayed, so the possibility of not trusting the lines drawn after starting the transaction increases. To prevent this, it does not matter if you use the indicator added to the HA-MS indicator. The reason is because it is objective information. You should increase profits or reduce losses by adjusting the investment ratio while conducting the transaction using this objective information. - Have a good time. Thank you. --------------------------------------------------
Editors' picks
Education
by readCrypto
4
Building a Trading PlanBuilding a Trading Plan When it comes to the dynamic world of finance, a well-developed plan is the cornerstone of effective trading. Although it may seem that building trading plans is useful only for traders with little experience, a plan empowers any trader to make informed decisions. This FXOpen article will delve into how to make a trading plan that aligns with your unique goals and risk tolerance. Setting Your Trading Goals A personalised business plan for traders serves as a bridge between your aspirations and reality. Therefore, having a strategy that aligns with your financial goals is a must. Whether you are aiming for short- or long-term targets, your strategy will be the roadmap that guides you to them. Set clear and attainable trading goals so you don’t have to jump in over your head and worry about every little detail. Analysing and Researching the Market Gaining an advantage in the market starts with a comprehensive analysis. You may learn all the tools available to perform a thorough analysis to decipher market trends and patterns. You can find many useful tools on the TickTrader platform. Along with this, traders learn about the fundamental factors that potentially affect the assets they will trade. By accurately identifying opportunities, traders can move forward with confidence. Defining Your Trading Style Selecting a trading style that complements your goals is an important step. The first step is to reflect on your personality. Are you a risk-taker who thrives on short-term gains, or do you prefer a more measured approach? Self-awareness forms the foundation of your style. It’s also a good idea to assess how much time you can commit to trading on a daily or weekly basis. You may start with a style that matches your initial assessment. But remember that finding the right style may require trial and error. You can trade with virtual funds on demo accounts to get a practical idea of how your chosen style works for you. Learning Risk Management Techniques You will need to identify the level of risk you’re comfortable with. If you align your trading approach with your risk appetite, trading will become much more comfortable. Moreover, reducing risk is a trader’s mantra. Consider setting stop-losses and take-profits. Try to find optimal position sizing techniques, ensuring that each trade matches your risk tolerance. Diversification, a time-tested strategy, further strengthens your trading portfolio against unforeseen market fluctuations. Testing and Optimisation of Your Plan Practice makes perfect. At FXOpen, you can use a demo account, which allows you to practise and refine your strategy in a risk-free manner. This lets you adjust your trading plan based on actual results. Then, a great way to go is to evaluate your trading performance regularly. Through this iterative process, the strategy becomes a powerful tool that helps build traders’ most effective methods. Trading Plan Examples Here are two simplified examples of trading plans for different trading styles. Analyse them carefully before drawing up your own. Example 1: Day Trading Plan — Intraday 1. Goals and Objectives - Aim to achieve consistent daily profits. - Maintain a win rate of at least 60%. - Limit maximum daily loss to 2% of capital. 2. Market Analysis Focus on technical analysis using candlestick patterns, support and resistance levels, and indicators like Moving Averages and Relative Strength Index (RSI). 3. Risk Management - Set stop-loss at a maximum of 1% of trading capital per trade. - Use position sizing to ensure trades are within risk tolerance. - Avoid revenge trading after hitting the daily loss limit. 4. Trading Routine - Start with pre-market analysis and identify potential trading opportunities. - Trade during peak market hours to catch maximum liquidity. - Keep a trading journal to track trades, results, and areas for improvement. Example 2: Swing Trading Plan — Daily to Weekly 1. Goals and Objectives - Target larger price moves and trends over several days to weeks. - Achieve an average of 15-20% annual return. - Limit drawdowns to no more than 10% of capital. 2. Market Analysis - Combine technical and fundamental analysis. - Consider macroeconomic factors and news events for a broader market context. 3. Risk Management - Set stop-loss orders at levels that align with technical support or resistance. - Risk no more than 2-3% of capital per trade. - Diversify by trading different assets or industries to reduce correlation risk. 4. Trading Routine - Conduct analysis and review trades in the evenings or over weekends. - Monitor positions periodically but avoid over-trading. - Keep a trading journal to assess the effectiveness of your strategy and make adjustments. Remember that these examples are simplified and don’t cover every aspect of a comprehensive plan. You need to tailor your plan to your risk tolerance, your style, and your personal circumstances. Additionally, trading carries inherent risks, and it’s essential to understand the markets, strategies, and risk management tools before executing trades. Final Thoughts In this article, we discussed the steps applicable for trading with different assets, including forex, crypto*, stocks, and commodities. With the right guidance, tools and knowledge, you can create a stock trading business plan that enhances your strengths and fulfils your needs and desires. By building a plan according to your aspirations and risk tolerance, you will have a strategy that is sustainable in the face of market volatility. And then our tools, low commissions, tight spreads and our huge variety of assets will make trading easy. Open an FXOpen account and discover a world where informed decisions determine success. *At FXOpen UK and FXOpen AU, Cryptocurrency CFDs are only available for trading by those clients categorised as Professional clients under FCA Rules and Professional clients under ASIC Rules, respectively. They are not available for trading by Retail clients. This article represents the opinion of the Companies operating under the FXOpen brand only. It is not to be construed as an offer, solicitation, or recommendation with respect to products and services provided by the Companies operating under the FXOpen brand, nor is it to be considered financial advice.
