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Liquidity is KEY to the MarketsIn this video I go through more about liquidity and why it is important. The markets move because of liquidity. Without liquidity, there is no trading. The larger the trader, the larger the liquidity required. Understanding the concept of liquidity and the fractal nature of price, trading becomes very interesting. A whole new world opens up to you and you no longer have to keep guessing where price is going. You no longer have to keep chasing candles. I hope you find this video insightful. - R2F
OANDA:XAUUSDEducation
by Road_2_Funded
1
Do not Trap in Gambler's/ Monte Carlo Fallacy!This image shows a historical chart of the QQQ ticker (which tracks the Nasdaq-100 index) over the past 15 years. The chart displays sequences of the market's consecutive up days (green) and down days (red). Key points from the image: 1. The chart spans from 2009 to 2024. 2. Green and red bars represent up and down days respectively. 3. Numbers in boxes above certain points indicate strings of consecutive up or down days. 4. The longest streak shown is 14 consecutive up days. 5. The title warns: "Be aware to not trapped in Gambler's/Monte Carlo fallacy" The Monte Carlo fallacy, also known as the gambler's fallacy, is the mistaken belief that if an event has occurred more frequently than normal in the past, it's less likely to happen in the future (or vice versa). In the context of this chart, it warns against assuming that because the market has been up for several consecutive days, it's "due" for a down day, or the opposite. This fallacy is particularly relevant in financial markets where past performance doesn't necessarily predict future results. The chart illustrates that while streaks of consecutive up or down days do occur, they're unpredictable and don't follow a set pattern. The warning aims to remind investors and traders not to make decisions based on the expectation that a trend must reverse simply because it has continued for some time. Each market day is independent, and past patterns don't determine future movements.
NASDAQ:QQQEducation
by Moshkelgosha
7
Nasdaq's Stellar Returns, Potential Risks AheadThe Nasdaq-100 has been a stellar performer since its debut in 1985, rising 22,900% (with dividends reinvested) for a 14.8% compounded annual total rate of return. By comparison, the S&P 500 returned 7,200% over the same period with dividends reinvested, an 11.5% compounded return (Figure 1). Figure 1: Since the inception of the Nasdaq-100 index in 1985, it has outperformed the S&P Source: Bloomberg Professional (XNDX and SPXT) However, the Nasdaq’s outperformance can partly be attributed to higher risk levels. It has been consistently more volatile than the S&P 500 (Figure 2) and has been subject to much greater drawdowns. On March 28, 2000, Nasdaq began a drawdown that reached -81.76% on August 5, 2002 (Figure 3). The total return index didn’t hit a new high-water mark until February 12, 2015. It also had a sharper drawdown during the 2022 bear market. Figure 2: The Nasdaq-100 has nearly always been more volatile than the S&P 500 Source: Bloomberg Professional (XNDX and SPXT), CME Economic Research Calculations Figure 3: From 2000 to 2002, the Nasdaq-100 fell by nearly 82% and didn’t recover until 2015. Source: Bloomberg Professional (XNDX and SPXT), CME Economic Research Calculations A large part of the reason for the Nasdaq’s greater overall return, higher volatility and its heightened susceptibility to deep and long drawdowns is its dependence on one sector: information technology. Since at least the 1990s, Nasdaq has been nearly synonymous with the tech sector. While nearly every sector has at least some presence in the Nasdaq, since its launch in 1999 it has always had a near-perfect correlation with the S&P 500 Information Technology Index (the basis for the S&P E-Mini Technology Select Sector futures launched in 2011). That correlation has never fallen below +0.9 and has sometimes been as high as +0.98. In the past 12 months the correlation has been +0.95 (Figure 4). Figure 4: The Nasdaq-100 has always had extremely high correlations with the tech sector Source: Bloomberg Professional (NDX, S5INFT, S5UTIL, S5ENRS, S5FINL, S5HLTH, S5CONS, S5COND, S5MATR, S5INDU, S5TELS) The preponderance of technology stocks in the Nasdaq is largely a function of history. Nasdaq was founded in 1971 as the world’s first electronic stock market and it began to attract technology companies, in part, because it had more flexible listing requirements regarding revenue and profitability than other venues. Over time the technology ecosystem settled largely on this market and came to dominate the Nasdaq-100 Index. Those who need to minimize tracking risks with respect to the S&P 500 Information Technology Index can do so with the Select Sector futures. However, those who wish to increase or decrease exposure to the technology sector more generally, and for whom tracking risks is a less of a concern can easily increase or reduce their exposure with the Nasdaq-100 futures. Also launched in June 1999 were E-mini Nasdaq-100 futures, which are now turning 25 years old. The contracts caught on quickly, and today trade at more than 668K contracts or $60 billion in notional value each day. E-mini Nasdaq-100 futures offer capital-efficient exposure to the Nasdaq-100 index, and allow investors to trade and track one NQ futures contract versus 100 stocks to achieve nearly identical exposure. These futures also help mitigate risk against the top-heavy nature of the Nasdaq-100 index, where the so-called Magnificent Seven companies—Microsoft, Apple, Nvidia, Amazon.com, Meta Platforms, Google-parent Alphabet and Tesla—have dominated recently. Broad exposure to this index acts as a hedge if the Magnificent Seven stocks decline. The Nasdaq has also correlated highly in recent years with consumer discretionary stocks as well as telecoms. By contrast, it has typically low correlations with traditional high-dividend sectors such as consumer staples, energy and utilities which tend to be listed on other exchanges. The exception to this rule is during down markets, when stocks tend to become more highly correlated. The Nasdaq also has very different interest rate sensitivities than its peers. For starters, high short-term interest rates seem to benefit the Nasdaq-100 companies as many of them have large reserves of cash that are earning high rates of return by sitting in T-Bills and other short-term maturities. This is a sharp contrast to the Russell 2000 index, which has suffered as Federal Reserve (Fed) rate hikes have increased the cost of financing for smaller and mid-sized firms, which borrow from banks rather than bond holders and don’t usually have substantial cash reserves. By contrast, the Nasdaq has shown a very negative sensitivity to higher long-term bond yields. Many of the technology stocks in the Nasdaq-100 are trading at high earnings multiples. Some have market capitalization exceeding $1 trillion. Higher long-term bond yields are a potential threat because much the value of these corporations is what equity analysts might refer to as their “value in perpetuity,” meaning beyond any reasonable forecast horizon. Typically, such earnings are discounted using long-term bond yields and the higher those yields go, the lower the net present value of those future earnings. Additionally, higher long-term bond yields can also induce investors to switch out of highly volatile and expensive equity portfolios into the relatively less volatile, fixed- income securities. The Nasdaq’s high sensitivity to long-term bond yields may explain why the index sold off so sharply in 2022 alongside a steep fall in the price of long-dated U.S. Treasuries, whose yields were rising in anticipation of Fed tightening and due to concerns about the persistence of inflation. By contrast, the Nasdaq has done well since October 2022 despite the Fed continuing to raise short-term rates through July 2023 and subsequently keeping those rates high. On the one hand, many of the cash-rich Nasdaq companies are benefitting from higher returns on their holdings of short-term securities. On the other hand, they are also benefitting from the fact that higher short-term rates have steadied long-term bond yields by making it clear that the Fed is taking inflation seriously. This isn’t to suggest that the Nasdaq is immune from downside risks. History shows that the risks are very real, especially in the event of an economic downturn. In the 2001 tech wreck recession, the Fed cut short-term rates from 6.5% to 1% but long-term bond yields remained relatively high, which was not a helpful combination for the tech sector. In addition to its 82% decline during the tech wreck recession, it also fell sharply during the global financial crisis, though not as badly as the S&P 500, which had a far larger weighting to bank stocks. This time around, potential threats to the Nasdaq include: The possibility of an economic downturn which could crimp corporate profits. Rate cuts which would reduce the return on cash positions. Large budget deficits and quantitative tightening which could push up long-term bond yields. Possibly tighter regulation of the tech sector in the U.S. and abroad. If you have futures in your trading portfolio, you can check out on CME Group data plans available that suit your trading needs www.tradingview.com By Erik Norland, Executive Director and Senior Economist, CME Group *CME Group futures are not suitable for all investors and involve the risk of loss. Copyright © 2023 CME Group Inc. **All examples in this report are hypothetical interpretations of situations and are used for explanation purposes only. The views in this report reflect solely those of the author and not necessarily those of CME Group or its affiliated institutions. This report and the information herein should not be considered investment advice or the results of actual market experience.