Education
by FXOpen
2
Fibonacci: The importance of knowing how to use it properlyThe way the market moves is a fascinating Fibonacci puzzle. Whether the trend is down or up, there is a Fibonacci level waiting to be hit as a reversal and/or target. USDJPY is shown here: This is a monthly chart. Using the Fibonacci extension from Dec 1, 1975, I've modified it to record the actually Fibonacci number past the old "1.618" to include 5, 8, 13, 21, 34. As you can see how the market respects 8, 13, especially 21 as USDJPY heads in a down trend. As of recent price action toward the right of the chart, You'll see another a Fibonacci retracement tool used between the 13 and 21 levels of the Fibonacci extension tool. Yes, even using Fibonacci between another Fibonacci works. More importantly how Dec 1, 2023 found support at the 50% mark between 13 and 21 Fibs. The way I use the Fibonacci extension tool is different than anyone else I've seen. I take the first impulse as the first wave. In my interpretation of a wave is all consecutive candles are the same color. The next wave is the retracement where all consecutive candles are the opposite color. Works on all timeframes and the smaller the time frame the more accurate; IE candles or wicks hit or stop on the exact Fib level. I hope this encourages you to try Fibonacci in a way no one else has used Fibs and it gives you an edge in your trading/investing objective.
Education
by shamgar331
2
Basic example of starting a trade Hello, traders. If you "Follow", you can always get new information quickly. Please click "Boost" as well. Have a nice day today. ------------------------------------- This is an example of starting a trade, explaining that you should objectively define the basics that are right for you. Therefore, I hope that this will be an opportunity to reexamine your trading judgment criteria rather than judging it as right or wrong. ----------------------------------------- It is showing a downward trend without breaking through the sell line of the superTrend indicator. Accordingly, the key is whether it can receive support near the M-Signal indicator (approximately 59953.52) on the 1W chart and rise above 60672.0-61099.25. If not, you should check whether it is supported near the MS-Signal (M-Signal on the 1D chart). Therefore, 1st: 59053.55 2nd: 57889.10 You should check whether it is supported near the 1st and 2nd above. - Usually, there are many cases where you trade impulsively based on your psychological state. To prevent this, it is good to have an objective trading method according to your investment style. This objectification is best done at the support and resistance points drawn on the 1M, 1W, and 1D charts. Therefore, it is good to trade based on whether it is supported near 59053.55 or 60720.0-61099.25. However, judging whether it is supported only by sight can lead to an incorrect judgment depending on psychological factors that occur during trading, so it is good to have objective information as the basis for judgment. It refers to indicators added to the chart as objective information. The MS-Signal indicator is used as a trend-related indicator, which is the M-Signal indicator of the 1M, 1W, and 1D charts. As a trading-related indicator, the HA-Low, HA-High indicators and their corresponding box sections, superTend, and volume profile are used. As a trading-related reference auxiliary indicator, the BW indicator and StochRSI indicator are used. - If we explain the current movement by referring to these indicators, - The superTrend indicator, which is passing around 60672.0-61099.25, has failed to rise above the sell line, - It is showing a downward trend below the M-Signal indicator of the 1W chart, - The StochRSI indicator is showing a trend of changing from an upward to a downward slope in the overbought section. However, since the StochRSI indicator has not yet fallen from the overbought zone and is not in a state where StochRSI < StochRSI EMA, it is difficult to see it as a downward turn. Therefore, an aggressive sell (SHORT) is possible between the M-Signal indicator of the 1W chart and the 60672.0-61099.25 range. Afterwards, when the StochRSI indicator falls from the overbought zone and becomes a state where StochRSI < StochRSI EMA, if it shows resistance near 59053.55 or the MS-Signal (M-Signal on the 1D chart) indicator, you can sell (SHORT). If it is supported at the point mentioned above, you can buy (LONG). However, it is recommended to check whether the state has been changed to StochRSI > StochRSI EMA. If not, it can pretend to rise and fall right away. - Have a good time. Thank you. -------------------------------------------------- - ​​Big picture It is expected that the real uptrend will start after rising above 29K. The section expected to be touched in the next bull market is 81K-95K. #BTCUSD 12M 1st: 44234.54 2nd: 61383.23 3rd: 89126.41 101875.70-106275.10 (overshooting) 4th: 134018.28 151166.97-157451.83 (overshooting) 5th: 178910.15 These are the points where resistance is likely to be encountered in the future. We need to see if we can break through these points. We need to see the movement when we touch this section because I think we can create a new trend in the overshooting section. #BTCUSD 1M If the major uptrend continues until 2025, it is expected to start by creating a pull back pattern after rising to around 57014.33. 1st: 43833.05 2nd: 32992.55 -----------------
Education
by readCrypto
1