Editors' picks
CME_MINI:NQ1!Education
by CME_Group
6
Understanding Technical Indicators - Avoid FaultsI received a question from a member today related to Divergence on RSI or Stochastics. I've been lucky to actually sit down with the creator of Stochastics, George C. Lane, to discuss his indicator and how he used it to trade. I've also been luck to be able to attend multiple industry conferences over the past 20+ years where I've been able to watch and listen to dozens of the best technicians and analysts explain their techniques. Boy, those were the days - right? This video is going to help you understand most technical indicators are designed based on a RANGE of bars (usually 14 or so). This means they are measuring price trend/direction/strength/other over the past 14 bars - not longer. And because of that you need to understand any trend lasting more than 14+ bars could result in FAILURE of the technical indicator. Watch this video. I hope it helps. Get some.
AMEX:IWMEducation
by BradMatheny
Engage - The Set Up. Type of trading Day { The Trend Day}First Step of a successful trader is to build a Trade plan & review what he has done. This is my Trade Journal . (education purpose for all ) This is an Education Video explaining The Type of Trading Day. There are 6 Types of Trading Day, In this video we will look deep into First type 1> The Trend Day Key features: Price moves in a clear and continuous direction Pullbacks are shallow and limited. Trading strategies: Enter on first 15min Break out Ride the full day and exit 15 min before the market ends. Thanks TradeplanNifty
NSE:NIFTYEducation
by Tradeplannifty
Do Not Overwhelm Your Price Chart! In this article, we will discuss a very important term in trading psychology - paralysis by analysis in trading. Paralysis by analysis occurs when the trader is overwhelmed by a complexity of the data that he is working with. Most of the time, it happens when one is relying on wide spectra of non correlated metrics. That can be various trading indicators, different news outlets and analytical articles and multiple technical tools. Relying on such a mixed basket, one will inevitably be stuck with the contradictory data. For example, the technical indicators may show very bearish clues while the fundamental data is very bullish. Or it can be even worse, when the traders have dozens of indicators on his chart and half of them dictates to open a long position, while another half dictates to sell. Above, you can see an example of a EURUSD price chart that is overwhelmed by various technical indicators: Ichimoku, MA, Volume, ATR support and resistance levels fundamental data As a result, the one becomes paralyzed , not being able to make a decision. Moreover, each attempt to comprehend the data leads to deeper and deeper overthinking, driving into a vicious circle. The paralysis breeds the inaction that necessarily means the missed trading opportunities and profits. How to deal with that? The best option is to limit the number of data sources used for a decision-making. The rule here is simple - the fewer indicators you use, the easier it is to make a decision. EURUSD chart that we discussed earlier can look much better. Removing a bunch of tools will make the analysis easier and more accurate. There is a common fallacy among traders, that complexity breeds the profit. With so many years of trading, I realized, however, that the opposite is true... Keep the things simple, and you will be impressed how accurate your predictions will become. ❤️Please, support my work with like, thank you!❤️
Editors' picks
Education
by VasilyTrader
18
Best Price Action Pattern For Beginners to Start FOREX Trading There are a lot of price action patterns: wedges, channels, flags, cup & handle, etc. If you're just starting out your Forex journey, it's natural to wonder which one to trade and focus on. In this article, I will show you the best price action pattern for beginner s that you need to start forex trading. I will share a complete trading strategy with entry, stop and target, real market examples and useful trading tips. High accuracy and big profits guaranteed. The pattern that we will discuss is a reversal pattern. Depending on the shape of the pattern, it can be applied to predict a bearish or a bullish reversal. Its bearish variation has a very particular shape. It has 4 essential elements that make this pattern so unique: A strong bullish impulse, A pullback and a formation of a higher low, One more bullish impulse with a formation of an equal high, A pullback to the level of the last higher low. Such a pattern will be called a double top pattern. 2 equal highs will be called the tops , the level of the higher low will be called a neckline . Remember that the formation of a double top pattern is not a signal to sell. It is a warning sign. The pattern by itself simply signifies a consolidation and local market equilibrium. Your confirmation will be a breakout of the neckline of the pattern. Its violation is an important sign of strength of the sellers and increases the probabilities that the market will drop. Once you spotted a breakout of a neckline of a double top pattern, the best and the safest entry will be on a retest of a broken neckline. Target level will be based on the closest support. Stop loss will lie above the tops. A bullish variation of a double top pattern is called a double bottom. It is also based on 4 main elements: A strong bearish impulse, A pullback and a formation of a lower high, One more bearish impulse with a formation of an equal low, A pullback to the level of the last lower high. 2 equal lows will be called the bottoms , the level of the lower high will be called a neckline . The formation of a double bottom pattern is not a signal to buy. It is a warning sign. The pattern by itself simply signifies a consolidation and local market equilibrium. Your confirmation will be a breakout of the neckline of the pattern. Once you spotted a breakout of a neckline of a double bottom pattern, the best and the safest entry will be on a retest of a broken neckline. Target level will be based on the closest resistance. Stop loss will lie below the bottoms. Double top & bottom is a classic price action pattern that everyone knows. Being very simple to recognize, its neckline violation provides a very accurate trading signal. Moreover, once you learn to recognize and trade this pattern, it will be very easy for you to master more advanced price action patterns like head and shoulders or triangle. ❤️Please, support my work with like, thank you!❤️
Education
by VasilyTrader
1
LIVE ACCOUNT or PROP FIRM? A Comprehensive GuideIn this video I discuss the pros and cons of trading with a Live Account or with a Prop Firm Account. Hopefully, this will give you a better idea on what would be more ideal for your situation and style of trading. The FIVE factors I will talk about are: 1. Account Ownership 2. Regulations 3. Profit Potential 4. Financial Risk 5. Trading Rules At the end of the day, as a trader you should ALWAYS manage your money and your risk. Every choice you make is a trade. When you go to work, you trade your time for money. When you drink a bottle of coca cola you trade your health for quick gratification. Everything is a trade. If you go with a prop firm, treat it with the same respect as a live account. If you trade with a live account with a small balance, treat it like it is a large balance. Your wealth is a consequence of who you are as a person and how you live your life. Trade smart, trade safe! - R2F
Education
by Road_2_Funded
How to Trade a Break of a TrendlineHow to Trade a Break of a Trendline Trading broken trendlines is a critical aspect of technical analysis. Understanding how to interpret and act upon the break of trendlines can make a significant difference to a trader's performance. This FXOpen article delves into the intricacies of trading broken trendlines, providing insights, strategies, and risk management techniques to help traders navigate this essential aspect of market analysis. Understanding Trendlines Although you know what trendlines are, let’s briefly go over the subject. Trendlines are foundational tools used in technical analysis to visualise the direction of price movements. Drawing accurate trendlines involves selecting the appropriate highs and lows to connect, so they provide a clear representation of the prevailing trend. According to the established rules, there should be at least two highs/lows to draw a strong trendline. The more points you connect, the more solid the line is supposed to be. There are trendlines in forex, stock, commodity, index, and cryptocurrency* charts. Still, it may be easier to find trendlines on charts of assets experiencing less price volatility. The three primary types of trendlines are: 1. Uptrend lines connect higher lows and act as support levels. They represent bullish market conditions. 2. Downtrend lines connect lower highs and serve as resistance levels. They depict bearish market conditions. 3. Sideways or Range-Bound lines connect comparable highs and lows, indicating a range-bound or consolidating market. Significance of Broken Trendlines Broken trendlines create trading opportunities for traders with different trading styles and risk tolerances. Traders can employ various strategies based on trendlines with breaks, including trend continuation, trend reversal, and breakout strategies. These opportunities can provide traders with entry and exit points to take advantage of changing market dynamics. Identification of Trend Reversals Perhaps the key value of broken trendlines is their role in identifying potential trend reversals. When an established trendline is decisively broken, it often signifies a shift in market sentiment. This break indicates that the previous trend's momentum has weakened or reversed, which can be a vital turning point for traders. In an uptrend, the break of an uptrend line can suggest a potential reversal to a downtrend, and conversely, the break of a downtrend line in a downtrend may signal a potential reversal to an uptrend. If the price breaks the sideways trendline, it usually reflects the end of consolidation and the formation of a new trend, either upward or downward. In the chart above, the price broke above the downward trendline, after which a new uptrend was formed. Confirmation of Price Movements Broken trendlines can act as confirmation signals for other technical analysis tools and patterns. For example, when a trendline break aligns with the formation of chart patterns like head and shoulders or double top and double bottom, it may reinforce the validity of these patterns and their associated price projections. Market Sentiment Broken trendlines can also provide insights into market sentiment and psychology. Traders' reactions to trendline breaks can reveal their beliefs and expectations regarding future price movements, which can impact market dynamics and create trading opportunities. False Trendline Breakout A false trendline breakout, also known as a fakeout or failed breakout, occurs when the price of an asset appears to break a trendline but then reverses direction, often moving back within the trendline's boundaries. False breakouts can mislead traders and can result in losses for those who initiate trades based on the initial breakout signal. Here's a breakdown of the key characteristics of a false trendline breakout: - Initial Breakout. Initially, the price of the asset appears to break above or below a trendline. This break may even be accompanied by increased trading volume, which can provide confirmation of the breakout. - Traders' Reactions. Many traders may interpret the breakout as a significant move and initiate trades in that direction. For example, if a downtrend line is seemingly broken to the upside, traders may start buying, expecting a trend reversal. - Reversal. However, instead of continuing in the direction of the breakout, the price reverses course and moves back within the boundaries of the trendline. This reversal negates the initial breakout signal and can catch traders off guard. Look at the chart above. The price broke above the falling trendline, but the uptrend didn’t form, so the downtrend resumed. There are several reasons for false trendline breakouts, including: - Market Manipulation: In some cases, market participants with substantial resources may deliberately manipulate prices to trigger breakouts and then reverse the market's direction to take advantage of the price swings. - Lack of Confirmation: Fakeouts often occur when there is a lack of confirmation from other technical indicators or factors. Therefore, experienced traders look for multiple signals aligning to increase the validity of a breakout. - Whipsawing Markets: In volatile or indecisive markets, prices can frequently whipsaw above and below trendlines, making it challenging to distinguish between genuine and fakeouts. Factors to Consider When Trading Broken Trendlines To reduce the risk of falling victim to false trendline breakouts, traders often use additional technical analysis tools and confirmation signals. These may include waiting for reversal signals from other indicators, monitoring price action after the breakout, and setting stop-loss orders to potentially reduce losses in case of a reversal. Confirmation Signals Confirmation signals can come from various technical indicators and patterns, including but not limited to: - Candlestick Patterns. Traders look for candlestick patterns that support the direction of the breakout, such as bullish engulfing patterns for an upside breakout and bearish engulfing patterns for a downside breakout. - Oscillators. Oscillators like the Relative Strength Index (RSI) or the Stochastic can provide overbought or oversold conditions, which may help traders confirm the strength of the move. - Chart Patterns. Aside from candlestick patterns, chart formations, such as flags, triangles, or pennants, that coincide with the trendline break may provide additional confirmation. Volume Analysis Analysing trading volume is a crucial component of evaluating broken trendlines. Volume can provide insights into the significance of the breakout and whether it is more likely to be genuine or a false signal. A breakout with increasing volume is generally seen as more reliable. It suggests that market participants are actively involved in the move, increasing the chances of a sustained trend. Conversely, a breakout with decreasing volume may be less reliable, as it indicates a lack of enthusiasm among traders and raises the possibility of a false breakout. Timeframes Considering multiple timeframes is essential when trading broken trendlines. Different periods may provide different perspectives on the trendline break, and using a combination of them may enhance decision-making. Here's how traders approach timeframes: - Higher Timeframes. They start by analysing higher timeframes (e.g., daily or weekly) to identify the primary trend direction. This provides context for the trendline break observed on shorter timeframes. - Lower Timeframes. Market participants use lower timeframes (e.g., hourly or 15-minute charts) for finer entry and exit points. These shorter timeframes may help pinpoint optimal trade execution levels after the trendline break. - Confluence. Traders seek confluence between different timeframes. When a trendline break aligns with a breakout on higher timeframes, it adds strength to the trade signal. Support and Resistance Levels When trading broken trendlines, it's crucial to consider nearby support and resistance levels. These levels can influence price movements and provide valuable context for trade management. Fibonacci Retracement and Extension Tools Fibonacci retracement and extension levels can complement trendline analysis. If the price breaks the Fibo level after a trendline breakout, this may confirm the strength of the newly forming trend. Risk Management and Position Sizing when Trading Trendline Breakouts Effective risk management is paramount when trading trendline breakouts. When trading with trendlines, potential profits and losses can be determined via these techniques: - Setting Stop Losses. Setting appropriate stop-loss orders is a crucial component of risk management strategies. - Proper Position Sizing. Position sizing is a critical aspect of risk management, especially when trading trendline breakouts. It determines the amount of capital allocated to each trade and helps control exposure to potential losses. - Risk-Reward Ratios. Risk-reward ratios are essential for evaluating the potential effectiveness of a trade relative to the risk taken. Common Mistakes to Avoid when Trading Trendline Breakouts Common mistakes when trading trendline breakouts include making decisions based on insufficient confirmation signals, ignoring fundamental factors, and being guided by emotions. By implementing a disciplined approach and being aware of these pitfalls, traders may increase their chances of making informed trading decisions. Ignoring Confirmation Signals One of the most common mistakes traders make when trading trendline breakouts is ignoring confirmation signals. Relying solely on the trendline break itself can lead to premature or misguided trades. Overlooking Fundamentals While technical analysis plays a significant role in trading trendline breakouts, overlooking fundamental factors can be a costly mistake. Traders consider the broader market context and macroeconomic factors that may impact the assets they trade. Fundamental events like economic releases, earnings reports, or geopolitical developments can influence market sentiment and override technical signals. Emotional Trading Emotional trading is a common pitfall for traders, and it becomes particularly pronounced when trading trendline breakouts. Emotions such as fear and greed can lead to impulsive decisions and erode trading discipline. Final Thoughts The ability to trade broken trendlines is a valuable skill for market analysts and traders. Understanding the basics of trendlines, recognising their significance, and implementing effective trendline strategies and risk management techniques may lead to more sound trading outcomes. It's essential to approach broken trendline trading with discipline, patience, and continuous learning to navigate the complexities of financial markets effectively. *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.
Editors' picks
Education
by FXOpen
6
Exploring Bullish Plays with E-minis, Micro E-minis and OptionsIntroduction The S&P 500 futures market offers a variety of ways for traders to capitalize on bullish market conditions. This article explores several strategies using E-mini and Micro E-mini futures contracts as well as options on futures. Whether you are looking to trade outright futures contracts, create sophisticated spreads, or leverage options strategies, this guide will help you design effective bullish plays while managing your risk. Choosing the Right Contract Size When considering a bullish play on the S&P 500 futures, the first decision is choosing the appropriate contract size. The E-mini and Micro E-mini futures contracts offer different levels of exposure and risk. E-mini S&P 500 Futures: Standardized contracts linked to the S&P 500 index with a point value = $50 per point. Suitable for traders seeking significant exposure to market movements. Greater potential for profits but also higher risk due to larger contract size. TradingView ticker symbol is ES1! Margin Requirements: As of the current date, the margin requirement for E-mini S&P 500 futures is approximately $12,400 per contract. Margin requirements are subject to change and may vary based on the broker and market conditions. Micro E-mini S&P 500 Futures: Contracts representing one-tenth the value of the standard E-mini S&P 500 futures. Each point move in the Micro E-mini S&P 500 futures equals $5. Ideal for traders who prefer lower exposure and risk. Allows for more precise risk management and position sizing. TradingView ticker symbol is MES1! Margin Requirements: As of the current date, the margin requirement for Micro E-mini S&P 500 futures is approximately $1,240 per contract. Margin requirements are subject to change and may vary based on the broker and market conditions. Choosing between E-mini and Micro E-mini futures depends on your risk tolerance, account size, and trading strategy. Smaller contracts like the Micro E-minis provide flexibility, especially for newer traders or those with smaller accounts. Bullish Futures Strategies Outright Futures Contracts: Buying E-mini or Micro E-mini futures outright is a straightforward way to express a bullish view on the S&P 500. This strategy involves purchasing a futures contract in anticipation of a rise in the index. Benefits: Direct exposure to market movements. Simple execution and understanding. Ability to leverage positions due to the margin requirements. Risks: Potential for significant losses if the market moves against your position. Requires substantial margin and capital. Mark-to-market losses can trigger margin calls. Example Trade: Buy one E-mini S&P 500 futures contract at 5,588.00. Target price: 5,645.00. Stop-loss price: 5,570.00. This trade aims to profit from a 57-point rise in the S&P 500, with a risk of a 18-point drop. Futures Spreads: 1. Calendar Spreads: A calendar spread, also known as a time spread, involves buying (or selling) a longer-term futures contract and selling (or buying) a shorter-term futures contract with the same underlying asset. This strategy profits from the difference in price movements between the two contracts. Benefits: Reduced risk compared to outright futures positions. Potential to profit from changes in the futures curve. Risks: Limited profit potential compared to outright positions. Changes in contango could hurt the position. Example Trade: Buy a December E-mini S&P 500 futures contract. Sell a September E-mini S&P 500 futures contract. Target spread: Increase in the difference between the two contract prices. In this example, the trader expects the December contract to gain more value relative to the September contract over time. The profit is made if the spread between the December and September contracts widens. 2. Butterfly Spreads: A butterfly spread involves a combination of long and short futures positions at different expiration dates. This strategy profits from minimal price movement around a central expiration date. It is constructed by buying (or selling) a futures contract, selling (or buying) two futures contracts at a nearer expiration date, and buying (or selling) another futures contract at an even nearer expiration date. Benefits: Reduced risk compared to outright futures positions. Profits from stable prices around the middle expiration date. Risks: Limited profit potential compared to other spread strategies or outright positions. Changes in contango could hurt the position. Example Trade: Buy one December E-mini S&P 500 futures contract. Sell two September E-mini S&P 500 futures contracts. Buy one June E-mini S&P 500 futures contract. In this example, the trader expects the S&P 500 index to remain relatively stable. Bullish Options Strategies 1. Long Calls: Buying call options on S&P 500 futures is a classic bullish strategy. It allows traders to benefit from upward price movements while limiting potential losses to the premium paid for the options. Benefits: Limited risk to the premium paid. Potential for significant profit if the underlying futures contract price rises. Leverage, allowing control of a large position with a relatively small investment. Risks: The potential loss of the entire premium if the market does not move as expected. Time decay, where the value of the option decreases as the expiration date approaches. Example Trade: Buy one call option on E-mini S&P 500 futures with a strike price of 5,500, expiring in 73 days. Target price: 5,645.00. Stop-loss: Premium paid (e.g., 213.83 points x $50 per contract). If the S&P 500 futures price rises above 5,500, the call option gains value, and the trader can sell it for a profit. If the price stays below 5,500, the trader loses only the premium paid. 2. Synthetic Long: Creating a synthetic long involves buying a call option and selling a put option at the same strike price and expiration. This strategy mimics owning the underlying futures contract. Benefits: Similar profit potential to owning the futures contract. Flexibility in managing risk and adjusting positions. Risks: Potential for unlimited losses if the market moves significantly against the position. Requires margin to sell the put option. Example Trade: Buy one call option on E-mini S&P 500 futures at 5,500, expiring in 73 days. Sell one put option on E-mini S&P 500 futures at 5,500, expiring in 73 days. Target price: 5,645.00. The profit and loss (PnL) profile of the synthetic long position would be the same as owning the outright futures contract. If the price rises, the position gains value dollar-for-dollar with the underlying futures contract. If the price falls, the position loses value in the same manner. 3. Bullish Options Spreads: Options are incredibly versatile and adaptable, allowing traders to design a wide range of bullish spread strategies. These strategies can be tailored to specific market conditions, risk tolerances, and trading goals. Here are some popular bullish options spreads: Vertical Call Spreads Bull Call Spreads Call Debit Spreads Ratio Call Spreads Diagonal Call Spreads Calendar Call Spreads Bullish Butterfly Spreads Bullish Condor Spreads Etc. The following Risk Profile Graph represents a Bull Call Spread made of buying the 5,500 call and selling the 5,700 call with 73 to expiration: For detailed explanations and examples of these and other bullish options spread strategies, please refer to the many published ideas under the "Options Blueprint Series." These resources provide in-depth analysis and step-by-step guidance. Trading Plan A well-defined trading plan is crucial for successful execution of any bullish strategy. Here’s a step-by-step guide to formulating your plan: 1.Select the Strategy: Choose between outright futures contracts, calendar or butterfly spreads, or options strategies based on your market outlook and risk tolerance. 2. Determine Entry and Exit Points: Entry price: Define the price level at which you will enter the trade (breakout, UFO support, indicators convergence/divergence, etc.) Target price: Set a realistic target based on technical analysis or market projections. Stop-loss price: Establish a stop-loss level to manage risk and limit potential losses. 3. Position Sizing: Calculate the appropriate position size based on your account size and risk tolerance. Ensure that the position aligns with your overall portfolio strategy. 4. Risk Management: Implement risk management techniques such as using stop-loss orders, hedging, and diversifying positions to protect your capital. Risk management is vital in trading to protect your capital and ensure long-term success Conclusion and Preview for Next Article In this article, we've explored various bullish strategies using E-mini and Micro E-mini S&P 500 futures as well as options on futures. From outright futures contracts to sophisticated spreads and options strategies, traders have multiple tools to capitalize on bullish market conditions while managing their risk effectively. Stay tuned for our next article, where we will delve into bearish plays using similar instruments to navigate downward market conditions. 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.
CME_MINI:ES1!Education
by traddictiv
Portfolio Stability - Advanced StrategiesHave you ever wondered why, during a crisis, BTC prices plummet significantly while altcoins are also massively sold off, even if the crisis primarily impacts BTC (such as the Mt. Gox crisis)? The answer lies in the advanced strategies employed by crypto whales, who manage large, diversified portfolios. Crypto whales typically build extensive portfolios with strategic entry points at low prices. To maintain stability in these portfolios over the long term, professional traders use various sophisticated strategies. One such strategy, which addresses the question above, involves a calculated response during a crisis. During a crisis, some traders offload massive quantities of BTC, whether in anticipated or unexpected scenarios. To safeguard their liquidity and minimize market exposure, these traders sell large quantities of altcoins. By converting altcoins to cash , they create a liquidity buffer, reducing the portfolio's overall volatility. Additionally, traders may sell small quantities of BTC if their entry prices were particularly advantageous. This approach not only mitigates the immediate impact of market fluctuations but also positions traders to capitalize on short-term trading opportunities (up to 15 min timeframe !) . The liquidity set aside allows them to engage aggressively in the market as volatility rises , a period during which trading algorithms and artificial intelligence systems struggle to perform manipulations effectively. Such insights into portfolio management techniques can cost up to $10,000. Happy learning !
Education
by Monstralian
2
How to read Volume properlyIn this video, I explain how to interpret volume bars in conjunction with price movements. Recognizing large volume bars is crucial for understanding significant market interest, especially when they accompany substantial percentage changes in the underlying asset. These insights can help confirm institutional buying, signal the beginning or end of uptrends, and indicate the start of sell-offs or the end of downtrends. For example, large green volume bars can suggest the start of an uptrend or confirm institutional buying, while large red volume bars can signal the beginning of a sell-off or the end of a downtrend. This indicator simplifies the process of reading volume bars, making it easier to extract valuable insights from them.
NASDAQ:AAPLEducation
by PappyTrading
11
Visualize $TSLA CALL pricing skew due to the upcoming earningsLet’s take a look at our new tradingview options screener indicator to see what we observe, as the options chain data has recently been updated. When we look at the screener, we can immediately see that NASDAQ:TSLA has an exceptional Implied Volatility Rank value of over 100, which is extremely high. This is clearly due to the upcoming earnings report on July 23rd. As we proceed, we notice that Tesla's Implied Volatility Index is also high, over 70. This means that not only the relative but also the absolute implied volatility of Tesla is high. Because the IVX value is above 30, Tesla’s IV Rank is displayed with a distinguishable black background. This favors credit strategies such as iron condors, broken wing butterflies, strangles, or simple short options. Next, let’s examine how this IV index value has changed over the past five days. We can see it has increased by more than 6%, indicating an upward trend as we approach the earnings report. In the next cell, we see a significant vertical price skew. Specifically, at 39 days to expiration, call options are 84% more expensive than put options at the same distance. This indicates that market participants are pricing in a significant upward movement in the options chain. The call skew is so pronounced that at 39 days to expiration, the 16 delta call value exits the expected range. This signifies a substantial delta skew twist, which I will show you visually. We see a horizontal IV index skew between the third and fourth weeks in the options chain. This means the front weekly IVX is lower than the IVX for the following week, which may favor calendar or diagonal strategies. Hovering over this with the mouse reveals it’s around the third and fourth week. In the last cell, we observe that there’s a horizontal IVX skew not just in weekly expirations but also between the second and third monthly expirations. Now, let’s see how these values appear visually on Tesla’s chart using our Options Overlay Indicator. On the right panel, the previously mentioned values are displayed in more detail when you hover over them with the mouse. The really exciting part is setting the 16 delta curve and seeing the extent of the upward shift in options pricing. This significant skew is also visible at closer delta values. When we enable the expected move and standard deviation curves, it immediately becomes clear what this severe vertical pricing skew in favor of call options means. Practically, market participants are significantly pricing in upward movement right after the earnings report. Hovering over the colored labels associated with the expirations displays all data precisely, showing the number of days until expiration and the high implied volatility index value for that expiration. Additionally, a green curve indicating overpricing due to extra interest is displayed. Weekly expiration horizontal IVX skew values appear in purple, and those affected by monthly skew are shown in turquoise blue. The 'Lite' version of our indicators is available for free to everyone, where you can also view Tesla as demonstrated. Pro indicators are available more than 150 US market symbols like SPY, S&P500, Nvidia, bonds, etfs and many others. Trade options like a pro with TanukiTrade Option Indicators for TradingView. Thank you for your attention.
NASDAQ:TSLAEducation
by TanukiTrade
How to Plot Head & Shoulders Pattern on TradingViewWelcome back, Traders! We’re excited to have you here on TradingView where we share valuable trading insights and educational posts to help you succeed in the markets. Today, we’re diving into one of the most reliable chart patterns in technical analysis: the Head and Shoulders pattern. Understanding and identifying this pattern can significantly improve your trading strategy, whether you’re dealing with forex, stocks, or commodities. What is the Head and Shoulders Pattern? The Head and Shoulders pattern is a bearish reversal pattern that indicates a potential end to an uptrend and the beginning of a downtrend. It consists of three peaks: Left Shoulder: The first peak followed by a decline. Head: The highest peak followed by a decline. Right Shoulder: A peak similar in height to the left shoulder, followed by a decline. The neckline is the support line that connects the lows after the left shoulder and the head. How to Trade the Head and Shoulders Pattern: Identify the Pattern: Look for the three distinct peaks with the head being the highest. Draw the Neckline: Connect the lows after the left shoulder and the head to form the neckline. Entry Point: Enter a short position when the price breaks below the neckline. Target: Measure the distance from the head to the neckline and subtract this distance from the breakout point to set your target. Stop Loss: Place a stop loss above the right shoulder to manage your risk. Inverse Head and Shoulders Pattern Conversely, the Inverse Head and Shoulders is a bullish reversal pattern signaling the end of a downtrend and the start of an uptrend. It consists of three troughs: Left Shoulder: The first trough followed by a rise. Head: The lowest trough followed by a rise. Right Shoulder: A trough similar in depth to the left shoulder, followed by a rise. The neckline is the resistance line connecting the highs after the left shoulder and the head. How to Trade the Inverse Head and Shoulders Pattern: Identify the Pattern: Look for the three distinct troughs with the head being the lowest. Draw the Neckline: Connect the highs after the left shoulder and the head to form the neckline. Entry Point: Enter a long position when the price breaks above the neckline. Target: Measure the distance from the head to the neckline and add this distance to the breakout point to set your target. Stop Loss: Place a stop loss below the right shoulder to manage your risk. Follow us on TradingView for more helpful ideas and educational posts! Stay tuned as we continue to share insights that will help you on your trading journey. Happy trading! - BK Trading Academy
Editors' picks
Education
by BKTradingAcademy
7
Btc dominance Market Dominance: BTC's Market Cap: Bitcoin has the largest market capitalization (total value of all outstanding coins) compared to other cryptocurrencies. This significant size means its price movements have a ripple effect. Investor Confidence: Bitcoin is often seen as the most established and trusted cryptocurrency. When its price goes down, it can trigger a loss of confidence in the entire crypto market, leading to sell-offs in other cryptocurrencies. Trading Mechanisms: BTC Pairing: Many altcoins (alternative cryptocurrencies) are traded against Bitcoin (BTC) on crypto exchanges. A drop in Bitcoin's price can lead to a decrease in the altcoin's BTC value, even if its USD price remains stable. Margin Trading: Some investors use margin trading to leverage their positions, borrowing funds to amplify potential gains (and losses). When Bitcoin's price falls, it can trigger margin calls, forcing investors to sell other crypto holdings to meet margin requirements. This can lead to a broader sell-off. Investor Psychology: Correlation Bias: Investors sometimes perceive a correlation between assets even when it's not inherently strong. A decline in Bitcoin's price might lead investors to believe the entire crypto market is headed for a downturn, leading them to sell other cryptocurrencies as well. Bitcoin as a Benchmark: Many investors use Bitcoin as a benchmark for the overall health of the cryptocurrency market. A decline in Bitcoin's price can signal broader market weakness, prompting investors to sell other crypto holdings. However, there are also signs that the correlation between Bitcoin and altcoins is weakening: Rise of DeFi and NFTs: The growth of Decentralized Finance (DeFi) and Non-Fungible Tokens (NFTs) has created new sub-sectors within the crypto market with their own dynamics, less reliant on Bitcoin's price movements. Maturing Market: As the cryptocurrency market matures, individual projects are increasingly valued based on their own fundamentals and functionalities, potentially reducing their dependence on Bitcoin's price. Overall: While Bitcoin still exerts a significant influence, the relationship between Bitcoin and the broader crypto market is evolving. As the market matures and diversifies, we might see altcoins become less susceptible to Bitcoin's price swings.
CRYPTOCAP:BTC.DEducation
by ParabolicP
Chart Time SettingsIn the chart analysis tool that I use, selecting the right time frame is crucial for correctly interpreting and analyzing market movements. Unfortunately, I cannot upload 1-minute charts on TradingView, but I can start from a 15-minute interval. This is helpful, but I particularly recommend using shorter time frames like 1-minute or 5-minute charts for day trading. What are Time Settings? Time settings determine the period that a single candle or bar on the chart represents. For example, a 1-hour chart shows price movements in hourly intervals, with each candle representing the price action of one hour. Available Time Frames A wide range of time frames, from minutes to months, is available. Here are some of the most common options: 15 Minutes (15M): Popular among day traders who execute multiple trades within a day. (CAUTION - For the 15-minute interval, one should be able to wait 2-5 days - always conduct analysis using 1-minute and 5-minute charts for day trading.) 1 Hour (1H): For traders who want to recognize intraday patterns without tracking every movement. I never use the 1-hour view. Does anyone use 1-hour charts? What experiences have you had with them, and how long do you hold trades? 4 Hours (4H): A good compromise for swing traders who hold trades for several days. 1 Day (1D): Provides a comprehensive overview for long-term strategies. 1 Week (1W): Suitable for long-term investors observing larger trends. 1 Month (1M): Ideal for analyzing very long-term trends. How Do I Choose the Right Time Frame? Choosing the right time frame depends on my trading strategy and time horizon. Here are some of my tips: Scalping and Short-Term Trading: For scalping and short-term trades, I recommend shorter time frames like 1-minute (1M) or 5-minute (5M). These help in capturing small market movements and reacting quickly to changes. Although I cannot upload these time frames, I use them for detailed analysis. Day Trading: For day trading, I use the 15-minute (15M) charts, (1M and 5M) charts to analyze the entire trading day and respond to intraday trends. Swing Trading: For swing trading, I use longer time frames like 15-minute and 4-hour (4H) charts, and 1-day (1D) charts to follow trends over several days or weeks. Long-Term Investments: For long-term investments, weekly (1W) or monthly (1M) charts are ideal for identifying major trends and long-term movements. Multi-Time Frame Analysis A proven method is multi-time frame analysis. I examine the same market in different time frames to get a more comprehensive picture. For example, I identify a long-term trend on the daily chart and then use the 15-minute chart to find precise entry and exit points. Conclusion The right time setting can make the difference between a successful and an unsuccessful trade. Although I cannot upload 1-minute charts, I experiment with various time frames to find the one that best suits my strategy. By understanding and applying different time settings, I can improve my trading decisions and refine my market analyses.
Education
by myforexblog
How to Trade on Support and Resistance ReversalsHow to Trade on Support and Resistance Reversals Trading in the financial markets can be a complex endeavour, but it may become more manageable when traders have a solid grasp of support and resistance levels. Recognising support and resistance reversals is a crucial skill that may enhance one's trading performance. In this FXOpen article, we will learn the types of support and resistance and consider some trading strategies based on market reversals. Recognising Support and Resistance Reversals It’s unlikely you will need to ask, “What are support and resistance lines?” Still, let’s refresh your memory. A support line is a level at which an asset's price tends to find buying interest, preventing it from falling further. In other words, it's where demand for the asset is strong enough to counteract selling pressure. Traders often identify support as a potential point when going long or a take-profit target when selling. It can be formed at various price points on a chart and can be horizontal and diagonal (trendlines). A resistance line is a level at which an asset's price tends to encounter selling pressure, preventing it from rising further. It represents a point where supply exceeds demand, leading to potential reversals or pullbacks. Traders often identify resistance as a potential point when going short or a take-profit target when buying. Like support, resistance levels can also be horizontal, diagonal, or coincide with round numbers. Support and Resistance: Types There are various types of support and resistance, including trendlines, round numbers, Fibonacci retracements and extensions, pivot points, and dynamic lines. Trendlines Trendlines are one of the most fundamental tools in technical analysis. They are lines drawn on a price chart to connect consecutive lows and consecutive highs to identify the direction of the market. Trendlines act as support and resistance, helping traders identify potential reversal points and trend continuations. The intersection of price movements with trendlines often signifies significant market sentiment shifts. There are three fundamental types of trendlines: - Uptrend Lines: Uptrend lines connect a series of higher lows and function as support levels on a price chart. These lines are indicative of bullish market conditions, signifying a consistent upward trajectory in asset value. Traders often use uptrend lines to identify potential entry points for long positions. - Downtrend Lines: Downtrend lines link lower highs and act as resistance in technical analysis. They reflect bearish market conditions, suggesting a persistent downward trend in asset value. Downtrend lines are valuable for traders looking to establish potential entry points for short positions. - Sideways or Range-Bound Lines: Sideways or range-bound lines connect comparable highs and lows, illustrating a market in a state of consolidation or trading within a defined range. These lines indicate the lack of strong trends in either direction and are essential for traders to recognise when markets are moving sideways. Closest Swing Points Traders can draw support and resistance through the most recent swing point. - Support: To find a support level based on the closest swing point, traders identify a recent swing low. This low point is where buying interest emerged previously. - Resistance: To determine a resistance level based on the closest swing point, traders look for the recent swing high. This high point is where selling pressure halted a previous uptrend. Round Numbers Round numbers are psychological levels that often serve as support or resistance. They tend to attract the attention of traders and investors due to their simplicity and significance. For example, in a currency pair like EUR/USD, a round number might be 1.2000. These levels can act as barriers where traders make decisions to buy or sell, making them essential reference points in technical analysis. Fibonacci Retracements and Extensions Fibonacci retracement and extension levels are based on the Fibonacci sequence and are used to identify potential support and resistance zones. The most commonly used Fibonacci retracements are 23.6%, 38.2%, 50%, and 61.8%. Traders apply these levels to charts to determine where price reversals or corrections may occur. Fibonacci extensions are key tools in technical analysis used to project potential price targets beyond the original trend. The most commonly used levels are 161.8%, 261.8%, and 423.6%. Pivot Points Pivot points are calculated levels that help traders identify critical support and resistance points. They are used to determine potential price reversals or breakouts. Traders often look at multiple pivot point levels, including support 1 (S1), support 2 (S2), resistance 1 (R1), and resistance 2 (R2), to gauge the market's sentiment and make trading decisions accordingly. Dynamic Lines Dynamic support and resistance are not fixed on the chart but change with market conditions. Common examples include moving averages and Bollinger Bands. Moving averages can act as dynamic support or resistance depending on their positioning relative to the current price: if the price is above the MA, the moving average serves as a support, while if the price is below the MA, the moving average can be used as a resistance. Bollinger Bands consist of a middle band (the moving average) and upper and lower bands that represent dynamic support and resistance zones based on price volatility. Trading Strategies for Support and Resistance Reversals Below, you will find two of the most straightforward strategies you can apply to various markets and timeframes. Bounce Trading Strategy Objective: To capitalise on confirmed support or resistance by entering positions when the price bounces off these levels. Entry Point: - Long Trade (Support Bounce): Traders may wait for the market to approach a strong support level. They always look for a confirmation signal, including a bullish candlestick pattern, such as a hammer or engulfing pattern, or a technical indicator. You may enter the trade at the opening of the next candle after the bullish confirmation signal. - Short Trade (Resistance Bounce): The trader may wait for the market to approach a robust resistance level. They always look for confirmation with a bearish candlestick pattern, such as a shooting star or bearish engulfing pattern, near the resistance level or a technical indicator. You may enter the trade at the opening of the next candle after the bearish confirmation signal. Exit Point: - Take Profit: Traders might set a take-profit order at a reasonable distance from their entry point, aiming for a risk-reward ratio of at least 1:2. - Stop-Loss: One common practice you may consider is to place a stop-loss order just below (for long trades) or above (for short trades) the support or resistance level you are trading. This may help protect against significant losses if the market moves against your trade. Look at the chart above. A trader could initiate two trades on the support level. In the first one, they could get confirmation from consecutive candles with small or non-existing lower shadows and rising bullish volumes. In the second trade, they may get confirmation from the Bollinger Bands as the lower band is aligned with the support level. Pullback and Retest Strategy Objective: To enter trades on pullbacks to previously broken support or resistance levels, which may now act as new support or resistance. Entry Point: - Long Trade (Resistance Turned Support): Traders wait for the price to break significant resistance and retrace to retest it as new support. To confirm a successful retest, you may look for reduced volume and bullish candlestick patterns. To enter a trade, you may wait for the next candle after the retest confirmation to open. - Short Trade (Support Turned Resistance): Traders wait for the price to break substantial support and retrace to retest it as new resistance. You may ask, “If the price is dancing above the support zone but hasn't broken below it, what should we do?” To make the strategy work, you will need to wait for a breakout and confirm the retest. To get a confirmation signal, you may look for reduced volume and bearish candlestick patterns. An entry point may be initiated when the next candle after the retest confirmation opens. Exit Point: - Take Profit: You may set a take-profit order based on your desired risk-reward ratio, considering the potential price target based on the recent significant swing point. - Stop-Loss: Traders usually place a stop-loss order just below (for long trades) or above (for short trades) the retested support or resistance level to manage risk. In the chart above, a trader could enter a trade on a retest of a broken resistance level that turned into support. Rising bullish volumes on a support point could serve as a confirmation signal. Common Pitfalls to Avoid Trading on support and resistance reversals may be a rewarding strategy, but it's essential to steer clear of common pitfalls that may lead to losses. Here are three significant pitfalls to avoid: - Overtrading. As the support and resistance reversal strategies are straightforward and conditions for them can be found on almost any market and any timeframe, traders may fall into an overtrading trap. Overtrading occurs when traders execute an excessive number of trades, often driven by the fear of missing out or the desire for quick profits. - Ignoring Fundamental Analysis. While technical analysis plays a crucial role in trading support and resistance reversals, ignoring fundamental analysis can be a significant pitfall. Economic data releases, geopolitical events, or company news can lead to unexpected market moves. - Neglecting Risk Management. Neglecting risk management is a critical mistake that traders should avoid, regardless of their strategies. Failing to implement proper risk management can result in substantial losses that outweigh gains. Final Thoughts Understanding the various types of support and resistance, including trendlines, round numbers, Fibonacci retracements and extensions, pivot points, and dynamic levels, is essential for traders and analysts to make informed decisions in the financial markets. These tools offer valuable insights into potential market reversals and overall market sentiment. Support vs resistance trading strategies are straightforward and may be applied to almost any market. If you want to test them, open an FXOpen account and enjoy trading in over 600 markets on the TickTrader platform! 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
8
WHAT IS APY IN CRYPTO ?💹 APY (Annual Percentage Yield) is the amount of money an investor will earn in a year if the money is reinvested after each accrual period. The calculation formula is compound interest. In cryptocurrencies and decentralised finance (DeFi), APY is used to express the returns users can get from staking, liquidity mining and other types of income farming. 📍 UNDERSTANDING APY CALCULATION APY allows users to understand what annual returns they can expect from their investments, taking into account reinvestment of interest earned. This helps to compare different investment opportunities in cryptocurrency startups: ➡️ Comparing the returns of different cryptocurrencies in staking, income farming on one exchange. ➡️ Comparing the yield of staking one coin on different exchanges. The rate, which is calculated using the simple interest formula, only takes into account the initial investment amount. In comparison, APY gives a more accurate idea of how much an investor will earn, taking into account the re-investment of interest 📍 THE APY CALCULATION FORMULA IS: APY is the Annual Percentage Yield r is the interest rate per period (in decimal form, e.g. 0.05 for 5%) n is the number of times interest is compounded per year For example, if an investment has an annual interest rate of 5% compounded quarterly, the APY would be: APY = (1 + 0.05/4)^(4) - 1 = 5.127% This means that over a year, the investment would earn an effective annual return of 5.127%, taking into account the compounding effect. Note that this formula assumes that the interest is compounded at the end of each period, which is often referred to as "compounding frequency". The more frequently interest is compounded, the higher the APY will be. 📍 THREE CRUCIAL POINTS TO KEEP IN MIND ARE: 1️⃣ Frequency of interest accrual. The more frequently interest is accrued, the higher the APY will be, even if the nominal interest rate remains the same. 2️⃣ Reinvestment. APY assumes that all interest earned is reinvested, which increases the total return. 3️⃣ Transparency. APY provides a more accurate representation of potential returns compared to a simple interest rate. APY is a forecast and actual returns may vary. It may be affected by market volatility, changes in interest rates, risks associated with a particular investment product. APY is specified for each product and each coin separately, you can find this information on the website of the cryptocurrency exchange. To understand the amount of earnings, you need to know the period of accrual of income. For example, accrual in staking can occur both every minute and every day. In addition to APY, there is another key rate to consider: APR (Annual Percentage Rate). Similar to APY, APR is a rate that measures the yield of an investment, but it is calculated using the simple interest formula. While APR is commonly associated with the cost of borrowing at an interest rate, it can also be applied to investments. Like APY, APR is not a fixed value, as it can fluctuate based on network activity and other factors. 📍 CONCLUSION APY is a critical parameter that represents the return on an asset with compound interest, taking into account the reinvestment of profits after each accrual. This metric is essential when evaluating the feasibility of staking or other income-generating opportunities. For instance, it can help you decide whether to stake Coin A or convert it to Coin B and stake it instead. By comparing APY rates for different coins and staking options, you can make informed decisions about where to allocate your assets to maximize your returns. Traders, If you liked this educational post🎓, give it a boost 🚀 and drop a comment 📣
Education
by Lingrid
3
A Simple/Consistent Trading Strategy Using AnchorBars For AllI was talking with a friend today and he stated he just wanted something simple and consistent. He stated he was using Weekly, Daily, and 30 Min charts to try to confirm his trade setups. He did not want to swing for trades too often - only when the Weekly, Daily, 30 Min charts aligned. I've build multiple systems somewhat like the one I'm showing you in this video. The trick to managing this system is to avoid consolidation periods. When price settles into an extended sideways range - you want to cut your trading down to almost NOTHING and wait for a more defined trend. Here you go. Simple and easy. If you don't understand AnchorBars, you can learn more on my other TradingView videos. Go Get Some...
AMEX:DIAEducation
by BradMatheny
2
Elementary Bitcoin in its entirety for beginnersUnlike all kinds of cryptocurrencies, the issue of Bitcoin is limited by the condition of a regular reduction in the size of the mining reward. Naturally, the American dollar will always be issued without any special restrictions. This allows you to make a basic calculation: “infinity” divided by “21 million” = “infinity”. That is, theoretically, in the infinite future, Bitcoin can cost as much as you like; based on general data, you can already calculate the nearest maximum target of $120k at the end of 2025. Of course people won't spend all their dollars on Bitcoin because they have other needs to survive. People will buy and sell Bitcoin to achieve their budget goals. Therefore, the price will not rise every day. Looking at the figure, you can see three symbolic exponents (blue at the bottom, red at the top and orange in the middle) the struggle between buyers and sellers unfolds. But this is not a fact that the price will reach them, since the real exponential median is extended into eternity, or at least for the next hundred years until all Bitcoin is mined. The most likely upward trend will fluctuate around a straight white line. I think the price will charge below this line and shoot exponentially much higher again and again as mankind's speculative sentiment never runs out. Therefore, in the near future, since the price has not reached its nearest maximum immediately, a break is needed to recharge. Anything can happen at once, but most likely it will drop below the previously mentioned orange exponential and below the white straight line to collect at least part of the liquidity between $28k-33k and reverse fast back to its nearest target at $120k. I believe this downward and upward movement will occur before the end of 2025. However, from my own experience, I can note that my scenarios are implemented much faster because we are not given time, we create it ourselves. Therefore, just stay in touch and watch the unfold of events vertically if you are not in a hurry. =] I still provide brief comments as the story progresses from that “Watchlist, details and news” section in the upper right corner of the screen on the stationary monitor. Best wishes.
BITSTAMP:BTCUSDEducation
by tradephenomena
Combined Staking and Shorting Strategy with Technical AnalysisThis strategy involves buying and staking cryptocurrencies during oversold conditions while shorting during overbought conditions to maximize profits from both price movements and staking rewards. Strategy Breakdown Buy and Stake 1. Identify Oversold Condition:    - Use technical indicators (like RSI or a combination of RSI and CCI) to identify an oversold condition on the 4-hour chart. 2. Wait for Support Reclamation:    - Wait for the cryptocurrency to reclaim a previously broken support level, indicating a potential price reversal. 3. Buy Cryptocurrency:    - Purchase the cryptocurrency at this point. 4. Stake Cryptocurrency:    - Stake the purchased cryptocurrency to earn staking rewards. Short and Profit 1. Price Breakdown:    - If the price breaks down below a new support level, initiate a short position. 2. Target Profits:    - Set profit targets based on the 30-period average price change on the 4-hour chart. Short and Hold 1. Identify Overbought Condition:    - Use technical indicators to identify when the price enters the overbought region. 2. Wait for Support Break:    - Wait for the price to break below a support level (or a previously broken resistance level), signaling a potential downtrend. 3. Go Short:    - Initiate a short position while still holding your staked positions to hedge against potential losses. Pros and Cons Pros 1. Earning Staking Rewards:    - Continues to earn staking rewards even when prices are volatile. 2. Capitalizing on Market Conditions:    - Gains from both upward (via staking) and downward (via shorting) price movements. 3. Risk Management:    - Hedging through short positions can protect against significant losses in a bear market. 4. Enhanced Profits:    - Potential for higher overall returns by combining staking rewards with profits from shorting. Cons 1. Complexity:    - Requires a good understanding of both technical analysis and market timing. 2. Transaction Costs:    - Multiple trades (buying, shorting, covering) can lead to higher transaction fees. 3. Market Risks:    - Volatility can lead to unexpected losses, especially if the market moves against your short positions. 4. Staking Risks:    - Staked assets might be locked for a period, limiting liquidity and flexibility. Using Leverage Leverage can amplify both gains and losses. It allows you to open larger positions than your capital would normally allow, but it comes with increased risk. How to Use Leverage 1. Careful Position Sizing:    - Use leverage sparingly. Consider using 2x to 5x leverage rather than extreme levels. 2. Risk Management:    - Always use stop-loss orders to limit potential losses. 3. Monitor Margin Levels:    - Keep a close eye on margin requirements to avoid liquidation. 4. Balancing Exposure:    - Maintain a balanced portfolio. For instance, if you use leverage to go short, ensure your staked positions are not excessively exposed to market downturns. 5. Leverage in Short Positions:    - Use leverage for short positions to maximize potential profits from price declines. For example, if you have $100 in staked assets, you might use $20 to $50 of your own capital and $20 to $50 of borrowed funds to short an equivalent value.
Education
by The_Bull_Trader